Udemy(UDMY) - 2022 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements of Udemy, Inc, including balance sheets, statements of operations, and cash flows Condensed Consolidated Balance Sheets | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $745,989 | $739,851 | | Total Liabilities | $371,043 | $350,151 | | Total Stockholders' Equity | $374,946 | $389,700 | Condensed Consolidated Statements of Operations | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Revenue | $153,112 | $126,093 | $305,335 | $250,643 | | Cost of revenue | $65,812 | $55,993 | $132,250 | $113,916 | | Gross profit | $87,300 | $70,100 | $173,085 | $136,727 | | Loss from operations | $(28,527) | $(10,974) | $(53,843) | $(27,412) | | Net loss attributable to common stockholders | $(29,380) | $(11,391) | $(55,029) | $(29,380) | | Basic and diluted net loss per share | $(0.21) | $(0.31) | $(0.39) | $(0.80) | - Revenue increased by 21% for the three months ended June 30, 2022, and by 22% for the six months ended June 30, 2022, compared to the prior year periods[18] - Net loss attributable to common stockholders increased significantly to $29.38 million for the three months ended June 30, 2022, from $11.39 million in the prior year, and to $55.03 million for the six months ended June 30, 2022, from $29.38 million in the prior year[18] Condensed Consolidated Statements of Comprehensive Loss | Metric | Three Months Ended June 30, 2022 (in thousands) | Three Months Ended June 30, 2021 (in thousands) | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(29,380) | $(11,391) | $(55,029) | $(29,380) | | Comprehensive loss | $(29,408) | $(11,391) | $(55,047) | $(29,380) | Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) | Metric | June 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Accumulated Deficit | $(513,558) | $(458,529) | | Total Stockholders' Equity | $374,946 | $389,700 | - The accumulated deficit increased to $513.6 million as of June 30, 2022, from $458.5 million as of December 31, 2021, reflecting ongoing net losses[16][24] Condensed Consolidated Statements of Cash Flows | Cash Flow Activity | Six Months Ended June 30, 2022 (in thousands) | Six Months Ended June 30, 2021 (in thousands) | | :--- | :--- | :--- | | Operating activities | $(16,435) | $(5,486) | | Investing activities | $(12,342) | $(9,791) | | Financing activities | $7,808 | $3,444 | | Net decrease in cash, cash equivalents and restricted cash | $(20,973) | $(11,833) | - Net cash used in operating activities increased to $16.4 million for the six months ended June 30, 2022, from $5.5 million in the prior year, primarily due to increased net loss and changes in operating assets and liabilities[26][234][235] - Net cash used in investing activities increased to $12.3 million, driven by strategic investments and capitalized software costs[26][236] - Net cash provided by financing activities increased to $7.8 million, mainly from stock option exercises and employee stock purchase plan proceeds[26][237] Notes to Unaudited Condensed Consolidated Financial Statements 1. Organization and description of business Udemy, Inc operates as a global marketplace platform connecting learners with expert instructors - Udemy is a global marketplace platform connecting millions of learners to skills from expert instructors[31] Initial Public Offering (IPO) Details: | Date | Shares Sold | Price per Share | Net Proceeds | | :--- | :--- | :--- | :--- | | Oct 29, 2021 | 14,500,000 | $29.00 | $397.4 million | | Nov 24, 2021 (Underwriters' Option) | 650,000 | $29.00 | $17.8 million | 2. Summary of significant accounting policies This section details the company's accounting policies, including segment reporting, use of estimates, and recently adopted accounting pronouncements - The company operates under two reportable segments: Consumer (individual learners) and Enterprise (business and government customers)[37][139] - The COVID-19 pandemic has not had a material negative impact on the business, results of operations, financial position, and liquidity to date, but future impacts remain uncertain[41] - The company adopted ASU No 2016-02, Leases (Topic 842) on January 1, 2022, recognizing $17.6 million in operating ROU assets and $20.0 million in operating lease liabilities, with no material impact on the income statement or cash flows[53][59] - Udemy is an Emerging Growth Company (EGC) and has elected to use the extended transition period for new accounting standards; it will cease to be an EGC on December 31, 2022[61][243] 3. Revenue recognition Revenue is recognized from both Consumer and Enterprise segments, with details on deferred revenue and remaining performance obligations Deferred Revenue by Segment (in thousands): | Segment | June 30, 2022 | December 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | :--- | | Enterprise | $188,642 | $148,966 | $84,241 | | Consumer | $55,010 | $61,588 | $58,135 | | Total | $243,652 | $210,554 | $142,376 | - As of June 30, 2022, remaining performance obligations totaled $414.3 million, with 70% expected to be recognized over the next twelve months[66] 4. Consolidated balance sheet components This note provides a breakdown of prepaid expenses, property