Klaviyo Inc

1. Organization and Business Description

Klaviyo, Inc. (the “Company”) is a technology company that provides a software-as-a-service (“SaaS”) platform to enable its customers to send the right messages at the right time across email, short message service (“SMS”) and push notifications, more accurately measure and predict performance, and deploy specific actions and campaigns. The Company’s reviews add-on allows for the collection of product reviews within its platform and its Customer Data Platform (“CDP”) offering gives user-friendly ways to track, transform, and cleanse data as well as run more advanced reporting and predictive analysis to drive revenue growth. The platform combines proprietary data and application layers into one solution with machine learning and artificial intelligence capabilities. The Company focused on marketing automation within eCommerce as its first application use case.

The Company generates revenue through the sale of subscriptions to its customers for the use of its platform. Subscription plans are tiered based on the number of consumer profiles stored on the Company’s platform and the number of emails and SMS messages sent.

The Company is headquartered in Boston, Massachusetts and was incorporated in the state of Delaware on September 14, 2012. The Company hasthree wholly-owned subsidiaries located in the United Kingdom, Australia, and the United States.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASUs”) of the Financial Accounting Standards Board (“FASB”).

Unaudited Interim Condensed Consolidated Financial Statements

The accompanying Condensed Consolidated Balance Sheets as of June 30, 2024 and December 31, 2023, the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income and the Condensed Consolidated Statements of Changes in Redeemable Common Stock and Stockholders’ Equity (Deficit) for the three and six months ended June 30, 2024 and 2023, and the Condensed Consolidated Statements of Cash Flow for the six months ended June 30, 2024 and 2023, and the related notes to such interim condensed consolidated financial statements, are unaudited.

These unaudited condensed consolidated financial statements are presented in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Certain information and note disclosures normally included in the consolidated financial statements prepared in accordance with GAAP have been omitted. The condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024. In the opinion of management, the interim condensed consolidated financial statements reflect all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the Company’s financial position for the periods presented. The results for the interim periods presented are not necessarily indicative of future results or results for the full fiscal year or for any other period.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant items subject to such estimates and assumptions include, but are not limited to, the allowance for doubtful accounts, determination of revenue recognition under ASC 606, estimated benefit period of deferred contract acquisition costs, estimated life of prepaid marketing expense, and historical valuation of common stock and stock-based compensation, including fair value of warrants.

The Company evaluates estimates based on historical and anticipated results, trends, and various other assumptions. The Company assesses these estimates on a regular basis; however, actual results could differ from these estimates.

Significant Accounting Policies

Our significant accounting policies are detailed in “Note 2. Summary of Significant Accounting Policies” of the audited annual consolidated financial statements for the year ended December 31, 2023 included in the Company’s Annual Report on Form 10-K, as filed with the SEC on February 29, 2024. There have been no material changes to our significant accounting policies with the exception of the below:

Stock-Based Compensation

The Company recognizes stock-based compensation on awards granted under stock compensation plans, which are described in more detail in Note 11. Stock-Based Compensation.

The Company measures stock-based compensation awards, including stock options and restricted stock units (“RSUs”), based on the estimated fair value of the awards on the date of grant. Stock-based compensation expense is recorded for awards issued to employees and non-employees at fair value with a corresponding increase in additional paid-in capital. For awards with service conditions only, the Company recognizes compensation expense on a straight-line basis over the requisite service period of the award. Forfeitures are recognized when they occur.

RSUs granted under the Company’s 2015 Stock Incentive Plan (the “2015 Plan”) are subject to both service-based and performance-based vesting conditions, whereby the performance condition is satisfied upon occurrence of a liquidity event. Upon the effectiveness of the Company’s registration statement on Form S-1 filed with the SEC in connection with its initial public offering (“IPO”) in September 2023, the performance vesting condition was satisfied and cumulative compensation cost was recognized using the accelerated attribution method. Compensation costs continue to be recognized under this method as the RSUs vest over the remaining service period. The fair value of each RSU grant is calculated based on the estimated fair value of the Company’s common stock on the date of grant, or, if modified, the date of modification.

