10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39453

Markforged Holding Corporation

(Exact Name of Registrant as Specified in its Charter)


Delaware	92-3037714
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

60 Tower Road Waltham, MA	02451
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (866) 496-1805

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
 

Trading
Symbol(s)
 

Name of each exchange
on which registered
 

Common stock, par value $0.0001 per share
Redeemable Warrants, each whole warrant exercisable for one share of Common Stock, $0.0001 par value

MKFG
MKFG.WS

New York Stock Exchange
New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of May 11, 2023, the registrant had 196,335,666 shares of common stock, $0.0001 par value per share, outstanding.

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Condensed Consolidated Financial Statements	1
	Unaudited Condensed Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022	1
	Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2023 and 2022	2
	Unaudited Condensed Consolidated Statements of Other Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022	3
	Unaudited Statement of Changes in Stockholders' Equity for the three months ended March 31, 2023 and 2022	4
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2023 and 2022	5
	Unaudited Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	34
PART II.	OTHER INFORMATION	37
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	72
Item 3.	Defaults Upon Senior Securities	72
Item 4.	Mine Safety Disclosures	72
Item 5.	Other Information	72
Item 6.	Exhibits	73
Signatures		74

Risk Factors Summary

The risk factors detailed in Item 1A entitled “Risk Factors” in this Quarterly Report on Form 10-Q are the risks that we believe are material to our investors and a reader should carefully consider them. Those risks are not all of the risks we face and other factors not presently known to us or that we currently believe are immaterial may also affect our business if they occur. The following is a summary of the risk factors detailed in Item 1A:

•

We have a history of net losses and may not be able to achieve profitability for any period in the future or sustain cash flow from operating activities. We have a relatively limited operating history and have experienced rapid growth, which makes evaluating our current business and future prospects difficult and may increase the risk of your investment. Our operating results may fluctuate significantly from period-to-period.

•

The additive manufacturing industry in which we operate is characterized by rapid technological change, which requires us to continue to develop new products and innovations to meet constantly evolving customer demands and which could adversely affect market adoption of our products.

•

A future pandemic, epidemic, or outbreak of an infectious disease, such as the COVID-19 pandemic, may materially and adversely affect our business and our financial results and could cause a disruption to the development of our products. The continued impact of the economic downturn and related supply chain disruptions have continued to adversely impact our business.

•

Adverse developments affecting the financial services industry or other third parties, such as a liquidity crisis, increased levels of defaults or non-performance by financial institutions or transactional counterparties or the perception that any of these events could occur, could adversely affect our current and projected business operations and our financial condition and results of operations.

•

We face significant competition in our industry. If we are unable to create new products or meet the demands of our customers, our business could be materially adversely affected.

•

We depend on our network of value-added resellers and our business could be materially adversely affected if they do not meet our expectations.

•

We depend heavily on third-party suppliers. If they or their facilities become unavailable or inadequate, our business could be adversely affected. We may experience significant delays in the design, production and launch of our additive manufacturing solutions and enhancements to existing products, and we may be unable to successfully commercialize products on our planned timelines.

•

We rely on a limited number of third-party logistics providers for distribution of our products, and their failure to effectively distribute our products, including because of delays and disruptions caused by current conditions in global shipping capacity would adversely affect our sales.

•

If demand for our products does not grow as expected, or if market adoption of additive manufacturing does not continue to develop, or develops more slowly than expected, our revenues may stagnate or decline, and our business may be adversely affected.

•

Defects in new products or in enhancements to our existing products that give rise to product returns or warranty or other claims could result in material expenses, diversion of management time and attention, and damage to our reputation.

•

We may be unable to consistently manufacture our products to the necessary specifications or in quantities necessary to meet demand at an acceptable cost or at an acceptable performance level. As manufacturing becomes a larger part of our operations, we will become exposed to accompanying risks and liabilities. We depend on a limited number of third-party contract manufacturers for a substantial portion of our manufacturing needs and we depend on a number of suppliers for other parts and components; since the second half of 2021, we have increasingly experienced, and expect to continue to experience, price increases, supply shortages and delays and any such delay, disruption or quality control problems in their operations which could cause harm to our operations, including loss of market share, reduced margins and damage to our brand.

•

We have experienced, and expect to continue to experience, rapid growth and organizational change since our inception. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service and customer satisfaction or attract new employees and customers.

