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Name | Symbol | Market | Type |
---|---|---|---|
South Mountain Merger Corporation | NASDAQ:SMMCU | NASDAQ | Trust |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 19.69 | 18.77 | 29.48 | 0 | 01:00:00 |
|
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-252698 |
|
|
PROSPECTUS SUPPLEMENT
(to Prospectus dated March 25, 2021)
|
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
83-3780685
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
1009 Lenox Drive, Suite 101
Lawrenceville, New Jersey
|
|
08648
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Title of Each Class
|
|
Trading Symbol(s)
|
|
Name of Each Exchange on Which Registered
|
Class 1 Common Stock, $0.0001 par value
|
|
BTRS
|
|
The Nasdaq Global Select Market
|
Warrants, each whole warrant exercisable for one
share of Class 1 Common Stock at an exercise price of
$11.50 per share
|
|
BTRSW
|
|
The Nasdaq Capital Market
|
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☒
|
Smaller reporting company
|
☒
|
|
|
|
Emerging growth company
|
☒
|
|
Page
Number
|
|
3
|
||
|
|
|
PART I. FINANCIAL INFORMATION
|
|
|
4
|
||
|
4
|
|
|
5
|
|
|
6
|
|
|
8
|
|
|
9
|
|
32
|
||
48
|
||
48
|
||
|
|
|
PART II. OTHER INFORMATION
|
|
|
49
|
||
49
|
||
50
|
||
50
|
||
50
|
||
50
|
||
51
|
||
|
|
|
52
|
|
• |
our financial and business performance, including the financial projections, forecasts and business metrics, and any underlying assumptions thereunder;
|
|
• |
changes in our strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, and plans;
|
|
• |
the capabilities and benefits to our customers of our technology platforms;
|
|
• |
the advantages and expected growth of our Business Payments Network;
|
|
• |
our ability to digitally transform the accounts receivable industry;
|
|
• |
our ability to scale in a cost-effective manner;
|
|
• |
developments and projections relating to our competitors and industry;
|
|
• |
the impact of health epidemics, including the COVID-19 pandemic, on our business and the actions we may take in response thereto;
|
|
• |
creating additional infrastructure to support our operations as a public company, losing emerging growth company status, and becoming a large accelerated filer effective as of
December 31, 2021;
|
|
• |
our future capital requirements and sources and uses of cash;
|
|
• |
our ability to obtain funding for our operations;
|
|
• |
our business, expansion plans, and opportunities; and
|
|
• |
the outcome of any known and unknown litigation and regulatory proceedings.
|
Item 1. |
Financial Statements
|
June 30, 2021
|
December 31, 2020
|
|||||||
ASSETS
|
(Unaudited)
|
|||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$
|
241,607
|
$
|
14,642
|
||||
Short-term investments
|
45,037
|
—
|
||||||
Customer funds
|
24,618
|
20,924
|
||||||
Accounts receivable, net
|
29,009
|
23,009
|
||||||
Prepaid expenses
|
5,072
|
2,961
|
||||||
Deferred implementation, commission, and other costs, current
|
4,706
|
4,718
|
||||||
Other current assets
|
1,032
|
4,108
|
||||||
Total current assets
|
351,081
|
70,362
|
||||||
Property and equipment, net
|
16,194
|
16,650
|
||||||
Goodwill
|
36,956
|
36,956
|
||||||
Intangible assets, net
|
8,423
|
9,534
|
||||||
Deferred implementation and commission costs, non-current
|
8,453
|
8,677
|
||||||
Other assets
|
5,068
|
5,361
|
||||||
Total assets
|
$
|
426,175
|
$
|
147,540
|
||||
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
Current liabilities:
|
||||||||
Customer funds payable
|
$
|
24,618
|
$
|
20,924
|
||||
Current portion of debt and capital lease obligations, net of deferred financing costs
|
124
|
380
|
||||||
Accounts payable
|
1,841
|
1,646
|
||||||
Accrued expenses and other
|
31,055
|
26,341
|
||||||
Deferred revenue
|
8,012
|
14,895
|
||||||
Other current liabilities
|
462
|
906
|
||||||
Total current liabilities
|
66,112
|
65,092
|
||||||
Long-term debt and capital lease obligations, net of deferred financing costs
|
28
|
43,295
|
||||||
Customer postage deposits
|
10,227
|
10,418
|
||||||
Deferred revenue, net of current portion
|
17,214
|
14,861
|
||||||
Deferred taxes
|
859
|
768
|
||||||
Other long-term liabilities
|
7,361
|
9,296
|
||||||
Total liabilities
|
101,801
|
143,730
|
||||||
Commitments and contingencies (Note 10)
|
||||||||
Stockholders' equity:
|
||||||||
Preferred stock, $0.0001 par value,10,000,000 shares authorized; no shares issued and outstanding at June 30, 2021 and December 31, 2020,
respectively
|
—
|
—
|
||||||
Class 1 common stock, $0.0001 par value, 538,000,000 shares authorized; 150,648,937 and 92,760,478 shares issued and outstanding at June 30,
2021 and December 31, 2020, respectively
|
15
|
9
|
||||||
Class 2 common stock, $0.0001 par value, 27,000,000 shares authorized; 7,251,307 and 8,196,622 shares issued and outstanding at June 30, 2021
and December 31, 2020, respectively
|
1
|
1
|
||||||
Additional paid-in capital
|
502,765
|
148,677
|
||||||
Accumulated deficit
|
(178,407
|
)
|
(144,877
|
)
|
||||
Total stockholders’ equity
|
324,374
|
3,810
|
||||||
Total liabilities and stockholders’ equity
|
$
|
426,175
|
$
|
147,540
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription, transaction, and services
|
$
|
31,589
|
$
|
25,646
|
$
|
64,708
|
$
|
50,170
|
||||||||
Reimbursable costs
|
8,643
|
8,945
|
17,460
|
18,566
|
||||||||||||
Total revenues
|
40,232
|
34,591
|
82,168
|
68,736
|
||||||||||||
Cost of revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services
|
9,360
|
7,633
|
18,613
|
15,523
|
||||||||||||
Cost of reimbursable costs
|
8,643
|
8,945
|
17,460
|
18,566
|
||||||||||||
Total cost of revenues, excluding depreciation and amortization
|
18,003
|
16,578
|
36,073
|
34,089
|
||||||||||||
Operating expenses:
|
||||||||||||||||
Research and development
|
11,270
|
8,778
|
22,263
|
18,162
|
||||||||||||
Sales and marketing
|
9,980
|
5,129
|
18,916
|
11,551
|
||||||||||||
General and administrative
|
10,478
|
4,871
|
22,928
|
10,119
|
||||||||||||
Depreciation and amortization
|
1,359
|
1,410
|
2,719
|
2,821
|
||||||||||||
Total operating expenses
|
33,087
|
20,188
|
66,826
|
42,653
|
||||||||||||
Loss from operations
|