RSUs granted under the Company’s 2023 Stock Option and Incentive Plan (the “2023 Plan”) are for shares of Series A common stock and are subject to service-based vesting conditions only. Compensation costs related to these awards are recognized using the straight-line method over the service period of the award. The fair value of each RSU grant is calculated based on the fair value of the Company’s Series A common stock on the date of grant, or, if modified, the date of modification.

Rights granted to employees to purchase shares of Series A common stock under the 2023 Employee Stock Purchase Plan (the “ESPP”) are subject to service-based vesting conditions only. Compensation costs related to the ESPP are recognized using the straight-line method over the service period of the award. The fair value of the estimated shares of Series A common stock to be purchased is computed as the sum of (a)15% purchase discount off the grant date quoted trading price of the Company’s Series A common stock and (b) the fair value of the look-back feature of the Company’s Series A common stock on the grant date which consists of a call option on 85% of a share of Series A common stock and a put option on 15% of a share of Series A common stock.

Shopify Collaboration Agreement

On July 28, 2022, the Company entered into a collaboration agreement with Shopify Inc. and certain of its affiliates (collectively, “Shopify”) to form a strategic relationship for the purposes of creating greater interoperability between the Klaviyo and Shopify platforms and forming a strategic product, distribution, and marketing relationship. Shopify became a related party upon execution of this agreement.

The Company determined that Shopify is a vendor and not a customer, as the collaboration agreement is a services contract under which the Company is receiving marketing services from Shopify in exchange for payments under the revenue sharing agreement. The revenue sharing agreement is a mechanism for Shopify to be compensated for the customer acquisition and marketing services Shopify is providing to the Company. Shopify is not a reseller or distributor of our platform, nor does Shopify provide any services on the Company’s behalf. Fees paid under the revenue share agreement are recognized as a component of selling and marketing expense in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income. During the three and six months ended June 30, 2024, the Company incurred$6.6 million and $13.0 million, respectively, related to fees paid under the revenue sharing agreement. During the three and six months ended June 30, 2023, the Company incurred $5.3 million and $10.4 million, respectively, related to fees paid under the revenue sharing agreement. As of June 30, 2024 and December 31, 2023, the Company had$2.2 million and $4.5 million in accrued expenses owed to Shopify for fees payable under the revenue sharing agreement, respectively.

During the three and six months ended June 30, 2024, the Company capitalized prepaid marketing expense of $8.1 million and $16.2 million, respectively, related to the vested warrants issued as consideration for the collaboration agreement. During the three and six months ended June 30, 2023, the Company capitalized prepaid marketing expense of $13.9 million and $27.8 million, respectively, related to the vested warrants issued as consideration for the collaboration agreement. For the three and six months ended June 30, 2024, the Company recorded marketing expense of $13.2 million and $26.4 million, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income as a component of selling and marketing expense related to the amortization of the prepaid marketing expense. For the three and six months ended June 30, 2023, the Company recorded marketing expense of$13.2 million and $26.4 million, respectively, in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income as a component of selling and marketing expense related to the amortization of the prepaid marketing expense. As of June 30, 2024 and December 31, 2023, the Company’s prepaid marketing expense was $163.6 million and $173.8 million, respectively. As of June 30, 2024, there was $268.9 million of unrecognized marketing expense related to the warrants that will be recognized over 5.08 years. Refer to Note 10. Redeemable Common Stock, Common Stock, and Stockholders’ Equity (Deficit) for further discussion of the warrants.

On June 24, 2022, the Company entered into a stock purchase agreement with Shopify. On the closing date of July 28, 2022, Shopify purchased 2,951,846 shares of common stock for $33.88 per share. The stock purchase agreement gives Shopify the right to purchase 15,743,174 additional shares of common stock for $88.93 per share (the “Investment Option”), which remained unexercised as of June 30, 2024. The common stock and Investment Option were determined to be freestanding financial instruments purchased at fair value and were accounted for separately from the collaboration agreement, revenue sharing agreement, and common stock warrant.