and equipment, and capitalized software, including amortization schedules Expected Amortization Expense for Capitalized Software (in thousands): | Period | Amount | | :--- | :--- | | Remainder of 2022 | $6,107 | | 2023 | $10,395 | | 2024 | $6,070 | | 2025 | $945 | | Total | $23,517 | 5. Leases The company reports operating lease costs, variable lease costs, and future minimum lease payments for its real estate facilities Operating Lease Information (Six Months Ended June 30, 2022): | Metric | Amount (in thousands) | | :--- | :--- | | Operating lease costs | $3,400 | | Variable lease costs | $400 | | Cash paid for operating lease liabilities, net of incentives | $3,044 | | Weighted average remaining term | 2.5 years | | Weighted average discount rate | 3.8% | 6. Strategic investments The company made a strategic investment in a privately held online education platform technology company, increasing its total investment to $15.0 million - Total strategic investment in a privately held online education platform company reached $15.0 million as of June 30, 2022, up from $10.0 million at December 31, 2021[74][50] - The investment is classified as Level 3 within the fair value hierarchy, indicating significant unobservable inputs in its valuation[74] - No impairment losses or changes in carrying value were recognized for the strategic investment during the three and six months ended June 30, 2022[75][76] 7. Business combinations On August 24, 2021, Udemy acquired CorpU, an online learning platform, for a purchase price of $28.6 million - Acquired CorpU on August 24, 2021, for $28.6 million to deepen Udemy Business offerings[78][79] - Goodwill of $12.6 million was recorded and allocated to the Enterprise reporting segment[81][85] 8. Intangible assets, net and goodwill This note details the intangible assets acquired from the CorpU business combination, along with their estimated useful lives and amortization Intangible Assets, Net (as of June 30, 2022, in thousands): | Asset Type | Estimated Useful Lives | Intangible Assets, Net | | :--- | :--- | :--- | | Customer relationships | 6 years | $4,719 | | Vendor relationships | 3 years | $3,222 | | Developed technology | 3 years | $3,007 | | Tradename | 2 years | $516 | | Total | | $11,464 | Expected Future Amortization Expense for Intangible Assets (as of June 30, 2022, in thousands): | Period | Amount | | :--- | :--- | | Remainder of 2022 | $2,133 | | 2023 | $4,108 | | 2024 | $2,795 | | 2025 | $917 | | 2026 | $917 | | Thereafter | $594 | | Total | $11,464 | - Goodwill from the CorpU acquisition remains at $12.6 million as of June 30, 2022, with no adjustments[85] 9. Accrued expenses and other current liabilities This section details the components of accrued expenses and other current liabilities, with a focus on indirect tax reserves Accrued Expenses and Other Current Liabilities (in thousands): | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Accrued expenses | $6,495 | $7,326 | | Indirect tax reserves | $16,138 | $18,392 | | Indirect tax payables | $7,616 | $10,786 | | Other current liabilities | $3,471 | $2,833 | | Total | $33,720 | $40,140 | - As of June 30, 2022, the company estimated a probable liability of $15.9 million for instructor withholding taxes related to historical payments[92][94] 10. Commitments and contingencies The company has noncancellable purchase commitments and engages in indemnification agreements in the ordinary course of business - Noncancellable purchase commitments total approximately $18.8 million, expected to be paid through 2024[95] - Current legal proceedings and claims are not expected to have a material adverse effect on the company's financial position, results of operations, or cash flows[98] 11. Income taxes The income tax provision is based on an estimated annual effective tax rate, and a full valuation allowance is maintained against U.S. deferred tax assets Effective Tax Rate: | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30, | (1.1)% | (1.4)% | | Six Months Ended June 30, | (1.2)% | (3.7)% | - A full valuation allowance is provided against U.S. federal and state deferred tax assets due to the uncertainty of their realization[101] 12. Employee retirement plan The company maintains a 401(k) retirement savings plan for eligible employees with a matching contribution Company 401(k) Contributions (in thousands): | Period | 2022 | 2021 | | :--- | :--- | :--- | | Three Months Ended June 30, | $100 | $100 | | Six Months Ended June 30, | $400 | $300 | 13. Related party transactions The company engages in transactions with entities affiliated with its Board members, including revenue and expenses Related Party Transactions (in thousands): | Transaction Type | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue from customers | $400 | $300 | $800 | $600 | | Expenses with vendors | $300 | $200 | $500 | $300 | 14. Stockholders' equity This note details the company's stock, equity incentive plans, and Employee Stock Purchase Plan (ESPP) Common Stock Reserved for Future Issuance: | Item | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Stock options to purchase common stock | 18,553,783 | 20,342,259 | | Shares available for future issuance