(10,858
|
)
|
(2,175
|
)
|
(20,731
|
)
|
(8,006
|
)
|
||||||||
Other income (expense):
|
||||||||||||||||
Interest income
|
131
|
1
|
234
|
17
|
||||||||||||
Interest expense and loss on extinguishment of debt
|
(3
|
)
|
(1,102
|
)
|
(2,945
|
)
|
(2,285
|
)
|
||||||||
Change in fair value of financial instruments and other income
|
5
|
411
|
(9,985
|
)
|
392
|
|||||||||||
Total other income (expense)
|
133
|
(690
|
)
|
(12,696
|
)
|
(1,876
|
)
|
|||||||||
Loss before income taxes
|
(10,725
|
)
|
(2,865
|
)
|
(33,427
|
)
|
(9,882
|
)
|
||||||||
Provision for income taxes
|
(11
|
)
|
(37
|
)
|
(103
|
)
|
(117
|
)
|
||||||||
Net loss and comprehensive loss
|
$
|
(10,736
|
)
|
$
|
(2,902
|
)
|
$
|
(33,530
|
)
|
$
|
(9,999
|
)
|
||||
Net loss per common share, basic and diluted
|
$
|
(0.07
|
)
|
$
|
(0.03
|
)
|
$
|
(0.22
|
)
|
$
|
(0.10
|
)
|
||||
Weighted average common shares outstanding, basic and diluted
|
157,197
|
99,854
|
151,289
|
99,829
|
Three Months Ended June 30, 2021
|
||||||||||||||||||||||||||||
Class 1 Common Stock
|
Class 2 Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance, March 31, 2021
|
149,315,319
|
$
|
15
|
7,251,307
|
$
|
1
|
$
|
495,165
|
$
|
(167,671
|
)
|
$
|
327,510
|
|||||||||||||||
Issuance of common stock under stock plans
|
1,331,318
|
—
|
—
|
—
|
1,868
|
—
|
1,868
|
|||||||||||||||||||||
Shares issued for exercise of warrants
|
2,300
|
—
|
—
|
—
|
26
|
—
|
26
|
|||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
5,706
|
—
|
5,706
|
|||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(10,736
|
)
|
(10,736
|
)
|
|||||||||||||||||||
Balance, June 30, 2021
|
150,648,937
|
$
|
15
|
7,251,307
|
$
|
1
|
$
|
502,765
|
$
|
(178,407
|
)
|
$
|
324,374
|
Three Months Ended June 30, 2020
|
||||||||||||||||||||||||||||
Class 1 Common Stock
|
Class 2 Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
|
||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||
Balance, March 31, 2020
|
91,653,631
|
$
|
9
|
8,196,622
|
$
|
1
|
$
|
144,910
|
$
|
(134,947
|
)
|
$
|
9,973
|
|||||||||||||||
Issuance of common stock under stock plans
|
79,511
|
—
|
—
|
—
|
129
|
—
|
129
|
|||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
680
|
—
|
680
|
|||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
(2,902
|
)
|
(2,902
|
)
|
|||||||||||||||||||
Balance, June 30, 2020
|
91,733,142
|
$
|
9
|
8,196,622
|
$
|
1
|
$
|
145,719
|
$
|
(137,849
|
)
|
$
|
7,880
|
Six Months Ended June 30, 2021
|
||||||||||||||||||||||||||||||||||||
Redeemable Convertible
Preferred Stock
|
Class 1
Common Stock
|
Class 2
Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
(Deficit)
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance, December 31, 2020
|
68,382,882
|
$
|
159,028
|
32,574,218
|
$
|
3
|
—
|
$
|
—
|
$
|
16,301
|
$
|
(171,527
|
)
|
$
|
(155,223
|
)
|
|||||||||||||||||||
Retroactive application of reverse recapitalization (Note 3)
|
(68,382,882
|
)
|
(159,028
|
)
|
60,186,260
|
6
|
8,196,622
|
1
|
132,376
|
26,650
|
159,033
|
|||||||||||||||||||||||||
Adjusted balance, December 31, 2020
|
—
|
—
|
92,760,478
|
9
|
8,196,622
|
1
|
148,677
|
(144,877
|
)
|
3,810
|
||||||||||||||||||||||||||
Reverse recapitalization and PIPE Financing (Note 3)
|
—
|
—
|
44,522,375
|
5
|
(1,658,887
|
)
|
—
|
329,617
|
—
|
329,622
|
||||||||||||||||||||||||||
Fair value of Earnout Share liabilities (Note 13)
|
—
|
—
|
—
|
—
|
—
|
—
|
(230,995
|
)
|
—
|
(230,995
|
)
|
|||||||||||||||||||||||||
Issuance and vesting of Earnout Shares at fair value (Note 3)
|
—
|
—
|
10,204,164
|
1
|
713,572
|
—
|
237,008
|
—
|
237,009
|
|||||||||||||||||||||||||||
Issuance of common stock under stock plans
|
—
|
—
|
3,159,620
|
—
|
—
|
—
|
3,900
|
—
|
3,900
|
|||||||||||||||||||||||||||
Shares issued for exercise of warrants
|
—
|
—
|
2,300
|
—
|
—
|
—
|
26
|
—
|
26
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
14,532
|
—
|
14,532
|
|||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(33,530
|
)
|
(33,530
|
)
|
|||||||||||||||||||||||||
Balance, June 30, 2021
|
—
|
$
|
—
|
150,648,937
|
$
|
15
|
7,251,307
|
$
|
1
|
$
|
502,765
|
$
|
(178,407
|
)
|
$
|
324,374
|
Six Months Ended June 30, 2020
|
||||||||||||||||||||||||||||||||||||
Redeemable Convertible
Preferred Stock
|
Class 1
Common Stock
|
Class 2
Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Deficit
|
Total
Stockholders’
Equity
(Deficit)
|
|||||||||||||||||||||||||||||||
Shares
|
Amount
|
Shares
|
Amount
|
Shares
|
Amount
|
|||||||||||||||||||||||||||||||
Balance, December 31, 2019
|
68,382,882
|
$
|
150,356
|
31,234,610
|
$
|
3
|
—
|
$
|
—
|
$
|
11,933
|
$
|
(145,830
|
)
|
$
|
(133,894
|
)
|
|||||||||||||||||||
Retroactive application of reverse recapitalization (Note 3)
|
(68,382,882
|
)
|
(150,356
|
)
|
60,186,260
|
6
|
8,196,622
|
1
|
132,373
|
17,980
|
150,360
|
|||||||||||||||||||||||||
Adjusted balance, December 31, 2019
|
—
|
—
|
91,420,870
|
9
|
8,196,622
|
1
|
144,306
|
(127,850
|
)
|
16,466
|
||||||||||||||||||||||||||
Issuance of common stock under stock plans
|
—
|
—
|
312,272
|
—
|
—
|
—
|
252
|
—
|
252
|
|||||||||||||||||||||||||||
Stock-based compensation expense
|
—
|
—
|
—
|
—
|
—
|
—
|
1,161
|
—
|
1,161
|
|||||||||||||||||||||||||||
Net loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(9,999
|
)
|
(9,999
|
)
|
|||||||||||||||||||||||||
Balance, June 30, 2020
|
—
|
$
|
—
|
91,733,142
|
$
|
9
|
8,196,622
|
$
|
1
|
$
|
145,719
|
$
|
(137,849
|
)
|
$
|
7,880
|
Six Months Ended June 30,
|
||||||||
2021
|
2020
|
|||||||
Operating activities:
|
||||||||
Net loss
|
$
|
(33,530
|
)
|
$
|
(9,999
|
)
|
||
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
2,719
|
2,821
|
||||||
Provision for bad debts
|
65
|
20
|
||||||
Loss on extinguishment of debt and amortization of debt discount
|
2,799
|
161
|
||||||
Stock-based compensation expense
|
14,532
|
1,161
|
||||||
Change in fair value of financial instruments and other income
|
9,985
|
(406
|
)
|
|||||
Deferred income taxes
|
92
|
109
|
||||||
Changes in assets and liabilities:
|
||||||||
Accounts receivable
|
(6,064
|
)
|
(53
|
)
|
||||
Prepaid expenses
|
(2,112
|
)
|
(1,196
|
)
|
||||
Deferred implementation, commissions, and other costs
|
236
|
(380
|
)
|
|||||
