blze-20220331
000146205612-312022Q1False11P3YP3YP4Y00014620562022-01-012022-03-310001462056us-gaap:CommonClassAMember2022-04-30xbrli:shares0001462056us-gaap:CommonClassBMember2022-04-3000014620562022-03-31iso4217:USD00014620562021-12-310001462056us-gaap:CommonClassAMember2022-03-31iso4217:USDxbrli:shares0001462056us-gaap:CommonClassAMember2021-12-310001462056us-gaap:CommonClassBMember2021-12-310001462056us-gaap:CommonClassBMember2022-03-3100014620562021-01-012021-03-310001462056us-gaap:CommonStockMember2021-12-310001462056us-gaap:AdditionalPaidInCapitalMember2021-12-310001462056us-gaap:RetainedEarningsMember2021-12-310001462056us-gaap:RetainedEarningsMember2022-01-012022-03-310001462056us-gaap:CommonStockMember2022-01-012022-03-310001462056us-gaap:AdditionalPaidInCapitalMember2022-01-012022-03-310001462056us-gaap:CommonStockMember2022-03-310001462056us-gaap:AdditionalPaidInCapitalMember2022-03-310001462056us-gaap:RetainedEarningsMember2022-03-3100014620562020-12-310001462056us-gaap:CommonStockMember2020-12-310001462056us-gaap:AdditionalPaidInCapitalMember2020-12-310001462056us-gaap:RetainedEarningsMember2020-12-310001462056us-gaap:RetainedEarningsMember2021-01-012021-03-310001462056us-gaap:CommonStockMember2021-01-012021-03-310001462056us-gaap:AdditionalPaidInCapitalMember2021-01-012021-03-3100014620562021-03-310001462056us-gaap:CommonStockMember2021-03-310001462056us-gaap:AdditionalPaidInCapitalMember2021-03-310001462056us-gaap:RetainedEarningsMember2021-03-310001462056blze:CashDisbursementsMemberus-gaap:SupplierConcentrationRiskMemberblze:TwoVendorsMember2022-01-012022-03-31xbrli:pure0001462056us-gaap:SupplierConcentrationRiskMemberus-gaap:AccountsPayableMemberblze:ThreeVendorsMember2022-01-012022-03-310001462056blze:CashDisbursementsMemberus-gaap:SupplierConcentrationRiskMemberblze:TwoVendorsMember2021-01-012021-03-310001462056us-gaap:SupplierConcentrationRiskMemberus-gaap:AccountsPayableMemberblze:ThreeVendorsMember2021-01-012021-12-310001462056us-gaap:AccountingStandardsUpdate201602Member2022-03-31blze:segment0001462056blze:ConsumptionBasedArragmentsMember2022-01-012022-03-310001462056blze:ConsumptionBasedArragmentsMember2021-01-012021-03-310001462056blze:SubscriptionBasedArrangementsMember2022-01-012022-03-310001462056blze:SubscriptionBasedArrangementsMember2021-01-012021-03-310001462056blze:PhysicalMediaMember2022-01-012022-03-310001462056blze:PhysicalMediaMember2021-01-012021-03-310001462056country:US2022-01-012022-03-310001462056country:US2021-01-012021-03-310001462056us-gaap:NonUsMember2022-01-012022-03-310001462056us-gaap:NonUsMember2021-01-012021-03-310001462056us-gaap:CommercialPaperMember2022-03-310001462056us-gaap:CommercialPaperMember2022-03-31blze:security0001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMember2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Memberus-gaap:CommercialPaperMember2021-12-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Memberus-gaap:CommercialPaperMember2021-12-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2021-12-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2021-12-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel2Member2021-12-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2021-12-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel1Member2021-12-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:CommercialPaperMemberus-gaap:FairValueInputsLevel2Member2021-12-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2022-03-310001462056us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Memberus-gaap:CommercialPaperMember2021-12-310001462056blze:DataCenterEquipmentMember2022-03-310001462056blze:DataCenterEquipmentMember2021-12-310001462056blze:LeasedDataCenterEquipmentMember2022-03-310001462056blze:LeasedDataCenterEquipmentMember2021-12-310001462056us-gaap:MachineryAndEquipmentMember2022-03-310001462056us-gaap:MachineryAndEquipmentMember2021-12-310001462056us-gaap:ComputerEquipmentMember2022-03-310001462056us-gaap:ComputerEquipmentMember2021-12-310001462056us-gaap:LeaseholdImprovementsMember2022-03-310001462056us-gaap:LeaseholdImprovementsMember2021-12-310001462056us-gaap:ConstructionInProgressMember2022-03-310001462056us-gaap:ConstructionInProgressMember2021-12-310001462056us-gaap:EquipmentMember2022-03-310001462056us-gaap:EquipmentMember2021-12-310001462056blze:HardDrivesMember2022-01-012022-03-310001462056blze:HardDrivesMember2021-01-012021-03-310001462056us-gaap:SoftwareDevelopmentMember2022-03-310001462056us-gaap:SoftwareDevelopmentMember2021-12-310001462056blze:GeneralAndAdministrativeSoftwareMember2022-03-310001462056blze:GeneralAndAdministrativeSoftwareMember2021-12-310001462056us-gaap:ComputerSoftwareIntangibleAssetMember2022-03-310001462056srt:MinimumMember2022-01-012022-03-310001462056srt:MaximumMember2022-01-012022-03-31blze:arrangement00014620562021-01-012021-12-310001462056us-gaap:CostOfSalesMember2022-01-012022-03-310001462056us-gaap:GeneralAndAdministrativeExpenseMember2021-01-012021-03-310001462056us-gaap:LineOfCreditMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2021-10-310001462056us-gaap:LineOfCreditMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMember2021-10-012021-10-310001462056us-gaap:LineOfCreditMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:RevolvingCreditFacilityMember2022-03-310001462056us-gaap:CommonClassBMember2021-11-10blze:vote0001462056blze:A2011EquityInceptivePlanMemberus-gaap:EmployeeStockOptionMember2022-03-310001462056blze:A2011EquityInceptivePlanMemberus-gaap:EmployeeStockOptionMember2021-12-310001462056blze:A2011EquityInceptivePlanMember2022-03-310001462056blze:A2011EquityInceptivePlanMember2021-12-310001462056blze:A2021EquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2022-03-310001462056blze:A2021EquityIncentivePlanMemberus-gaap:EmployeeStockOptionMember2021-12-310001462056us-gaap:RestrictedStockUnitsRSUMemberblze:A2021EquityIncentivePlanMember2022-03-310001462056us-gaap:RestrictedStockUnitsRSUMemberblze:A2021EquityIncentivePlanMember2021-12-310001462056blze:A2021EquityIncentivePlanMember2022-03-310001462056blze:A2021EquityIncentivePlanMember2021-12-310001462056blze:A2021EmployeeStockPurchasePlanMember2022-03-310001462056blze:A2021EmployeeStockPurchasePlanMember2021-12-310001462056blze:A2021EquityIncentivePlanMember2021-10-310001462056blze:A2021EquityIncentivePlanMember2021-10-012021-10-310001462056blze:A2021EquityIncentivePlanMember2022-01-012022-03-310001462056blze:A2011EquityInceptivePlanMemberus-gaap:EmployeeStockOptionMember2022-01-012022-03-310001462056us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001462056us-gaap:RestrictedStockUnitsRSUMembersrt:MinimumMemberblze:A2021EquityIncentivePlanMember2022-01-012022-03-310001462056us-gaap:RestrictedStockUnitsRSUMembersrt:MaximumMemberblze:A2021EquityIncentivePlanMember2022-01-012022-03-310001462056us-gaap:RestrictedStockUnitsRSUMemberblze:A2021EquityIncentivePlanMember2022-01-012022-03-310001462056us-gaap:RestrictedStockUnitsRSUMember2021-12-310001462056us-gaap:RestrictedStockUnitsRSUMember2022-03-310001462056us-gaap:EmployeeStockMemberblze:A2021EquityIncentivePlanMember2021-10-310001462056us-gaap:EmployeeStockMemberblze:A2021EquityIncentivePlanMember2022-01-012022-03-310001462056us-gaap:EmployeeStockMemberblze:A2021EquityIncentivePlanMember2021-10-012021-10-310001462056srt:MinimumMemberus-gaap:EmployeeStockOptionMember2022-01-012022-03-310001462056srt:MaximumMemberus-gaap:EmployeeStockOptionMember2022-01-012022-03-310001462056us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001462056us-gaap:CostOfSalesMember2021-01-012021-03-310001462056us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-03-310001462056us-gaap:ResearchAndDevelopmentExpenseMember2021-01-012021-03-310001462056us-gaap:SellingAndMarketingExpenseMember2022-01-012022-03-310001462056us-gaap:SellingAndMarketingExpenseMember2021-01-012021-03-310001462056us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-03-310001462056blze:A2022EmployeeBonusPlanMemberus-gaap:EmployeeStockMember2022-01-012022-03-310001462056blze:TerminatedEmployeesMember2021-01-012021-03-310001462056us-gaap:CommonClassAMember2022-01-012022-03-310001462056us-gaap:CommonClassBMember2022-01-012022-03-310001462056us-gaap:CommonClassBMember2021-01-012021-03-310001462056us-gaap:ConvertiblePreferredStockMember2022-01-012022-03-310001462056us-gaap:ConvertiblePreferredStockMember2021-01-012021-03-310001462056us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-03-310001462056us-gaap:RestrictedStockUnitsRSUMember2021-01-012021-03-310001462056us-gaap:EmployeeStockOptionMember2022-01-012022-03-310001462056us-gaap:EmployeeStockOptionMember2021-01-012021-03-310001462056blze:SharesIssuablePursuantToTheESPPMember2022-01-012022-03-310001462056blze:SharesIssuablePursuantToTheESPPMember2021-01-012021-03-310001462056us-gaap:LineOfCreditMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:SubsequentEventMemberus-gaap:RevolvingCreditFacilityMember2022-04-30
Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 10-Q
___________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-41026
___________________________________
BACKBLAZE, INC.
___________________________________
(Exact name of registrant as specified in its charter)
Delaware
20-8893125
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
500 Ben Franklin Ct
San Mateo, CA
94401
(Address of principal executive offices)
(Zip Code)
(650) 352-3738
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per shareBLZEThe Nasdaq Stock Market LLC
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
¨
Accelerated filer
o
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).Yes ☐ No 
As of April 30, 2022, 12.6 million shares of the registrant’s Class A common stock were outstanding, and 18.2 million shares of registrant's Class B common stock were outstanding.


