• LegalZoom Reports Third Quarter 2021 Results

    Source: Nasdaq GlobeNewswire / 10 Nov 2021 15:00:01   America/Chicago

    GLENDALE, Calif., Nov. 10, 2021 (GLOBE NEWSWIRE) -- LegalZoom.com, Inc. (NASDAQ: LZ), today announced results for its third quarter ended September 30, 2021, including the following highlights:

    • Revenue was $147.9 million, up 12% year-over-year.
      • Transaction revenue was $66.9 million, up 5% year-over-year driven by business formations of 106,000, down 9% year-over-year and a 16% improvement in average order value.
      • Subscription revenue was $73.3 million, up 24% year-over-year. We had 1,264,000  subscription units as of September 30, 2021, with 49,000 net units added in the quarter.
      • Partner revenue was $7.7 million, down 8% year-over-year.
    • Gross margin was 68% for the quarter, up from 67% in the third quarter of 2020 as the revenue mix shifted toward subscription revenue.
    • Net loss was $39.7 million compared to a net income of $9.4 million in the third quarter of 2020.
    • Non-GAAP net income was $2.6 million compared to a Non-GAAP net income of $12.4 million in the third quarter of 2020.
    • Adjusted EBITDA was $15.1 million, or 10% of revenue, compared to $27.4 million, or 21% of revenue, in the third quarter of 2020.
    • Cash and cash equivalents were $310.7 million as of September 30, 2021. On July 2, 2021 we raised $666.9 million net of underwriting discounts and commissions from our IPO and private placement and repaid in full $521.6 million of our 2018 Term Loan.
    • Cash flows provided by operating activities decreased from $32.7 million in the three months ended September 30, 2020 to $19.5 million in the three months ended September 30, 2021. Cash flows provided by operating activities decreased from $82.1 million in the nine months ended September 30, 2020 to $60.2 million in the nine months ended September 30, 2021.
    • Free cash flow was $17.0 million for the three months ended September 30, 2021 compared to $29.4 million for the three months ended September 30, 2020. Free cash flow was $51.7 million for the nine months ended September 30, 2021 compared to $74.3 million for the nine months ended September 30, 2020.
    • Basic and diluted net loss per share was $(0.20) and diluted Non-GAAP net income per share attributable to common stockholders was $0.01 for the third quarter of 2021.

    “We’re pleased by the results in the quarter with revenue coming in above the top end of our guidance range.” said Dan Wernikoff, LegalZoom’s Chief Executive Officer. “Our transition to subscription continues to outperform as we aggressively build out an ecosystem of products and services to help our customers stay compliant after forming their business.”

    Noel Watson, the Company’s Chief Financial Officer added, “We are committed to making the right strategic investments to capitalize on the large market opportunities that exist within the legal and compliance vertical. We are patient operators and will continue to make decisions aligned to our long-term, growth-oriented mindset.”

    Key Business Metrics and Non-GAAP Financial Measures

    (unaudited, in thousands except AOV, ARPU and percentages)

     Three Months Ended % Growth Nine Months Ended % Growth
     September 30, (Decline) September 30, (Decline)
     2021 2020 YOY 2021 2020 YOY
    Revenue$147,879   $131,595  12 % $432,943   $348,397  24 %
    Business formations106   117  (9)% 351   290  21 %
    Transaction units229   254  (10)% 765   696  10 %
    Average order value (AOV)$291   $251  16 % $263   $227  16 %
    Subscription units1,264   1,043  21 % 1,264   1,043  21 %
    Average revenue per subscription unit (ARPU)$231   $221  5 % $231   $221  5 %
    Net (loss) income$(39,675)  $9,412  (522)% $(87,893)  $475  (18,604)%
    Adjusted EBITDA$15,121   $27,431  (45)% $40,687   $61,064  (33)%
    Net (loss) income margin(27)% 7% (475)% (20)% —% (14,990)%
    Adjusted EBITDA margin10 % 21% (51)% 9 % 18% (46)%
    Net cash provided by operating activities$19,460   $32,749  (41)% $60,156   $82,069  (27)%
    Free cash flow$16,964   $29,421  (42)% $51,656   $74,250  (30)%
                

    Financial Guidance and Outlook
    Our guidance for the fourth quarter ending December 31, 2021 is as follows:

    • Revenue is expected to be in the range of $142 million to $146 million.

    Our guidance for the full year ending December 31, 2021 is as follows:

    • Revenue is expected to be in the range of $575 million to $579 million.
    • Adjusted EBITDA is expected to be in the range of $45 million to $47 million.