Other assets (current and non-current)
|
1,475
|
184
|
||||||
Accounts payable
|
195
|
(1,160
|
)
|
|||||
Accrued expenses and other
|
4,165
|
(127
|
)
|
|||||
Deferred revenue
|
(4,530
|
)
|
1,305
|
|||||
Other liabilities (current and non-current)
|
(848
|
)
|
122
|
|||||
Net cash used in operating activities
|
(10,821
|
)
|
(7,438
|
)
|
||||
Investing activities:
|
||||||||
Purchases of short-term investments
|
(45,037
|
)
|
—
|
|||||
Purchases of property and equipment
|
(1,120
|
)
|
(1,310
|
)
|
||||
Net cash used in investing activities
|
(46,157
|
)
|
(1,310
|
)
|
||||
Financing activities:
|
||||||||
Proceeds from borrowings, net of costs
|
—
|
46,554
|
||||||
Payments on borrowings
|
(44,663
|
)
|
(31,696
|
)
|
||||
Business Combination and PIPE financing
|
349,902
|
—
|
||||||
Payments of equity issuance costs
|
(20,200
|
)
|
—
|
|||||
Debt extinguishment costs
|
(1,565
|
)
|
—
|
|||||
Payments of deferred purchase consideration
|
—
|
(524
|
)
|
|||||
Payments on capital lease obligations
|
(125
|
)
|
(134
|
)
|
||||
Proceeds from common stock issued
|
4,184
|
252
|
||||||
Taxes paid on net share issuance of stock-based compensation
|
(4,271
|
)
|
—
|
|||||
Net cash provided by financing activities
|
283,262
|
14,452
|
||||||
Net increase in cash, cash equivalents, and restricted cash
|
226,284
|
5,704
|
||||||
Cash, cash equivalents, and restricted cash, beginning of period
|
17,919
|
4,736
|
||||||
Cash, cash equivalents, and restricted cash, end of period (Note 2)
|
$
|
244,203
|
$
|
10,440
|
||||
Supplemental disclosure of cash flow information:
|
||||||||
Cash paid for interest
|
$
|
135
|
$
|
2,078
|
||||
Cash paid for income taxes
|
$
|
—
|
$
|
8
|
||||
Non-cash investing & financing activities:
|
||||||||
Reclassification of Series C preferred stock warrant liability to equity (Note 3)
|
$
|
1,433
|
$
|
—
|
||||
Net assets acquired in Business Combination and other
|
$
|
255
|
$
|
—
|
||||
Equity issuance costs in other assets and accrued expenses charged to additional paid-in-capital
|
$
|
1,888
|
$
|
—
|
||||
Issuance and vesting of Earnout Shares at fair value (Note 3)
|
$
|
237,008
|
$
|
—
|
|
• |
Within the Condensed Consolidated Balance Sheets, redeemable convertible preferred stock in mezzanine equity was converted into Class 1 and 2 common stock and classified in permanent
equity.
|
|
• |
The Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit were renamed the Condensed Consolidated Statements of Stockholders’ Equity.
|
|
• |
Within the Condensed Consolidated Statements of Stockholders’ Equity:
|
|
◦ |
Redeemable convertible preferred stock, common stock, share activity, and per share amounts were converted to Class 1 and 2 common stock at an exchange ratio of 7.2282662 shares per
share of Legacy Billtrust common stock (the "Conversion Rate").
|
|
◦ |
Preferred stock dividends and accretion of preferred stock to redemption value for the six months ended June 30, 2020 in the amount $4.3 million has been reclassified from redeemable
convertible preferred stock to accumulated deficit.
|
|
• |
Within the Condensed Consolidated Statements of Operations and Comprehensive Loss, net loss per share and the weighted average number of shares used to compute net loss per share were
adjusted based on the converted number of Class 1 and 2 common shares.
|
|
• |
Within the Notes to Financial Statements:
|
|
◦ |
In Note 6 - Loss Per Share, all per share and share amounts for the 2020 periods presented were adjusted based on (1) the converted number of
Class 1 and 2 common shares, and (2) the removal of the preferred stock dividends and accretion to redemption value.
|
|
◦ |
In Note 7 - Stockholders' Equity and Stock-Based Compensation, stock options outstanding at December 31, 2020 and the weighted average fair
value of stock options granted during the six months ended June 30, 2020 before the Business Combination have been adjusted using the Conversion Rate.
|
Six Months Ended June 30,
|
||||||||
2021
|
2020
|
|||||||
Cash and cash equivalents
|
$
|
241,607
|
$
|
7,164
|
||||
Restricted cash (1)
|
2,596
|
3,276
|
||||||
Total cash, cash equivalents, and restricted cash
|
$
|
244,203
|
$
|
10,440
|
(1)
|
Restricted cash consists of collateral for letters of credit required for leased office space. At June 30, 2021 restricted cash is included in other assets in the
Condensed Consolidated Balance Sheets. At December 31, 2020 restricted cash is included in other current assets in the Condensed Consolidated Balance Sheets. The short-term or long-term classification is determined in accordance with the
expiration of the underlying letters of credit.
|
|
i. |
Approximately $90.1 million in cash to certain Billtrust shareholders who elected to receive cash for shares of Billtrust common stock at closing of the Business Combination,
accounted for as a reverse recapitalization; and
|
|
ii. |
Approximately $1,099.0 million in South Mountain Class A and Class C common stock at closing of the Business Combination, accounted for as a reverse recapitalization, or 109,944,090
shares (including 15,175,967 shares issuable pursuant to outstanding vested and unvested options from the 2003 and 2014 Plans), converted at an exchange ratio of 7.2282662 shares per share of Legacy Billtrust common stock based on an
assumed share price of $10.00 per share.
|
|
i. |
138,728,373 shares of Class 1 common stock, including 2,375,000 shares to prior South Mountain shareholders that are subject to the vesting and forfeiture provisions based upon the
same share price targets described below in the First Earnout and Second Earnout. During the first quarter of 2021, all of these shares vested;
|
|
ii. |
6,537,735 shares of Class 2 common stock; and
|
|
iii. |
12,500,000 warrants, each exercisable for one share of Class 1 common stock at a price of $11.50 per share (the "Public Warrants", refer to Note 7 -
Stockholders' Equity and Stock-Based Compensation).
|
|
i. |
Each issued and outstanding South Mountain Class A and Class B share was converted into 1.0 share of Class 1 common stock of the Company; and
|
|
ii. |
All 6,954,500 private placement warrants of South Mountain were cancelled and are no longer outstanding.
