blze-20230930
000146205612-312023Q3False201 Baldwin Ave.San MateoCA9440111P3Yhttp://www.backblaze.com/20230930#CapitalLeaseLiabilityAndLeaseFinancingObligationCurrent http://www.backblaze.com/20230930#CapitalLeaseLiabilityAndLeaseFinancingObligationNoncurrentP1Y00014620562023-01-012023-09-3000014620562023-10-31xbrli:shares00014620562023-09-30iso4217:USD00014620562022-12-310001462056us-gaap:CommonClassAMember2023-09-30iso4217:USDxbrli:shares0001462056us-gaap:CommonClassAMember2022-12-310001462056us-gaap:CommonClassBMember2022-12-310001462056us-gaap:CommonClassBMember2023-09-3000014620562023-07-012023-09-3000014620562022-07-012022-09-3000014620562022-01-012022-09-300001462056us-gaap:CommonStockMember2023-06-300001462056us-gaap:AdditionalPaidInCapitalMember2023-06-300001462056us-gaap:RetainedEarningsMember2023-06-3000014620562023-06-300001462056us-gaap:RetainedEarningsMember2023-07-012023-09-300001462056us-gaap:CommonStockMember2023-07-012023-09-300001462056us-gaap:AdditionalPaidInCapitalMember2023-07-012023-09-300001462056us-gaap:CommonStockMember2023-09-300001462056us-gaap:AdditionalPaidInCapitalMember2023-09-300001462056us-gaap:RetainedEarningsMember2023-09-300001462056us-gaap:CommonStockMember2022-06-300001462056us-gaap:AdditionalPaidInCapitalMember2022-06-300001462056us-gaap:RetainedEarningsMember2022-06-3000014620562022-06-300001462056us-gaap:RetainedEarningsMember2022-07-012022-09-300001462056us-gaap:CommonStockMember2022-07-012022-09-300001462056us-gaap:AdditionalPaidInCapitalMember2022-07-012022-09-300001462056us-gaap:CommonStockMember2022-09-300001462056us-gaap:AdditionalPaidInCapitalMember2022-09-300001462056us-gaap:RetainedEarningsMember2022-09-3000014620562022-09-300001462056us-gaap:CommonStockMember2022-12-310001462056us-gaap:AdditionalPaidInCapitalMember2022-12-310001462056us-gaap:RetainedEarningsMember2022-12-310001462056us-gaap:RetainedEarningsMember2023-01-012023-09-300001462056us-gaap:CommonStockMember2023-01-012023-09-300001462056us-gaap:AdditionalPaidInCapitalMember2023-01-012023-09-300001462056us-gaap:CommonStockMemberblze:A2022EmployeeBonusPlanMember2023-01-012023-09-300001462056us-gaap:AdditionalPaidInCapitalMemberblze:A2022EmployeeBonusPlanMember2023-01-012023-09-300001462056blze:A2022EmployeeBonusPlanMember2023-01-012023-09-300001462056us-gaap:CommonStockMember2021-12-310001462056us-gaap:AdditionalPaidInCapitalMember2021-12-310001462056us-gaap:RetainedEarningsMember2021-12-3100014620562021-12-310001462056us-gaap:RetainedEarningsMember2022-01-012022-09-300001462056us-gaap:CommonStockMember2022-01-012022-09-300001462056us-gaap:AdditionalPaidInCapitalMember2022-01-012022-09-300001462056blze:TwoVendorsMemberblze:CashDisbursementsMemberus-gaap:SupplierConcentrationRiskMember2023-07-012023-09-30xbrli:pure0001462056blze:TwoVendorsMemberblze:CashDisbursementsMemberus-gaap:SupplierConcentrationRiskMember2022-07-012022-09-300001462056blze:TwoVendorsMemberblze:CashDisbursementsMemberus-gaap:SupplierConcentrationRiskMember2023-01-012023-09-300001462056blze:TwoVendorsMemberblze:CashDisbursementsMemberus-gaap:SupplierConcentrationRiskMember2022-01-012022-09-300001462056blze:TwoVendorsMemberus-gaap:SupplierConcentrationRiskMemberus-gaap:AccountsPayableMember2023-01-012023-09-300001462056blze:TwoVendorsMemberus-gaap:SupplierConcentrationRiskMemberus-gaap:AccountsPayableMember2022-01-012022-09-30blze:segment00014620562023-10-01blze:A12MonthsMember2023-09-3000014620562023-10-01blze:A24MonthsMember2023-09-300001462056blze:B2CloudStorageMember2023-07-012023-09-300001462056blze:B2CloudStorageMember2022-07-012022-09-300001462056blze:B2CloudStorageMember2023-01-012023-09-300001462056blze:B2CloudStorageMember2022-01-012022-09-300001462056blze:ComputerBackupMember2023-07-012023-09-300001462056blze:ComputerBackupMember2022-07-012022-09-300001462056blze:ComputerBackupMember2023-01-012023-09-300001462056blze:ComputerBackupMember2022-01-012022-09-300001462056blze:ConsumptionBasedArragmentsMember2023-07-012023-09-300001462056blze:ConsumptionBasedArragmentsMember2022-07-012022-09-300001462056blze:ConsumptionBasedArragmentsMember2023-01-012023-09-300001462056blze:ConsumptionBasedArragmentsMember2022-01-012022-09-300001462056blze:SubscriptionBasedArrangementsMember2023-07-012023-09-300001462056blze:SubscriptionBasedArrangementsMember2022-07-012022-09-300001462056blze:SubscriptionBasedArrangementsMember2023-01-012023-09-300001462056blze:SubscriptionBasedArrangementsMember2022-01-012022-09-300001462056blze:PhysicalMediaMember2023-07-012023-09-300001462056blze:PhysicalMediaMember2022-07-012022-09-300001462056blze:PhysicalMediaMember2023-01-012023-09-300001462056blze:PhysicalMediaMember2022-01-012022-09-300001462056country:US2023-07-012023-09-300001462056country:US2022-07-012022-09-300001462056country:US2023-01-012023-09-300001462056country:US2022-01-012022-09-300001462056country:GB2023-07-012023-09-300001462056country:GB2022-07-012022-09-300001462056country:GB2023-01-012023-09-300001462056country:GB2022-01-012022-09-300001462056country:CA2023-07-012023-09-300001462056country:CA2022-07-012022-09-300001462056country:CA2023-01-012023-09-300001462056country:CA2022-01-012022-09-300001462056us-gaap:NonUsMember2023-07-012023-09-300001462056us-gaap:NonUsMember2022-07-012022-09-300001462056us-gaap:NonUsMember2023-01-012023-09-300001462056us-gaap:NonUsMember2022-01-012022-09-300001462056us-gaap:CommercialPaperMember2023-09-300001462056us-gaap:CommercialPaperMember2023-09-300001462056us-gaap:CommercialPaperMember2022-12-31blze:security0001462056blze:DataCenterEquipmentMember2023-09-300001462056blze:DataCenterEquipmentMember2022-12-310001462056blze:LeasedDataCenterEquipmentMember2023-09-300001462056blze:LeasedDataCenterEquipmentMember2022-12-310001462056us-gaap:MachineryAndEquipmentMember2023-09-300001462056us-gaap:MachineryAndEquipmentMember2022-12-310001462056us-gaap:ComputerEquipmentMember2023-09-300001462056us-gaap:ComputerEquipmentMember2022-12-310001462056us-gaap:LeaseholdImprovementsMember2023-09-300001462056us-gaap:LeaseholdImprovementsMember2022-12-310001462056us-gaap:ConstructionInProgressMember2023-09-300001462056us-gaap:ConstructionInProgressMember2022-12-310001462056us-gaap:EquipmentMember2023-09-300001462056us-gaap:EquipmentMember2022-12-310001462056country:US2023-09-300001462056country:NL2023-09-300001462056country:US2022-12-310001462056country:NL2022-12-310001462056us-gaap:SoftwareDevelopmentMember2023-09-300001462056us-gaap:SoftwareDevelopmentMember2022-12-310001462056blze:GeneralAndAdministrativeSoftwareMember2023-09-300001462056blze:GeneralAndAdministrativeSoftwareMember2022-12-310001462056us-gaap:ComputerSoftwareIntangibleAssetMember2023-09-300001462056srt:MinimumMember2023-01-012023-09-300001462056srt:MaximumMember2023-01-012023-09-30blze:arrangement00014620562023-07-310001462056blze:DataCenterOperationsNonTangibleUtilitiesAndServicesMember2023-09-300001462056blze:LeaseAndNonLeaseComponentsMember2023-07-012023-09-300001462056blze:LeaseAndNonLeaseComponentsMember2022-07-012022-09-300001462056us-gaap:CostOfSalesMemberblze:LeaseAndNonLeaseComponentsMember2023-07-012023-09-300001462056us-gaap:CostOfSalesMemberblze:LeaseAndNonLeaseComponentsMember2022-07-012022-09-300001462056blze:LeaseComponentsMember2022-07-012022-09-300001462056blze:LeaseComponentsMember2023-07-012023-09-300001462056blze:LeaseAndNonLeaseComponentsMember2023-01-012023-09-300001462056blze:LeaseAndNonLeaseComponentsMember2022-01-012022-09-300001462056us-gaap:CostOfSalesMemberblze:LeaseAndNonLeaseComponentsMember2023-01-012023-09-300001462056us-gaap:CostOfSalesMemberblze:LeaseAndNonLeaseComponentsMember2022-01-012022-09-300001462056blze:LeaseComponentsMember2023-01-012023-09-300001462056blze:LeaseComponentsMember2022-01-012022-09-300001462056us-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMember2022-04-300001462056us-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMember2021-10-310001462056us-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMemberus-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMember2023-01-012023-01-310001462056us-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMemberus-gaap:BaseRateMember2023-01-012023-01-310001462056us-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMember2023-09-300001462056us-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMember2023-07-012023-09-300001462056us-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMember2023-01-012023-09-300001462056us-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMember2022-07-012022-09-300001462056us-gaap:RevolvingCreditFacilityMemberblze:CityNationalBankRevolvingCreditAgreementMemberus-gaap:LineOfCreditMember2022-01-012022-09-300001462056us-gaap:NotesPayableOtherPayablesMemberblze:AFCOPremiumCreditLLCInsurancePremiumFinancingAgreementMember2022-11-300001462056us-gaap:NotesPayableOtherPayablesMemberblze:AFCOPremiumCreditLLCInsurancePremiumFinancingAgreementMember2022-11-012022-11-30blze:installment0001462056us-gaap:CommonClassBMember2023-07-060001462056us-gaap:EmployeeStockOptionMemberblze:A2011EquityInceptivePlanMember2023-09-300001462056us-gaap:EmployeeStockOptionMemberblze:A2011EquityInceptivePlanMember2022-12-310001462056blze:A2011EquityInceptivePlanMember2023-09-300001462056blze:A2011EquityInceptivePlanMember2022-12-310001462056us-gaap:EmployeeStockOptionMemberblze:A2021PlanMember2023-09-300001462056us-gaap:EmployeeStockOptionMemberblze:A2021PlanMember2022-12-310001462056blze:A2021PlanMemberus-gaap:RestrictedStockUnitsRSUMember2023-09-300001462056blze:A2021PlanMemberus-gaap:RestrictedStockUnitsRSUMember2022-12-310001462056blze:A2021PlanMember2023-09-300001462056blze:A2021PlanMember2022-12-310001462056blze:A2021EmployeeStockPurchasePlanMember2023-09-300001462056blze:A2021EmployeeStockPurchasePlanMember2022-12-310001462056blze:A2021PlanMember2023-06-300001462056blze:A2021PlanMember2023-06-052023-06-050001462056blze:A2021PlanMember2022-01-012022-03-310001462056blze:A2021PlanMember2023-01-012023-01-310001462056blze:A2021PlanMember2022-01-012022-01-310001462056srt:MinimumMemberblze:A2021PlanMemberus-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001462056srt:MaximumMemberblze:A2021PlanMemberus-gaap:ShareBasedPaymentArrangementEmployeeMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001462056us-gaap:ShareBasedPaymentArrangementNonemployeeMemberblze:A2021PlanMemberus-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001462056us-gaap:RestrictedStockUnitsRSUMember2022-12-310001462056us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001462056us-gaap:RestrictedStockUnitsRSUMember2023-09-300001462056us-gaap:EmployeeStockOptionMemberblze:A2011EquityInceptivePlanMember2023-01-012023-09-3000014620562022-01-012022-12-310001462056us-gaap:EmployeeStockMemberblze:A2021PlanMember2023-09-300001462056us-gaap:EmployeeStockMemberblze:A2021PlanMember2023-01-012023-01-310001462056us-gaap:EmployeeStockMemberblze:A2021PlanMember2022-01-012022-01-310001462056us-gaap:EmployeeStockMemberblze:A2021PlanMember2023-01-012023-09-300001462056us-gaap:EmployeeStockMemberblze:A2021PlanMember2023-07-012023-09-300001462056us-gaap:EmployeeStockMemberblze:A2021PlanMember2022-07-012022-09-300001462056us-gaap:EmployeeStockMemberblze:A2021PlanMember2022-01-012022-09-300001462056us-gaap:EmployeeStockMembersrt:MinimumMember2022-07-012022-09-300001462056us-gaap:EmployeeStockMembersrt:MaximumMember2022-07-012022-09-300001462056us-gaap:EmployeeStockMembersrt:MinimumMember2023-01-012023-09-300001462056us-gaap:EmployeeStockMembersrt:MaximumMember2023-01-012023-09-300001462056us-gaap:EmployeeStockMembersrt:MinimumMember2022-01-012022-09-300001462056us-gaap:EmployeeStockMembersrt:MaximumMember2022-01-012022-09-300001462056us-gaap:EmployeeStockMember2022-07-012022-09-300001462056us-gaap:EmployeeStockMember2023-01-012023-09-300001462056us-gaap:EmployeeStockMember2022-01-012022-09-300001462056us-gaap:CostOfSalesMember2023-07-012023-09-300001462056us-gaap:CostOfSalesMember2022-07-012022-09-300001462056us-gaap:CostOfSalesMember2023-01-012023-09-300001462056us-gaap:CostOfSalesMember2022-01-012022-09-300001462056us-gaap:ResearchAndDevelopmentExpenseMember2023-07-012023-09-300001462056us-gaap:ResearchAndDevelopmentExpenseMember2022-07-012022-09-300001462056us-gaap:ResearchAndDevelopmentExpenseMember2023-01-012023-09-300001462056us-gaap:ResearchAndDevelopmentExpenseMember2022-01-012022-09-300001462056us-gaap:SellingAndMarketingExpenseMember2023-07-012023-09-300001462056us-gaap:SellingAndMarketingExpenseMember2022-07-012022-09-300001462056us-gaap:SellingAndMarketingExpenseMember2023-01-012023-09-300001462056us-gaap:SellingAndMarketingExpenseMember2022-01-012022-09-300001462056us-gaap:GeneralAndAdministrativeExpenseMember2023-07-012023-09-300001462056us-gaap:GeneralAndAdministrativeExpenseMember2022-07-012022-09-300001462056us-gaap:GeneralAndAdministrativeExpenseMember2023-01-012023-09-300001462056us-gaap:GeneralAndAdministrativeExpenseMember2022-01-012022-09-300001462056us-gaap:RestrictedStockUnitsRSUMemberblze:A2022EmployeeBonusPlanMember2023-02-280001462056us-gaap:RestrictedStockUnitsRSUMemberblze:A2022EmployeeBonusPlanMember2022-07-012022-09-300001462056us-gaap:RestrictedStockUnitsRSUMemberblze:A2022EmployeeBonusPlanMember2022-01-012022-09-300001462056us-gaap:RestrictedStockUnitsRSUMemberblze:A2022EmployeeBonusPlanMember2023-07-012023-09-300001462056us-gaap:RestrictedStockUnitsRSUMemberblze:A2022EmployeeBonusPlanMember2023-01-012023-09-300001462056us-gaap:CommonClassAMember2023-07-012023-09-300001462056us-gaap:CommonClassBMember2023-07-012023-09-300001462056us-gaap:CommonClassAMember2022-07-012022-09-300001462056us-gaap:CommonClassBMember2022-07-012022-09-300001462056us-gaap:CommonClassAMember2023-01-012023-09-300001462056us-gaap:CommonClassBMember2023-01-012023-09-300001462056us-gaap:CommonClassAMember2022-01-012022-09-300001462056us-gaap:CommonClassBMember2022-01-012022-09-300001462056us-gaap:RestrictedStockUnitsRSUMember2023-01-012023-09-300001462056us-gaap:RestrictedStockUnitsRSUMember2022-01-012022-09-300001462056us-gaap:EmployeeStockOptionMember2023-01-012023-09-300001462056us-gaap:EmployeeStockOptionMember2022-01-012022-09-300001462056blze:SharesIssuablePursuantToTheESPPMember2023-01-012023-09-300001462056blze:SharesIssuablePursuantToTheESPPMember2022-01-012022-09-300001462056srt:MaximumMember2023-01-012023-06-300001462056blze:VoluntaryTerminationsMember2023-01-012023-09-300001462056blze:InvoluntaryTerminationsMember2023-01-012023-09-300001462056blze:InvoluntaryTerminationsMember2023-07-012023-09-30
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 September 30, 2023
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.)
201 Baldwin Ave.
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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
¨
Accelerated filer
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 October 31, 2023, 37.6 million shares of the registrant’s Class A 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 pandemics, inflation, war, 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 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 CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
(unaudited)
September 30,
2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents$9,016 $6,690 
Accounts receivable, net1,991 856 
Restricted cash, current6,078  
Short-term investments, net20,732 58,733 
Prepaid expenses and other current assets7,066 8,120 
Total current assets
44,883 74,399 
Restricted cash, non-current 4,306 
Property and equipment, net49,573 49,375 
Operating lease right-of-use assets10,482 6,881 
Capitalized internal-use software, net28,943 16,704 
Other assets
868 793 
Total assets
$134,749 $152,458 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$1,985 $3,283 
Accrued expenses and other current liabilities8,248 9,418 
Debt facility, current6,078  
Finance lease liabilities and lease financing obligations, current19,077 18,531 
Operating lease liabilities, current1,998 2,130 
Deferred revenue, current23,589 22,912 
Total current liabilities
60,975 56,274 
Finance lease liabilities and lease financing obligations, non-current14,265 15,487 
Operating lease liabilities, non-current8,518 5,032 
Deferred revenue, non-current
3,633 2,611 
Debt facility, non-current 4,306 
Total liabilities
$87,391 $83,710 
Commitments and contingencies (Note 10)
Stockholders’ Equity
Class A common stock, $0.0001 par value; 113,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; 37,464,639 and 16,198,333 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.
4 2 
Class B common stock, $0.0001 par value; 295,986 and 37,000,000 shares authorized as of September 30, 2023 and December 31, 2022, respectively; zero and 17,195,404 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively.
 2 
Additional paid-in capital
182,600 156,485 
Accumulated deficit
(135,246)(87,741)
Total stockholders’ equity
47,358 68,748 
Total liabilities and stockholders’ equity
$134,749 $152,458 