Table of Contents
Table of Contents
Page





Table of Contents
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. These statements involve known and unknown risks, uncertainties, and other important factors that are in some cases beyond our control and may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
our ability to sell our platform to new customers;
our ability to retain and expand use of our platform by our existing customers;
our ability to effectively manage our growth;
our ability to successfully obtain timely returns on our investments in initiatives relating to sales and marketing, research and development, and other areas;
our ability to maintain our competitive advantages;
our ability to maintain and expand our partner ecosystem;
our ability to maintain the security of our platform and the security and privacy of customer data;
our ability to successfully expand in our existing markets and into new markets;
the attraction and retention of qualified employees and key personnel;
our ability to successfully defend litigation brought against us;
the impact of the COVID-19 pandemic, inflation, war and other hostilities and other disruptive events on our business or that of our customers, partners, and supply chain or on the global economy;
our ability to successfully remediate and prevent material weaknesses in internal controls over financial reporting; and
the increased expenses associated with being a public company.
You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.


Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BACKBLAZE, INC.
CONDENSED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
March 31,
2022
December 31,
2021
Assets
Current assets:
Cash and cash equivalents
$19,290 $104,843 
Accounts receivable, net
241 309 
Short-term investments79,843  
Prepaid expenses and other current assets
5,913 5,930 
Total current assets
105,287 111,082 
Property and equipment, net
43,678 43,068 
Operating lease right-of-use assets4,677  
Capitalized software, net
8,689 7,637 
Other assets
1,873 1,794 
Total assets
$164,204 $163,581 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$2,528 $2,075 
Accrued expenses and other current liabilities
6,138 5,109 
Accrued value-added tax (“VAT”) liability
2,957 2,511 
Finance lease liabilities and lease financing obligations, current15,107 13,645 
Operating lease liabilities, current1,953  
Deferred revenue, current
22,571 21,722 
Total current liabilities
51,254 45,062 
Finance lease liabilities and lease financing obligations, non-current18,984 19,603 
Operating lease liabilities, non-current3,165 — 
Deferred revenue, non-current
3,195 3,132 
Other long-term liabilities
38 298 
Total liabilities
$76,636 $68,095 
Commitments and contingencies (Note 10)
Stockholders’ Equity
Class A common stock, $0.0001 par value; 113,000,000 shares authorized as of March 31, 2022 and December 31, 2021, respectively; 9,019,361 and 8,227,992 shares issued and outstanding as of March 31, 2022 and December, 31, 2021, respectively.
1 1 
Class B common stock, $0.0001 par value; 37,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 21,795,112 and 22,156,842 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.
2 2 
Additional paid-in capital
136,438 131,826 
Accumulated deficit
(48,873)(36,343)
Total stockholders’ equity
87,568 95,486 
Total liabilities and stockholders’ equity
$164,204 $163,581 
See accompanying notes, which are an integral part of these condensed financial statements.
1