|
Reverse
Recapitalization
|
||||
Cash - South Mountain (net of redemptions and non-contingent expenses)
|
$
|
240,670
|
||
Cash - PIPE investors
|
200,000
|
|||
Cash electing shares of Legacy Billtrust shareholders
|
(90,061
|
)
|
||
Fees to underwriters and other transaction costs
|
(20,200
|
)
|
||
Net cash received from reverse recapitalization
|
330,409
|
|||
Net assets acquired and other adjustments
|
255
|
|||
Net contributions from reverse recapitalization
|
$
|
330,664
|
Number of
Shares
|
||||
Common Stock outstanding prior to Business Combination
|
25,000,000
|
|||
South Mountain founder shares
|
5,500,000
|
|||
Redemption of South Mountain shares
|
(2,015
|
)
|
||
Common stock of South Mountain
|
30,497,985
|
|||
Shares issued from PIPE
|
20,000,000
|
|||
Legacy Billtrust shareholders' shares purchased for cash
|
(9,005,863
|
)
|
||
Recapitalization shares
|
41,492,122
|
|||
Legacy Billtrust stockholders' shares
|
103,773,986
|
|||
Total Shares
|
145,266,108
|
Earnout Shares
|
Sponsor Vesting
Shares
|
Total
|
||||||||||
Fair value on Closing Date
|
$
|
191,095
|
$
|
39,900
|
$
|
230,995
|
||||||
Fair value adjustment (1)
|
8,246
|
1,780
|
10,026
|
|||||||||
Amount paid for tax withholding
|
(4,013
|
)
|
—
|
(4,013
|
)
|
|||||||
Amount reclassified to equity
|
(195,328
|
)
|
(41,680
|
)
|
(237,008
|
)
|
||||||
Ending balance, June 30, 2021
|
$
|
—
|
$
|
—
|
$
|
—
|
(1) |
Included in change in fair value of financial instruments and other income in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
|
June 30, 2021
|
||||||||||||
Gross Carrying
Value
|
Accumulated Amortization
|
Net Carrying
Value
|
||||||||||
Customer relationships
|
$
|
16,350
|
$
|
(9,524
|
)
|
$
|
6,826
|
|||||
Non-compete agreements
|
1,430
|
(773
|
)
|
657
|
||||||||
Trademarks and trade names
|
160
|
(60
|
)
|
100
|
||||||||
Technology
|
1,540
|
(700
|
)
|
840
|
||||||||
Total
|
$
|
19,480
|
$
|
(11,057
|
)
|
$
|
8,423
|
December 31, 2020
|
||||||||||||
Gross Carrying
Value
|
Accumulated Amortization
|
Net Carrying
Value
|
||||||||||
Customer relationships
|
$
|
16,350
|
$
|
(8,698
|
)
|
$
|
7,652
|
|||||
Non-compete agreements
|
1,460
|
(660
|
)
|
800
|
||||||||
Trademarks and trade names
|
160
|
(47
|
)
|
113
|
||||||||
Technology
|
1,540
|
(571
|
)
|
969
|
||||||||
Total
|
$
|
19,510
|
$
|
(9,976
|
)
|
$
|
9,534
|
2021 (remainder)
|
$
|
714
|
||
2022
|
1,269
|
|||
2023
|
1,174
|
|||
2024
|
930
|
|||
2025
|
737
|
|||
Thereafter
|
3,599
|
|||
Total
|
$
|
8,423
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
Revenues:
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
Subscription and transaction fees
|
$
|
29,072
|
$
|
23,809
|
$
|
59,255
|
$
|
46,935
|
||||||||
Services and other
|
2,517
|
1,837
|
5,453
|
3,235
|
||||||||||||
Subscription, transaction, and services
|
$
|
31,589
|
$
|
25,646
|
$
|
64,708
|
$
|
50,170
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net loss
|
$
|
(10,736
|
)
|
$
|
(2,902
|
)
|
$
|
(33,530
|
)
|
$
|
(9,999
|
)
|
||||
Denominator:
|
||||||||||||||||
Weighted-average common shares outstanding
|
157,196,511
|
99,853,968
|
151,289,243
|
99,828,779
|
||||||||||||
Net loss per share attributable to common stockholders:
|
||||||||||||||||
Basic and diluted
|
$
|
(0.07
|
)
|
$
|
(0.03
|
)
|
$
|
(0.22
|
)
|
$
|
(0.10
|
)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
|
2021
|
2020
|
2021
|
2020
|
||||||||||||
Stock options
|
21,082,614
|
16,913,426
|
21,082,614
|
16,913,426
|
||||||||||||
Restricted stock units
|
706,471
|
—
|
706,471
|
—
|
||||||||||||
Warrants
|
12,497,700
|
12,500,000
|
12,497,700
|
12,500,000
|
||||||||||||
34,286,785
|
29,413,426
|
34,286,785
|
29,413,426
|
|
i. |
In whole and not in part;
|
|
ii. |
At a price of $0.01 per warrant;
|
|
iii. |
Upon a minimum of 30 days’ prior written notice of redemption; and
|
|
iv. |
If, and only if, the reported last sale price of the Company’s Class 1 common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on
the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders.
|
Number of
Shares
|
Weighted-
Average
Exercise Price
|
Weighted-
Average
Remaining
Contractual
Life (in Years)
|
Aggregate
Intrinsic
Value
|
|||||||||||||
Outstanding at December 31, 2020
|
16,170,738
|
$
|
2.69
|
|||||||||||||
Granted
|
8,251,638
|
16.70
|
||||||||||||||
Exercised
|
(3,046,982
|
)
|
1.39
|
|||||||||||||
Forfeited
|
(292,780
|
)
|
10.24
|
|||||||||||||
Outstanding at June 30, 2021
|
21,082,614
|
$
|
8.26
|
8.2
|
$
|
125,232
|
||||||||||
Vested and expected to vest at June 30, 2021
|
18,285,991
|
$
|
7.36
|
8.0
|
$
|
120,570
|
||||||||||
Exercisable at June 30, 2021
|
7,122,553
|
$
|
2.97
|
6.4
|
$
|
70,029
|
Number of
Shares
|
Weighted-
Average
Grant Date
Fair Value
|
|||||||
Unvested at December 31, 2020
|
—
|
$
|
—
|
|||||
Granted (1)
|
847,888
|
16.77
|
||||||
Vested
|
(134,823
|
)
|
16.58
|
|||||
Forfeited
|
(27,492
|
)
|
16.80
|
|||||
Unvested at June 30, 2021
|
685,573
|
$
|
16.80
|
(1) |
No RSU's were granted prior to the Business Combination. 836,208 of the granted shares represent the Earnout RSU's issued as part of the Business Combination (refer to Note 3 - Business Combination for further discussion).
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Cost of subscription, transaction, and services
|
$
|
405
|
$
|
57
|
$
|
848
|
$
|
88
|
||||||||
Research and development
|
1,091
|
139
|
2,314
|
237
|
||||||||||||
Sales and marketing
|
961
|
117
|
2,292
|
193
|
||||||||||||
General and administrative
|
3,249
|
367
|
9,078
|
643
|
||||||||||||
Total
|
$
|
5,706
|
$
|
680
|
$
|
14,532
|
$
|
1,161
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Risk-free interest rate
|
1.3% - 1.4
|
%
|
0.5% - 0.7
|
%
|
0.6% - 1.4
|
%
|
0.5% - 1.6
|
%
|
||||||||
Expected dividend yield
|
—
|
%
|
—
|
%
|
—
|
%
|
—
|
%
|
||||||||
Expected volatility
|
41
|
%
|
39% -44
|
%
|
41% - 42
|
%
|
39% - 44
|
%
|
||||||||
Expected life (in years)
|
5.5
|
6.9
|
5.5
|
6.9
|
||||||||||||
Weighted average grant date fair value
|
$
|
6.61
|
$
|
0.97
|
$
|
7.47
|
$
|
1.14
|
June 30,
2021
|
December 31,
2020
|
|||||||
Term Loan
|
$
|
—
|
$
|
44,663
|
||||
Unamortized debt issuance costs
|
—
|
(1,234
|
)
|
|||||
Capital lease obligations (Note 10)
|
152
|
246
|
||||||
Net carrying amounts
|
152
|
43,675
|
|
i. |
An Initial Term Loan of $45.0 million, which was drawn at closing and used to pay off previously outstanding borrowings;
|
|
ii. |
A Delayed Draw Term Loan of up to $20.0 million, which was available to draw in minimum increments through July 17, 2021; and
|
|
iii. |
A Revolving Commitment facility of $7.5 million, including a sub-limit of up to $4.0 million for issuing additional letters of credit.
