Three months ended December 31, 2019

Redeemable

Accumulated

convertible

Additional

other

Total

preferred stock

Common stock

paid-in

comprehensive

Accumulated

stockholders'

Shares

Amount

Shares

Amount

capital

income

deficit

equity (deficit)

Balance at September 30, 2019

52,435

$
276,307

8,296

$
1

$
17,242

$
128

$
(123,352
)

$
(105,981
)
Conversion of redeemable
   convertible preferred stock to
   common stock upon initial public
   offering

(52,435
)

(276,307
)

52,435

1

276,306

—

—

276,307

Reclassification of redeemable
   convertible preferred stock
   warrant liabilities to additional
   paid-in capital upon initial public
   offering

—

—

—

—

1,405

—

—

1,405

Issuance of common stock upon
   initial public offering, net of
   underwriting discounts and
   commissions and other offering
   costs

—

—

11,297

—

225,481

—

—

225,481

Exercise of stock options

—

—

174

—

607

—

—

607

Exercise of stock warrants

—

—

65

—

144

—

—

144

Employee stock-based compensation

—

—

—

—

3,075

—

—

3,075

Other comprehensive loss, net of tax

—

—

—

—

—

(108
)

—

(108
)
Net loss

—

—

—

—

—

—

(7,578
)

(7,578
)
Balance at December 31, 2019

—

$
—

72,267

$
2

$
524,260

$
20

$
(130,930
)

$
393,352

Six months ended December 31, 2019

Redeemable

Accumulated

convertible

Additional

other

Total

preferred stock

Common stock

paid-in

comprehensive

Accumulated

stockholders'

Shares

Amount

Shares

Amount

capital

income

deficit

equity (deficit)

Balance at June 30, 2019

52,435

$
276,307

8,154

$
1

$
14,672

$
326

$
(117,656
)

$
(102,657
)
Conversion of redeemable
   convertible preferred stock to
   common stock upon initial public
   offering

(52,435
)

$
(276,307
)

52,435

1

276,306

$
—

—

276,307

Reclassification of redeemable
   convertible preferred stock
   warrant liabilities to additional
   paid-in capital upon initial public
   offering

—

—

—

—

1,405

—

—

1,405

Issuance of common stock upon
   initial public offering, net of
   underwriting discounts and
   commissions and other offering
   costs

—

—

11,297

—

225,481

—

—

225,481

Exercise of stock options

—

—

316

—

901

—

—

901

Exercise of stock warrants

—

—

65

—

144

—

—

144

Employee stock-based compensation

—

—

—

—

5,351

—

—

5,351

Other comprehensive loss, net of tax

—

—

—

—

—

(306
)

—

(306
)
Net loss

—

—

—

—

—

—

(13,274
)

(13,274
)
Balance at December 31, 2019

—

$
—

72,267

$
2

$
524,260

$
20

$
(130,930
)

$
393,352


	Common stock			Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
	Shares	Amount
Balance at June 30, 2022	104,731	$	2	$	4,598,737	$	(10,217)	$	(544,828)	$	4,043,694
Issuance of common stock upon exercise of stock options and release of restricted stock units	835	—		3,901		—		—		3,901
Issuance of common stock under the employee stock purchase plan	67	—		8,494		—		—		8,494
Stock-based compensation	—	—		73,352		—		—		73,352
Other comprehensive loss	—	—		—		(270)		—		(270)
Net loss	—	—		—		—		(81,640)		(81,640)
Balance at September 30, 2022	105,633	$	2	$	4,684,484	$	(10,487)	$	(626,468)	$	4,047,531
Issuance of common stock upon exercise of stock options and release of restricted stock units	663	—		4,316		—		—		4,316
Issuance of common stock as consideration for an acquisition	40	—		3,376		—		—		3,376
Stock-based compensation	—	—		119,604		—		—		119,604
Other comprehensive income	—	—		—		4,126		—		4,126
Net loss	—	—		—		—		(95,076)		(95,076)
Balance at December 31, 2022	106,336	$	2	$	4,811,780	$	(6,361)	$	(721,544)	$	4,083,877
Issuance of common stock upon exercise of stock options and release of restricted stock units	596	—		2,643		—		—		2,643
Issuance of common stock under the employee stock purchase plan	115	—		9,385		—		—		9,385
Repurchase and retirement of common stock	(359)	—		—		—		(27,000)		(27,000)
Stock-based compensation	—	—		63,392		—				63,392
Other comprehensive income	—	—		—		3,178		—		3,178
Net loss	—	—		—		—		(31,138)		(31,138)
Balance at March 31, 2023	106,688	$	2	$	4,887,200	$	(3,183)	$	(779,682)	$	4,104,337