under: | | | | 2021 Equity Incentive Plan | 6,831,278 | 11,417,359 | | 2021 Employee Stock Purchase Plan | 2,273,246 | 2,800,000 | | Total shares of common stock reserved | 27,658,307 | 34,559,618 | - The Employee Stock Purchase Plan (ESPP) purchase price was reset on May 20, 2022, resulting in incremental compensation cost of $3.4 million to be recognized over the new offering period ending May 2024[130] Total Stock-Based Compensation Expense (in thousands): | Category | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Cost of revenue | $989 | $237 | $1,829 | $537 | | Sales and marketing | $5,007 | $1,712 | $9,144 | $3,636 | | Research and development | $3,711 | $1,052 | $7,045 | $3,142 | | General and administrative | $5,025 | $2,971 | $10,056 | $9,169 | | Total | $14,732 | $5,972 | $28,074 | $16,484 | 15. Net loss per share This section provides the calculation of basic and diluted net loss per share and lists excluded potentially dilutive securities Net Loss Per Share Attributable to Common Stockholders: | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Basic and diluted net loss per share | $(0.21) | $(0.31) | $(0.39) | $(0.80) | | Weighted-average shares used in computing net loss per share | 140,035,203 | 37,269,650 | 139,691,508 | 36,726,992 | Potentially Dilutive Securities Excluded from Diluted EPS: | Security Type | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Redeemable convertible preferred stock | — | 85,403,933 | — | 85,403,933 | | Stock options | 18,553,783 | 20,173,022 | 18,553,783 | 20,173,022 | | RSUs and restricted stock | 8,049,418 | — | 8,049,418 | — | | Contingently issuable shares under ESPP | 132,041 | — | 132,041 | — | | Total potentially dilutive securities | 26,735,242 | 105,576,955 | 26,735,242 | 105,576,955 | 16. Segment and geographic information This note provides financial information for the company's Consumer and Enterprise segments and breaks down revenue by geographic region Segment Revenue (in thousands): | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Consumer | $78,485 | $83,964 | $165,797 | $171,837 | | Enterprise | $74,627 | $42,129 | $139,538 | $78,806 | | Total Revenue | $153,112 | $126,093 | $305,335 | $250,643 | Segment Gross Profit (in thousands): | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Consumer | $42,274 | $45,051 | $89,789 | $90,474 | | Enterprise | $49,945 | $27,674 | $92,693 | $51,393 | | Total Segment Gross Profit | $92,219 | $72,725 | $182,482 | $141,867 | Revenue by Geographic Region (in thousands): | Region | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | North America | $62,863 | $49,206 | $123,451 | $97,216 | | Europe, Middle East, Africa | $46,229 | $42,115 | $93,954 | $85,616 | | Asia Pacific | $32,727 | $24,825 | $65,915 | $48,309 | | Latin America | $11,293 | $9,947 | $22,015 | $19,502 | | Total Revenue | $153,112 | $126,093 | $305,335 | $250,643 | 17. Subsequent events The company announced an option exchange program on July 11, 2022, allowing eligible service providers to exchange certain options for RSUs - An option exchange program was announced on July 11, 2022, allowing exchange of up to 7,373,532 stock options and 22,655 SARs for RSUs[144] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Udemy's financial condition and results of operations, emphasizing the shift towards the Enterprise segment Overview - Udemy's mission is to create new possibilities by connecting people and organizations to knowledge and skills[147] - The platform serves 54 million learners with access to 204,000 courses in over 75 languages across 180 countries[149] Key factors impacting our performance - Growth depends on attracting and engaging new learners and Udemy Business (UB) customers, and retaining existing relationships[153][154] - The mix of Consumer and Enterprise segments is shifting, with Enterprise revenue expected to grow faster, benefiting overall margins due to lower content costs[160] - The company is actively investing in sales and marketing, course catalog expansion, employee base, and technology development to penetrate market opportunities[162] - The COVID-19 pandemic accelerated demand for online learning, but its future impact remains uncertain[164] Components of results of operations - Consumer revenue includes individual course purchases (recognized ratably over 4 months) and subscriptions (recognized ratably over term)[167] - Enterprise revenue primarily comes from annual or multi-year subscription contracts, recognized ratably over the term[168] - Content costs are the primary component of cost of revenue, with UB and consumer subscription offerings having lower content costs as a percentage of revenue compared to individual course purchases[170][171] - Operating expenses (Sales & Marketing, R&D, G&A) are expected to increase in absolute dollars due to investments in growth but generally decrease as a percentage of revenue over the long term[173][174][175][177] Results of operations Revenue Performance (in thousands, except percentages): | Segment | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Consumer | $78,485 | $83,964 | $(5,479) | (7)% | | Enterprise | $74,627 | $42,129 | $32,498 | 77% | | Total Revenue | $153,112 | $126,093 | $27,019 | 21% | | Segment | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Consumer | $165,797 | $171,837 | $(6,040) | (4)% | | Enterprise | $139,538 | $78,806 | $60,732 | 77% | | Total Revenue | $305,335 | $250,643 | $54,692 | 22% | - Enterprise revenue growth (77% for both three and six months) was the primary driver of overall revenue increase, offsetting a decrease in Consumer revenue[184][186][187][189] Gross Margin Performance: | Period | June 30, 2022 | June 30, 2021 | | :--- | :--- | :--- | | Three Months Ended June 30, | 57% | 56% | | Six Months Ended June 30, | 57% | 55% | - Gross margin improved due to a shift in revenue mix towards the Enterprise segment, which has comparatively lower content costs[193][196] - Operating expenses increased significantly across sales and marketing (34% for Q2, 30% for H1), research and development (62% for Q2, 54% for H1), and general and administrative (52% for Q2, 51% for H1) due to headcount growth, increased stock-based compensation, and public company costs[198][199][200][201][202][203] Certain key business metrics and non-GAAP financial metrics Key Business Metrics (in thousands, except percentages): | Metric | June 30, 2022 | June 30, 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Monthly average buyers (3 months) | 1,290 | 1,316 | (2)% | | Monthly average buyers (6 months) | 1,337 | 1,364 | (2)% | | Udemy Business customers | 12,514 | 8,669 | 44% | | Udemy Business annual recurring revenue | $316,107 | $181,870 | 74% | | Udemy Business net dollar retention rate | 118% | 121% | (2)% | - Udemy Business (UB) customers grew 44% year-over-year to 12,514, and UB Annual Recurring Revenue (ARR) increased 74% to $316.1 million[213][215] - Monthly average buyers decreased by 2% for both the three and six months ended June 30, 2022[211] Adjusted EBITDA Reconciliation (in thousands, except percentages): | Metric | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net loss | $(29,380) | $(11,391) | $(55,029) | $(29,380) | | Adjusted EBITDA | $(8,562) | $(1,615) | $(15,569) | $(4,471) | | Adjusted EBITDA margin | (6)% | (1)% | (5)% | (2)% | - Adjusted EBITDA decreased by $6.9 million for the three months and $11.1 million for the six months ended June 30, 2022, primarily due to increased operating expenses[226][227] Liquidity and capital resources Cash, Cash Equivalents and Restricted Cash (in thousands): | Date | Amount | | :--- | :--- | | June 30, 2022 | $515,795 | | December 31, 2021 | $536,768 | - The company believes existing cash and expected cash flows will be sufficient for at least the next 12 months[228] Net Cash Provided by (Used in) Activities (in thousands): | Activity | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Operating activities | $(16,435) | $(5,486) | | Investing activities | $(12,342) | $(9,791) | | Financing activities | $7,808 | $3,444 | | Net decrease | $(20,973) | $(11,833) | Critical accounting policies and estimates - No material changes to critical accounting policies and estimates compared to the Annual Report on Form 10-K[241] Recent accounting pronouncements - Information regarding recently issued accounting pronouncements is provided in Note 2 to the condensed consolidated financial statements[242] JOBS Act transition period - The company is an Emerging Growth Company (EGC) and uses the extended transition period for new accounting standards, but will cease to be an EGC on December 31, 2022[243] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section assesses the company's exposure to market risks, concluding that hypothetical changes would not materially impact financial statements - Hypothetical 10% changes in interest rates would not materially impact financial statements[244] - No hedging arrangements are in place for foreign currency risk, and a hypothetical 10% change in exchange rates would not have a material impact on income or expense[245] - Credit risk on accounts receivable is mitigated by a large, diverse customer base, with no single customer accounting for more than 10% of total accounts receivable or revenue[246] Item 4. Controls and Procedures Management evaluated the effectiveness of disclosure controls and procedures as of June 30, 2022, concluding they were effective - Disclosure controls and procedures were deemed effective as of June 30, 2022[247] - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2022[248] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings, which management believes will not have a material adverse effect on financial condition - A putative class action complaint (Williams v Udemy, Inc) was filed on August 23, 2021, alleging violations of California's unfair competition and false advertising statutes related to pricing practices[253] - The outcome of current litigation is not expected to have a material adverse effect on the company's business, operating results, or financial condition[252][254] Item 1A. Risk Factors This section details numerous risks that could materially and adversely affect Udemy's business, financial condition, and results of operations Risks related to our Business and operations Key business risks include a history of losses, intense