|
Operating
Leases
|
Capital
Leases
|
|||||||
2021 (remainder)
|
$
|
2,333
|
$
|
91
|
||||
2022
|
4,563
|
52
|
||||||
2023
|
4,284
|
13
|
||||||
2024
|
4,138
|
1
|
||||||
2025
|
4,115
|
—
|
||||||
Thereafter
|
28,136
|
—
|
||||||
Total minimum lease payments
|
$
|
47,569
|
$
|
157
|
||||
Less: Amounts representing interest
|
(5
|
)
|
||||||
Present value of lease payments
|
152
|
|||||||
Less: Current portion
|
(124
|
)
|
||||||
Long-term portion of minimum lease payments
|
$
|
28
|
|
• |
Level 1: Observable inputs based on unadjusted quoted prices in active markets for identical assets or liabilities.
|
|
• |
Level 2: Inputs, other than Level 1 inputs, that are observable either directly or indirectly, such as quoted prices for similar assets or liabilities, quotes prices in markets that
are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
|
• |
Level 3: Unobservable inputs for which there is little or no market data, requiring the Company to develop its own estimates and assumptions
|
June 30, 2021
|
||||||||||||||||
Balance
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Assets:
|
||||||||||||||||
Short-term investments
|
45,037
|
45,037
|
—
|
—
|
||||||||||||
Total Assets
|
$
|
45,037
|
$
|
45,037
|
$
|
—
|
$
|
—
|
||||||||
Liabilities:
|
||||||||||||||||
Contingent consideration (1)
|
$
|
370
|
$
|
—
|
$
|
—
|
$
|
370
|
||||||||
Total Liabilities
|
$
|
370
|
$
|
—
|
$
|
—
|
$
|
370
|
December 31, 2020
|
||||||||||||||||
Balance
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Liabilities:
|
||||||||||||||||
Contingent consideration (1)
|
$
|
660
|
$
|
—
|
$
|
—
|
$
|
660
|
||||||||
Warrants to purchase Series C Preferred Stock (2)
|
1,172
|
—
|
—
|
1,172
|
||||||||||||
Total Liabilities
|
$
|
1,832
|
$
|
—
|
$
|
—
|
$
|
1,832
|
(1) |
The acquisition of Second Phase, LLC in April 2019 included a contingent consideration arrangement that required additional consideration to be paid to the sellers annually based
meeting certain recurring revenue growth and profitability targets (together, "the Financial Targets") during the three-year period beginning May 1, 2019. No amounts were paid during 2020 or 2021 for the first or second year as the
Financial Targets were not met. The year three amount, if any, is expected to be finalized and paid to the sellers by the end of 2022. The range of outcomes for the year three amount cannot be estimated as the amount payable is a percentage
of the growth in the Financial Targets. The fair value of the remaining contingent consideration is included in other current liabilities in the Condensed Consolidated Balance Sheets.
|
(2) |
The Company had outstanding warrants to purchase Series C stock, as described in Note 3 - Business Combination. The amount was included in
other long term liabilities in the Condensed Consolidated Balance Sheets.
|
Contingent
Consideration
|
||||
Ending balance, December 31, 2020
|
$
|
660
|
||
Fair value adjustment to contingent consideration (1)
|
(290
|
)
|
||
Ending balance, June 30, 2021
|
$
|
370
|
Warrants
|
||||
Ending balance, December 31, 2020
|
$
|
1,172
|
||
Change in fair value (2)
|
256
|
|||
Exercise of Series C warrants (3)
|
(1,428
|
)
|
||
Ending balance, June 30, 2021
|
$
|
—
|
(1) |
Subsequent to the acquisition of Second Phase, LLC, the changes in the fair value of the contingent consideration were primarily due to management's estimates and the achievements of
the Financial Targets during each period. Increases or decreases in the inputs would have resulted in higher or lower fair value adjustments. This amount was recognized in change in fair value of financial instruments and other income in
the Condensed Consolidated Statements of Operations and Comprehensive Loss.
|
(2) |
Included in change in fair value of financial instruments and other expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
|
(3) |
As part of the Business Combination on January 12, 2021 (refer to Note 3 - Business Combination), the warrants were exercised and
subsequently converted to common stock.
|
June 30,
2021
|
December 31,
2020
|
|||||||
Assets held under capital leases
|
$
|
3,784
|
$
|
3,752
|
||||
Computer, print and mail equipment
|
8,777
|
7,998
|
||||||
Furniture and fixtures
|
4,073
|
4,073
|
||||||
Leasehold improvements
|
12,133
|
12,120
|
||||||
Software
|
1,437
|
1,437
|
||||||
Vehicles
|
115
|
115
|
||||||
Internal software development
|
2,959
|
2,644
|
||||||
Construction in progress
|
90
|
79
|
||||||
Total property and equipment
|
33,368
|
32,218
|
||||||
Less: accumulated depreciation and amortization
|
(17,174
|
)
|
(15,568
|
)
|
||||
Total property and equipment, net
|
$
|
16,194
|
$
|
16,650
|
June 30,
2021
|
December 31,
2020
|
|||||||
Accrued expenses
|
$
|
14,152
|
$
|
11,749
|
||||
Accrued compensation
|
10,059
|
9,513
|
||||||
Accrued professional services and other
|
5,707
|
3,569
|
||||||
Accrued business combination expense
|
1,137
|
1,510
|
||||||
Total accrued expenses and other
|
$
|
31,055
|
$
|
26,341
|
|
• |
Print – The Print segment is primarily responsible for printing customer invoices and optimizing the amount of time and costs associated with
billing customers via mail.
|
|
• |
Software and Payments – The Software and Payments segment primarily operates using software and cloud based services, optimizes electronic
invoice presentment, electronic payments, credit decisioning, collections automation, cash application and deduction management, and e-commerce of B2B customers.
