Zevia PBC

Previous wording

We are a growth beverage company that develops, markets, sells, and distributes great tasting, zero sugar beverages made with simple, plant-based ingredients. We are a Delaware public benefit corporation and have been designated as a “Certified B Corporation,” and are focused on addressing the global health challenges resulting from excess sugar consumption by offering a broad portfolio of zero sugar, zero calorie, naturally sweetened beverages. All Zevia® beverages are Non-GMO Project verified, gluten-free, Kosher, vegan and zero sodium and include a variety of flavors across Soda, Energy Drinks, Organic Tea, and Kids drinks. Our products are distributed and sold principally across the U.S. and Canada through a diverse network of major retailers in the food, drug, warehouse club, mass, natural and e-commerce channels and in grocery and natural product stores and specialty outlets. We believe that consumers increasingly select beverage products based on taste, ingredients and fit with today’s consumer preferences, which has benefited the Zevia® brand and resulted in over 2.0 billion cans of Zevia sold to date.

Current wording

We are a growth beverage company that develops, markets, sells, and distributes great tasting, zero sugar beverages made with simple, plant-based ingredients. We are a Delaware public benefit corporation and have been designated as a “Certified B Corporation,” and are focused on addressing the global health challenges resulting from excess sugar consumption by offering a broad portfolio of zero sugar, zero calorie, naturally sweetened beverages. All Zevia® beverages are Non-GMO Project verified, gluten-free, Kosher, vegan and zero sodium and include a variety of flavors across Soda, Energy Drinks, Organic Tea, and Kids drinks. Our products are distributed and sold principally across the U.S. and Canada through a diverse network of major retailers in the food, drug, warehouse club, mass, natural, convenience and e-commerce channels and in grocery and natural product stores and specialty outlets. The Company’s products are manufactured and maintained at third-party beverage production and warehousing facilities located in both the U.S. and Canada. We believe that consumers increasingly select beverage products based on taste, ingredients and fit with today’s consumer preferences, which has benefited the Zevia® brand and resulted in over 2.0 billion cans of Zevia sold to date.

Previous wording

Key Events During the First Quarter of 2024

Current wording

Key Events During the First Half of 2024

Previous wording

We experienced delays in the recovery of SKU level distribution at certain retailers during the first quarter of 2024 which was primarily due to a lag effect from supply chain challenges in 2023 that resulted in reduced volumes. We expect it may take time to recover this lost shelf space, however we are focused on winning back distribution in our key accounts and concurrently evolving our route-to-market.

Current wording

We have experienced delays in the recovery of SKU level distribution at certain retailers during the first half of 2024 which was primarily due to a lag effect from supply chain challenges in 2023 as well as from increased competition within the category, that resulted in reduced volumes. We are focused on building distribution in our key accounts and concurrently evolving our route-to-market, however we expect it will take time to regain placement and SKU level distribution in an increasingly competitive environment.

Previous wording

We are launching a regional approach to direct store delivery “DSD” as well as gaining distribution in a limited number of regional convenience chains in the U.S. and Canada. We expect these initiatives to have an immaterial impact to net sales in the near term, however, we expect to obtain certain insights from these routes to position us for potential additional opportunities for future growth and expansion.

Current wording

We launched a regional approach to direct store delivery “DSD” as well as gained distribution in a limited number of regional convenience chains in the U.S. and Canada. We are still in the early stages, however we expect these initiatives to have an immaterial impact to net sales in the near term. We expect to obtain certain insights from these routes to position us for potential additional opportunities for future growth and expansion.

Previous wording

In parallel with these evolutions in route-to-market, and with the completion of our brand refresh marketing efforts, we began ramping up investments in consumer marketing outside of the store and we expect that to continue throughout 2024.

Current wording

In parallel with these evolutions in route-to-market, we began ramping up investments in consumer marketing outside of the store and increased our marketing spend in the second quarter, investing in brand awareness and building the “marketing flywheel”, as well as increased our spend on promotional activity at key accounts during the quarter in order to drive velocity, which we expect to continue throughout 2024.