Recent Accounting Pronouncements

The Company has implemented all applicable accounting pronouncements that are in effect. In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires disclosure of incremental segment information on an interim and annual basis. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal periods beginning after December 15, 2024, and requires retrospective application to all prior periods presented in the financial statements. The Company is currently evaluating the impact of the guidance on the consolidated financial statements and disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-09.

There are no other new accounting pronouncements that have been issued that could have a material impact on the Company’s financial position or results of operations.

3. Revenue Recognition, Deferred Revenue, Remaining Performance Obligations, and Accounts Receivable

Disaggregation of Revenue

Revenue by geographic area, based on the location of the Company’s customers, was as follows (in thousands):

(1) Other than the United States, no other individual country accounted for 10% or more of total revenue for any of the periods presented.

(2) Asia-Pacific

(3) Europe, the Middle East and Africa

Deferred Revenue

The change in deferred revenue reflects billings during the period for which the performance obligation was not satisfied prior to the end of the period, partially offset by revenues recognized during the period. The following table summarizes the changes in the balance of deferred revenue during the periods presented (in thousands):

For thethree and six months ended June 30, 2024, revenue recognized from amounts included in deferred revenue at the beginning of the period was $38.2 million and$37.9 million, respectively. For thethree and six months ended June 30, 2023, revenue recognized from amounts included in deferred revenue at the beginning of the period was $26.1 million and$25.1 million, respectively.

Remaining Performance Obligations

Remaining performance obligations represents the amount of contracted future revenue that has not yet been recognized, including deferred revenue. As of June 30, 2024, the Company’s remaining performance obligations are $115.5 million, of which $107.6 million is expected to be recognized within the next twelve months and $7.9 million is expected to be recognized during a period greater than twelve months.

Accounts Receivable

Accounts receivable are shown net of an allowance for doubtful accounts of $1.3 million and $1.5 million as of June 30, 2024 and December 31, 2023, respectively.

4. Fair Value Measurements

The following table sets forth the Company’s financial instruments that were measured at fair value on a recurring basis at the periods indicated below, by level within the fair value hierarchy (in thousands):

As of June 30, 2024 and December 31, 2023, certain of the Company’s cash equivalents were held in money market funds. The Company’s investments in money market funds are classified within Level 1 of the fair value hierarchy as they are valued using quoted market prices in active markets.

As of June 30, 2024 and December 31, 2023, the Company’s carrying amounts of financial instruments, including cash, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate their fair values due to their short-term maturities.

5. Property and Equipment, Net

Property and equipment consist of the following (in thousands):

Depreciation and amortization expense related to property and equipment was approximately $4.2 million and $8.2 million for thethree and six months ended June 30, 2024, respectively, and $3.2 million and $6.4 million for thethree and six months ended June 30, 2023, respectively.

During the three months ended June 30, 2024 and 2023, the Company capitalized $4.8 million and $1.5 million of internal-use software development costs, respectively. Of the $4.8 million internal-use software development costs capitalized during the three months ended June 30, 2024, $1.8 million is attributable to stock-based compensation expense. During the six months ended June 30, 2024 and 2023, the Company capitalized $6.9 million and $2.8 million of internal-use software development costs, respectively. Of the $6.9 million internal-use software development costs capitalized during the six months ended June 30, 2024, $1.9 million is attributable to stock-based compensation expense. During the three and six months ended June 30, 2023, the Company didnot capitalize any stock-based compensation expense related to internal-use software development. The Company recorded amortization expense associated with its capitalized internal-use software development costs of $1.0 million and $0.4 million for the three months ended June 30, 2024 and 2023, respectively, and $1.8 million and $0.7 million for the six months ended June 30, 2024 and 2023, respectively. Amortization expense is included in cost of revenue in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

The asset retirement obligation is included in other non-current liabilities on the Condensed Consolidated Balance Sheets. Asset retirement obligation activity is as follows (in thousands):

6. Accrued Expenses

The following table presents components of accrued expenses (in thousands):

7. Commitments and Contingencies

Contractual Obligations and Commitments

The Company has material long-term non-cancelable contractual obligations outstanding with marketing vendors and various service providers. Future minimum payments under the Company’s non-cancelable purchase commitments as of June 30, 2024 and December 31, 2023, were $279.2 million and $346.2 million, respectively.