Table of Contents
BACKBLAZE, INC.
CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended March 31,
20222021
Revenue
$19,490 $15,312 
Cost of revenue
9,681 7,830 
Gross profit
9,809 7,482 
Operating expenses:
Research and development
7,941 4,269 
Sales and marketing
8,029 3,777 
General and administrative
5,528 2,253 
Total operating expenses
21,498 10,299 
Loss from operations
(11,689)(2,817)
Interest income75  
Interest expense
(948)(871)
Loss before benefit for income taxes
(12,562)(3,688)
Income tax benefit
(32) 
Net loss
$(12,530)$(3,688)
Net loss per share, basic and diluted
$(0.41)$(0.20)
Weighted average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted
30,541,942 18,679,110 
See accompanying notes, which are an integral part of these condensed financial statements.
2

Table of Contents
BACKBLAZE, INC.
CONDENSED STATEMENTS OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands, except share data)
(unaudited)
Three Months Ended March 31, 2022
Convertible
Preferred Stock
Class A and Class B Common Stock
Additional
Paid-in
Capital
Accumulated
Deficit
Total
SharesAmountSharesAmount
Balance as of December 31, 2021
— $— 30,384,834 $3 $131,826 $(36,343)$95,486 
Net loss
— — — — — (12,530)(12,530)
Issuance of common stock upon exercise of stock options— — 429,639 — 887 — 887 
Stock-based compensation
— — — — 3,725 — 3,725 
Balance as of March 31, 2022
— $— 30,814,473 $3 $136,438 $(48,873)$87,568 
Three Months Ended March 31, 2021
Convertible
Preferred Stock
Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total
SharesAmountSharesAmount
Balance as of December 31, 2020
3,359,195 $2,784 18,614,905 $5 $7,794 $(14,639)$(6,840)
Net loss— — — — — (3,688)(3,688)
Issuance of common stock upon exercise of stock options— — 87,226 — 148 — 148 
Stock-based compensation— — — — 960 — 960 
Balance as of March 31, 2021
3,359,195 $2,784 18,702,131 $5 $8,902 $(18,327)$(9,420)
See accompanying notes, which are an integral part of these condensed financial statements.
3

Table of Contents
BACKBLAZE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March 31,
20222021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$(12,530)$(3,688)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Net accretion of discount on investment securities(61) 
Noncash lease expense on operating leases541  
Depreciation and amortization
4,863 4,010 
Stock-based compensation
3,835 908 
(Gain) loss on disposal of assets and other adjustments(1)16 
Changes in operating assets and liabilities:
Accounts receivable
68 (15)
Prepaid expenses and other current assets
(153)4 
Other assets
91 (27)
Accounts payable
462 326 
Accrued expenses and other current liabilities
1,187 89 
Accrued VAT liability
446 19 
Deferred revenue
912 1,021 
Operating lease liabilities(528) 
Other long-term liabilities
(32)(148)
Net cash (used in) provided by operating activities
(900)2,515 
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of marketable securities(79,782) 
Proceeds from disposal of property and equipment
1 13 
Purchases of property and equipment, net
(516)(2,610)
Capitalized internally-developed software costs
(1,180)(911)
Net cash used in investing activities
(81,477)(3,508)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on finance leases and lease financing obligations
(3,405)(2,801)
Payments of deferred offering costs
(658)(755)
Proceeds from debt facility 1,256 
Repayment of debt facility (1,256)
Proceeds from lease financing obligations
 2,784 
Proceeds from exercises of stock options887 148 
Net cash used in financing activities
(3,176)(624)
Net decrease in cash, cash equivalents and restricted cash
(85,553)(1,617)
Cash, cash equivalents and restricted cash at beginning of period
105,012 6,076 
Cash, cash equivalents and restricted cash at end of period
$19,459 $4,459 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
$948 $849 
Cash paid for income taxes$26 $ 
Cash paid for operating lease liabilities$598 $ 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock-based compensation included in capitalized software
$383 $52 
Accrued bonus classified as stock-based compensation$493 $ 
Equipment acquired through finance lease obligations
$4,451 $3,306 
Accruals related to purchases of property and equipment
$124 $1,144 
Lease liabilities arising from right-of-use assets upon adoption of ASC 842$5,220 $ 
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Cash and cash equivalents$19,290 $4,459 
Restricted cash - included in other assets$169 $ 
Total cash, cash equivalents and restricted cash$19,459 $4,459 
See accompanying notes, which are an integral part of these condensed financial statements.
4

Table of Contents
BACKBLAZE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1. Organization and Description of Business
Description of Business
Backblaze, Inc. (“Backblaze” or the “Company”) is a storage cloud platform, providing businesses and consumers with solutions to store and use their data. Backblaze provides these cloud services through purpose-built, web-scale software built on commodity hardware. Backblaze was incorporated in the state of Delaware on April 20, 2007 and is headquartered in San Mateo, California.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed financial statements should be read in conjunction with the audited financial statements and notes for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 28, 2022. In management’s opinion, these unaudited condensed financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of March 31, 2022, results of operations for the three months ended March 31, 2022 and 2021, cash flows for the three months ended March 31, 2022 and 2021, and stockholders' equity (deficit) for the three months ended March 31, 2022 and 2021. The results of operations for the three months ended March 31, 2022 and 2021 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.
Emerging Growth Company
The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The Company expects to use the extended transition period for any other new or revised accounting standards during the period in which it remains an EGC.
Segment Information
The Company has a single operating and reportable segment. In reaching this conclusion, management considers the definition of the chief operating decision maker (“CODM”), how the business is defined by the CODM, the nature of the information provided to the CODM and how that information is used to make operating decisions, allocate resources and assess performance. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on an aggregated basis for purposes of making operating decisions, assessing financial performance and allocating resources.
Significant accounting policies
The Company’s significant accounting policies are disclosed in the Company’s audited financial statements and related notes thereto included in the Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on March 28, 2022.
5