Previous wording

Beginning in the first quarter of 2024, our contract manufacturers are responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods. We believe this change will allow us to leverage the purchasing power of our contract manufacturers and further diversify, as well as provide us with the flexibility to scale the business. We also onboarded a new global transportation management company in the first quarter of 2024 to support the optimization of the procurement of freight and associated freight management activities to improve our cost management. We believe both of these changes will better optimize our supply chain in order to help support future growth and drive increasing returns as we scale the business.

Current wording

Beginning in the first half of 2024, our contract manufacturers are responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods. We believe this change will allow us to leverage the purchasing power of our contract manufacturers and further diversify, as well as provide us with the flexibility to scale the business. We also onboarded a new global transportation management company to support the optimization of the procurement of freight and associated freight management activities to improve our cost management. We believe both of these changes will better optimize our supply chain in order to help support future growth and drive increasing returns as we scale the business.

Previous wording

In the second quarter of 2024, we began executing a multi-year, broad-based Productivity Initiative designed to realign our cost structure in order to accelerate our route-to-market evolution and build the Zevia Brand. This Productivity Initiative is designed to focus on our most critical initiatives including driving growth and innovation in our highest margin carbonated better for you beverages, re-align our cost structure to support greater investments in the Zevia Brand and improve operational excellence while simplifying processes across the organization.

Current wording

In the second quarter of 2024, we began executing a multi-year, broad-based Productivity Initiative designed to realign our cost structure in order to accelerate our route-to-market evolution and continue to build the Zevia Brand. This Productivity Initiative is designed to focus on our most critical initiatives including driving growth and innovation in our highest margin carbonated better for you beverages, re-align our cost structure to support greater investments in the Zevia Brand and improve operational excellence while simplifying processes across the organization.

Previous wording

Costs associated with the Productivity Initiative, including restructuring costs, are expected to be between $0.5 million and $0.8 million during the three months ended June 2024, which primarily includes employee related severance costs.

Current wording

Costs associated with the Productivity Initiative, including restructuring costs, were $0.9 million during the three and six months ended June 2024, which primarily includes employee related severance costs as well as costs related to exiting two of our third-party warehouse and distribution facilities.

Previous wording

The Productivity Initiative is expected to result in estimated annualized benefits in the range of $8.0 million to $12.0 million, and we expect to begin seeing these benefits in the third quarter of 2024. These benefits include reduction in costs of goods sold and reduction in operating expenses.

Current wording

The Productivity Initiative is expected to result in estimated annualized benefits in the range of $8.0 million to $12.0 million, and we began seeing these benefits in the second quarter of 2024. These benefits include reduction in costs of goods sold and reduction in operating expenses.

Previous wording

Additional Restructuring Charges or cash expenditures may be incurred as the Company makes further progress on this Productivity Initiative.

Current wording

Additional restructuring charges or cash expenditures may be incurred as the Company makes further progress on this Productivity Initiative, which we expect to be substantially completed by the end of 2024.

Previous wording

In addition to the supply chain challenges discussed above, a number of external factors, including the global economy, global health emergencies, inflationary pressures, relatively high interest rates, volatility in the financial markets, recession fears, financial institution instability, any potential shutdown of the U.S. government, global hostilities, including the military conflicts in Ukraine and Israel and the surrounding areas, and political tensions between the U.S. and China have impacted and may continue to impact transportation, labor, and commodity costs. During the three months ended March 31, 2024, we continued to experience slightly higher operating costs, including logistics, manufacturing and labor costs, which we expect to continue through 2024. These pressures have and are expected to continue to impact our margins and operating results. We, along with our competitors, have increased pricing on a number of products in response to widespread inflation. These pricing increases may result in future reductions in volume.