    Quarterly revenue growth rates in 2021 are impacted by the effect COVID-19 had on business formations in 2020. Adjusted EBITDA guidance reflects near-term opportunities to invest in our business, including our brand, channel testing and product, in order to drive long-term growth.

    Webcast and Conference Call Information
    A webcast and conference call to discuss third quarter 2021 results is scheduled for today, November 10, 2021, at 4:30 p.m. Eastern time/1:30 p.m. Pacific time. Those interested in participating in the conference call are invited to dial 1-877-312-1878 (domestic); 1-470-495-9528 (international), Conference ID—2761586. A live webcast of the conference call will be available online at: https://investors.legalzoom.com/news-events/events-presentations. A replay of the webcast will remain available on the website for 90 days.

    Forward-Looking Statements
    Statements in this press release that are not statements of historical fact are forward-looking statements made pursuant to the safe-harbor provisions of the Securities Exchange Act of 1934 and the Securities Act of 1933. These statements include statements regarding our guidance for fourth quarter and full year 2021 revenue, Adjusted EBITDA, and related disclosures. Forward-looking statements in some cases can be identified by the use of words such as “may,” “was,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “believe,” “could,” “would,” “project,” “predict,” “continue,” “plan,” “propose” or other similar words or expressions. Forward-looking statements are made only as of the date of this press release and are based on our current intent, beliefs, plans and expectations. They involve risks and uncertainties that could cause actual future results, performance, or developments to differ materially from historical results or those described in or implied by such forward-looking statements.

    Factors that might cause or contribute to such differences include, but are not limited to, the risk that our recent growth may not be indicative of our future growth; our ability to sustain our revenue growth rate to main profitability in the future; our anticipation of increasing expenses in the future; our ability to attract and retain customers; our ability to continue to innovate and provide a platform that is useful to our customers; our dependence on business formations; the dependence of our subscription services on our transaction products; our dependence on our subscribers renewing their subscriptions with us; our ability to drive additional purchases and cross-sell to paying customers; the competitive legal solutions market; our dependence on top talent, including our senior management and other key personnel; risks and costs associated with complex and evolving laws and regulations; and our ability to remediate material weaknesses in our internal control over financial reporting that we have previously identified. Refer to the “Risk Factors” section titled “Risk Factors” included in our final prospectus, dated June 29, 2021, filed with the Securities and Exchange Commission, or SEC, in accordance with Rule 424(b) of the Securities Act on June 30, 2021, or the Prospectus, in connection with our IPO. Our business involves significant risks. You should carefully consider the risks and uncertainties described in our Prospectus, and subsequent filings with the SEC. The risks and uncertainties described in our Prospectus are not the only ones we face. Additional risk and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. The realization of any of these risks and uncertainties could have a material adverse effect on our reputation, business, financial condition, results of operations, growth and future prospects as well as our ability to accomplish our strategic objectives. In that event, the market price of our common stock could decline and you could lose part or all of your investment. In addition, please note that any forward-looking statements contained herein are based on assumptions that we believe to be reasonable as of the date of this press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

    About Non-GAAP Financial Measures
    This press release includes non-GAAP financial measures including Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net income, diluted Non-GAAP net income per share attributable to common stockholders, Non-GAAP net income margin and Free cash flow. To supplement our unaudited interim condensed consolidated financial statements, which are prepared and presented in accordance with U.S. generally accepted accounting principles, or GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important measures used by our management for financial and operational decision-making. We are presenting these non-GAAP measures to assist investors in seeing our financial performance using a management view and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

    We define Adjusted EBITDA as net (loss) income adjusted to exclude interest expense, net, provision for (benefit from) income taxes, depreciation and amortization, other expense (income), net, non-cash stock-based compensation, loss on debt extinguishment, losses from impairments of long-lived and other assets, impairments of available-for-sale debt securities, restructuring expenses, legal expenses, acquisition related expenses, IPO-related costs and other transaction-related expense and certain other non-recurring expenses, net of related income tax impacts. Our Adjusted EBITDA financial measure differs from GAAP in that it excludes certain items of income and expense. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of revenue. We define net (loss) income margin as net (loss) income as a percentage of revenue based on our unaudited condensed consolidated financial statements.