•

A real or perceived defect, security vulnerability, error or performance failure in our software or technical problems or disruptions caused by our third-party service providers could cause us to lose revenue, damage our reputation and expose us to liability.

•

Our existing and planned global operations subject us to a variety of risks and uncertainties that could adversely affect our business and operating results. Our business is subject to risks associated with selling machines and other products in non-United States locations. Global economic, political and social conditions and uncertainties in the market that we serve may adversely impact our business.

•

A significant portion of our business depends on sales to the public sector, and our failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector could have a material adverse effect on our business.

•

We are, and have been in the recent past, subject to business and intellectual property litigation. We could be subject to personal injury, property damage, product liability, warranty and other claims involving allegedly defective products that we supply. We could face liability if our additive manufacturing solutions are used by our customers to print dangerous objects.

•

If we are unable to adequately protect our proprietary technology or obtain and maintain patent protection for our technology and products or if the scope of the patent protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.

•

If we are unable for any reason to meet the continued listing requirements of the NYSE, such action or inaction could result in a delisting of our securities.

•

We have identified material weaknesses in our internal control over financial reporting and may identify additional material weaknesses in the future or fail to maintain effective internal control over financial reporting, which may result in material misstatements of our consolidated financial statements or cause us to fail to meet our periodic reporting obligations.

EXPLANATORY NOTE

On July 14, 2021, we consummated the merger (the "Merger") contemplated by the Agreement and Plan of Merger, dated as of February 23, 2021 (the “Merger Agreement”), by and among one, a Cayman Islands exempted company limited by shares (“one”), Caspian Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of one (“Merger Sub”), and MarkForged, Inc., a Delaware corporation (“Legacy Markforged”). As a result of the Merger, Legacy Markforged merged with and into Merger Sub with Legacy Markforged surviving as our wholly-owned subsidiary and, following one’s filing of a notice of deregistration and necessary accompanying documents with the Cayman Islands Registrar of Companies, and a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, under which one was domesticated, one changed its name to “Markforged Holding Corporation.”

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements that are forward-looking and as such are not historical facts. This includes, without limitation, statements regarding the financial position, business strategy and the plans and objectives of management for our future operations of Markforged Holding Corporation (“Markforged,” the “Company,” “we,” “us”). These statements constitute projections, forecasts and forward-looking statements, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report on Form 10-Q, words such as “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “strive”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.

Forward-looking statements in this Quarterly Report on Form 10-Q include, for example, statements about:

•

the benefits of the Merger, and other recent acquisitions and our ability to realize such benefits;

•

our financial performance;

•

the effect of uncertainties related to economic downturns and global supply chain disruptions, or any future pandemics;

•

the expected growth of the additive manufacturing industry;

•

our anticipated growth and our ability to achieve and maintain profitability in the future;

•

the impact of the regulatory environment and complexities with compliance related to such environment on us;

•

the effect of and our ability to respond to general economic, political and business conditions, including recent increases in interest rates, rising inflation, foreign exchange fluctuations and risk of recession;

•

our ability to access sources of capital, including debt financing and other sources of capital to finance operations and growth;

•

the success of our marketing efforts and our ability to expand our customer base;

•

our ability to develop and deliver new products, features and functionality that are competitive and meet market needs;

•

our ability to maintain an effective system of internal control over financial reporting;

•

our ability to remediate our material weaknesses in our internal control of financial reporting;

•

our ability to grow and manage growth profitably and retain key employees; and

•

the outcome of legal or governmental proceedings that may be instituted against us.

These forward-looking statements are based on information available as of the date of this Quarterly Report on Form 10-Q and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and we do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

As a result of a number of known and unknown risks and uncertainties, our actual results or performance may be materially different from those expressed or implied by these forward-looking statements. You should not place undue reliance on these forward-looking statements.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

As of March 31, 2023 and December 31, 2022

(In thousands, except share data and par value amounts) (Unaudited)