Current wording

A number of external factors, including the global economy, global health emergencies, inflationary pressures, relatively high interest rates, volatility in the financial markets, recession fears, financial institution instability, any potential shutdown of the U.S. government, global hostilities, including the military conflicts in Ukraine and Israel and the surrounding areas, and political tensions between the U.S. and China have impacted and may continue to impact transportation, labor, and commodity costs. These pressures have and are expected to continue to impact our margins and operating results. We, along with our competitors, have increased pricing on a number of products in response to widespread inflation. These pricing increases may result in future reductions in volume.

Previous wording

The following summarizes the components of our results of operations for the three months ended March 31, 2024 and 2023, respectively.

Current wording

The following summarizes the components of our results of operations for the three and six months ended June 30, 2024 and 2023, respectively.

Previous wording

We expect both new distribution and increased organic sales from existing outlets and pricing strategies to contribute to our future growth; however, sales levels in any given period may continue to be impacted by seasonality, increased level of competition, customers efforts to manage inventory, and our ability to fulfill customer demands. During the first quarter of 2024, we experienced delays in the recovery of SKU level distribution at certain retailers which was primarily due to a lag effect from supply chain challenges in 2023 that resulted in reduced volumes. We are also increasing our spend on promotional activity at key accounts during the quarter in order to drive velocity. We expect it may take time to recover this lost shelf space, however we are focused on winning back distribution in our key accounts and concurrently evolving our route-to-market.

Current wording

We expect our future growth to be driven by a combination of new distribution, increased organic sales from existing outlets, package and product innovation, and continued pricing strength; however, sales levels in any given period may continue to be impacted by seasonality, increased level of competition, customers efforts to manage inventory, and our ability to fulfill customer demands. During the first half of 2024, we experienced delays in the recovery of SKU level distribution at certain retailers which was primarily due to a lag effect from supply chain challenges in 2023 as well as increased competition within the category, that resulted in reduced volumes. We are also increasing our spend on promotional activity at key accounts in order to drive velocity. We are focused on building distribution in our key accounts and concurrently evolving our route-to-market, however we expect it will take time to regain placement and SKU level distribution in an increasingly competitive environment.

Previous wording

Historically, cost of goods sold consists of all costs to acquire and manufacture our products, including the cost of ingredients, raw materials, packaging, in-bound freight and logistics and third-party production fees. Beginning in 2024, our contract manufacturers are responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods, therefore, cost of goods sold for the three months ended March 31, 2024 consist of all costs to purchase our product from our contract manufacturers as a finished good.

Current wording

Historically, cost of goods sold consists of all costs to acquire and manufacture our products, including the cost of ingredients, raw materials, packaging, in-bound freight and logistics and third-party production fees. Beginning in the first quarter of 2024, our contract manufacturers are responsible for the procurement of raw materials to produce our products, which are then sold to us as finished goods, therefore, cost of goods sold for the three and six months ended June 30, 2024 consist of all costs to purchase our product from our contract manufacturers as a finished good.

Previous wording

We expect our cost of goods sold to increase in absolute dollars as our volume increases.

Current wording

We expect our cost of goods sold to increase in absolute dollars as our volume increases, however, decrease over time as a percentage of net sales as a result of the Productivity Initiative, our continued focus on cost and efficiency improvements, and as we realize the benefit of scale.

Previous wording

Gross profit consists of our net sales less costs of goods sold. Our gross profit and gross margin are affected by the mix of distribution channels of our net sales in each period, as well as the level of discounts and promotions offered during the period. Gross profit may be favorably impacted by leveraging our asset-light business model and through increased distribution direct to retailers, the increased scale of our business and our continued focus on cost and efficiency improvements.

Current wording

Gross profit consists of our net sales less costs of goods sold. Our gross profit and gross margin are affected by the mix of distribution channels of our net sales in each period, as well as the level of discounts and promotions offered during the period. Gross profit may be favorably impacted by leveraging our asset-light business model and through increased distribution direct to retailers, the increased scale of our business, our Productivity Initiative, and our continued focus on cost and efficiency improvements.