Table of Contents
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the financial statements and the accompanying notes. Such estimates and assumptions include the costs to be capitalized as internal-use software and their useful life, the useful lives of other long-lived assets, impairment considerations for long-lived assets, the determination of the incremental borrowing rate for lease agreements, expected lease term, and lease and non-lease component allocation, estimates related to variable consideration, valuation of the Company’s common stock prior to our initial public offering in November 2021 (the “IPO”), stock options, and Employee Stock Purchase Plan and accounting for taxes, including estimates for sales tax and VAT liability, deferred tax assets, valuation allowance and uncertain tax positions. The Company bases its estimates on historical experience and on assumptions that management considers reasonable. Future actual results could differ materially from these estimates.
Concentrations
Vendors. The Company acquires infrastructure equipment from third-party vendors. Vendors may have limited sources of equipment and supplies which may expose the Company to potential supply and service disruptions that could harm the Company’s business. Two vendors represented an aggregate 23% of total cash disbursements during the three months ended March 31, 2022, while three vendors represented an aggregate 38% of the accounts payable balance as of March 31, 2022. Two vendors represented in aggregate 29% of total cash disbursements during the three months ended March 31, 2021, while three vendors represented 40% of the accounts payable balance as of December 31, 2021.
Revenue. The Company derives substantially all of its revenue from the services operating on its Backblaze Storage Cloud platform: its Backblaze B2 Cloud Storage (“Backblaze B2”) and Backblaze Computer Backup (“Computer Backup”) offerings. The potential for severe impact to the Company’s business could result if the Company was unable to operate its platform or serve customers through its platform for an extended period of time.
Accounting Pronouncements Recently Adopted
In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842), and since that date, has issued several ASUs to further clarify certain aspects of ASU 2016-02 and provide entities with practical expedients that may be elected upon adoption. The Company adopted the new standard beginning January 1, 2022 using the modified retrospective approach, electing the optional transition approach of not adjusting the comparative period financial statements for the impact of adoption. The Company elected the package of practical expedients permitted under the transition guidance, which allows the Company to carryforward its historical lease classification, its assessment on whether a contract is or contains a lease, and its initial direct costs for any leases that existed prior to adoption of the new standard.
In accordance with ASU 2016-02, the Company determines if an arrangement is a lease at its inception. Right-of-use (“ROU”) assets, and corresponding lease liabilities, are recognized at the commencement date based on the present value of remaining lease payments over the lease term, which, for the Company, include primarily fixed payments. As a majority of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available as of the commencement date. For leases existing at adoption, the Company elected to use the remaining lease term and remaining minimum lease payments in calculating the incremental borrowing rate for all existing leases. The discount rate used is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. The Company has elected the short-term lease practical expedient for all asset classes, which allows the lessee to not apply the recognition requirements of Accounting Standards Codification (“ASC”) 842 to short-term leases (leases with original terms of 12 months or less and that do not include a purchase option that the lessee is reasonably certain to exercise).

The Company has elected the practical expedient to combine lease and non-lease components for all of its leases, with the exception of its colocation lease agreement asset class.

6

Table of Contents
The adoption of the new standard on January 1, 2022 resulted in the recognition of approximately $5.2 million and $5.6 million of operating lease ROU assets and operating lease liabilities on the Company's condensed balance sheets, respectively, with the ROU asset on an existing lease being offset by an existing ASC 420 obligation of approximately $0.4 million. The Company noted no material impact on its condensed financial statements with respect to its finance leases as a result of its ASC 842 adoption. See Note 10 to these condensed financial statements
Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently. For trade receivables, loans and other financial instruments, the Company will be required to use a forward-looking expected loss model rather than the incurred loss model for recognizing credit losses which reflects losses that are probable. Credit losses relating to available-for-sale debt securities are required to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. This guidance is effective for the Company for its fiscal year beginning January 1, 2023 and interim periods within that fiscal year. The Company is currently evaluating the impact of the adoption of this guidance on its financial statements.
Note 3. Revenues
Deferred Contract Costs
The Company’s amortization of deferred contract costs was $0.2 million for the three months ended March 31, 2022 and 2021, respectively. The amount of capitalized contract costs was $0.4 million as of March 31, 2022 and December 31, 2021, respectively.
Deferred Revenue
Deferred revenue was $25.8 million and $24.9 million as of March 31, 2022 and December 31, 2021, respectively. Revenue recognized during the three months ended March 31, 2022 and 2021 was approximately $8.5 million and $7.1 million, respectively, which was included in each deferred revenue balance at the beginning of each respective period. The Company’s deferred revenue as stated on the condensed balance sheets presented approximate its contract liability balance as of March 31, 2022 and December 31, 2021. The Company’s deferred revenue balance as of March 31, 2022, approximates the aggregate amount of the transaction price allocated to remaining performance obligations (“RPOs”) as of that date. Further, as of March 31, 2022, the Company’s deferred revenue, current, balance on its condensed balance sheet of $22.6 million approximates the expected amount to be recognized from its RPOs as revenue over the next 12 months.
Disaggregation of Revenues
The following table presents the Company’s revenues disaggregated by timing of revenue recognition (in thousands):
For the Three Months Ended March 31,
20222021
Consumption-based arrangements (B2 Cloud Storage)
$6,987 $4,715 
Subscription-based arrangements (Computer Backup)
12,309 10,392 
Physical Media
194 205 
Total revenue
$19,490 $15,312 
7

Table of Contents
Revenue by geographic area, based on the location of the Company’s customers, was as follows (in thousands):
For the Three Months Ended March 31,
20222021
United States$13,982 $11,080 
Other5,508 4,232 
Total$19,490 $15,312 

Note 4. Cash Equivalents and Investments
The Company holds all investments on a held-to-maturity basis and evaluates each position quarterly for impairment. The Company recognizes an impairment on a security through the statement of operations if (i) the Company intends to sell the impaired security; or (ii) it is more likely than not the Company will be required to sell the impaired security prior to recovery of its amortized cost basis. If a sale is intended or likely to be required, the amortized cost basis of the security will be written down to fair value and recognize the full amount of the impairment through the statement of operations as a net realized investment loss.
Fair Values and Gross Unrealized Gains and Losses on Investments
The following table summarizes adjusted cost, gross unrealized gains (losses), and fair value by significant investment category reported as cash, cash equivalents and held-to-maturity investments as of March 31, 2022. The Company did not have investments reported as held-to-maturity investments as of December 31, 2021.
Amortized CostGross UnrealizedFair ValueNet Carrying Value
GainsLosses
As of March 31, 2022(In Thousands)
Cash equivalents
Commercial paper$8,999 $— $(1)$8,998 $8,999 
Total cash equivalents$8,999 $— $(1)$8,998 $8,999 
Investments
Commercial paper$79,843 $ $(351)$79,492 $79,843 
Total investments$79,843 $ $(351)$79,492 $79,843 
Scheduled Maturities
The amortized cost and fair value of held-to-maturity securities as of March 31, 2022 and December 31, 2021 by contractual maturity are shown below. The Company did not have held-to-maturity investments as of December 31, 2021.