See accompanying notes, which are an integral part of these condensed consolidated financial statements.
1

Table of Contents
BACKBLAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per share data)
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Revenue$25,299 $22,051 $73,282 $62,229 
Cost of revenue13,546 10,836 38,509 30,073 
Gross profit11,753 11,215 34,773 32,156 
Operating expenses:
Research and development9,639 8,152 30,097 24,493 
Sales and marketing10,736 9,727 31,170 26,125 
General and administrative6,944 5,396 19,786 16,106 
Total operating expenses27,319 23,275 81,053 66,724 
Loss from operations(15,566)(12,060)(46,280)(34,568)
Investment income 447 210 1,576 405 
Interest expense(936)(950)(2,801)(2,811)
Loss before provision for income taxes(16,055)(12,800)(47,505)(36,974)
Income tax benefit   (69)
Net loss$(16,055)$(12,800)$(47,505)$(36,905)
Net loss per share, basic and diluted$(0.44)$(0.40)$(1.35)$(1.18)
Weighted average shares used in computing net loss per share attributable to Class A and Class B common stockholders, basic and diluted(1)
36,665,195 31,994,391 35,255,672 31,245,069 
(1) On July 6, 2023, all shares of the Company’s then outstanding Class B common stock were automatically converted into the same number of shares of Class A common stock, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation. No additional shares of Class B common stock will be issued following such conversion. See Note 12 for further details.
See accompanying notes, which are an integral part of these condensed consolidated financial statements.
2

Table of Contents
BACKBLAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(in thousands, except share data)
(unaudited)

Three Months Ended September 30, 2023
Class A and Class B Common Stock(1)
Additional
Paid-in
Capital
Accumulated
Deficit
Total
SharesAmount
Balance as of June 30, 202335,984,501 $4 $173,372 $(119,191)$54,185 
Net loss— — — (16,055)(16,055)
Issuance of Class A common stock upon exercise of stock options659,837 — 1,254 — 1,254 
Issuance of Class A common stock under the 2021 Equity Incentive Plan ("2021 Plan")
820,301 — — — — 
Stock-based compensation— — 7,974 — 7,974 
Balance as of September 30, 202337,464,639 $4 $182,600 $(135,246)$47,358 
Three Months Ended September 30, 2022
Class A and Class B Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total
SharesAmount
Balance as of June 30, 202231,631,532 $3 $143,431 $(60,448)$82,986 
Net loss— — — (12,800)(12,800)
Issuance of Class A common stock upon exercise of stock options694,260 — 1,376 — 1,376 
Issuance of Class A common stock under the 2021 Plan110,597 — — —  
Stock-based compensation— — 4,960 — 4,960 
Balance as of September 30, 202232,436,389 $3 $149,767 $(73,248)$76,522 


3

Table of Contents
Nine Months Ended September 30, 2023
Class A and Class B Common Stock(1)
Additional
Paid-in
Capital
Accumulated
Deficit
Total
SharesAmount
Balance as of December 31, 202233,393,737 $4 $156,485 $(87,741)$68,748 
Net loss— — — (47,505)(47,505)
Issuance of Class A common stock upon exercise of stock options1,844,602 — 3,309 — 3,309 
Issuance of Class A common stock under the 2021 Plan1,589,837 — — — — 
Issuance of Class A common stock related to the 2021 Employee Stock Purchase Plan ("ESPP")348,555 — 1,171 — 1,171 
Stock-based compensation— — 19,787 — 19,787 
Issuance of restricted stock units related to the 2022 Bonus Plan (see Note 13) 287,908 — 1,848 — 1,848 
Balance as of September 30, 202337,464,639 $4 $182,600 $(135,246)$47,358 
Nine Months Ended September 30, 2022
Class A and Class B Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Total
SharesAmount
Balance as of December 31, 202130,384,834 $3 $131,826 $(36,343)$95,486 
Net loss— — — (36,905)(36,905)
Issuance of Class A common stock upon exercise of stock options1,609,789 — 3,439 — 3,439 
Issuance of Class A common stock under the 2021 Plan, net of taxes withheld153,195 — (130)(130)
Issuance of Class A common stock related to the ESPP
288,571 — 1,529 1,529 
Stock-based compensation— — 13,103 — 13,103 
Balance as of September 30, 202232,436,389 $3 $149,767 $(73,248)$76,522 
(1) On July 6, 2023, all shares of the Company’s then outstanding Class B common stock were automatically converted into the same number of Class A common stock, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation. No additional shares of Class B common stock will be issued following such conversion. See Note 12 for further details.