Previous wording

Our selling and marketing expenses are expected to increase in absolute dollars in the long-term, both as a result of the increased warehousing and distribution costs resulting from increased net sales and as a result of increased focus on marketing programs/spend, which we expect to be partially offset by our continued focus on cost improvements in our supply chain. Our selling and marketing expenses are expected to slightly decrease from the prior year in the short-term, largely due to a decrease in logistics expenses compared to the prior year as a result of the historical supply chain logistics challenges encountered during 2023 as well as cost savings initiatives implemented. These cost savings are expected to be partially offset by increased marketing expenses as a result of increased focus on marketing programs.

Current wording

Our selling expenses are expected to increase in absolute dollars in the long-term as a result of increased warehousing and distribution costs resulting from increased net sales, but decrease as a percentage of sales over time as a result of our Productivity Initiative and our continued focus on cost improvements in our supply chain. Our selling expenses are expected to decrease from the prior year in the short-term, largely due to a decrease in logistics expenses compared to the prior year as a result of the historical supply chain logistics challenges encountered during 2023 as well as a result of the Productivity Initiative.

Previous wording

Net sales were $38.8 million for the three months ended March 31, 2024 as compared to $43.3 million for the three months ended March 31, 2023. Equivalized cases sold were 3.0 million during the three months ended March 31, 2024 as compared to 3.3 million equivalized cases sold during the three months ended March 31, 2023. The decrease in net sales was primarily driven by a decrease in the number of equivalized cases sold, resulting in $4.9 million lower net sales primarily caused by delay in the recovery of SKU level distribution at retail discussed in the Key Events During the First Quarter of 2024 section above, partially offset by pricing increases of $0.4 million. We define an equivalized case as a 288 fluid ounce case.

Current wording

Net sales were $40.4 million for the three months ended June 30, 2024 as compared to $42.2 million for the three months ended June 30, 2023. Equivalized cases sold were 3.1 million during the three months ended June 30, 2024 as compared to 3.3 million equivalized cases sold during the three months ended June 30, 2023. The decrease in net sales was primarily driven by a decrease in the number of equivalized cases sold, resulting in $4.2 million lower net sales primarily caused by delay in the recovery of SKU level distribution at retail discussed above in the Key Events During the First Half of 2024 section as well as lost distribution in our club channel, partially offset by pricing increases of $2.4 million which is inclusive of greater promotional levels at retailers. We define an equivalized case as a 288 fluid ounce case.

Previous wording

Cost of goods sold was $21.1 million for the three months ended March 31, 2024 as compared to $23.2 million for the three months ended March 31, 2023. The decrease of $2.1 million, or 9.1%, was primarily due to a 10.4% decrease in the shipment of equivalized cases, resulting in $2.3 million lower costs of goods sold and favorable product mix of $0.6 million, partially offset by unfavorable unit costs of $1.0 million primarily driven by investments in pack-specific enhanced visuals to improve on-shelf visibility.

Current wording

Cost of goods sold was $23.5 million for the three months ended June 30, 2024 as compared to $22.5 million for the three months ended June 30, 2023. The increase of $0.9 million, or 4.1%, was largely due to higher inventory write-downs primarily related to club specific excess inventory driven by lost distribution of $1.4 million as well as unfavorable unit costs of $1.0 million primarily driven by investments in enhanced package-specific designs to improve on-shelf visibility and drive brand awareness, partially offset by a 5.9% decrease in the shipment of equivalized cases, resulting in $1.3 million lower costs of goods sold and favorable product mix of $0.2 million.

Previous wording

Equity-based compensation expense was $1.5 million for the three months ended March 31, 2024 as compared to $2.4 million for the three months ended March 31, 2023, primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards. The decrease of $0.9 million was primarily driven by a $1.0 million decrease related to the accelerated method of expense recognition on certain equity awards issued in connection with the Company’s IPO in 2021, partially offset by equity-based compensation expense related to new equity awards granted.