As of March 31, 2022Amortized CostFair Value
(In Thousands)
Within one year$79,843 $79,492 
After one year through five years  
After 5 years through 10 years  
After 10 years  
Total investments$79,843 $79,492 


8

Table of Contents

Aging of Unrealized Losses
As of March 31, 2022, the investment portfolio had gross unrealized losses of $0.4 million, all of which had been in an unrealized loss position of less than twelve months. As of March 31, 2022, the investment portfolio did not have any securities that had been in an unrealized loss position for a period of twelve months or longer. The Company did not have held-to-maturity investments as of December 31, 2021.

For those securities in an unrealized loss position, the length of time the securities were in such a position is as follows:

Less than 12 MonthsTotal
# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses
As of March 31, 2022(Dollars In Thousands)
Investments
Commercial Paper10 $79,492 $(351)10 $79,492 $(351)
Total10 $79,492 $(351)10 $79,492 $(351)

Net Investment Income

The following table presents the components of net investment income:
For the Three Months Ended March 31,
20222021
Investment income$75 $ 
Investment expenses  
Net investment income$75 $ 

Investment income is included in interest income in the condensed statements of operations.

Note 5. Fair Value Measurements
The Company measures financial assets and liabilities at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are reported under a three-level valuation hierarchy. The classification of the Company’s financial assets within the hierarchy is as follows:
Level 1 — Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 assets include money market funds.
Level 2 — Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 — Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.
The Company’s cash equivalents are comprised of highly liquid money market funds and commercial paper. The Company classifies money market funds within Level 1 of the fair value hierarchy because they are valued based on quoted market prices in active markets. The Company classifies its investments, which are comprised of investment grade commercial paper, within Level 2 of the fair value hierarchy because the fair value of these securities are priced by using inputs based
9

Table of Contents
on non-binding market consensus that are primarily corroborated by observable market data or quoted market prices for similar instruments.
The following table presents the fair value hierarchy for the Company’s assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and as of December 31, 2021 (in thousands):
Level 1Level 2Level 3
March 31,
2022
December 31,
2021
March 31,
2022
December 31,
2021
March 31,
2022
December 31,
2021
Assets
Cash equivalents:
Commercial paper$ $ $8,998 $ $ $ 
Total cash equivalents$ $ $8,998 $ $ $ 
Investments
Commercial Paper$ $ $79,492 $ $ $ 
Total investments$ $ $79,492 $ $ $ 
Total$ $ $88,490 $ $ $ 
There were no transfers between levels of the fair value hierarchy for the three months ended March 31, 2022 and the year ended December 31, 2021, respectively. The Company had no Level 3 instruments held as of March 31, 2022 and December 31, 2021, respectively.
As of March 31, 2022 and December 31, 2021, the Company had $169 thousand in restricted cash related to the letter of credit established according to requirements under a lease agreement, reported as a component of other assets on the condensed balance sheets.
Note 6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
March 31,
2022
December 31,
2021
Unbilled accounts receivable$1,254 $1,220 
Prepaid expenses2,223 2,403 
Prepaid subscriptions1,177 730 
Prepaid flash drives305 378 
Capitalized commissions357 345 
Receivable from payment processor377 289 
Prepaid data migration fees72 93 
Other148 472 
Total prepaid expenses and other current assets
$5,913 $5,930 
10

Table of Contents
Note 7. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
March 31,
2022
December 31,
2021
Data center equipment
$25,677 $25,338 
Leased and financed data center equipment
54,646 50,419 
Machinery and equipment
7,977 7,803 
Computer equipment
1,843 1,631 
Leasehold improvements
966 956 
Construction-in-process
  
Total property and equipment
91,109 86,147 
Less: accumulated depreciation
(47,431)(43,079)
Total property and equipment, net
$43,678 $43,068 
Depreciation expense was $4.4 million and $3.6 million for the three months ended March 31, 2022 and 2021, respectively. For the Company’s equipment under finance leases and collateralized financing obligations, accumulated depreciation was $16.4 million and $13.5 million as of March 31, 2022 and December 31, 2021, respectively. The carrying value of the Company’s equipment under finance lease agreements and lease financing obligations was $38.2 million and $36.9 million as of March 31, 2022 and December 31, 2021, respectively.
During the three months ended March 31, 2022 and 2021, the Company recorded a gain and a loss of less than $0.1 million, respectively, as a result of disposing of certain hard drives. These disposals occurred in the ordinary course of business, as the Company continuously evaluates its requirements for operating its data centers. The loss and gains are recorded as general and administrative expenses in the Company’s condensed statements of operations.
As of March 31, 2022 and December 31, 2021, substantially all of the Company’s assets were held in the United States.
Note 8. Capitalized Software, Net
Capitalized software, net consisted of the following (in thousands):
March 31,
2022
December 31,
2021
Developed software
$14,064 $12,535 
General and administrative software
144 144 
Total capitalized internal-use software
14,208 12,679 
Less: accumulated amortization
(5,519)(5,042)
Total capitalized internal-use software, net
$8,689 $7,637 
In accordance with the adoption of ASU 2018-15, during 2021 the Company aligned its capitalization of implementation costs for cloud computing arrangements with its accounting for the underlying software license included in such arrangements. Accordingly, the Company reclassified these implementation costs on its balance sheet in prepaid expenses and other current assets and other assets as of December 31, 2021, on a prospective basis.
Amortization expense of capitalized internal-use software was $0.5 million and $0.4 million for the three months ended March 31, 2022 and 2021, respectively. Amortization of developed software and software purchased for internal use are included in cost of revenue and general and administrative expense, respectively, in the Company’s statements of operations. As of March 31, 2022, future amortization expense is expected to be as follows (in thousands):
11

Table of Contents
Year Ending December 31,
Remainder of 2022$1,601 
20232,205 
20241,941 
20251,486 
20261,033 
Thereafter
423 
Total
$8,689 
Note 9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
March 31,
2022
December 31,
2021
Accrued compensation
$1,388 $1,159 
ESPP Withholding1,567 489 
Accrued expenses
1,138 1,646 
Accrued sales tax
1,243 1,209 
Accrued income tax
15 15 
Other
787 591 
Accrued expenses and other current liabilities
$6,138 $5,109 
Note 10. Commitments and Contingencies
Finance Leases and Lease Financing Obligations
The Company enters into finance lease arrangements to obtain hard drives and related equipment for its data center operations. The term of these agreements primarily range from three to four years and certain of these arrangements have optional renewals to extend the term of the lease generally at a fixed price. Contingent rental payments are generally not included in the Company’s finance lease agreements. The finance leases are generally secured by the underlying leased equipment. The Company's finance leases have original lease periods expiring between 2022 and 2025. Finance leases are included in property and equipment, net on the Company’s condensed balance sheet.
At March 31, 2022, the weighted average remaining lease term for finance lease agreements was approximately 2.4 years and the weighted average discount rate for finance leases was approximately 11.2%.