Legal Matters

From time to time, the Company may become involved in legal proceedings or be subject to claims arising in the course of its business, including but not limited to claims brought by its customers in connection with commercial disputes and litigation arising from employee and ex-employee related matters. The Company is not presently subject to any pending or threatened litigation, individually or taken together, for which it is reasonably possible to have a material effect on its consolidated financial position or results of operations.

Guarantees and Indemnification Obligations

In the ordinary course of business, the Company enters into agreements with its customers that include commercial provisions with respect to licensing, infringement, indemnification, and other common provisions. The Company does not, in the ordinary course of business, agree to indemnification obligations for the Company under its contracts with customers except for intellectual property infringement claims related to the Company’s services. Based on historical experience and information known at June 30, 2024 and December 31, 2023, the Company has not incurred any costs for guarantees or indemnities.

8. Leases

The components of lease expense are as follows (in thousands):

Supplemental balance sheet information related to the Company’s operating leases is as follows (in thousands):

Supplemental cash flow information and non-cash activity related to the Company’s leases are as follows (in thousands):

There wereno ROU assets recognized for new leases or amendments for the six months ended June 30, 2024 and 2023.

Other information related to leases is as follows:

Future undiscounted annual cash flows for the Company’s operating leases as of June 30, 2024 are as follows (in thousands):

The table above does not include options to extend lease terms that are not reasonably certain of being exercised or leases signed but not yet commenced as of June 30, 2024.

9. Income Taxes

The Company computes its provision for interim periods by applying its estimated annual effective tax rate to its anticipated net (loss) income and adjustments for discrete items in the period. The Company’s effective tax rates for the three and six months ended June 30, 2024 and 2023 were less than the U.S. federal statutory income tax rate of 21% primarily due to the valuation allowance in the U.S. The Company’s effective tax rate was (21.1)% and 5.0% for the three months ended June 30, 2024 and 2023, respectively, and the Company’s effective tax rate was (7.6)% and 6.4% for the six months ended June 30, 2024 and 2023, respectively. The current period tax expense reflects the impact of the capitalization of research and development expenditures in accordance with Internal Revenue Code (“IRC”) Section 174, partially offset by excess tax benefits related to stock-based compensation.

Deferred income taxes reflect the impact of carryforwards and temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws. The carryforwards and temporary differences give rise to a significant portion of the Company’s deferred tax assets and liabilities. The Company continues to maintain a valuation allowance against its deferred tax assets in the U.S.

The Company hasnot recognized any liabilities for uncertain tax positions or unrecognized benefits as of June 30, 2024 and December 31, 2023. The Company doesnot expect any material change in uncertain tax benefits within the next 12 months.

As of June 30, 2024, the Company has had an immaterial amount of earnings from its wholly-owned non-U.S. subsidiaries indefinitely reinvested outside the U.S. The Company does not intend to repatriate these earnings or realize the outside basis differences in its foreign subsidiaries and, accordingly, the Company hasnot provided any taxes for those amounts, given the indefinite reinvestment, and it is not practicable to estimate the amount of deferred tax liability that would be incurred.

10. Redeemable Common Stock, Common Stock, and Stockholders’ Equity (Deficit)

Redeemable Common Stock

The Company issued 64,046,223 shares of common stock at various dates in 2019, 2020, and 2021 to select investors that were subject to redemption at fair value of common stock at the investor’s option after November 6, 2029. In accordance with the SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within control of the Company require classification of the associated instrument outside of permanent equity.

As of June 30, 2023, the Company determined that the redeemable shares were probable of becoming redeemable. In accordance with ASC 480-10-S99, the Company elected to recognize changes in redemption value immediately as they occur. The per-share redemption value is equal to the fair market value of a single share of the Company’s common stock subject to a floor of the initial carrying value.