    Adjusted EBITDA is one of the primary performance measures used by our management and our board of directors to understand and evaluate our financial performance and operating trends, including period-to-period comparisons, prepare and approve our annual budget, develop short- and long-term operational plans and determine appropriate compensation plans for our employees. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team and board of directors. In assessing our performance, we exclude certain expenses that we believe are not comparable period over period. Adjusted EBITDA should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of Adjusted EBITDA rather than net (loss) income, which is the nearest GAAP equivalent of Adjusted EBITDA, and it may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure. Some of these limitations include that the non-GAAP financial measure:

    • does not reflect interest expense, or the cash requirements necessary to service interest or principal payments, which reduces cash available to us;
    • does not reflect provision for income taxes that may result in payments that reduce cash available to us;
    • excludes depreciation and amortization and, although these are non-cash expenses, the assets being depreciated may be replaced in the future;
    • does not reflect foreign currency exchange or other gains or losses, which are included in other income, net;
    • excludes stock-based compensation expense, which has been, and will continue to be, a significant recurring expense for our business and an important part of our compensation strategy;
    • excludes losses from impairments of goodwill, long-lived and other assets and available-for-sale debt securities;
    • excludes legal expenses, which reduce cash available to us
    • excludes acquisition related expenses, which reduce cash available to us;
    • excludes restructuring expenses, which reduce cash available to us;
    • excludes IPO-related costs and other transaction related expenses that are not considered representative of our underlying performance, which reduce cash available to us;
    • excludes debt extinguishment charges that represents accelerated amortization of debt issuance costs related to the early extinguishment of our long-term debt. These adjustments are not expected to recur and do not reflect expected ongoing operating results; and
    • does not reflect certain other non-recurring expenses that are not considered representative of our underlying performance, which reduce cash available to us.

    We define Non-GAAP net income as net (loss) income adjusted to exclude amortization of acquired intangible assets from our business combinations, non-cash stock-based compensation expense, loss on debt extinguishment, losses from impairments of long-lived and other assets, impairments of available-for-sale debt securities, acquisition related expenses, restructuring expenses, legal expenses, acquisition related expenses, IPO-related costs and other transaction-related expenses and certain other non-recurring expenses, net of related income tax impacts. Our Non-GAAP net income financial measure differs from GAAP in that it excludes certain items of income and expense. We define Net (loss) income margin as net (loss) income as a percentage of revenue. We define Non-GAAP net income margin as Non-GAAP net income as a percentage of revenue. We believe non-GAAP net income is an operating performance measure which provides investors and analysts with useful supplemental information about the financial performance of our business.

    Free cash flow is a liquidity measure used by management in evaluating the cash generated by our operations after purchases of property and equipment including capitalized internal-use software. We consider Free cash flow to be an important metric because it provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business and strengthening our balance sheet. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. The usefulness of Free cash flow as an analytical tool has limitations because it excludes certain items, which are settled in cash, does not represent residual cash flow available for discretionary expenses, does not reflect our future contractual commitments, and may be calculated differently by other companies in our industry. Accordingly, it should not be considered in isolation of or as a substitute for analysis of other GAAP financial measures, such as net cash provided by operating activities.

    We do not provide a reconciliation for non-GAAP estimates on a forward-looking basis (including the information under “Financial Guidance and Outlook” above) where we are unable to provide a meaningful calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various items that would impact the most directly comparable forward-looking GAAP financial measure, that have not yet occurred, are out of the Company’s control and/or cannot be reasonably predicted. Forward-looking non-GAAP financial measures provided without the most directly comparable GAAP financial measures may vary materially from the corresponding GAAP financial measures.

    The tables in this press release contain more details on the GAAP financial measures that are most directly comparable to non-GAAP financial measures and the related reconciliations between these financial measures.

    LegalZoom
    LegalZoom is a leading online platform for legal and compliance solutions in the United States that is on a mission to democratize law. LegalZoom operates across all 50 states and over 3,000 counties in the United States and has more than 20 years of experience navigating complex regulations and simplifying the legal and compliance process for its customers. Driven by its core value that every business deserves the full protection of the legal system and a simple way to stay compliant with it, LegalZoom helps its customers form and protect their businesses, their ideas and families. In 2020, 10% of all new limited liability companies and 5% of all new corporations in the United States were formed through LegalZoom, enabling small business owners to apply their energy and passion to their businesses instead of the legal and regulatory complexity required to operate them. In addition to business formations, LegalZoom offers ongoing compliance and tax advice, trademark and copyright filings and estate planning documents to protect small businesses and the families that create them. For more information, please visit www.legalzoom.com.