See accompanying notes, which are an integral part of these condensed consolidated financial statements.
4

Table of Contents
BACKBLAZE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Nine Months Ended September 30,
20232022
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$(47,505)$(36,905)
Adjustments to reconcile net loss to net cash used in operating activities:
Accretion of discount on investment securities and investment income, net113 (367)
Noncash lease expense on operating leases1,839 1,820 
Depreciation and amortization
18,337 14,689 
Stock-based compensation
18,670 13,011 
(Gain) loss on disposal of assets and other adjustments(242)24 
Changes in operating assets and liabilities:
Accounts receivable
(1,135)(411)
Prepaid expenses and other current assets
867 (234)
Other assets
(313)56 
Accounts payable
(592)(137)
Accrued expenses and other current liabilities
(366)(901)
Deferred revenue
1,697 635 
Operating lease liabilities(1,968)(1,853)
Other long-term liabilities
 (69)
Net cash used in operating activities
(10,598)(10,642)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of marketable securities(19,492)(113,259)
Maturities of marketable securities57,380 61,000 
Proceeds from disposal of property and equipment
319  
Purchases of property and equipment
(5,066)(4,061)
Capitalized internal-use software costs
(11,061)(5,645)
Net cash provided by (used in) investing activities
22,080 (61,965)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on finance leases and lease financing obligations
(14,878)(11,602)
Payments of deferred offering costs
 (658)
Proceeds from debt facility4,273 2,543 
Repayment of debt facility(2,500) 
Principal payments on insurance premium financing(1,545) 
Proceeds from lease financing obligations
2,500  
Employee payroll taxes paid related to net settlement of equity awards (130)
Proceeds from exercises of stock options3,426 3,439 
Proceeds from ESPP1,171 1,529 
Net cash used in financing activities
(7,553)(4,879)
Net increase (decrease) in cash, restricted cash and restricted cash, non-current
3,929 (77,486)
Cash, restricted cash, current and restricted cash, non-current at beginning of period
11,165 105,012 
Cash, cash equivalents, restricted cash, current and restricted cash, non-current at end of period
$15,094 $27,526 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest
$2,752 $2,838 
Cash paid for income taxes$58 $26 
Cash paid for operating lease liabilities$2,174 $1,948 
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Stock-based compensation included in capitalized internal-use software
$3,703 $1,808 
Accrued bonus settled in restricted stock units$1,848 $ 
Accrued bonus classified as stock-based compensation$2,586 $1,716 
Equipment acquired through finance lease and lease financing obligations
$11,995 $15,680 
Accruals related to purchases of property and equipment
$131 $337 
Lease liabilities arising from right-of-use assets upon adoption of ASC 842$ $5,220 
Assets obtained in exchange for operating lease obligations$5,568 $ 
Receivable recorded due to stock option exercises pending settlement
$38 $ 
RECONCILIATION OF CASH AND RESTRICTED CASH
Cash and cash equivalents
$9,016 $24,813 
Restricted cash - included in prepaid expenses and other current assets$— $169 
Restricted cash, current$6,078 $ 
Restricted cash, non-current$ $2,544 
Total cash, cash equivalents, restricted cash and restricted cash, non-current
$15,094 $27,526 
See accompanying notes, which are an integral part of these condensed consolidated financial statements.
5

Table of Contents
BACKBLAZE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Organization and Description of Business
Description of Business
Backblaze, Inc. and its subsidiaries (collectively, “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.
Note 2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated. The accompanying condensed consolidated 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 consolidated financial statements should be read in conjunction with the audited financial statements and notes for the year ended December 31, 2022 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 31, 2023. In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as its 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 September 30, 2023, results of operations for the three and nine months ended September 30, 2023 and 2022, cash flows for the nine months ended September 30, 2023 and 2022, and stockholders' equity for the three and nine months ended September 30, 2023 and 2022. The results of operations for the three and nine months ended September 30, 2023 and 2022 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, certain of which have been updated below, 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, 2022, which was filed with the SEC on March 31, 2023.
6

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, which include determining (i) whether projects will result in new or additional functionality, (ii) the start and end date of the application development phase of projects, and (iii) their useful life, the useful lives of other long-lived assets, impairment considerations for long-lived assets, the incremental borrowing rate for lease agreements, expected lease term, lease and non-lease component allocation, valuation of the Company’s ESPP expense, and accounting for taxes, including estimates for 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.
Foreign Currency
The reporting currency of the Company is the United States dollar (“USD”). The functional currency of the Company and its subsidiaries is USD. Transaction gains and losses that arise from exchange rate fluctuations on monetary transactions denominated in a currency other than the functional currency are included in general and administrative on the condensed consolidated statements of operations when realized.
Concentrations and Risks and Uncertainties

Liquidity. The Company believes that its existing cash, cash equivalents and short-term investments together with cash provided by operations, will be sufficient to support its working capital and capital expenditure requirements for at least the next 12 months. However, to achieve its continued growth and objectives, the Company will need to obtain additional sources of financing which may include entering into lease agreements, sale-leaseback arrangements, credit facilities, and other debt financing arrangements for the purpose of acquiring infrastructure equipment and to fund its operations. In the event that the Company requires additional financing, it may not be able to raise such financing on terms acceptable to us or at all. If the Company is unable to obtain additional sources of financing, raise additional capital or generate cash flows necessary to expand its operations and invest in continued innovation, it may not be able to compete successfully, which would harm its business, results of operations and financial condition.

Credit risk. Financial instruments that potentially subject the Company to credit risk primarily consist of cash, cash equivalents, accounts receivable, short-term investments, and unbilled accounts receivable. The Company maintains its cash, restricted cash, and short-term investments with high-quality financial institutions with investment-grade ratings. In the event of a failure of any financial institutions where the Company maintains deposits, it may lose timely access to its funds at such institutions and incur significant losses to the extent its funds exceed the $250,000 limit insured by the Federal Deposit Insurance Corporation. Deposits with these financial institutions may exceed the amount of insurance provided on such deposits. For accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amount recorded on the balance sheets. In addition, the Company uses City National Bank, a subsidiary of Royal Bank of Canada (“RBC”), for its banking needs. While the Company and its bank has not been directly affected by the recent failures of certain banks, the banking industry overall has experienced disruption and uncertainty, which could put additional pressures on the Company’s bank and other banks, and may negatively impact the availability and costs for various banking and investment offerings.

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.

7

Table of Contents
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Cash disbursement concentration
Number of vendors2222
Total cash disbursements represented by vendors listed above21%25%21%26%
September 30,
2023
December 31,
2022
Accounts payable concentration
Number of vendors32
Total accounts payable balance represented by vendors listed above28%26%

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.

Restructuring

Restructuring costs are comprised of severance costs related to workforce reductions. The Company recognizes restructuring charges when the liability is incurred. For involuntary terminations, employee termination benefits are accrued at the date (i) management has committed to a plan of termination, which includes identification of employees to be terminated and related information, (ii) actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn, and (iii) employees have been notified of their termination dates and expected severance payments. For voluntary terminations, the Company recognizes a liability when the termination benefit has been irrevocably accepted by the employee.
Investments

The Company holds all investments on a held-to-maturity basis, and they are reported at amortized cost with realized gains or losses reported in earnings. The Company determines the appropriate classification of its investment in debt securities at the time of purchase and re-evaluates such determination at each balance sheet date.