Immediately prior to the Company’s IPO in September 2023, the redeemable common stock was accreted to the IPO issuance price. Upon the IPO, the redemption right of these shares was terminated and all shares of the Company’s redeemable common stock automatically converted into shares of Series B common stock. This transaction resulted in a reclassification of redeemable common stock to stockholders’ equity, including an increase to additional paid-in capital and Accumulated Deficit to reverse accretion recorded to these accounts.

Common Stock

Immediately following the effectiveness of the registration statement relating to the Company’s IPO in September 2023, the Company filed its Amended and Restated Certificate of Incorporation, which authorized a total of 3,000,000,000 shares of Series A common stock,350,000,000 shares of Series B common stock, and 100,000,000 shares of undesignated preferred stock. All shares of common stock then outstanding were reclassified as Series B common stock. The rights of the holders of Series A common stock and Series B common stock are identical, except with respect to voting and conversion. Each share of Series A common stock is entitled toone vote per share and is not convertible into any other shares of the Company’s capital stock. Each share of Series B common stock is entitled toten votes per share and is convertible intoone share of Series A common stock at any time. Shares of the Company’s Series B common stock will also automatically convert into shares of Series A common stock upon certain transfers and other events. Upon theseventh anniversary of the Company’s IPO, all outstanding shares of Series B common stock will automatically convert into Series A common stock.

Preferred Stock

The Company has authorized 100,000,000 shares of preferred stock with a par value of $0.001 per share. As of June 30, 2024, there wereno shares of preferred stock issued or outstanding.

Common Stock Warrants

On July 28, 2022, the Company granted warrants to purchase up to 15,743,174 shares of Series B common stock in connection with the collaboration agreement and strategic partnership with Shopify as compensation for marketing services.

The following table summarizes changes to outstanding warrants during the six months ended June 30, 2024:

During the three and six months ended June 30, 2024,344,381 and 688,763 warrants vested, respectively. The Company has no vested but unexercised warrants outstanding as of June 30, 2024. During the three and six months ended June 30, 2023,590,368 and 1,180,742 warrants vested, respectively.

11. Stock-Based Compensation

Equity Incentive Plans

On September 1, 2015, the Company’s board of directors (the “Board”) adopted the 2015 Plan. The Board or, at its sole discretion, a committee of the Board, is responsible for the administration of the 2015 Plan. As of June 30, 2024, outstanding awards under the 2015 Plan include options and RSUs. Generally, 2015 Plan awards vest into shares of Series B common stock and are immediately reclassified to shares of Series A common stock based upon the employee’s conversion election made at the time of the IPO. All equity grants subsequent to the IPO are made pursuant to the 2023 Plan, which was approved by the Board effective as of September 18, 2023. The Board or, at its sole discretion, a committee of the Board, is responsible for the administration of the 2023 Plan. As of June 30, 2024, the Company’s authorized common stock includes 59,026,723 shares of Series A common stock reserved for issuance of equity awards under the 2023 Plan, of which 48,618,164 shares are available for future grants.

The 2015 Plan provides for the grant of various types of stock-based compensation awards including, but not limited to, RSUs, incentive stock options (“ISOs”), non-qualified stock options (“NSOs,” referred to collectively with ISOs as “options”) and restricted stock awards (“RSAs”) to directors, consultants, employees, and officers of the Company. ISOs may only be granted to employees, and the exercise price thereon cannot be less than the fair value of the Company’s common stock on the date of grant or less than 110% of the fair value in the case of employees holding 10% or more of the voting stock of the Company. The exercise price on NSOs must be at least equal to the fair value of the Company’s common stock on the date of grant. The Company has historically granted RSUs, ISOs, NSOs, and RSAs.

The 2023 Plan provides for the grants of various types of stock-based compensation awards including, but not limited to, RSUs, ISOs, NSOs, and RSAs. During the three and six months ended June 30, 2024 and 2023, the Company solely granted RSUs as further described below.