For the Company’s assets acquired through finance lease and lease financing obligation agreements, depreciation expense was $2.9 million and $3.0 million for the three months ended March 31, 2022 and 2021, respectively. Depreciation expense on the Company’s finance lease agreements is included in cost of revenue in its statements of operations. There have been no material changes to the Company’s finance lease obligation commitments during the three months ended March 31, 2022. During the three months ended March 31, 2022, total finance lease costs were $3.5 million, of which interest expense was approximately $0.8 million, and total lease financing obligation costs were $0.4 million, of which interest expense was approximately $0.1 million.
During 2021, the Company entered into four sale-leaseback arrangements with vendors to provide approximately $4.3 million in cash proceeds for previously purchased hard drives and related equipment. The Company concluded the related lease arrangements would be classified as lease financing obligations as it has the option to repurchase the assets at their fair value at a future date. Therefore, the transaction was deemed a failed sale-leaseback and was accounted for as a financing arrangement. The assets continue to be depreciated over their useful lives, and payments are allocated between interest expense and repayment of the financing liability. The failed sale-leaseback transactions will continue to be accounted for as a failed sale-leaseback upon adoption of ASC 842 because the leaseback is classified as financing.

12

Table of Contents
The future minimum commitments for these finance leases and lease financing obligations as of March 31, 2022 were as follows (in thousands):
Year Ending December 31,
Finance leasesLease financing obligationsTotal
Remainder of 2022$12,659 $1,039 $13,698 
202314,396 1,385 15,781 
20247,072 1,240 8,312 
2025549 387 936 
2026   
Thereafter   
Total future minimum lease and financing commitments34,676 4,051 38,727 
Less imputed interest(4,036)(600)(4,636)
Total liability$30,640 $3,451 $34,091 
Prior to the ASC 842 adoption, the future minimum commitments for these finance leases and lease financing obligations as of December 31, 2021 were as follows (in thousands):
Year Ending December 31,
2022$16,765 
202314,123 
20246,707 
2025617 
2026 
Thereafter
 
Total future minimum lease and financing commitments
38,212 
Less imputed interest
(4,964)
Total liability
$33,248 
Prior to the ASC 842 adoption, as of December 31, 2021, the future minimum payments related to the lease financing obligations consisted of the following (in thousands):
Year Ending December 31,
2022$1,385 
20231,385 
20241,240 
2025387 
2026— 
Thereafter
 
Total future minimum financing payments
$4,397 
Operating Leases
The Company leases its facilities for data centers and office space under non-cancelable operating leases with various expiration dates. Certain lease agreements include renewal options to extend the lease term at a price to be determined upon exercise. These options are not reasonably certain to be exercised and therefore are not factored into the determination of lease payments. Contingent rental payments are generally not included in the Company’s lease agreements. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company's leases have original lease periods expiring between 2022 and 2031. The Company does not have a material amount of short-term leases as of March 31, 2022.
13

Table of Contents
At March 31, 2022, the weighted average remaining lease term for operating leases was approximately 4.4 years and the weighted average discount rate for operating leases was approximately 4.3%.
The future minimum commitments for these operating leases as of March 31, 2022 were as follows (in thousands), which excludes amounts allocated to services under our operating lease agreements that are considered non-lease components:
Year Ending December 31,
Remainder of 2022$1,684 
20231,613 
2024785 
2025245 
2026252 
Thereafter1,105 
Total future minimum operating lease commitments5,684 
Less imputed interest(566)
Total liability$5,118 
Non-lease components included in the Company’s colocation lease agreements are related to non-tangible utilities and services used in its data center operations. The Company used judgement and third-party data in determining the stand-alone price for allocating consideration to lease and non-lease components under these colocation lease agreements, such as, the price of utilities as compared to its tangible data center footprint within each colocation facility.

Prior to the ASC 842 adoption, the future minimum commitments for these operating leases as of December 31, 2021 were as follows (in thousands), which also include minimum payments for services under our operating lease agreements:
Year Ending December 31,
2022$4,896 
20234,351 
20243,098 
20251,327 
20261,363 
Thereafter
5,977 
Total
$21,012 
Rental expense related to the Company’s operating leases was approximately $1.4 million and $1.0 million for the three months ended March 31, 2022 and 2021, of which $1.1 million and $0.9 million is included in cost of revenue in its statement of operations, respectively. During the three months ended March 31, 2022, total operating lease cost was approximately $1.7 million, which does not include costs related to services.
At March 31, 2022, the Company had additional operating leases that had not yet commenced with lease obligations of $8.3 million. The operating lease is expected to commence in 2022 with non-cancellable lease terms of approximately 7 years.
Other Contractual Commitments
Other non-cancellable commitments relate mainly to service agreements used to facilitate the Company’s infrastructure operations. As of March 31, 2022, the Company had non-cancelable purchase commitments of $1.4 million and $1.5 million payable during the years ending December 31, 2022 and 2023, respectively.
401(k) Plan
The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. The Company contributed $0.4 million and $0.2 million to the 401(k) plan during the three months ended March 31, 2022 and 2021, respectively.
14