The Company will recognize an allowance for estimated credit losses on its held-to-maturity securities, using a forward-looking expected loss model, which reflects losses that are expected to be incurred over the life of the financial instrument. The Company uses a roll-rate method to determine the estimated credit losses using factors including historical global average default rates and expected recovery rates on similar credit quality, bond maturity and duration, along with historical experience, current conditions, and forecasts of future economic conditions, if available. The Company monitors the credit profile of its held-to-maturity securities on a periodic basis, using third party data to assess their credit ratings as well as any adverse conditions specifically related to the security.

The Company’s short-term investments include investment grade commercial paper with original maturities of 365 days or less at the date of purchase. Short-term investments are recorded at amortized cost on the balance sheet.

Accounting Pronouncements Recently Adopted
In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires a financial asset measured at an amortized cost basis to be presented at the net amount expected to be collected, with further clarifications made more recently. For accounts receivables, unbilled 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. The Company adopted the guidance effective January 1, 2023 using the modified retrospective transition method with comparative periods continuing to be reported using the previous applicable guidance and determined that it did not have a material impact on its condensed consolidated financial statements.
8

Table of Contents
Note 3. Revenues
Deferred Contract Costs
The Company’s amortization of deferred contract costs was $0.2 million for each of the three months ended September 30, 2023 and 2022, and was $0.7 million for each of the nine months ended September 30, 2023 and 2022. The amount of capitalized contract costs was $0.4 million as of both September 30, 2023 and December 31, 2022.
Deferred Revenue

Total deferred revenue was $27.2 million and $25.5 million as of September 30, 2023 and December 31, 2022, respectively. Revenue recognized for the three months ended September 30, 2023 and 2022 was $9.7 million and $9.2 million, respectively, and was $20.5 million and $19.3 million for the nine months ended September 30, 2023 and 2022, respectively, which was included in each deferred revenue balance at the beginning of each respective period. The Company’s deferred revenue as stated on its condensed consolidated balance sheets presented approximates its contract liability balance as of September 30, 2023 and December 31, 2022. The Company’s total deferred revenue balance as of September 30, 2023, approximates the aggregate amount of the transaction price allocated to remaining performance obligations (“RPOs”) as of that date. As of September 30, 2023, the Company's RPOs were $29.5 million. This amount includes deferred revenue arising from consideration invoiced for which the related performance obligations have not been satisfied, as well as future committed revenue for periods within current contracts with customers. As of September 30, 2023, the Company expects to recognize approximately 84% of its RPOs over the next 12 months, and substantially all of its RPOs over the next 24 months.
Disaggregation of Revenue
The following table presents the Company’s revenue disaggregated by product (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2023202220232022
B2 Cloud Storage
$11,608 $8,864 $32,384 $23,678 
Computer Backup
13,691 13,187 40,898 38,551 
Total revenue(1)
$25,299 $22,051 $73,282 $62,229 
________________
(1) For the periods presented, Physical Media revenue has been consolidated into B2 Cloud Storage or Computer Backup revenue based on the underlying offering from which it originates.

The following table presents the Company’s revenue disaggregated by timing of revenue recognition (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2023202220232022
Consumption-based arrangements
$11,393 $8,825 $31,986 $23,553 
Subscription-based arrangements
13,774 13,065 40,878 38,168 
Physical Media (point in time)
132 161 418 508 
Total revenue
$25,299 $22,051 $73,282 $62,229 
9

Table of Contents
Revenue by geographic area, based on the location of the Company’s customers, was as follows (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2023202220232022
United States$18,277 $15,802 $52,502 $44,636 
United Kingdom1,373 1,213 3,944 3,434 
Canada1,223 1,133 3,634 3,129 
Other4,426 3,903 13,202 11,030 
Total revenue$25,299 $22,051 $73,282 $62,229 

Note 4. Investments
Fair Values and Gross Unrealized Gains and Losses on Investments
The following table summarizes adjusted cost, gross unrealized losses, and fair value by significant investment category. The Company’s commercial paper investments with original maturities greater than 90 days are classified as held-to-maturity investments on its balance sheets as of September 30, 2023 and December 31, 2022, respectively. The Company’s commercial paper investments with original maturities of 90 days or less are classified as cash equivalents on its balance sheets as of September 30, 2023 and December 31, 2022, respectively.
Amortized CostGross UnrealizedFair ValueNet Carrying Value
GainsLosses
As of September 30, 2023(In Thousands)
Cash equivalents
Commercial paper$2,964 $2 $ $2,966 $2,964 
Total cash equivalents$2,964 $2 $ $2,966 $2,964 
Investments
Commercial paper$20,732 $ $(16)$20,716 $20,732 
Total investments$20,732 $ $(16)$20,716 $20,732 
Amortized CostGross UnrealizedFair ValueNet Carrying Value
GainsLosses
As of December 31, 2022(In Thousands)
Investments
Commercial Paper$58,733 $ $(144)$58,589 $58,733 
Total investments$58,733 $ $(144)$58,589 $58,733 
Scheduled Maturities
The amortized cost and fair value of held-to-maturity securities as of September 30, 2023 and December 31, 2022, by contractual maturity, are shown below.
10

Table of Contents
As of September 30, 2023Amortized CostFair Value
(In Thousands)
Within one year$20,732 $20,716 
After one year through five years  
After 5 years through 10 years  
After 10 years  
Total investments$20,732 $20,716 
As of December 31, 2022Amortized CostFair Value
(In Thousands)
Within one year$58,733 $58,589 
After one year through five years  
After 5 years through 10 years  
After 10 years  
Total investments$58,733 $58,589 
Aging of Unrealized Losses
The Company’s investments had an aggregate gross unrealized loss of $16 thousand and $0.1 million as of September 30, 2023 and December 31, 2022, respectively, all of which had been in an unrealized loss position of less than twelve months and are recorded at amortized cost on the Company’s condensed consolidated balance sheets. As of September 30, 2023 and December 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.
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 September 30, 2023(Dollars In Thousands)
Investments
Commercial paper4 $20,716 $(16)4 $20,716 $(16)
Total4 $20,716 $(16)4 $20,716 $(16)
Less than 12 MonthsTotal
# of SecuritiesFair ValueUnrealized Losses# of SecuritiesFair ValueUnrealized Losses
As of December 31, 2022(Dollars In Thousands)
Investments
Commercial paper11 $58,589 $(144)11 $58,589 $(144)
Total11 $58,589 $(144)11 $58,589 $(144)
Note 5. Fair Value Measurements
The Company classifies its held-to-maturity 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 on non-binding market consensus that are primarily corroborated by observable market data or quoted market prices for similar
11

Table of Contents
instruments. The Company’s cash equivalents on its condensed consolidated balance sheet included commercial paper with an amortized cost and estimated fair value of $3.0 million as of September 30, 2023.
There were no transfers between levels of the fair value hierarchy for the three and nine months ended September 30, 2023 and the year ended December 31, 2022, respectively. The Company held no assets or liabilities that were measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, respectively.
As of December 31, 2022, 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 current assets on the condensed consolidated balance sheets. As of September 30, 2023, this balance is no longer restricted as the lease agreement and associated letter of credit have been completed.