Restricted Stock Units

During the three and six months ended June 30, 2024, the Company granted RSUs to employees under the 2023 Plan, and during the three and six months ended June 30, 2023, the Company granted RSUs to employees under the 2015 Plan. In general, RSUs granted under the 2015 Plan vest upon the satisfaction of both a service-based vesting condition and a performance-based vesting condition. Generally, the service-based vesting condition requires the grantee to remain an eligible participant, as that term is defined in the 2015 Plan, for a period of 4 years. Generally, RSUs vest quarterly over the entire 4-year period or vest 25% after 1 year, with the remainder vesting quarterly over the following 3 years. The performance-based vesting condition was satisfied upon the occurrence of the IPO in September 2023. In general, RSUs granted after the IPO under the 2023 Plan vest upon the satisfaction of service-based vesting conditions only. These service-based vesting conditions are consistent with those under the 2015 Plan detailed above.

Employee Stock Purchase Plan

On August 24, 2023, the Board adopted the ESPP pursuant to which eligible employees may contribute up to 15% of their base compensation to purchase shares of the Company’s Series A common stock at a price equal to 85% of the lower of (1) the fair market value of a share of the Company’s Series A common stock at the beginning of the offering period and (2) the fair market value of a share of the Company’s Series A common stock on the purchase date. The ESPP provides for 12-month offering periods beginning January 1 and July 1 of each year, or the next trading date thereafter. Each offering period will consist of twosix-month purchase periods. The initial offering period began on January 2, 2024 and will end on December 31, 2024. As of June 30, 2024, the Company has 8,587,502 shares of Series A common stock available for issuance pursuant to purchase rights granted to the Company’s eligible employees under the ESPP. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2024, by the least of 6,200,000 shares of our Series A common stock,1% of the outstanding number of shares of our Series A common stock and Series B common stock on the immediately preceding December 31, or such lesser number of shares as determined by our administrator of the ESPP.

The Company recognized stock-based compensation expense related to the ESPP of $0.9 million and $1.9 million during the three and six months ended June 30, 2024, respectively. As of June 30, 2024, $1.6 million of unrecognized stock-based compensation expense related to the ESPP is expected to be recognized on a straight-line basis over the subsequent 0.5 years.

During the three and six months ended June 30, 2024, the Company issued 206,156 shares of Series A common stock under the ESPP.

Stock-Based Compensation Expense

Stock-based compensation included in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income is as follows (in thousands):

12. (Loss) Income Per Share

Basic net (loss) income per share is computed by dividing the net (loss) income by the number of weighted-average outstanding common shares. Diluted net (loss) income per share is determined by giving effect to all potential common equivalents during the reporting period, unless including them yields an antidilutive result, and is calculated using the treasury stock method. The Company considers its warrants, Investment Option, RSUs, stock options, and ESPP shares as potential common equivalents. The Company excluded these potential common equivalents from the computation of diluted earnings per share attributable to Series A and Series B common stockholders for the three and six months ended June 30, 2024 as their effect was antidilutive. The Company included dilutive potential common equivalents in the computation of diluted earnings per share attributable common stockholders for the three and six months ended June 30, 2023.

The rights, including the liquidation and dividend rights, of the holders of Series A and Series B common stock are identical, except with respect to voting and conversion. As the liquidation and dividend rights are identical, the undistributed earnings are allocated on a proportionate basis to each series of common stock and the resulting basic and diluted net (loss) income per share attributable to common stockholders are, therefore, the same for both Series A and Series B common stock on both an individual and combined basis.

The following table presents the calculation of basic and diluted net (loss) income per share for the three and six months ended June 30, 2024 and 2023 (in thousands, except share and per share data):

The following table summarizes the potential common shares excluded from the computation of diluted net income (loss) per share (in thousands):

13. Restructuring Costs

On March 15, 2023 the Company announced a restructuring plan that resulted in a reduction of approximately 8% of the Company’s full time workforce. The Company’s restructuring actions were intended to improve operational efficiencies. Restructuring costs consist primarily of employee severance and related benefits as well as stock-based compensation from the modification of terminated employee stock options. Restructuring costs included in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income is as follows (in thousands):

There wereno restructuring costs for the three months ended June 30, 2023 or unpaid restructuring costs as of December 31, 2023.