|
Three Months Ended June 30, 2021
|
||||||||||||||||
Print
|
Software and
Payments
|
All other
|
Consolidated
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
4,490
|
$
|
24,582
|
$
|
—
|
$
|
29,072
|
||||||||
Services and other
|
—
|
—
|
2,517
|
2,517
|
||||||||||||
Subscription, transaction, and services
|
4,490
|
24,582
|
2,517
|
31,589
|
||||||||||||
Reimbursable costs
|
8,643
|
—
|
—
|
8,643
|
||||||||||||
Total revenues
|
13,133
|
24,582
|
2,517
|
40,232
|
||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services revenue
|
1,900
|
3,679
|
3,781
|
9,360
|
||||||||||||
Cost of reimbursable costs
|
8,643
|
—
|
—
|
8,643
|
||||||||||||
Total cost of revenues
|
10,543
|
3,679
|
3,781
|
18,003
|
||||||||||||
Gross profit:
|
||||||||||||||||
Total segment gross profit (loss)
|
$
|
2,590
|
$
|
20,903
|
$
|
(1,264
|
)
|
$
|
22,229
|
|||||||
Total segment gross margin
|
20
|
%
|
85
|
%
|
(50
|
)%
|
55
|
%
|
||||||||
Subscription, transaction, and services gross margin
|
58
|
%
|
85
|
%
|
(50
|
)%
|
70
|
%
|
||||||||
Unallocated amounts:
|
||||||||||||||||
Sales, marketing, research, development, and administrative expenses
|
(31,728
|
)
|
||||||||||||||
Depreciation and amortization
|
(1,359
|
)
|
||||||||||||||
Interest, loss on extinguishment of debt, changes in fair value of financial instruments, and other income (expenses)
|
133
|
|||||||||||||||
Loss before income taxes
|
$
|
(10,725
|
)
|
Three Months Ended June 30, 2020
|
||||||||||||||||
Print
|
Software and
Payments
|
All other
|
Consolidated
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
4,448
|
$
|
19,361
|
$
|
—
|
$
|
23,809
|
||||||||
Services and other
|
—
|
—
|
1,837
|
1,837
|
||||||||||||
Subscription, transaction, and services
|
4,448
|
19,361
|
1,837
|
25,646
|
||||||||||||
Reimbursable costs
|
8,945
|
—
|
—
|
8,945
|
||||||||||||
Total revenues
|
13,393
|
19,361
|
1,837
|
34,591
|
||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services revenue
|
2,297
|
2,880
|
2,456
|
7,633
|
||||||||||||
Cost of reimbursable costs
|
8,945
|
—
|
—
|
8,945
|
||||||||||||
Total cost of revenues
|
11,242
|
2,880
|
2,456
|
16,578
|
||||||||||||
Gross profit:
|
||||||||||||||||
Total segment gross profit (loss)
|
$
|
2,151
|
$
|
16,481
|
$
|
(619
|
)
|
$
|
18,013
|
|||||||
Total segment gross margin
|
16
|
%
|
85
|
%
|
(34
|
)%
|
52
|
%
|
||||||||
Subscription, transaction, and services gross margin
|
48
|
%
|
85
|
%
|
(34
|
)%
|
70
|
%
|
||||||||
Unallocated amounts:
|
||||||||||||||||
Sales, marketing, research, development, and administrative expenses
|
(18,778
|
)
|
||||||||||||||
Depreciation and amortization
|
(1,410
|
)
|
||||||||||||||
Interest, loss on extinguishment of debt, changes in fair value of financial instruments, and other expenses
|
(690
|
)
|
||||||||||||||
Loss before income taxes
|
$
|
(2,865
|
)
|
Six Months Ended June 30, 2021
|
||||||||||||||||
Print
|
Software and
Payments
|
All other
|
Consolidated
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
8,988
|
$
|
50,267
|
$
|
—
|
$
|
59,255
|
||||||||
Services and other
|
—
|
—
|
5,453
|
5,453
|
||||||||||||
Subscription, transaction, and services
|
8,988
|
50,267
|
5,453
|
64,708
|
||||||||||||
Reimbursable costs
|
17,460
|
—
|
—
|
17,460
|
||||||||||||
Total revenues
|
26,448
|
50,267
|
5,453
|
82,168
|
||||||||||||
Cost of revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services revenue
|
3,826
|
7,391
|
7,396
|
18,613
|
||||||||||||
Cost of reimbursable costs
|
17,460
|
—
|
—
|
17,460
|
||||||||||||
Total cost of revenues
|
21,286
|
7,391
|
7,396
|
36,073
|
||||||||||||
Gross profit:
|
||||||||||||||||
Total segment gross profit (loss)
|
$
|
5,162
|
$
|
42,876
|
$
|
(1,943
|
)
|
$
|
46,095
|
|||||||
Total segment gross margin
|
20
|
%
|
85
|
%
|
(36
|
)%
|
56
|
%
|
||||||||
Subscription, transaction, and services gross margin
|
57
|
%
|
85
|
%
|
(36
|
)%
|
71
|
%
|
||||||||
Unallocated amounts:
|
||||||||||||||||
Sales, marketing, research, development, and administrative expenses
|
(64,107
|
)
|
||||||||||||||
Depreciation and amortization
|
(2,719
|
)
|
||||||||||||||
Interest, loss on extinguishment of debt, changes in fair value of financial instruments, and other expenses
|
(12,696
|
)
|
||||||||||||||
Loss before income taxes
|
$
|
(33,427
|
)
|
Six Months Ended June 30, 2020
|
||||||||||||||||
Print
|
Software and
Payments
|
All other
|
Consolidated
|
|||||||||||||
Revenues:
|
||||||||||||||||
Subscription and transaction
|
$
|
9,234
|
$
|
37,701
|
$
|
—
|
$
|
46,935
|
||||||||
Services and other
|
—
|
—
|
3,235
|
3,235
|
||||||||||||
Subscription, transaction, and services
|
9,234
|
37,701
|
3,235
|
50,170
|
||||||||||||
Reimbursable costs
|
18,566
|
—
|
—
|
18,566
|
||||||||||||
Total revenues
|
27,800
|
37,701
|
3,235
|
68,736
|
||||||||||||
Cost of Revenues:
|
||||||||||||||||
Cost of subscription, transaction, and services revenue
|
4,508
|
5,994
|
5,021
|
15,523
|
||||||||||||
Cost of reimbursable costs
|
18,566
|
—
|
—
|
18,566
|
||||||||||||
Total cost of revenues
|
23,074
|
5,994
|
5,021
|
34,089
|
||||||||||||
Gross profit:
|
||||||||||||||||
Total segment gross profit (loss)
|
$
|
4,726
|
$
|
31,707
|
$
|
(1,786
|
)
|
$
|
34,647
|
|||||||
Total segment gross margin
|
17
|
%
|
84
|
%
|
(55
|
)%
|
50
|
%
|
||||||||
Subscription, transaction, and services gross margin
|
51
|
%
|
84
|
%
|
(55
|
)%
|
69
|
%
|
||||||||
Unallocated amounts:
|
||||||||||||||||
Sales, marketing, research, development, and administrative expenses
|
(39,832
|
)
|
||||||||||||||
Depreciation and amortization
|
(2,821
|
)
|
||||||||||||||
Interest, loss on extinguishment of debt, changes in fair value of financial instruments, and other expenses
|
(1,876
|
)
|
||||||||||||||
Loss before income taxes
|
$
|
(9,882
|
)
|
Item 2. |
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
|
▪ |
TPV - ACH/Wire - payments made via our software, portals, gateways, and our Business Payments Network that are processed via automated
clearing house ("ACH") or wire transfers.
|
|
▪ |
TPV - Card - payments through our software, portals, gateways, and third party processors, and includes our payment facilitator (“PayFac”)
customers.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
(in billions)
|
||||||||||||||||
Total Payment Volume
|
$
|
18.8
|
$
|
12.7
|
$
|
33.9
|
$
|
24.1
|
||||||||
TPV - ACH/Wire
|
12.2
|
8.9
|
21.9
|
16.7
|
||||||||||||
TPV - Card
|
$
|
6.6
|
$
|
3.9
|
$
|
12.0
|
$
|
7.4
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
(in millions)
|
||||||||||||||||
Number of electronic invoices presented
|
77
|
63
|
148
|
128
|
|
• |
Print – The Print segment is primarily responsible for printing customer invoices and optimizing the amount of time and costs associated with
billing customers via mail.