    Contacts
    Danny Vivier, Head of Investor Relations
    investor@legalzoom.com

    Bryan Curran, Head of PR, Communications and Social Media
    bcurran@legalzoom.com


    LegalZoom.com, Inc.
    Unaudited Condensed Consolidated Balance Sheets
    (In thousands, except par values)

     September 30,
    2021    		 December 31,
    2020
    Assets   
    Current assets:   
    Cash and cash equivalents$310,704   $114,470  
    Accounts receivable, net11,595   8,555  
    Prepaid expenses and other current assets16,338   10,536  
    Total current assets338,637   133,561  
    Property and equipment, net47,112   51,374  
    Goodwill11,392   11,404  
    Intangible assets, net438   815  
    Deferred income taxes26,362   22,807  
    Restricted cash equivalent—   25,000  
    Available-for-sale debt securities1,123   1,050  
    Other assets9,408   6,053  
    Total assets$434,472   $252,064  
    Liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)   
    Current liabilities:   
    Accounts payable$43,196   $28,734  
    Accrued expenses and other current liabilities42,958   41,028  
    Deferred revenue152,314   127,142  
    Current portion of long-term debt—   3,029  
    Total current liabilities238,468   199,933  
    Long-term debt, net of current portion—   512,362  
    Deferred revenue1,697   2,937  
    Other liabilities3,263   16,558  
    Total liabilities243,428   731,790  
    Commitments and contingencies   
    Series A redeemable convertible preferred stock, $0.001 par value; 30,512 shares authorized at December 31, 2020; 23,081 shares issued and outstanding at December 31, 2020—   70,906  
    Stockholders’ equity (deficit):   
    Preferred stock, $0.001 par value; 100,000 shares authorized at September 30, 2021, none issued or outstanding at September 30, 2021—   —  
    Common stock, $0.001 par value; 1,000,000 and 264,720 shares authorized; 197,048 and 125,037 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively197   126  
    Additional paid-in capital919,712   102,417  
    Accumulated deficit(727,241)  (639,348) 
    Accumulated other comprehensive loss(1,624)  (13,827) 
    Total stockholders’ equity (deficit)191,044   (550,632) 
    Total liabilities, redeemable convertible preferred stock and stockholders’ equity (deficit)$434,472   $252,064  
              


    LegalZoom.com, Inc.
    Unaudited Condensed Consolidated Statements of Operations
    (In thousands, except per share amounts)

     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
     2021 2020 2021 2020
    Revenue$147,879    $131,595    $432,943    $348,397   
    Cost of revenue47,267    43,841    141,086    114,712   
    Gross profit100,612    87,754    291,857    233,685   
    Operating expenses:       
    Sales and marketing72,572    46,833    209,364    130,487   
    Technology and development26,865    10,911    65,790    31,619   
    General and administrative28,192    10,424    75,202    35,697   
    Impairment of long-lived and other assets493    —    872    555   
    Loss on sale of business—    —    —    1,764   
    Total operating expenses128,122    68,168    351,228    200,122   
    (Loss) income from operations(27,510)  19,586    (59,371)  33,563   
    Interest expense, net(9,957)  (8,658)  (27,923)  (26,785) 
    Other (expense) income, net(368)  1,610    300    149   
    Loss on debt extinguishment(7,748)  —    (7,748)  —   
    Impairment of available-for-sale debt securities of $4,912, net of $94 loss recognized in other comprehensive loss—    —    —    (4,818) 
    (Loss) income before income taxes(45,583)  12,538    (94,742)  2,109   
    (Benefit from) provision for income taxes(5,908)  3,126    (6,849)  1,634   
    Net (loss) income$(39,675)  $9,412    $(87,893)  $475   
    Net (loss) income per share attributable to common stockholders – basic:$(0.20)  $0.06    $(0.59)  $—   
    Net (loss) income per share attributable to common stockholders – diluted:$(0.20)  $0.05    $(0.59)  $—   
    Weighted-average shares used to compute net (loss) income per share attributable to common stockholder – basic:196,351    124,846    149,207    124,647   
    Weighted-average shares used to compute net (loss) income per share attributable to common stockholder – diluted:196,351    127,238    149,207    127,339   
                    


    LegalZoom.com, Inc.
    Unaudited Condensed Consolidated Statements of Cash Flows
    (In thousands)