Table of Contents
Legal Matters
The Company is involved from time to time in various claims and legal actions arising in the ordinary course of business. While it is not feasible to predict or determine the ultimate outcome of these matters, the Company believes that none of its current legal proceedings will have a material adverse effect on its financial position, results of operations or cash flows. However, the results of legal proceedings are inherently unpredictable and if an unfavorable ruling were to occur in any of the current legal proceedings, there exists the possibility of a material adverse effect on the Company’s financial position, results of operations and cash flows.
Sales Tax
The Company undertook an analysis of its sales tax exposure based on the South Dakota vs. Wayfair case whereby the U.S. Supreme Court determined that physical presence was not required to determine the potential exposure a company has for sales tax purposes. Based on the Company’s analysis, its total accrual for sales tax payable was $1.2 million as of March 31, 2022 and December 31, 2021, respectively, which includes estimated amounts for penalties and interest.
Accrued VAT Liability
The Company has calculated a liability for uncollected and unpaid VAT, which is generally assessed by various taxing authorities on services the Company provides to its customers. The Company accrues an amount that it considers probable to be collected and can be reasonably estimated. Based on the Company’s analysis, its total accrual for VAT tax payable was $3.0 million and $2.5 million as of March 31, 2022 and December 31, 2021, respectively, which includes estimated amounts for penalties and interest.
Indemnification
The Company enters into indemnification provisions under agreements with other parties from time to time in the ordinary course of business. The Company has agreed in certain circumstances to indemnify and defend the indemnified party for claims and related losses suffered or incurred by the indemnified party from third-party claims due to the Company’s activities or non-compliance with certain representations and warranties made by the Company. It is not possible to determine the maximum potential loss under these indemnification provisions due to the Company’s limited history of prior indemnification claims and the unique facts and circumstances involved in each particular provision. No losses have been recorded in the condensed statements of operations in connection with the indemnification provisions.
Note 11. Debt
Credit Facility
During October 2021, the Company entered into a revolving credit agreement with City National Bank. Under this agreement, among other things, (i) amounts available to be borrowed are $9.5 million and (ii) advances on the line of credit bear interest at the average Secured Overnight Financing Rate (“SOFR”) plus 2.75%. The revolving credit agreement matures in September 2024. In connection with this agreement, the Company fully repaid and subsequently terminated its 2017 revolving credit agreement with HomeStreet Bank.
During December 2021, the Company entered into its first amendment to the revolving credit agreement with City National Bank. The amendment removed the financial covenants under the agreement and added a requirement for cash collateral to be posted prior to any advance. As of March 31, 2022, the Company had no outstanding balance and the total amount available to the Company to be borrowed was $9.5 million.
Note 12. Stockholders’ Equity
Common Stock. In connection with the IPO, the Amended and Restated Certificate of Incorporation provided for a dual class common stock structure, all outstanding shares of the Company’s common stock converted into an equivalent number of shares of its Class B common stock, and all shares of the convertible preferred stock then outstanding automatically converted into 3,359,195 shares of Class B common stock. The Class B common stock on the Company’s balance sheets presented is representative of its common stock prior to the inception of the dual class structure. Subsequent to the IPO, the Company has two classes of common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except for voting, transfer, and conversion rights. Each
15

Table of Contents
share of Class A common stock is entitled to one vote. Each share of Class B common stock is entitled to ten votes and is convertible at any time into one share of Class A common stock.
The Company had reserved shares of common stock for future issuance as follows:
 March 31,
2022
December 31,
2021
2011 Equity Incentive Plan
Options outstanding
12,855,847 13,506,662 
Shares available for future grants  
2021 Equity Incentive Plan
Options outstanding1,543,320 1,433,520 
RSUs outstanding908,449 18,750 
Shares available for future grants
4,621,192 3,880,274 
2021 Employee Stock Purchase Plan
Shares available for future purchases1,564,496 956,800 
Total
21,493,304 19,796,006 
Note 13. Stock-Based Compensation
Equity Incentive Plan
2021 Equity Incentive Plan. In October 2021, The Company’s Board of Directors and stockholders adopted the 2021 Equity Incentive Plan (the “2021 Plan”) and it was approved by stockholders in October 2021. The 2021 Plan replaced our 2011 Plan. However, awards outstanding under our 2011 Plan will continue to be governed by their existing terms. The 2021 Plan has the features described below.
Share Reserve. The number of shares of our common stock available for issuance under our 2021 Plan equals the sum of 5,262,500 shares plus up to approximately 13,719,000 shares subject to awards granted under our 2011 Plan that expire, forfeit or are repurchased following the effective date of the 2021 Plan. The number of shares reserved for issuance under our 2021 Plan will be increased automatically on the first business day of each of our fiscal years, commencing in 2022 and ending in 2031, by a number equal to the least of (i) 4,784,100 shares, (ii) 5% of the shares of common stock outstanding on the last business day of the prior fiscal year; or (iii) the number of shares determined by the Board of Directors. During the three months ended March 31, 2022 the Company increased the number of shares reserved under the 2021 Plan by 1,519,241 pursuant to this evergreen provision.
In general, to the extent that any awards under the 2021 Plan are forfeited, terminate, expire or lapse without the issuance of shares, or if we reacquire the shares subject to awards granted under our 2021 Plan, those shares will again become available for issuance under our 2021 Plan, as will shares applied to pay the exercise or purchase price of an award or to satisfy tax withholding obligations related to any award.
Stock Options
Stock Options. Stock options granted under the Plan generally vest based on continued service over four years and expire ten years from the date of grant.

A summary of equity award activity under the Company’s equity plans and related information is as follows (in thousands, except share, price and year data):
16

Table of Contents
 Shares
available for
grant
Outstanding
Stock
Options
Weighted-
average
exercise
Price
Weighted-
average
remaining
contractual
life (years)
Aggregate
intrinsic
value
Balance as of December 31, 2021
3,880,274 14,940,182 $5.19 6.69$182,843 
Shares authorized1,519,241 
Options granted(109,800)109,800 13.29 
Options exercised (429,639)2.06 
Options cancelled221,176 (221,176)5.54 
Restricted Stock Units (“RSUs”) granted(897,224)
RSUs cancelled7,525 
Balance as of March 31, 2022
4,621,192 14,399,167 $5.34 6.54$93,993 
Vested and exercisable as of March 31, 2022
8,575,879 $2.26 4.88$72,090 
The weighted-average grant-date fair value of options granted was $13.29 and $4.53 during the three months ended March 31, 2022 and 2021, respectively. The intrinsic value of options exercised for the three months ended March 31, 2022 and 2021 was $4.1 million and $0.3 million, respectively. Aggregate intrinsic value represents the difference between the exercise price of the options and the estimated fair value of the Company’s common stock. The aggregate grant-date fair value of options vested was $1.8 million and $0.7 million during the three months ended March 31, 2022 and 2021, respectively.
The following table summarizes the Black-Scholes option pricing model weighted-average assumptions used in estimating the fair value of stock options granted to employees during the three months ended March 31, 2022 and 2021.
Three Months Ended March 31,
20222021
Expected term (in years)
6.06.0
Expected volatility
49.0 %49.2 %
Risk-free interest rate
1.20 %1.09 %
Expected dividend yield % %
Expected term. For stock options considered to be “plain vanilla” options, the Company estimates the expected term based on the simplified method, which is essentially the weighted average of the vesting period and contractual term, as the Company’s historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term.
Expected volatility. The Company performed an analysis using the average volatility of a peer group of representative public companies with sufficient trading history over the expected term to develop an expected volatility assumption.
Risk-free interest rate. Based upon quoted market yields for the United States Treasury debt securities for a term consistent with the expected life of the awards in effect at the time of grant.
Expected dividend yield. Because the Company has never paid and has no intention to pay cash dividends on common stock, the expected dividend yield is zero.
Fair value of underlying common stock. Prior to the IPO, because the Company’s common stock was not yet publicly traded, the Company estimated the fair value of common stock. The Board considered numerous objective and subjective factors to determine the fair value of the Company’s common stock at each meeting in which awards are approved. The factors considered include, but are not limited to: (i) the results of contemporaneous independent third-party valuations of the Company’s common stock; (ii) the prices, rights, preferences, and privileges of the Company’s convertible preferred stock relative to those of its common stock; (iii) the lack of marketability of the Company’s common stock; (iv) actual operating and financial results; (v) current business conditions and projections; (vi) the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company, given prevailing market conditions; and (vii) precedent transactions involving the Company’s shares.
17