|
|
• |
Software and Payments – The Software and Payments segment primarily operates using software and cloud based services, optimizes electronic
invoice presentment, electronic payments, credit decisioning, collections automation, cash application and deduction management, and e-commerce of B2B customers.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||||||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||||||||||||||||||
Revenues:
|
||||||||||||||||||||||||||||||||
Subscription, transaction, and services
|
$
|
31,589
|
79
|
%
|
$
|
25,646
|
74
|
%
|
$
|
64,708
|
79
|
%
|
$
|
50,170
|
73
|
%
|
||||||||||||||||
Reimbursable costs
|
8,643
|
21
|
8,945
|
26
|
17,460
|
21
|
18,566
|
27
|
||||||||||||||||||||||||
Total revenues
|
40,232
|
100
|
34,591
|
100
|
82,168
|
100
|
68,736
|
100
|
||||||||||||||||||||||||
Cost of revenues:
|
||||||||||||||||||||||||||||||||
Cost of subscription, transaction, and services
|
9,360
|
23
|
7,633
|
22
|
18,613
|
23
|
15,523
|
23
|
||||||||||||||||||||||||
Cost of reimbursable costs
|
8,643
|
21
|
8,945
|
26
|
17,460
|
21
|
18,566
|
27
|
||||||||||||||||||||||||
Total cost of revenues
|
18,003
|
45
|
16,578
|
48
|
36,073
|
44
|
34,089
|
50
|
||||||||||||||||||||||||
Operating expenses:
|
||||||||||||||||||||||||||||||||
Research and development
|
11,270
|
28
|
8,778
|
25
|
22,263
|
27
|
18,162
|
26
|
||||||||||||||||||||||||
Sales and marketing
|
9,980
|
25
|
5,129
|
15
|
18,916
|
23
|
11,551
|
17
|
||||||||||||||||||||||||
General and administrative
|
10,478
|
26
|
4,871
|
14
|
22,928
|
28
|
10,119
|
15
|
||||||||||||||||||||||||
Depreciation and amortization
|
1,359
|
3
|
1,410
|
4
|
2,719
|
3
|
2,821
|
4
|
||||||||||||||||||||||||
Total operating expenses
|
33,087
|
82
|
20,188
|
58
|
66,826
|
81
|
42,653
|
62
|
||||||||||||||||||||||||
Loss from operations
|
(10,858
|
)
|
(27
|
)
|
(2,175
|
)
|
(6
|
)
|
(20,731
|
)
|
(25
|
)
|
(8,006
|
)
|
(12
|
)
|
||||||||||||||||
Other income (expense):
|
||||||||||||||||||||||||||||||||
Interest income
|
131
|
—
|
1
|
—
|
234
|
—
|
17
|
—
|
||||||||||||||||||||||||
Interest expense and loss on extinguishment of debt
|
(3
|
)
|
—
|
(1,102
|
)
|
(3
|
)
|
(2,945
|
)
|
(4
|
)
|
(2,285
|
)
|
(3
|
)
|
|||||||||||||||||
Change in fair value of financial instruments and other income
|
5
|
—
|
411
|
1
|
(9,985
|
)
|
(12
|
)
|
392
|
1
|
||||||||||||||||||||||
Total other income (expense)
|
133
|
—
|
(690
|
)
|
(2
|
)
|
(12,696
|
)
|
(15
|
)
|
(1,876
|
)
|
(3
|
)
|
||||||||||||||||||
Loss before income taxes
|
(10,725
|
)
|
(27
|
)
|
(2,865
|
)
|
(8
|
)
|
(33,427
|
)
|
(41
|
)
|
(9,882
|
)
|
(14
|
)
|
||||||||||||||||
Provision for income taxes
|
(11
|
)
|
—
|
(37
|
)
|
—
|
(103
|
)
|
—
|
(117
|
)
|
—
|
||||||||||||||||||||
Net loss and comprehensive loss
|
$
|
(10,736
|
)
|
(27
|
)%
|
$
|
(2,902
|
)
|
(8
|
)%
|
$
|
(33,530
|
)
|
(41
|
)%
|
$
|
(9,999
|
)
|
(15
|
)%
|
Three Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Subscription and transaction fees
|
$
|
29,072
|
$
|
23,809
|
$
|
5,263
|
22
|
%
|
||||||||
Services and other
|
2,517
|
1,837
|
680
|
37
|
%
|
|||||||||||
Subscription, transaction, and services
|
31,589
|
25,646
|
5,943
|
23
|
%
|
|||||||||||
Reimbursable costs
|
8,643
|
8,945
|
(302
|
)
|
(3
|
)%
|
||||||||||
Total revenues
|
$
|
40,232
|
$
|
34,591
|
$
|
5,641
|
16
|
%
|
Three Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of subscription, transaction, and services
|
$
|
9,360
|
$
|
7,633
|
$
|
1,727
|
23
|
%
|
||||||||
Cost of reimbursable costs
|
8,643
|
8,945
|
(302
|
)
|
(3
|
)%
|
||||||||||
Total cost of revenues
|
$
|
18,003
|
$
|
16,578
|
$
|
1,425
|
9
|
%
|
Three Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Research and development
|
$
|
11,270
|
$
|
8,778
|
$
|
2,492
|
28
|
%
|
Three Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
9,980
|
$
|
5,129
|
$
|
4,851
|
95
|
%
|
Three Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
General and administrative
|
$
|
10,478
|
$
|
4,871
|
$
|
5,607
|
115
|
%
|
Three Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Depreciation and amortization
|
$
|
1,359
|
$
|
1,410
|
$
|
(51
|
)
|
(4
|
)%
|
Three Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Total other income (expense)
|
$
|
133
|
$
|
(690
|
)
|
$
|
823
|
119
|
%
|
Three Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Provision for income taxes
|
(11
|
)
|
(37
|
)
|
$
|
26
|
70
|
%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Subscription and transaction fees
|
$
|
59,255
|
$
|
46,935
|
$
|
12,320
|
26
|
%
|
||||||||
Services and other
|
5,453
|
3,235
|
2,218
|
69
|
%
|
|||||||||||
Subscription, transaction, and services
|
64,708
|
50,170
|
14,538
|
29
|
%
|
|||||||||||
Reimbursable costs
|
17,460
|
18,566
|
(1,106
|
)
|
(6
|
)%
|
||||||||||
Total revenues
|
$
|
82,168
|
$
|
68,736
|
$
|
13,432
|
20
|
%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Cost of subscription, transaction, and services
|
$
|
18,613
|
$
|
15,523
|
$
|
3,090
|
20
|
%
|
||||||||
Cost of reimbursable costs
|
17,460
|
18,566
|
(1,106
|
)
|
(6
|
)%
|
||||||||||
Total cost of revenues
|
$
|
36,073
|
$
|
34,089
|
$
|
1,984
|
6
|
%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Research and development
|
$
|
22,263
|
$
|
18,162
|
$
|
4,101
|
23
|
%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Sales and marketing
|
$
|
18,916
|
$
|
11,551
|
$
|
7,365
|
64
|
%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
General and administrative
|
$
|
22,928
|
$
|
10,119
|
$
|
12,809
|
127
|
%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Depreciation and amortization
|
$
|
2,719
|
$
|
2,821
|
$
|
(102
|
)
|
(4
|
)%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Total other income (expense)
|
$
|
(12,696
|
)
|
$
|
(1,876
|
)
|
$
|
(10,820
|
)
|
(577
|
)%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
(in thousands)
|
||||||||||||||||
Provision for income taxes
|
$
|
(103
|
)
|
$
|
(117
|
)
|
$
|
14
|
12
|
%
|
Six Months Ended June 30,
|
Change
|
|||||||||||||||
2021
|
2020
|
Amount
|
%
|
|||||||||||||
Net cash used in operating activities
|
$
|
(10,821
|
)
|
$
|
(7,438
|
)
|
$
|
(3,383
|
)
|
(45
|
)%
|
|||||
Net cash used in investing activities
|
(46,157
|
)
|
(1,310
|
)
|
(44,847
|
)
|
(3,423
|
)%
|
||||||||
Net cash provided by financing activities
|
283,262
|
14,452
|
268,810
|
1,860
|
%
|
|||||||||||
Net increase in cash, cash equivalents, and restricted cash
|
$
|
226,284
|
$
|
5,704
|
Contractual Obligations (1)
|
Total
|
< 1 Year
|
1-3 Years
|
3-5 Years
|
> 5 Years
|
|||||||||||||||
Capital leases
|
$
|
157
|
$
|
128
|
$
|
29
|
$
|
—
|
$
|
—
|
||||||||||
Operating leases
|
47,569
|
4,600
|
8,594
|
8,235
|
26,140
|
|||||||||||||||
Contingent consideration (2)
|
370
|
370
|
—
|
—
|
—
|
|||||||||||||||
Total contractual cash obligations
|
$
|
48,096
|
$
|
5,098
|
$
|
8,623
|
$
|
8,235
|
$
|
26,140
|
(1) |
In connection with the Business Combination on January 12, 2021 we repaid all amounts outstanding on our long term debt. Accordingly, long term debt is no longer shown as a
contractual obligation.