Current wording

Equity-based compensation expenses were $1.4 million for the three months ended June 30, 2024 as compared to $2.4 million for the three months ended June 30, 2023, primarily related to outstanding equity-based awards being recognized over the remaining service periods of the awards. The decrease of $0.9 million was primarily driven by a $1.0 million decrease related to the accelerated method of expense recognition on certain equity awards issued in connection with the Company’s IPO in 2021, partially offset by equity-based compensation expenses related to new equity awards granted.

Previous wording

Gross profit was $17.7 million for the three months ended March 31, 2024 as compared to $20.1 million for the three months ended March 31, 2023. The decrease in gross profit of $2.4 million, or 11.9%, was primarily driven by lower volumes, and unfavorable unit costs, partially offset by favorable product mix.

Current wording

Gross profit was $34.7 million for the six months ended June 30, 2024 as compared to $39.8 million for the six months ended June 30, 2023. The decrease in gross profit of $5.1 million, or 12.9%, was primarily driven by lower volumes, unfavorable unit costs, and higher inventory write-downs, partially offset by favorable product mix.

Previous wording

Gross margin for the three months ended March 31, 2024 decreased to 45.7% from 46.4% in the prior-year period. The decrease was primarily due to unfavorable unit costs and increased spend on promotional activity at key accounts, partially offset by favorable product mix.

Current wording

Gross margin for the six months ended June 30, 2024 declined to 43.8% from 46.5% in the prior-year period. The decrease was primarily due to unfavorable unit costs, higher inventory write-downs, and increased spend on promotional activity at key accounts, partially offset by favorable product mix.

Previous wording

Selling and marketing expenses were $15.1 million for the three months ended March 31, 2024 as compared to $11.9 million for the three months ended March 31, 2023. The increase of $3.2 million, or 26.5%, was primarily due to $1.0 million of higher freight and freight transfer costs related to increased levels of inventory production, and $1.7 million of higher warehousing costs resulting from increased level of storage costs driven by higher levels of inventory. Marketing expenses increased $0.5 million as a result of investments made to drive brand awareness as discussed in the Key Events During the First Quarter of 2024 section above.

Current wording

Selling and marketing expenses were $28.7 million for the six months ended June 30, 2024 as compared to $28.0 million for the six months ended June 30, 2023. The increase of $0.7 million, or 2.4%, was primarily due to an increase in marketing expenses of $1.9 million as a result of investments made to drive brand awareness, higher warehousing costs of $1.5 million resulting from increased level of storage costs driven by higher levels of inventory in the first quarter of 2024, and higher sales and broker and sales commissions of $0.4 million. These increases were partially offset by $1.5 million of lower freight transfers costs as a result of the impact of supply chain logistics challenges in the prior year, a decrease in repackaging costs of $1.5 million due to the automation of certain processes, and a decrease in freight out costs of $0.1 million due to lower volumes of $0.5 million partially offset by higher rates of $0.4 million.

Previous wording

As of March 31, 2024, we had $28.7 million in cash and cash equivalents. We believe that our cash and cash equivalents as of March 31, 2024, together with our operating activities and available borrowings under the Secured Revolving Line of Credit (as defined below), will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments beyond the next 12 months.

Current wording

As of June 30, 2024, we had $28.9 million in cash and cash equivalents. We believe that our cash and cash equivalents as of June 30, 2024, together with our operating activities and available borrowings under the Secured Revolving Line of Credit (as defined below), will provide adequate liquidity for ongoing operations, planned capital expenditures and other investments beyond the next 12 months.

Previous wording

Our cash flows (used in) provided by operating activities are primarily influenced by working capital requirements.

Current wording

Our cash flows used in or provided by operating activities are primarily influenced by working capital requirements.