     Nine Months Ended
    September 30,
     2021 2020
    Cash flows from operating activities   
    Net (loss) income$(87,893)  $475  
    Adjustments to reconcile net (loss) income to net cash provided by operating activities:   
    Depreciation and amortization11,604   14,162  
    Amortization of debt issuance costs1,335   1,943  
    Amortization of prior hedge effectiveness3,095   2,226  
    Stock-based compensation86,725   9,890  
    Impairment of long-lived assets872   555  
    Impairment of available-for-sale debt securities—   4,818  
    Loss on debt extinguishment7,955   —  
    Discontinuance of interest rate swaps and write-off of prior hedge effectiveness8,688   —  
    Loss on sale of business—   1,764  
    Deferred income taxes(7,218)  (141) 
    Change in fair value of financial guarantee(150)  (1,100) 
    Change in fair value of derivative instruments392   169  
    Change in fair value of other equity security(1,031)  —  
    Unrealized foreign exchange loss1,002   1,039  
    Other4   11  
    Changes in operating assets and liabilities, net of effects of disposal of business:   
    Accounts receivable(3,040)  (2,997) 
    Prepaid expenses and other current assets(5,562)  374  
    Other assets(2,283)  1,102  
    Accounts payable14,635   11,354  
    Accrued expenses and other liabilities7,416   4,431  
    Income tax payable(368)  17  
    Deferred revenue23,978   31,977  
    Net cash provided by operating activities60,156   82,069  
    Cash flows from investing activities   
    Purchase of property and equipment(8,500)  (7,819) 
    Payment upon extinguishment of interest rate swaps(3,283)  —  
    Sale of business, net of cash sold—   (1,194) 
    Net cash used in investing activities(11,783)  (9,013) 
    Cash flows from financing activities   
    Repayment of capital lease obligations(24)  (24) 
    Payment of debt issuance costs(767)  —  
    Repayment of 2018 Term Loan(524,300)  (4,012) 
    Proceeds from 2018 Revolving Facility—   40,000  
    Repayment of 2018 Revolving Facility—   (40,000) 
    Repayment of hybrid debt(1,332)  (757) 
    Payment upon extinguishment of hybrid debt(9,774)  —  
    Payment of contingent consideration(1,049)  —  
    Payment of special dividends(115)  (239) 
    Proceeds from issuance of common stock in initial public offering, net of underwriting discounts and commissions581,833   —  
    Proceeds from private placement, net of underwriting discounts and commissions85,050   —  
    Payment of stock issuance costs(5,634)  —  
    Repurchases of common stock for tax withholding obligations(1,462)  (3,459) 
    Proceeds from exercise of stock options, net of cash paid for employee tax withholding412   113  
    Net cash provided by (used in) financing activities122,838   (8,378) 
    Effect of exchange rate changes on cash, cash equivalents and restricted cash equivalent23   (89) 
    Net increase in cash, cash equivalents and restricted cash equivalent171,234   64,589  
    Cash, cash equivalents and restricted cash equivalent, at beginning of the period139,470   74,180  
    Cash, cash equivalents and restricted cash equivalent, at end of the period$310,704   $138,769  
              


    Adjusted EBITDA and Adjusted EBITDA Margin
    The following table presents a reconciliation of net (loss) income, the most directly comparable GAAP measure, to Adjusted EBITDA for each of the periods indicated (unaudited):

     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
     2021 2020 2021 2020
      
     (in thousands)
    Reconciliation of Net (loss) income to Adjusted EBITDA       
    Net (loss) income$(39,675)  $9,412   $(87,893)  $475  
    Interest expense, net9,957   8,658   27,923   26,785  
    (Benefit from) provision for income taxes(5,908)  3,126   (6,849)  1,634  
    Depreciation and amortization3,775   4,415   11,604   14,162  
    Other expense (income), net368   (1,610)  (300)  (149) 
    Stock-based compensation38,141   2,712   86,725   9,890  
    Loss on debt extinguishment7,748   —   7,748   —  
    Impairment of long-lived and other assets493   —   872   555  
    Impairment of available-for-sale debt securities—   —   —   4,818  
    Restructuring expenses—   155   —   567  
    Legal expenses(1)—   525   —   525  
    Acquisition related expenses—   38   —   38  
    IPO-related costs and other transaction related expenses(2)217   —   852   —  
    Certain other non-recurring expenses(3)5   —   5   1,764  
    Adjusted EBITDA$15,121   $27,431   $40,687   $61,064  
    Net (loss) income margin(27 %) 7 % (20 %) 0.1 %
    Adjusted EBITDA margin10 % 21 % 9 % 18 %

    ___________
    (1)   Legal expenses include costs accrued or paid for potential litigation settlements, and are net of insurance recoveries, if any.
    (2)   IPO-related costs and other transaction related expenses include certain non-recurring expenses, which occurred in connection with our IPO.
    (3)   In 2020, we incurred a loss on sale from the disposal of Beaumont, our conveyancing business in the U.K., of $1.8 million.