	March 31, 2023			December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	90,674		$	124,242
Short-term investments		60,756			43,690
Accounts receivable, net of allowance for expected credit losses ($768 and $971, respectively)		26,115			29,294
Inventory		29,272			26,409
Prepaid expenses		2,336			2,847
Other current assets		3,362			3,334
Total current assets		212,515			229,816
Property and equipment, net		19,122			18,298
Intangible assets, net		17,426			17,626
Goodwill		31,190			31,116
Right-of-use assets		44,591			45,955
Other assets		3,043			3,130
Total assets	$	327,887		$	345,941
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	10,515		$	14,425
Accrued expenses		11,459			9,663
Deferred revenue		9,174			8,854
Lease liabilities		7,979			8,022
Total current liabilities		39,127			40,964
Long-term deferred revenue		5,834			5,358
Contingent earnout liability		1,607			2,415
Long-term lease liabilities		39,391			40,608
Other liabilities		3,867			4,042
Total liabilities		89,826			93,387
Commitments and contingencies (Note 15)
Stockholders’ equity
Common stock, $0.0001 par value; 1,000,000,000 shares authorized at March 31, 2023 and December 31, 2022; 195,643,620 and 194,560,946 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively		19			19
Additional paid-in capital		356,982			352,564
Accumulated deficit		(120,116	)		(101,097	)
Accumulated other comprehensive income		1,176			1,068
Total stockholders’ equity		238,061			252,554
Total liabilities and stockholders’ equity	$	327,887		$	345,941

See notes to the unaudited condensed consolidated financial statements.

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the three months ended March 31, 2023 and 2022

(In thousands, except share data and per share data) (Unaudited)


	Three Months Ended March 31,
	2023			2022
Revenue	$	24,090		$	21,859
Cost of revenue		12,508			10,253
Gross profit		11,582			11,606
Operating expenses
Sales and marketing		10,576			10,448
Research and development		10,380			10,567
General and administrative		12,128			11,743
Total operating expenses		33,084			32,758
Loss from operations		(21,502	)		(21,152	)
Change in fair value of derivative liabilities		189			693
Change in fair value of contingent earnout liability		808			24,896
Other expense, net		(204	)		(219	)
Interest income		1,691			20
(Loss) profit before income taxes		(19,018	)		4,238
Income tax expense (benefit)		1			(1	)
Net (loss) profit	$	(19,019	)	$	4,239
Weighted average shares outstanding - basic		195,369,245			186,383,312
Weighted average shares outstanding - diluted		195,369,245			191,100,683
Net (loss) profit per share - basic	$	(0.10	)	$	0.02
Net (loss) profit per share - diluted		(0.10	)		0.02

See notes to the unaudited condensed consolidated financial statements.

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS)

For the three months ended March 31, 2023 and 2022

(In thousands, except share data and per share data) (Unaudited)


	Three Months Ended March 31,
	2023			2022
Net (loss) profit	$	(19,019	)	$	4,239
Other comprehensive income, net of taxes:
Unrealized (loss) on available-for-sale marketable securities, net		(50	)		—
Foreign currency translation adjustment		158			—
Total comprehensive (loss) income	$	(18,911	)	$	4,239

See notes to the unaudited condensed consolidated financial statements.

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

For the three months ended March 31, 2023 and 2022

(In thousands, except share data) (Unaudited)


	Common Stock				Additional Paid-in			Accumulated			Accumulated Other Comprehensive
	Shares		Amount		Capital			Deficit			Income		Total
December 31, 2022		194,560,946	$	19	$	352,564		$	(101,097	)	$	1,068	$	252,554
Exercise of common stock options		502,299		—		180			—			—		180
Stock vested under compensation plan less shares withheld to cover taxes		580,375		—		(118	)		—			—		(118	)
Stock-based compensation expense		—		—		4,144			—			—		4,144
Earnout stock-based compensation expense		—		—		212			—			—		212
Net loss		—		—		—			(19,019	)		—		(19,019	)
Other comprehensive income		—		—		—			—			108		108
March 31, 2023		195,643,620	$	19	$	356,982		$	(120,116	)	$	1,176	$	238,061

December 31, 2021		185,993,058	$	19	$	319,859		$	(75,709	)	$	—	$	244,169
Exercise of common stock options		942,836		—		580			—			—		580
Stock vested under compensation plan less shares withheld to cover taxes		182,066		—		—			—			—		—
Stock-based compensation expense		—		—		4,285			—			—		4,285
Earnout stock-based compensation expense		—		—		1,137			—			—		1,137
Net income and comprehensive income		—		—		—			4,239			—		4,239
March 31, 2022		187,117,960	$	19	$	325,861		$	(71,470	)	$	—	$	254,410

See notes to the unaudited condensed consolidated financial statements.