Previous wording

Net cash used in operating activities of $3.2 million for the three months ended March 31, 2024 was primarily driven by a net loss of $7.2 million, partially offset by non-cash expenses of $2.0 million primarily related to equity-based compensation and depreciation and amortization expense, and a net increase in cash related to changes in operating assets and liabilities of $2.0 million. Changes in cash flows related to operating assets and liabilities were primarily due to a decrease in inventories of $3.9 million as a result of managing inventory levels, a decrease in prepaid expenses and other assets of $1.1 million largely due to a decrease in prepaid deposits related to the sale of raw materials, and an increase of $0.1 million in accounts payable, accrued expenses and other current liabilities due to timing of purchases and increased production of inventory, partially offset by an increase in accounts receivable of $2.9 million due to timing of sales.

Current wording

Net cash used in operating activities of $2.9 million for the six months ended June 30, 2024 was primarily driven by a net loss of $14.2 million, partially offset by non-cash expenses of $4.0 million primarily related to equity-based compensation and depreciation and amortization expense and a net increase in cash related to changes in operating assets and liabilities of $7.3 million. Changes in cash flows related to operating assets and liabilities were primarily due to a decrease in inventories of $12.3 million due to decreased production of inventory as inventory levels are managed as well as higher inventory reserves, decreased prepaid expenses and other assets of $2.1 million largely due to a decrease in prepaid deposits related to the sale of raw materials, partially offset by a decrease in accounts payable, accrued expenses and other current liabilities of $6.6 million due to timing of purchases and decreased production of inventory, and an increase in accounts receivable of $0.2 million due to timing of payments.

Previous wording

Net cash provided by operating activities of $9.4 million for the three months ended March 31, 2023 was primarily driven by a net increase in cash related to changes in operating assets and liabilities of $9.3 million, partially offset by a net loss of $2.9 million and non-cash expenses of $3.0 million primarily related to equity-based compensation and depreciation and amortization expense. Changes in cash flows related to operating assets and liabilities were primarily due to an increase of $13.6 in accounts payable, accrued expenses and other current liabilities due to timing of purchases and increased production of inventory and a decrease in prepaid expenses and other assets of $0.5 million primarily due to amortization of prepaid insurance policies, partially offset by an increase in accounts receivable of $3.2 million due to increases in net sales, and an increase in inventories of $1.4 million due to timing of purchases.

Current wording

Net cash provided by operating activities of $1.1 million for the six months ended June 30, 2023 was primarily driven by a net increase in cash related to changes in operating assets and liabilities of $3.1 million and non-cash expenses of $5.9 million primarily related to equity-based compensation and depreciation and amortization expense, partially offset by a net loss of $7.9 million. Changes in cash flows related to operating assets and liabilities were primarily due to an increase of $18.7 million in accounts payable, accrued expenses and other current liabilities due to timing of purchases and increased production of inventory, and a decrease in prepaid expenses and other assets of $0.6 million primarily due to amortization of prepaid insurance policies, partially offset by an increase in accounts receivable of $5.9 million due to timing of invoices, and an increase in inventories of $10.0 million due to timing of purchases and build-up of inventory to support future sales.

Previous wording

Net cash used in investing activities of $33 thousand for the three months ended March 31, 2024 was primarily due to purchases of property and equipment used in ongoing operations.

Current wording

Net cash used in investing activities of $0.1 million for the six months ended June 30, 2024 was primarily due to purchases of property, equipment, and software of $0.1 million for computer equipment, marketing fixtures, and software used in ongoing operations.

Previous wording

Net cash used in investing activities of $0.9 million for the three months ended March 31, 2023 was primarily due to purchases of property, equipment, and software of $0.9 million for leasehold improvements and computer equipment and software used in ongoing operations.

Current wording

Net cash used in investing activities of $1.5 million for the six months ended June 30, 2023 was primarily due to purchases of property, equipment, and software of $1.5 million for leasehold improvements and computer equipment and software used in ongoing operations.

Previous wording

Net cash provided by financing activities of $0.0 million for the three months ended March 31, 2024 was due to proceeds from the revolving line of credit of $8 million which was repaid in the same period.

Current wording

Net cash provided by financing activities of less than $0.1 million for the six months ended June 30, 2024 was due to proceeds from the Secured Revolving Line of Credit of $8 million which was repaid in the same period.