Three months ended December 31, 2018

Redeemable

Accumulated

convertible

Additional

other

Total

preferred stock

Common stock

paid-in

comprehensive

Accumulated

stockholders'

Shares

Amount

Shares

Amount

capital

loss

deficit

deficit

Balance at September 30, 2018

47,131

$
191,147

7,645

$
1

$
9,731

$
(72
)

$
(111,226
)

$
(101,566
)
Issuance of Series H redeemable
   convertible preferred stock, net of
   issuance costs

4,214

67,101

—

—

—

—

—

—

Exercise of stock options

—

—

234

—

491

—

—

491

Employee stock-based compensation

—

—

—

—

594

—

—

594

Other comprehensive income,
   net of tax

—

—

—

—

—

21

—

21

Net income

—

—

—

—

—

—

102

102

Balance at December 31, 2018

51,345

$
258,248

7,879

$
1

$
10,816

$
(51
)

$
(111,124
)

$
(100,358
)

Six months ended December 31, 2018

Redeemable

Accumulated

convertible

Additional

other

Total

preferred stock

Common stock

paid-in

comprehensive

Accumulated

stockholders'

Shares

Amount

Shares

Amount

capital

loss

deficit

deficit

Balance at June 30, 2018

47,131

$
191,147

7,345

$
1

$
8,614

$
(177
)

$
(110,342
)

$
(101,904
)
Issuance of Series H redeemable
   convertible preferred stock, net of
   issuance costs

4,214

67,101

—

—

—

—

—

—

Exercise of stock options

—

—

534

—

949

—

—

949

Employee stock-based compensation

—

—

—

—

1,201

—

—

1,201

Issuance of stock warrants

—

—

—

—

52

—

—

52

Other comprehensive income,
   net of tax

—

—

—

—

—

126

—

126

Net loss

—

—

—

—

—

—

(782
)

(782
)
Balance at December 31, 2018

51,345

$
258,248

7,879

$
1

$
10,816

$
(51
)

$
(111,124
)

$
(100,358
)


	Common stock			Additional paid-in capital		Accumulated other comprehensive income		Accumulated deficit		Total stockholders' deficit
	Shares	Amount
Balance at June 30, 2021	94,504	$	2	$	2,777,155	$	(100)	$	(247,467)	$	2,529,590
Cumulative effect of the accounting change upon the adoption of ASU 2020-06	—	—		(245,066)		—		29,000		(216,066)
Issuance of common stock upon public offering, net of underwriting discounts and other offering costs	5,074	—		1,341,122		—		—		1,341,122
Issuance of common stock as consideration for an acquisition, net of issuance costs	1,788	—		488,263		—		—		488,263
Fair value of replacement awards	—	—		26,710		—		—		26,710
Issuance of common stock upon exercise of stock options and release of restricted stock units	1,033	—		8,644		—		—		8,644
Issuance of common stock under the employee stock purchase plan	40	—		5,726		—		—		5,726
Purchase of capped calls	—	—		(37,893)		—		—		(37,893)
Stock-based compensation	—	—		38,839		—		—		38,839
Other comprehensive loss	—	—		—		(39)		—		(39)
Net loss	—	—		—		—		(74,259)		(74,259)
Balance at September 30, 2021	102,439	$	2	$	4,403,500	$	(139)	$	(292,726)	$	4,110,637
Issuance of common stock upon exercise of stock options and release of restricted stock units	1,022	—		14,140		—		—		14,140
Stock-based compensation	—	—		50,701		—		—		50,701
Other comprehensive loss	—	—		—		(1,711)		—		(1,711)
Net loss	—	—		—		—		(80,440)		(80,440)
Balance at December 31, 2021	103,461	$	2	$	4,468,341	$	(1,850)	$	(373,166)	$	4,093,327
Issuance of common stock upon exercise of stock options and release of restricted stock units	680	—		6,332		—		—		6,332
Issuance of common stock under the employee stock purchase plan	42	—		7,123		—		—		7,123
Stock-based compensation	—	—		53,903		—		—		53,903
Other comprehensive loss	—	—		—		(5,649)		—		(5,649)
Net loss	—	—		—		—		(86,720)		(86,720)
Balance at March 31, 2022	104,183	$	2	$	4,535,699	$	(7,499)	$	(459,886)	$	4,068,316

As of December 31, 2019, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) was $46.2 million. Of this amount, the Company expects to recognize $8.1 million within one year and $38.1 million thereafter.