    Non-GAAP Net Income, Non-GAAP Net Income Margin and diluted Non-GAAP Net Income Per Share
    The following table presents a reconciliation of net loss, the most directly comparable GAAP measure, to Non-GAAP net income for each of the periods indicated (unaudited):

     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
     2021 2020 2021 2020
      
     (in thousands)
    Reconciliation of Net (loss) income to Non-GAAP Net income        
    Net (loss) income$(39,675)  $9,412   $(87,893)  $475  
    Amortization of acquired intangible assets52   473   377   2,458  
    Stock-based compensation38,141   2,712   86,725   9,890  
    Loss on debt extinguishment7,748   —   7,748   —  
    Impairment of long-lived and other assets493   —   872   555  
    Impairment of available-for-sale debt securities—   —   —   4,818  
    Acquisition related expenses—   38   —   38  
    Restructuring expenses—   155   —   567  
    IPO-related costs and other transaction related expenses217   —   852   —  
    Legal expenses—   525   —   525  
    Certain other non-recurring expenses5   —   5   1,764  
    Income tax effects(1)(4,399)  (883)  (7,944)  (2,828) 
    Non-GAAP net income$2,582   $12,432   $742   $18,262  
    Net (loss) income margin(27)% 7 % (20)% — %
    Non-GAAP net income margin2 % 9 % — % 5 %
    Net (loss) income per share attributable to common stockholders – basic :$(0.20)  $0.06   $(0.59)  $—  
    Net (loss) income per share attributable to common stockholders – diluted:$(0.20)  $0.05   $(0.59)  $—  
    Non-GAAP net income per share-basic and diluted$0.01   0.07   —   0.11  
    Weighted-average shares used to compute net (loss) income per share attributable to common stockholder – basic:196,351   124,846   149,207   124,647  
    Weighted-average shares used to compute net (loss) income per share attributable to common stockholder – diluted:196,351   127,238   149,207   127,339  
    Weighted-average shares used to compute diluted Non-GAAP net income per share attributable to common stockholders207,368   127,238   156,283   127,339  

    ___________
    (1)     Income tax effects consist primarily of the tax impact of the non-GAAP pre-tax adjustments and the excess tax benefits on stock-based compensation.


    The following table shows the computation of basic and diluted Non-GAAP net income per share attributable to common stockholders (in thousands, except per share amounts):

     Three Months Ended
    September 30,    		 Nine Months Ended
    September 30,
     2021 2020 2021 2020
      
     (in thousands)
    Reconciliation of numerator for Non-GAAP net income to Non-GAAP net income per share attributable to common stockholders:       
    Non-GAAP net income$2,582  $12,432   $742  $18,262  
    Less: amounts attributable to redeemable convertible preferred stock—  (3,356)  —  (4,935) 
    Non-GAAP net income attributable to common stockholders—basic2,582  9,076   742  13,327  
    Add: undistributed earnings reallocated to common stockholders—  46   —  76  
    Non-GAAP net income attributable to common stockholders—diluted$2,582  $9,122   $742  $13,403  
    Reconciliation of denominator for net (loss) income per share attributable to common stockholders to Non-GAAP net income per share attributable to common stockholders:       
    Weighted-average shares used to compute Net (loss) income per share attributable to common stockholder – basic:196,351  124,846   149,207  124,647  
    Effect of potentially dilutive securities:       
    Stock options9,115  2,306   5,749  2,565  
    Restricted stock unit1,891  86   1,316  127  
    Employee stock purchase plan11  —   11  —  
    Weighted-average common stock used in computing Non-GAAP net income per share attributable to common stockholders—diluted207,368  127,238   156,283  127,339  
    Non-GAAP net income per share attributable to common stockholders – basic and diluted:$0.01  $0.07   $—  $0.11  
                      


    Free Cash Flow

    The following table presents a reconciliation of net cash provided by operating activities, the most directly comparable GAAP measure, to Free cash flow (unaudited):

     Nine Months Ended September 30,
     2021 2020
      
     (in thousands)
    Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow   
    Net cash provided by operating activities$60,156   $82,069  
    Purchase of property and equipment(8,500)  (7,819) 
    Free cash flow$51,656   $74,250  

     


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