MARKFORGED HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the three months ended March 31, 2023 and 2022

(In thousands, except share data) (Unaudited)


	For the Three Months Ended March 31,
	2023			2022
Operating Activities:
Net (loss) profit	$	(19,019	)	$	4,239
Adjustments to reconcile net profit (loss) to cash used in operating activities
Depreciation, amortization, and non-cash lease interest		2,430			1,163
Provision for doubtful accounts		(523	)		(43	)
Reserve for excess and obsolete inventory		150			109
Change in fair value of warrant liabilities		(189	)		(693	)
Change in fair value of contingent earnout liability		(808	)		(24,896	)
Amortization (accretion) of (discounts) premiums on available-for-sale securities		(670	)		—
Stock-based compensation expense		4,356			5,422
Changes in operating assets and liabilities
Accounts receivable		3,708			4,014
Inventory		(2,998	)		(2,533	)
Prepaid expenses		511			285
Other current assets		(28	)		(1,376	)
Other assets		85			(236	)
Accounts payable and accrued expenses		(2,117	)		(4,152	)
Other current liabilities		—			(82	)
Deferred revenue		788			145
Other non-current lease liabilities		(1,218	)		(613	)
Net cash used in operating activities		(15,542	)		(19,247	)
Investing Activities:
Purchases of property and equipment		(1,646	)		(798	)
Purchases of available-for-sale securities		(18,950	)		—
Proceeds from sales and maturities of marketable securities		2,500			—
Net cash used in investing activities		(18,096	)		(798	)
Financing Activities:
Proceeds from exercise of common stock options		180			580
Taxes paid related to net share settlement of equity awards		(118	)		—
Net cash provided by financing activities		62			580
Effect of exchange rate changes on cash		8			—
Net change in cash, cash equivalents, and restricted cash		(33,568	)		(19,465	)
Cash, cash equivalents, and restricted cash
Beginning of year		124,242			288,603
End of period	$	90,674		$	269,138

Supplemental disclosures of cash flow information
Cash and cash equivalents	$	90,674		$	269,138
Restricted cash in other non-current assets		1,430			—
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows	$	92,104		$	269,138
Non cash financing and investing activities
Purchase of property and equipment in accounts payable and accrued expenses	$	899		$	83

See notes to the unaudited condensed consolidated financial statements.

MARKFORGED HOLDING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Organization, Nature of the Business, and Risks and Uncertainties

Organization and Nature of Business

Unless otherwise indicated or the context otherwise requires, references to the “Company” and “Markforged” refer to the consolidated operations of Markforged Holding Corporation and its subsidiaries. References to “AONE” refer to the company prior to the consummation of the Merger and references to “Legacy Markforged” refer to MarkForged, Inc. and its consolidated subsidiaries prior to the consummation of the Merger.

Legacy Markforged was founded in 2013 to transform the manufacturing industry with high strength, cost effective parts using additive manufacturing. Markforged produces and sells 3D printers, materials, software, and other related services worldwide to customers who can build parts strong enough for the factory floor with significantly reduced lead time and cost. The printers print in plastic, nylon, metal, and the parts can be reinforced with carbon fiber for industry leading strength at an affordable price point.

On February 23, 2021, one, a Cayman Islands exempted company (“AONE”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Caspian Merger Sub Inc., a wholly owned subsidiary of AONE (“Merger Sub”), and Legacy Markforged, pursuant to which (i) AONE would deregister as a Cayman Islands company and domesticate as a corporation in the State of Delaware and would be renamed “Markforged Holding Corporation” (the “Domestication”) and (ii) Merger Sub would merge with and into Legacy Markforged with Legacy Markforged surviving as a wholly owned subsidiary of Markforged Holding Corporation (the “Merger”). AONE's shareholders approved the transactions contemplated by the Merger Agreement on July 13, 2021, and the Domestication and the Merger were completed on July 14, 2021 (the "Closing").

Cash proceeds of the merger were funded through a combination of AONE’s $132.5 million of cash held in trust (after redemptions of $64.2 million) and an aggregate of $210.0 million in fully committed common stock transactions at $10.00 per share. Immediately prior to the Closing, Legacy Markforged repurchased shares of common stock from certain of its stockholders, for a total value of $45.0 million, referred to as the “Employee Transactions”. Total net proceeds upon Closing, net of the Employee Transactions and transaction costs paid at Closing of $27.1 million, were $288.8 million.