|
(2) |
The acquisition of Second Phase, LLC in April 2019 included a contingent consideration arrangement that required additional consideration to be paid to the sellers annually based
meeting certain recurring revenue growth and profitability targets (together, "the Financial Targets") during the three-year period beginning May 1, 2019. In May 2021, we determined the second year Financial Targets were not met and
accordingly reduced the amount of remaining contingent consideration payable.
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Total revenues
|
$
|
40,232
|
$
|
34,591
|
$
|
82,168
|
$
|
68,736
|
||||||||
Less: Reimbursable costs revenue
|
8,643
|
8,945
|
17,460
|
18,566
|
||||||||||||
Net revenue (non-GAAP)
|
$
|
31,589
|
$
|
25,646
|
$
|
64,708
|
$
|
50,170
|
||||||||
Total revenues
|
$
|
40,232
|
$
|
34,591
|
$
|
82,168
|
$
|
68,736
|
||||||||
Less: Cost of revenue, excluding depreciation and amortization
|
18,003
|
16,578
|
36,073
|
34,089
|
||||||||||||
Gross profit, excluding depreciation and amortization
|
22,229
|
18,013
|
46,095
|
34,647
|
||||||||||||
Add: Stock-based compensation expense
|
405
|
57
|
848
|
88
|
||||||||||||
Adjusted gross profit (non-GAAP)
|
$
|
22,634
|
$
|
18,070
|
$
|
46,943
|
$
|
34,735
|
||||||||
Gross margin, excluding depreciation and amortization
|
55.3
|
%
|
52.1
|
%
|
56.1
|
%
|
50.4
|
%
|
||||||||
Adjusted gross margin (non-GAAP)
|
71.7
|
%
|
70.5
|
%
|
72.5
|
%
|
69.2
|
%
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net loss and comprehensive loss
|
$
|
(10,736
|
)
|
$
|
(2,902
|
)
|
$
|
(33,530
|
)
|
$
|
(9,999
|
)
|
||||
Provision for income taxes
|
11
|
37
|
103
|
117
|
||||||||||||
Change in fair value of financial instruments and other income
|
(5
|
)
|
(411
|
)
|
9,985
|
(392
|
)
|
|||||||||
Interest expense and loss on extinguishment of debt
|
3
|
1,102
|
2,945
|
2,285
|
||||||||||||
Interest income
|
(131
|
)
|
(1
|
)
|
(234
|
)
|
(17
|
)
|
||||||||
Depreciation and amortization
|
1,359
|
1,410
|
2,719
|
2,821
|
||||||||||||
Stock-based compensation expense
|
5,706
|
680
|
14,532
|
1,161
|
||||||||||||
Restructuring & severance
|
317
|
101
|
323
|
282
|
||||||||||||
Acquisition and integration expense
|
—
|
83
|
—
|
136
|
||||||||||||
Other capital structure transaction costs
|
498
|
—
|
498
|
—
|
||||||||||||
Adjusted EBITDA (non-GAAP)
|
$
|
(2,978
|
)
|
$
|
99
|
$
|
(2,659
|
)
|
$
|
(3,606
|
)
|
Three Months Ended June 30,
|
Six Months Ended June 30,
|
|||||||||||||||
2021
|
2020
|
2021
|
2020
|
|||||||||||||
Net cash used in operating activities
|
$
|
(904
|
)
|
$
|
1,423
|
$
|
(10,821
|
)
|
$
|
(7,438
|
)
|
|||||
Purchases of property and equipment
|
(617
|
)
|
(445
|
)
|
(1,120
|
)
|
(1,310
|
)
|
||||||||
Free cash flow (non-GAAP)
|
$
|
(1,521
|
)
|
$
|
978
|
$
|
(11,941
|
)
|
$
|
(8,748
|
)
|
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4. |
Controls and Procedures
|
Item 1. |
Item 1A. |
|
• |
the requirement that our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting under Section 404(b) of the
Sarbanes-Oxley Act of 2002:
|
|
• |
compliance with any requirement that may be adopted by the PCAOB regarding mandatory audit firm rotation or a supplement to the auditor's report providing additional information about
the audit and the financial statements;
|
|
• |
the requirement that we provide full and more detailed disclosures regarding executive compensation; and
|
|
• |
the requirement that we hold a non-binding advisory vote on executive compensation and obtain stockholder approval of any golden parachute payments not previously approve.
|
Item 2. |
Item 3. |
Item 4. |
Item 5. |
Item 6. |
Exhibit
Number
|
|
Description
|
3.1
|
|
Second Amended and Restated Certificate of Incorporation of the Company, dated January 12, 2021 (incorporated by reference to Exhibit 3.1 to the Company’s Current
Report on Form 8-K filed with the SEC on January 14, 2021).
|
3.2
|
|
Amended and Restated Bylaws of the Company, dated January 12, 2021(incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed with the
SEC on January 14, 2021).
|
4.1
|
|
Form of Common Stock Certificate of the Company (incorporated by reference to Exhibit 4.1 filed to the Company’s Current Report on Form 8-K filed with the SEC on
January 14, 2021).
|
4.2
|
|
Form of Warrant Certificate of the Company (incorporated by reference to Exhibit 4.2 filed to the Company’s Current Report on Form 8-K filed with the SEC on January
14, 2021).
|
4.3
|
|
Amended and Restated Registration Rights Agreement, dated October 18, 2020, by and among the Company and certain stockholders of the Company (incorporated by reference
to Exhibit 4.4 filed to the Company’s Current Report on Form 8-K filed with the SEC on January 14, 2021).
|
4.4
|
|
Form of Lock-Up Agreement (incorporated by reference to Exhibit 4.5 filed to the Company’s Current Report on Form 8-K filed with the SEC on January 14, 2021).
|
31.1
|
|
Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
31.2
|
|
Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002.
|
32.1
|
|
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2
|
|
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS
|
|
XBRL Instance Document
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF
|
|
XBRL Definition Linkbase Document
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
(1) |
Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and shall not be deemed to be incorporated by reference
into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
|
August 12, 2021
|
|
BTRS Holdings Inc.
|
|
|
|
|
|
|
|
By:
|
/s/ Mark Shifke
|
|
|
Name:
|
Mark Shifke
|
|
|
Title:
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
1 Year South Mountain Merger Chart |
1 Month South Mountain Merger Chart |
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