Table of Contents
Restricted Stock Units
During November 2021, in connection with the IPO, the Company granted its first RSUs under the 2021 Plan to certain of its non-employee directors. During the three months ended March 31, 2022, the Company began granting more RSUs than options to its employees. All RSUs granted have service-based vesting conditions. RSUs granted under the 2021 Equity Incentive Plan generally vest based on continued service over a three to four year period and expire ten years from the date of grant.
RSU activity for the three months ended March 31, 2022 was as follows:

SharesWeighted-Average Grant Date Fair Value per Share
Unvested balance as of December 31, 2021
18,750$22.04
Granted
897,224$11.50
Vested
$
Forfeited
(7,525)$13.29
Unvested balance as of March 31, 2022
908,449$11.70
ESPP
In October 2021, the Company’s Board of Directors adopted the 2021 Employee Stock Purchase Plan (“ESPP”), which became effective on the date of the IPO. The ESPP initially reserved and authorized the issuance of up to a total of 956,800 shares of Class A common stock to participating employees. During the three months ended March 31, 2022, the Company increased the number of shares reserved under the ESPP by 607,696 pursuant to its evergreen provision.

The initial offering period commenced in November 2021 and the first purchase date will occur in May 2022. Under the Company’s ESPP, eligible employees may authorize payroll deductions of up to 50% of their eligible compensation, subject to IRS limitations, during prescribed offering periods to purchase shares of the Company’s common stock at a price per share equal to 85% of the lesser of (1) the stock price at the employee’s first participation in the offering period or (2) the fair market value of the Company’s common stock on the purchase date. A participant may participate in only one offering period at a time, and a new offering period generally begins each May 20th and November 20th. Each offering period is generally 24 months and consists of four exercise dates (each, generally six months following the start of the offering period or the preceding exercise date, as the case may be). If the fair market value of the Company’s common stock is less on a given exercise date than on the date of grant, employee participation in that offering period ends and participants are automatically re-enrolled in the next new offering period. The ESPP shall terminate automatically 20 years after its effective date, unless the ESPP is extended by the Board and the extension is approved within 12 months by a vote of the stockholders of the Company.
There were no shares purchased by employees during the three months ended March 31, 2022, as the first purchase date will occur in May 2022. The fair value of the purchase rights under the ESPP plan was estimated using the Black-Scholes option pricing model with a similar methodology for determining inputs as the Company’s stock options, as described above. The Company recorded stock-based compensation expense under this plan of $0.8 million for the three months
18

Table of Contents
ended March 31, 2022. As of March 31, 2022, approximately $1.6 million had been withheld on behalf of employees, respectively.
The following table summarizes the Black-Scholes option pricing model assumptions used in estimating the fair value of the stock purchase rights under the ESPP Plan during the three months ended March 31, 2022.
Three Months Ended March 31,
2022
Expected term (in years)
0.5 - 2.0
Expected volatility
45% - 57%
Risk-free interest rate
0.10% - 0.51%
Expected dividend yield %

Stock-Based Compensation Expense

Stock-based compensation expense included in the condensed statements of operations was as follows (in thousands):
For the Three Months Ended March 31,
20222021
Cost of revenue
$276 $85 
Research and development
1,555 399 
Sales and marketing
1,134 189 
General and administrative
870 235 
Total stock-based compensation expense
$3,835 $908 
During the three months ended March 31, 2022 and 2021, the Company capitalized $0.4 million and $0.1 million, respectively, of stock-based compensation for the development of internal-use software. As of March 31, 2022, total compensation cost related to stock options not yet vested was approximately $29.8 million, which will be recognized over a weighted-average period of approximately 3 years.
During the three months ended March 31, 2022, the Company’s Compensation Committee approved a new bonus plan for its employees. The bonus plan is contingent upon the achievement of annual corporate performance targets. If these performance targets are met during 2022, employees will be paid out under the plan in RSUs in 2023. As a result, the Company recognized $0.5 million in stock-based compensation during the three months ended March 31, 2022 based on progress made towards these performance targets.
During the three months ended March 31, 2021, the Company’s Board approved modifications to extend the exercise period of vested options for certain terminated employees by the earlier of five years from the employee’s termination date or the option expiration date. The modification was effective upon the Board’s approvals, which resulted in incremental stock-based compensation expense during March 31, 2021. As a result, the Company recognized an incremental $0.1 million in stock-based compensation during the three months ended March 31, 2021. There were no such modifications during the three months ended March 31, 2022.
Note 14. Net Loss per Share Attributable to Common Stockholders
The Company computes net loss per share using the two-class method required for multiple classes of common stock and participating securities. The rights of the holders of the Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Accordingly, the Class A common stock and Class B common stock share equally in our net losses. Prior to the IPO, our participating securities also included convertible preferred stock. The holders of convertible preferred stock did not have a contractual obligation to share in our losses, and as a result, net losses were not allocated to these participating securities. The Company considers its convertible preferred stock to be participating securities.
19

Table of Contents
Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents during the period. For purposes of this calculation, the Company’s convertible preferred stock, stock options, shares issued pursuant to the Company’s ESPP, and unvested restricted stock are considered to be potential common stock equivalents, but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive.
The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data). The shares issued in the IPO, the shares issued pursuant to the exercise by the underwriters of an option to purchase additional shares, and the shares of Class A and Class B common stock issued upon conversion of the outstanding shares of convertible preferred stock and SAFE notes are included in the table below weighted for the period outstanding. For illustration purposes, Class B common stock in the table below represents the Company’s common stock prior the adoption of the dual class structure in connection with the IPO.