Risks and Uncertainties

We continue to monitor, analyze, and respond to evolving developments regarding supply chain disruptions and the economic downturn. The Company is unable to predict the ultimate impact that these factors will have on the business, future results of operations, financial position or cash flows. The potential risks to the Company including certain accounting estimates around its supply chain, accounts receivable, inventory and related reserves, intangible assets, goodwill, and long-lived assets, were assessed and had no material impact as of and for the three months ended March 31, 2023. There may be changes to those estimates in future periods, and actual results could differ from those estimates.

The Company has funded its operations to date primarily through the sale of convertible preferred stock, the proceeds from the Merger, including the sale of common stock, and the sale of its products. Management believes that existing cash will be sufficient to fund operating and capital expenditure requirements through at least one year after the date these condensed consolidated financial statements are issued. The accompanying condensed consolidated financial statements have been prepared on a basis which assumes that the Company will continue as a going concern and contemplates the realization of assets and satisfaction of liabilities and commitments in the normal course of business.

Note 2. Summary of Significant Accounting Policies

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s fiscal year end is December 31 and, unless otherwise stated, all years and dates refer to the fiscal year.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of the Company are prepared in conformity with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”), the instructions to Form 10-Q and the provisions of Regulation S-X

pertaining to interim financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. The condensed consolidated financial statements include the Company’s accounts and those of its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. In the opinion of the Company’s management, the financial information for the interim periods presented reflects all adjustments, which are of a normal and recurring nature, necessary for a fair statement of the Company’s financial position, results of operations, and cash flows. The results reported in these condensed consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. These financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2022, filed with the SEC on March 17, 2023.

Reporting Currency

The Company’s reporting currency is the U.S. Dollar, while the functional currencies of its foreign subsidiaries are the currencies of the primary economic environment in which each of them operate.

Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and 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. Management’s significant estimates include allowance for doubtful accounts, reserve for excess and obsolete inventory, fair value of contingent earnout liability, fair value of earnout share awards, fair value of the private placement warrant liability, assumptions in revenue recognition, and valuation of intangibles and goodwill. The Company evaluates its estimates based on historical experience, current conditions, and various other assumptions that it believes are reasonable under the circumstances.

Cash and Cash Equivalents

The Company considers all highly liquid investments including money market funds, treasury securities, and commercial paper with original maturities of 90 days or less to be cash equivalents.

Restricted Cash

Restricted cash represents cash and cash equivalents that are restricted to withdrawal or use as of the reporting date. Restricted cash as of March 31, 2023 relates to deposits to secure letters of credit. The deposits are related to contracts that have a remaining term greater than twelve months, thus this cash is included in other noncurrent assets.

Short-term Investments

The Company invests its excess cash in fixed income instruments denominated and payable in U.S. dollars including U.S. treasury securities, commercial paper, corporate bonds and asset-backed securities in accordance with the Company’s investment policy that primarily seeks to maintain adequate liquidity and preserve capital. Investments in marketable securities are recorded at fair value, and unrealized gains and losses are reported within accumulated other comprehensive income as a separate component of stockholders’ equity until realized or until a determination is made that an other-than-temporary decline in market value has occurred. We consider impairments to be other than temporary if they are related to deterioration in credit risk or if it is likely we will sell the securities before the recovery of their cost basis. When such reductions occur, the cost of the investment is adjusted to fair value through recording a loss on investments in the consolidated statements of operations. Realized gains and losses and declines in the value of securities attributable to actual or expected losses are included in other income (expense), net in the consolidated statements of operations. All investments in marketable securities mature within one year.

The Company’s cash equivalents and short-term investments are invested in the following:


	March 31, 2023
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds	$	82,704	$	—	$	—		$	82,704
Total cash equivalents		82,704		—		—			82,704
Commercial paper		27,447		—		—			27,447
Government bonds		20,440		17		—			20,457
Corporate bonds		4,966		—		(11	)		4,955
U.S. Treasury bills		4,944		1		—			4,945
Asset-backed securities		2,955		—		(3	)		2,952
Total short-term investments	$	60,752	$	18	$	(14	)	$	60,756
Total cash equivalents and short-term investments	$	143,456	$	18	$	(14	)	$	143,460

	December 31, 2022
(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Money market funds