Additionally, the Company had $6.1 million and $4.3 million in restricted cash as of September 30, 2023 and December 31, 2022, respectively, related to the line of credit agreement with City National Bank. See Note 11 for further details.
Note 6. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
September 30,
2023
December 31,
2022
Unbilled accounts receivable, net$1,893 $1,637 
Prepaid expenses2,532 2,600 
Receivable from payment processor922 644 
Financed prepaid insurance196 1,545 
Other1,523 1,694 
Total prepaid expenses and other current assets
$7,066 $8,120 
Note 7. Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
September 30,
2023
December 31,
2022
Data center equipment
$35,244 $28,531 
Leased and financed data center equipment
69,570 62,300 
Machinery and equipment
14,728 11,613 
Computer equipment
2,429 2,503 
Leasehold improvements
1,110 1,268 
Construction-in-progress
510 3,636 
Total property and equipment
123,591 109,851 
Less: accumulated depreciation
(74,018)(60,476)
Total property and equipment, net
$49,573 $49,375 
12

Table of Contents
Depreciation expense was $5.5 million and $4.8 million for the three months ended September 30, 2023 and 2022, respectively, and was $15.8 million and $13.1 million for the nine months ended September 30, 2023 and 2022, respectively. For the Company’s equipment under finance leases and lease financing obligations, accumulated depreciation was $30.1 million and $24.5 million as of September 30, 2023 and December 31, 2022, respectively. The carrying value of the Company’s equipment under finance lease agreements and lease financing obligations was $39.4 million and $37.8 million as of September 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023, the Company had long-lived assets of $60.1 million, comprising of property and equipment, net and operating lease right-of-use assets, with $55.1 million located in the United States and $5.0 million located in the Netherlands. As of December 31, 2022, the Company had long-lived assets of $56.3 million, comprising of property and equipment, net and operating lease right-of-use assets, with $50.2 million located in the United States and $6.1 million located in the Netherlands.
Note 8. Capitalized Internal-Use Software, Net
Capitalized internal-use software, net consisted of the following (in thousands):
September 30,
2023
December 31,
2022
Developed software
$38,542 $23,777 
General and administrative software
144 144 
Total capitalized internal-use software
38,686 23,921 
Less: accumulated amortization
(9,743)(7,217)
Total capitalized internal-use software, net
$28,943 $16,704 
Amortization expense of capitalized internal-use software was $1.0 million and $0.6 million for the three months ended September 30, 2023 and 2022, respectively, and was $2.5 million and $1.6 million for the nine months ended September 30, 2023 and 2022, 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 condensed consolidated statements of operations.
As of September 30, 2023, future amortization expense is expected to be as follows (in thousands):
Year Ending December 31,
Remainder of 2023$1,218 
20246,582 
20256,382 
20265,929 
20275,203 
Thereafter
3,629 
Total
$28,943 
13

Table of Contents
Note 9. Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
September 30,
2023
December 31,
2022
Accrued compensation$3,619 $2,728 
ESPP withholding1,185 415 
Accrued expenses1,615 2,881 
Accrued value-added tax ("VAT") liability1,048 1,220 
Financed insurance premiums (see Note 11) 1,545 
Other
781 629 
Accrued expenses and other current liabilities
$8,248 $9,418 
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. Finance leases are generally secured by the underlying leased equipment. The Company's finance leases have original lease periods expiring between 2023 and 2026. Finance leases are included in property and equipment, net on the Company’s condensed consolidated balance sheet.
As of September 30, 2023, the weighted average remaining lease term for finance lease and lease financing obligation agreements was 1.9 years and the weighted average discount rate for finance leases was 10.8%.

For the Company’s assets acquired through finance lease and lease financing obligation agreements, which are related to sale-leaseback agreements, depreciation expense was $3.9 million and $3.5 million for the three months ended September 30, 2023 and 2022, respectively, and was $11.2 million and $9.7 million for the nine months ended September 30, 2023 and 2022, respectively. Depreciation expense on assets acquired through the Company’s finance leases and lease financing obligations is included in cost of revenue in its condensed consolidated statements of operations.

During the three months ended September 30, 2023, total finance lease costs were $4.4 million, of which interest expense was approximately $0.7 million, and total lease financing obligation costs were $0.3 million, of which interest expense was approximately $0.1 million. During the three months ended September 30, 2022, total finance lease costs were $4.1 million, of which interest expense was approximately $0.9 million, and total lease financing obligation costs were $0.3 million, of which interest expense was approximately $0.1 million.

During the nine months ended September 30, 2023, total finance lease costs were $12.5 million, of which interest expense was approximately $2.2 million, and total lease financing obligation costs were $1.0 million, of which interest expense was approximately $0.2 million. During the nine months ended September 30, 2022, the total finance lease costs were $11.4 million, of which interest expense was approximately $2.5 million, and total lease financing obligation costs were $1.0 million, of which interest expense was approximately $0.3 million. The cash paid for interest on interest on finance lease and lease financing obligations was $2.4 million and $2.8 million for the nine months ended September 30, 2023 and 2022, respectively.

During the nine months ended September 30, 2023, the Company entered into one sale-leaseback arrangement with a vendor to provide $2.5 million in cash proceeds for previously purchased hard drives and related equipment. The Company concluded the related lease arrangements would be classified as a lease financing obligation as the Company is reasonably certain to exercise the purchase option within the arrangement. 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 Company did not enter into any sale-leaseback arrangements during the nine months ended September 30, 2022.

14

Table of Contents
The future minimum commitments for these finance leases and lease financing obligations as of September 30, 2023 were as follows (in thousands):
Year Ending December 31,Finance leasesLease financing obligationsTotal
Remainder of 2023$5,609 $805 $6,414 
202416,226 2,867 19,093 
20257,714 1,709 9,423 
20261,906  1,906 
2027   
Thereafter   
Total future minimum lease and financing commitments31,455 5,381 36,836 
Less imputed interest(2,808)(686)(3,494)
Total liability$28,647 $4,695 $33,342 
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 2023 and 2031. The Company did not have a material amount of short-term leases as of September 30, 2023.
As of September 30, 2023, the weighted average remaining lease term for operating leases was approximately 5.7 years and the weighted average discount rate for operating leases was approximately 7.5%.

In July 2023, the Company entered into an operating lease agreement for purposes of consolidating and moving out of two offices into one, resulting in the recognition of $5.3 million of operating right-of-use assets and $5.2 million of operating lease liabilities, current and non-current, on its condensed consolidated balance sheet as of September 30, 2023.

The future minimum commitments for these operating leases as of September 30, 2023 were as follows (in thousands), which excludes amounts allocated to services under operating lease agreements that are considered non-lease components:

Year Ending December 31,
Remaining of 2023$640 
20242,464 
20252,026 
20262,076 
20272,131 
Thereafter3,558 
Total future minimum operating lease commitments12,895 
Less imputed interest(2,379)
Total liability$10,516 

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 judgment 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.

The future minimum commitments for the Company’s non-cancellable contractual obligations as of September 30, 2023 for non-lease components were as follows (in thousands):

15

Table of Contents
Year Ending December 31,
Remaining of 2023$1,307 
20244,240 
20252,623 
20262,603 
20272,679 
Thereafter6,330 
Total future minimum commitments$19,782 
Rental expense related to the Company’s operating leases for both lease and non-lease components was $2.1 million and $1.9 million for the three months ended September 30, 2023 and 2022, of which $1.8 million and $1.4 million is included in cost of revenue in its condensed consolidated statement of operations, respectively. Rental expense related to lease components was $0.7 million for each of the three months ended September 30, 2023 and 2022. Total operating lease cost was $2.6 million and $2.3 million for the three months ended September 30, 2023 and 2022, respectively, which does not include costs related to services.