~~For periods the Company is in a loss position, basic net loss per share attributable to common shareholders is the same as diluted net loss per share attributable to common shareholders.~~

We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding stock-based compensation expense, depreciation and amortization expense, and amortization of deferred costs. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these measures eliminate the effects of certain variables unrelated to our overall operating performance. The following table presents a reconciliation of our non-GAAP gross profit and non-GAAP gross margin to our GAAP gross profit and GAAP gross margin for the periods presented (amounts in thousands):

Free cash flow is defined as net cash used in operating activities reduced by purchases of property and equipment and capitalization of internal-use software costs. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, after purchases of property and equipment and capitalization of internal-use software costs, for operational expenses and investment in our business. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. The following table presents a reconciliation of our free cash flow to net cash used in operating activities for the periods presented (in thousands):

Research and development expenses increased ~~to $13.0~~by $19.1 million and $79.9 million during the three and nine months ended ~~December~~March 31, ~~2019 from $6.2~~2023, respectively, as compared to the prior year periods, primarily due to a $20.1 million and $78.4 million increase during the three and nine months ended ~~December~~March 31, ~~2018, an increase of $6.8 million or 111%. The increase was due primarily to a $5.7 million increase~~2023, respectively, in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional personnel, who were directly engaged in developing new product ~~offerings, a $0.8 million increase in shared overhead costs, and a $0.3 million increase in costs for engaging consultants and temporary contractors who provided product development services.~~ offerings.

Sales and marketing expenses increased ~~to $11.5~~by $34.2 million and $194.0 million during the three and nine months ended ~~December~~March 31, ~~2019 from $6.9~~2023, respectively, as compared to the prior year periods, primarily due to the following:

General and administrative expenses increased ~~to $12.7~~by $11.7 million and $25.3 million during the three and nine months ended ~~December~~March 31, ~~2019 from $6.4~~2023, respectively, as compared to prior year periods, primarily due to the following:

reduction to the net deferred tax liability, as a result of our current year losses, offset by an estimated cash tax liability as a result of the mandatory Section 174 R&D capitalization, which was effective beginning fiscal year 2023. R&D expenses are capitalized and ~~2018 was~~amortized over five years for domestic R&D and fifteen years for international R&D. The requirement increases our current year cash tax liabilities, however, the cash flow impact is expected to decrease over time as ~~follows (amounts in thousands):~~

Three months ended

December 31,

Change

2019

2018

Amount

%

(Benefit from) provision for income taxes

$
—

$
(6
)

$
6

100
%

~~The benefit~~capitalized research and development expenses continue to amortize. Benefit from income taxes during the three and nine months ended ~~December~~March 31, ~~2018 pertains primarily~~2022 pertained mainly to the ~~income~~ tax benefit that is reported on the condensed consolidated statements of operations and is offset against the income tax on the unrealized gain on investments in available-for-sale securities that is shown on the condensed consolidated statements of comprehensive loss.

~~Comparison~~ of the ~~six months ended December 31, 2019 and 2018~~

~~Revenue~~

~~The components of our revenue~~net loss incurred during the ~~six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):~~

Six months ended
December 31,

Change

2019

2018

Amount

%

Subscription and transaction fees

$
61,512

$
38,614

$
22,898

59
%
Interest on funds held for customers

12,748

9,809

2,939

30
%
Total revenue

$
74,260

$
48,423

$
25,837

53
%

Subscription and transaction fees increased to $61.5 million during the six months ended December 31, 2019 from $38.6 million during the six months ended December 31, 2018, an increase of $22.9 million or 59%.