competition, reliance on instructors, and the uncertain impact of the COVID-19 pandemic - The company has a history of losses, with net losses of $55.0 million for the six months ended June 30, 2022, and an accumulated deficit of $513.6 million, and may not achieve profitability[257] - Success depends on attracting and retaining new learners, instructors, and Udemy Business (UB) customers, and expanding existing relationships[263][267] - The platform relies on a limited number of instructors for a significant portion of popular content and revenue; loss of these relationships could adversely affect the business[265] - The company operates in a highly competitive and rapidly evolving online learning market with limited barriers to entry[268] - The COVID-19 pandemic's long-term impact on online learning demand and the company's operations remains uncertain[274][275] Risks related to technology, privacy, and cybersecurity This section highlights risks from evolving privacy laws, potential cybersecurity attacks, and reliance on third-party cloud infrastructure - Compliance with evolving global privacy and data protection laws (e.g., GDPR, CCPA, CPRA, PIPL) imposes significant burdens and costs, with potential for substantial fines for non-compliance[321][322][326] - Cybersecurity attacks or other security breaches could interrupt service, harm reputation, and lead to significant liability, despite protective measures[329][332] - The business relies significantly on Amazon Web Services for platform services; any disruption or interference could negatively impact operations[337] - Dependence on third-party payment processors and mobile networks exposes the company to risks of service disruption, increased fees, and compliance challenges[339][340][341][342] Risks related to our intellectual property Risks include challenges in protecting intellectual property rights, potential litigation, and complexities of using open-source software - Inability to adequately obtain, maintain, protect, and enforce intellectual property and proprietary information could adversely affect the business[346] - Intellectual property litigation, including claims related to content on the platform, could result in significant costs, divert management attention, and harm reputation[353] - Use of third-party open-source software components carries risks, as non-compliance with licenses could restrict platform provision or require proprietary software disclosure[354][355] Risks related to financial reporting, taxation, and operations as a public company This section addresses risks associated with public company status, internal controls, tax liabilities, and currency fluctuations - As an Emerging Growth Company (EGC), the company benefits from reduced reporting requirements but will cease to be an EGC on December 31, 2022, leading to increased compliance burdens[357][359] - Failure to maintain effective disclosure controls and internal control over financial reporting could impair financial statement accuracy and compliance, adversely affecting investor confidence[361][363] - Unanticipated changes in effective tax rates, additional tax liabilities (including indirect taxes), and limitations on net operating loss (NOL) carryforwards could harm future results[367][371][377] - Fluctuations in currency exchange rates and the effects of historically high inflation could adversely impact reported financial results and operating costs[380][381] Risks related to ownership of our common stock This section outlines risks for common stock owners, including price volatility, future dilution, and significant control by insiders - The trading price of common stock may be volatile due to various factors, potentially leading to loss of investment[383][384] - Future sales of common stock, including by directors and executive officers, could depress the market price and cause dilution[385][388] - The company does not expect to pay dividends in the foreseeable future, requiring stockholders to rely on stock price appreciation for gains[390] - Directors, executive officers, and principal stockholders beneficially own approximately 57% of outstanding common stock, allowing them to exert significant control over stockholder-approved matters[391] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section confirms no unregistered sales of equity securities and details the use of proceeds from the company's Initial Public Offering (IPO) - No unregistered sales of equity securities occurred[399] - The IPO in November 2021 generated $408.4 million in net proceeds, with no material change in the planned use of funds[400][401] Item 3. Defaults Upon Senior Securities This item is not applicable to the company for the reporting period - Not applicable[402] Item 4. Mine Safety Disclosures This item is not applicable to the company for the reporting period - Not applicable[403] Item 5. Other Information This item is not applicable to the company for the reporting period - Not applicable[404] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q - Includes certifications from the Principal Executive Officer and Principal Financial Officer (Exhibits 31.1, 31.2, 32.1, 32.2) as required by SEC rules[407]