Rental expense related to the Company’s operating leases for both lease and non-lease components was $6.2 million and $4.7 million for the nine months ended September 30, 2023 and 2022, of which $5.1 million and $3.6 million is included in cost of revenue in its condensed consolidated statement of operations as of such dates, respectively. Rental expense related to lease components was $2.2 million and $2.0 million for the nine months ended September 30, 2023 and 2022, respectively. Total operating lease cost was $7.9 million and $5.8 million, for the nine months ended September 30, 2023 and 2022, respectively, which does not include costs related to services.
Other Contractual Commitments
Other non-cancellable commitments relate mainly to service agreements used to facilitate the Company’s infrastructure operations. As of September 30, 2023, the Company had non-cancelable purchase commitments of $2.5 million and $0.7 million payable during the remainder of the year ending December 31, 2023 and the year ending December 31, 2024, 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 $0.5 million and $0.4 million to the 401(k) plan during the three months ended September 30, 2023 and 2022, respectively, and $1.4 million and $1.2 million for the nine months ended September 30, 2023 and 2022, respectively.
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 there are not any current legal proceedings that are likely to 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 litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources, and other factors.
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 payable was $1.0 million and $1.2 million as of September 30, 2023 and December 31, 2022, respectively.
Indemnification
16

Table of Contents
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 consolidated statements of operations in connection with the indemnification provisions.
Note 11. Debt
Credit Facility
During April 2022, the Company entered into a second amendment to its revolving credit agreement (as amended, the “RCA”) with City National Bank (“Lender”). Under this amendment, the amount available to be borrowed was increased to $30.0 million from $9.5 million. During January 2023, the Company entered into a third amendment to the RCA. Under this amendment, advances on the line of credit will bear monthly interest at a variable rate equal to, at the Company’s discretion, (a) the average Secured Overnight Financing Rate (“SOFR”) plus 2.00%, or (b) the base rate. The base rate under the RCA is a rate equal to the greater of (i) 3.00% or (ii) the prime rate most recently announced by the Lender. There were no other material changes to the RCA as a result of the amendment. As of September 30, 2023, the Company had an outstanding balance of $6.1 million and the total amount available to the Company to be borrowed was $23.9 million.

Under the RCA, the outstanding balance of $6.1 million as of September 30, 2023 was collateralized by cash held by the Company. As such, the Company held $6.1 million in cash that it deemed to be restricted and is included in restricted cash, current on the Company’s condensed consolidated balance sheet as of September 30, 2023. With prior written notice to the Lender, the Company has the right, at any time prior to the maturity date in September 2024, to terminate the RCA. In the event of such termination, the aggregate principal of the then outstanding amounts, including any accrued interest to date, shall be repaid and the restrictions on the associated collateralized cash would be released. The Company classifies the facility as debt facility, current on its condensed consolidated balance sheet as of September 30, 2023.

As of September 30, 2023, the interest rate associated with the outstanding balance under the RCA was 7.4%, which is a per annum rate. Interest payments on outstanding borrowing are due on the last day of each monthly interest period and payments for the commitment fee are due at the end of each calendar quarter. Total interest expense related to the RCA was $0.2 million and $0.4 million for the three and nine months ended September 30, 2023, respectively. Total interest expense related to the RCA was less than $0.1 million for the three and nine months ended September 30, 2022, respectively.
Insurance Premium Financing Agreement
Effective November 2022, the Company entered into an insurance policy with annual premiums totaling $2.1 million. The Company executed a finance agreement with AFCO Premium Credit LLC over a term of twelve months, with an annual interest rate of 4.5%, that finances the payment of the total premiums owed. The finance agreement required a $0.5 million down payment, with the remaining $1.5 million plus interest paid over three quarterly installments. These quarterly payments started on February 10, 2023. As of September 30, 2023, the balance of this finance agreement was fully paid.
Note 12. Stockholders’ Equity

Common Stock. From the time of its initial public offering through July 5, 2023, the Company had two outstanding 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 were identical, except for voting, transfer, and conversion rights. On July 6, 2023, all of the Company’s then-outstanding shares of the Company’s Class B common stock were automatically converted (the “Conversion”) into the same number of shares of Class A common stock pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation. No additional shares of Class B common stock will be issued following the Conversion. In addition, on July 7, 2023, the Company filed a Certificate of Retirement with the Secretary of State of the State of Delaware effecting the retirement of the shares of Class B common stock that were issued but no longer outstanding following the Conversion. As of September 30, 2023, the Company’s sole outstanding class of common stock was its Class A common stock.
17

Table of Contents
The Company had reserved shares of common stock for future issuance as follows:
 September 30,
2023
December 31,
2022
2011 Equity Incentive Plan (“2011 Plan”)
Options outstanding
8,743,758 10,862,094 
Shares available for future grants  
2021 Plan
Options outstanding1,354,732 1,509,187 
Restricted stock units outstanding5,813,510 3,716,061 
Shares available for future grants
7,391,635 1,836,566 
2021 Employee Stock Purchase Plan
Shares available for future purchases1,309,451 990,132 
Total
24,613,086 18,914,040 
Note 13. Stock-Based Compensation
Equity Incentive Plan
Share Reserve. As of September 30, 2023, the number of shares of common stock available for issuance under the 2021 Equity Incentive Plan equaled the sum of 14,662,500 shares, plus up to approximately 13,719,000 shares subject to awards granted under the 2011 Plan that expire, forfeit or are repurchased following the effective date of the 2021 Plan. In addition, the number of shares reserved for issuance under the 2021 Plan will be increased automatically on the first business day of each of the Company’s fiscal years, by a number equal to the lowest of (i) 4,784,100 shares, (ii) 5% of the shares of Class A 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. Pursuant to this evergreen provision, the Company increased the number of shares reserved under the 2021 Plan by 809,916 and 411,399 shares of Class A common stock during January 2023 and 2022, respectively.
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 the Company reacquires the shares subject to awards granted under the 2021 Plan, those shares will again become available for issuance under the 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.
Restricted Stock Units
Restricted stock units (“RSUs”) granted under the 2021 Plan generally vest based on continued service over a one-to-four-year period for employees, and over a one year period for non-employee directors.
RSU activity for the nine months ended September 30, 2023 was as follows:

SharesWeighted-average grant date fair value per share
Unvested balance as of December 31, 2022
3,716,061$6.60 
Granted
4,214,704$5.04 
Vested
(1,877,745)$6.23 
Forfeited
(239,510)$5.44 
Unvested balance as of September 30, 2023
5,813,510$5.64 
18

Table of Contents
Stock Options
Stock Options. Stock options granted under the Company’s equity plans generally vest based on continued service over four years and expire ten years from the date of grant.
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 nine months ended September 30, 2022. No stock options were granted during the nine months ended September 30, 2023.
Nine Months Ended September 30, 2022
Expected term (in years)
6.0
Expected volatility
49.0 %
Risk-free interest rate
1.20 %
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.