Previous wording

Net cash provided by financing activities of $23 thousand for the three months ended March 31, 2023 was due to proceeds from the exercise of stock options.

Current wording

Net cash provided by financing activities of less than $0.1 million for the six months ended June 30, 2023 was primarily due to proceeds from the exercise of stock options.

Previous wording

We calculate Adjusted EBITDA as net loss adjusted to exclude: (1) other income (expense), net, which includes interest (income) expense, foreign currency (gains) losses, and (gains) losses on disposal of fixed assets, (2) provision (benefit) for income taxes, (3) depreciation and amortization, and (4) equity-based compensation. Also, Adjusted EBITDA may in the future be adjusted for amounts impacting net income related to the TRA liability and other infrequent and unusual transactions.

Current wording

We calculate Adjusted EBITDA as net loss adjusted to exclude: (1) other income (expense), net, which includes interest (income) expense, foreign currency (gains) losses, and (gains) losses on disposal of fixed assets, (2) provision (benefit) for income taxes, (3) depreciation and amortization, (4) equity-based compensation, and 5) restructuring expenses (for 2024, in light of our Productivity Initiative). Also, Adjusted EBITDA may in the future be adjusted for amounts impacting net income related to the TRA liability and other infrequent and unusual transactions.

Previous wording

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. Some of the limitations of Adjusted EBITDA include that (1) it does not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures, (3) it does not consider the impact of equity-based compensation expense, including the potential dilutive impact thereof, and (4) it does not reflect other non-operating expenses, including interest (income) expense, foreign currency (gains)/losses and (gains)/losses on disposal of fixed assets. In addition, our use of Adjusted EBITDA may not be comparable to similarly-titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net income (loss) and other results stated in accordance with U.S. GAAP.

Current wording

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. Some of the limitations of Adjusted EBITDA include that (1) it does not properly reflect capital commitments to be paid in the future, (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures, (3) it does not consider the impact of equity-based compensation expense, including the potential dilutive impact thereof, and (4) it does not reflect other non-operating expenses, including interest (income) expense, foreign currency (gains)/losses and (gains)/losses on disposal of fixed assets, and restructuring. In addition, our use of Adjusted EBITDA may not be comparable to similarly-titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial measures, including our net income (loss) and other results stated in accordance with U.S. GAAP.

Previous wording

Effective March 2022, the Company entered into an amendment to the lease for its corporate headquarters offices to extend the lease term through December 31, 2023 and expand the total square footage from 17,923 square feet to 20,185 square feet which commenced on May 1, 2022. In January 2023, the Company further extended the lease term through December 31, 2026.

Current wording

Effective March 2022, the Company entered into an amendment to the lease for its corporate headquarters offices to extend the lease term through December 31, 2023 and expand the total square footage from 17,923 square feet to 20,185 square feet which commenced on May 1, 2022. In January 2023, the Company entered into another amendment to the lease and further extended the lease term through December 31, 2026.

Previous wording

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We may take advantage of these exemptions until we are no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of the IPO or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if any of the following events occur: (i) we have more than $1.235 billion in annual revenue, (ii) we have more than $700.0 million in market value of our Class A common stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or (iii) we issue more than $1.0 billion of non-convertible debt securities over a three-year period.

Current wording

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” We may take advantage of these exemptions until such time we are no longer an “emerging growth company.” Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period afforded by the JOBS Act for the implementation of new or revised accounting standards. We have elected to use the extended transition period for complying with new or revised accounting standards and as a result of this election, our financial statements may not be comparable to companies that comply with public company effective dates. We may take advantage of these exemptions up until the last day of the fiscal year following the fifth anniversary of the IPO or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company if any of the following events occur: (i) we have more than $1.235 billion in annual revenue, (ii) we have more than $700.0 million in market value of our Class A common stock held by non-affiliates (and we have been a public company for at least 12 months and have filed one annual report on Form 10-K) or (iii) we issue more than $1.0 billion of non-convertible debt securities over a three-year period.