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):
 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, 2022
1,836,566 12,371,281 $5.74 6.07$32,385 
Shares authorized9,102,074 
Options granted   
Options exercised (1,844,602)1.79 
Options canceled
428,189 (428,189)11.31 
RSU award activity(3,975,194)— 
Balance as of September 30, 2023
7,391,635 10,098,490 $6.22 5.74$18,855 
Vested and exercisable as of September 30, 2023
8,075,929 $4.89 5.27$17,967 
The weighted-average grant-date fair value of options granted during the nine months ended September 30, 2022 was $6.26. The intrinsic value of options exercised for the nine months ended September 30, 2023 and 2022 was $6.1 million and $9.1 million, respectively. Aggregate intrinsic value represents the difference between the exercise price of the options
19

Table of Contents
and the estimated fair value of the Company’s common stock at the time of exercise. The aggregate grant-date fair value of options vested was $6.8 million and $8.0 million during the nine months ended September 30, 2023 and 2022, respectively.
ESPP
As of September 30, 2023, the ESPP reserved and authorized the issuance of up to a total of 956,800 shares of Class A common stock to participating employees. Pursuant to its evergreen provision, the Company increased the number of shares reserved under the ESPP by 667,874 and 607,696 during January 2023 and 2022, respectively.
During the nine months ended September 30, 2023, 348,555 shares of Class A common stock have been purchased under the ESPP. The fair value of the purchase rights under the ESPP 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 $0.9 million and $0.8 million for the three months ended September 30, 2023 and 2022, respectively, of which the Company capitalized $0.2 million and $0.2 million, respectively, of stock-based compensation expense under this plan for the development of internal-use software. The Company recorded stock-based compensation expense under this plan of $2.8 million and $2.4 million for the nine months ended September 30, 2023 and 2022, respectively, of which the Company capitalized $0.7 million and $0.3 million, respectively, of stock-based compensation expense under this plan for the development of internal-use software.
As of September 30, 2023, the total unrecognized stock-based compensation expense related to the ESPP was $1.8 million and is expected to be recognized over a weighted average period of one year. As of September 30, 2023, $1.2 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 during the three and nine months ended September 30, 2023 and 2022, respectively.
Three Months Ended September 30,Nine months ended September 30,
2023202220232022
Expected term (in years)
N/A
0.5 - 2.0
0.5 - 2.0
0.5 - 2.0
Expected volatility
N/A
45% - 68%
45% - 68%
45% - 68%
Risk-free interest rate
N/A
0.10% - 2.60%
0.10% - 5.43%
0.10% - 2.60%
Expected dividend yield
N/A
 % % %

Stock-Based Compensation Expense

Stock-based compensation expense included in the condensed consolidated statements of operations was as follows (in thousands):
Three Months Ended September 30,
Nine Months Ended September 30,
2023202220232022
Cost of revenue
$653 $353 $1,456 $977 
Research and development
2,865 1,828 6,786 5,066 
Sales and marketing
2,747 1,539 6,616 3,906 
General and administrative
1,693 1,110 3,812 3,062 
Total stock-based compensation expense
$7,958 $4,830 $18,670 $13,011 
During the nine months ended September 30, 2023 and 2022, the Company capitalized $3.7 million and $1.8 million, respectively, of stock-based compensation for the development of internal-use software. As of September 30, 2023, total compensation cost related to stock options and RSUs not yet vested was $13.0 million and $30.4 million, respectively, which will be recognized over a weighted-average period of two years for stock options and RSUs.
20

Table of Contents
Bonus Plan
During March 2022, the Company’s Compensation Committee approved a new bonus structure (“Bonus Plan”) for its employees. The Bonus Plan is contingent upon the achievement of annual corporate performance targets. In each respective calendar year, the Company accrues for the Bonus Plan. The actual payout amount is determined by the Company’s Compensation Committee based on the actual achievement with respect to the annual performance targets and paid in the subsequent year in the variable number of RSUs equal to the payout amount. These RSU’s are fully vested as they were earned (and expensed) prior to the payout. Participants must remain employed with the Company through the date of payout to maintain eligibility under the Bonus Plan.
Pursuant to the Bonus Plan, during February 2023 the Company’s Compensation Committee approved the issuance of approximately 288,000 RSUs that immediately vested based on actual performance against the performance targets for 2022. The Company recognized $0.7 million and $1.7 million in stock-based compensation during the three and nine months ended September 30, 2022, respectively, of which the Company capitalized $0.1 million and $0.2 million, respectively, of stock-based compensation expense under this plan for the development of internal-use software.
During February 2023, the Company’s Board of Directors approved annual corporate performance targets under its Bonus Plan for 2023 for its employees. If these performance targets are met during 2023, employees will be paid out under the Bonus Plan in RSUs in 2024. As a result, the Company recognized $1.7 million and $2.6 million in stock-based compensation during the three and nine months ended September 30, 2023, respectively, based on progress made towards these performance targets. During the three and nine months ended September 30, 2023, the Company capitalized $0.2 million and $0.4 million, respectively, of stock-based compensation expense under this plan for the development of internal-use software.
Note 14. Net Loss per Share Attributable to Common Stockholders
The Company computes net loss per share for periods prior to the Conversion using the two-class method required for multiple classes of common stock and participating securities. Prior to the Conversion, shares of Class A and Class B were the only outstanding equity in the Company. The rights of the holders of the Class A common stock and Class B common stock were identical, except with respect to voting and conversion. Accordingly, the Class A common stock and Class B common stock shared equally in the Company’s net losses.
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 stock options, share purchase rights 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.
As discussed above in Note 12, on July 6, 2023, all of the Company’s then-outstanding shares of Class B common stock, par value $0.0001 per share, were automatically converted into the same number of shares of Class A common stock, par value $0.0001 per share, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation. No additional shares of Class B common stock will be issued following the conversion. In addition, on July 7, 2023, the Company filed a Certificate of Retirement with the Secretary of State of the State of Delaware effecting the retirement of the shares of Class B common stock that were issued but no longer outstanding following the Conversion. Prior to the Conversion, the rights of the holders of the Class A common stock and Class B common stock were identical, except with respect to voting, transfer and conversion. As the liquidation and dividend rights were identical, the Company’s undistributed earnings or losses were allocated on a proportionate basis among the holders of Class A and Class B common stock. As a result, the net loss per share attributed to common stockholders was, therefore, the same for both Class A and Class B common stock on an individual or combined basis.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data):
21

Table of Contents
Three Months Ended September 30,
Nine Months Ended September 30,
2023202220232022
Numerator:
Class A
Class B
Class AClass BClass AClass BClass AClass B
Net loss attributable to common stockholders$(15,744)$(311)$(5,865)$(6,935)$(34,406)$(13,099)(14,185)$(22,720)
Denominator for basic and diluted net loss per share:
Weighted-average shares used in computing net loss per share attributable to Class A and Class B common stockholders – basic and diluted35,953,930711,26514,659,26217,335,12925,534,0829,721,59012,009,62019,235,449
Net loss per share attributable to common stockholders – basic and diluted$(0.44)$(0.44)$(0.40)$(0.40)$(1.35)$(1.35)$(1.18)$(1.18)
Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been antidilutive. The potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented are as follows:
September 30,
20232022
RSUs5,813,510 2,238,357 
Stock options10,098,490 12,982,199 
Shares issuable pursuant to the ESPP290,427 300,785 
Total
16,202,427 15,521,341 
Note 15. Restructuring
In January 2023, the Company initiated measures to reduce headcount to pursue greater cost efficiency and align strategic initiatives. These measures were substantially completed by June 30, 2023, and the total cost was $3.6 million. During this period, approximately 1% and 4% of the Company’s workforce terminated employment, which were voluntary and involuntary terminations, respectively. As a result, the Company incurred employee termination expenses and other associated costs.

22

Table of Contents
A summary of the restructuring charges as reported on the condensed consolidated statements of operations for the three and nine months ended September 30, 2023, of which $0.7 million were related to involuntary terminations, is as follows (in thousands):
Severance and other Personnel Costs
Three Months Ended September 30, 2023Nine Months Ended
September 30, 2023
Research and development$12 $2,311 
Sales and marketing 1,025 
General and administrative 280 
Total$12 $3,616 

The following table is a summary of the charges in the severance and other personnel liabilities, included within accrued expenses and other current liabilities on the condensed consolidated balance sheets, related to the workforce reduction (in thousands):

Balance as of January 1, 2023$ 
Severance and other personnel costs$3,616 
Cash payments during the period$(3,604)
Balance as of September 30, 2023(1)
$12 
(1) The Company expects the remaining severance and termination related liabilities to be substantially paid out in cash during the fourth quarter of 2023.
Note 16. Income Taxes
The Company is subject to U.S. federal and state income taxes as a corpora