Subscription fees increased to $38.0 million during the six months ended December 31, 2019 from $27.4 million during the six months ended December 31, 2018, an increase of $10.6 million or 39%, driven primarily by the increase in customers and average subscription revenue per customer. Transaction fees increased to $23.5 million during the six months ended December 31, 2019 from $11.2 million during the six months ended December 31, 2018, an increase of $12.3 million or 110%, due primarily to increased adoption of new product offerings and the increase in the number of transactions initiated. Our total customers increased to approximately 86,000 as of December 31, 2019 compared to over 71,000 as of December 31, 2018, or an increase of approximately 20%. Our average subscription revenue and transaction fees per customer increased by 15% and 74%, respectively, during the six months ended December 31, 2019, driven primarily by the increase in customers’ usage of our platform and payment activities.

Interest on funds held for customers increased to $12.7 million during the six months ended December 31, 2019 from $9.8 million during the six months ended December 31, 2018, an increase of $2.9 million or 30%. The increase was due primarily to the increase in the balance of customer funds held while payment transactions are clearing. The average balance of customer funds in transit increased to approximately $1.3 billion during the six months ended December 31, 2019 from approximately $1.0 billion during the six months ended December 31, 2018, an increase of 30%. Fund balances increased due primarily to growth in TPV. Our TPV increased to approximately $46.8 billion during the six months ended December 31, 2019 from approximately $33.2 billion during the six months ended December 31, 2018, an increase of 41%. The annualized rate of return earned on customer funds held was 1.90% during the six months ended December 31, 2019, which remained flat compared to the annualized yield during the same period in fiscal 2019.

~~Table of Contents~~

~~Cost of Revenue, Gross Profit, and Gross Margin~~

~~Cost of revenue, gross profit, and gross margin during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):~~

Six months ended
December 31,

Change

2019

2018

Amount

%

Cost of revenue

$
18,934

$
13,516

$
5,418

40
%
Gross profit

$
55,326

$
34,907

$
20,419

58
%
Gross margin

75
%

72
%

Cost of revenue increased to $18.9 million during the six months ended December 31, 2019 from $13.5 million during the six months ended December 31, 2018, an increase of $5.4 million or 40%. The increase was due primarily to a $2.6 million increase in direct costs associated with the processing of our customers’ payment transactions, use of software applications and equipment, bank fees for funds held for customers, and data hosting services, which were driven by the increase in the number of customers, increase in adoption of new product offerings and increase in volume of transactions. The increase was also due to a $1.7 million increase in personnel-related costs, including stock-based compensation expense and amortization of increased deferred service costs, due to the hiring of additional personnel who were directly engaged in providing implementation and support services to our customers,periods, and a ~~$0.9 million increase in shared overhead costs. Our average headcount~~reduction of ~~such personnel during the six months ended December 31, 2019 increased by 24% compared to the same period in fiscal 2019.~~

Gross margin increased to 75% during the six months ended December 31, 2019 from 72% during the six months ended December 31, 2018, an increase of 3%. The increase was driven primarily by higher revenue on increased adoption of new product offerings.

~~Research and Development Expenses~~

~~Research and development expenses during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):~~

Six months ended
December 31,

Change

2019

2018

Amount

%

Research and development expenses

$
24,507

$
11,578

$
12,929

112
%
Percentage of revenue

33
%

24
%

Research and development expenses increased to $24.5 million during the six months ended December 31, 2019 from $11.6 million during the six months ended December 31, 2018, an increase of $12.9 million or 112%. The increase was due primarily to a $10.7 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional personnel who were directly engaged in developing new product offerings, a $1.3 million increase in shared overhead costs, and a $0.8 million increase in costs for engaging consultants and temporary contractors who provided product development services. Our average research and development headcount during the six months ended December 31, 2019 increased by 65% compared to the same period in fiscal 2019.

As a percentage of total revenue, research and development expenses increased to 33% during the six months ended December 31, 2019 from 24% during the six months ended December 31, 2018 due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue.

~~Table of Contents~~

~~Sales and Marketing Expenses~~

~~Sales and marketing expenses during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):~~

Six months ended
December 31,

Change

2019

2018

Amount

%

Sales and marketing expenses

$
21,758

$
12,800

$
8,958

70
%
Percentage of revenue

29
%

26
%

Sales and marketing expenses increased to $21.8 million during the six months ended December 31, 2019 from $12.8 million during the six months ended December 31, 2018, an increase of $9.0 million or 70%. The increase was due primarily to a $4.7 million increase in personnel-related costs (net of increase in capitalized sales commissions of $1.1 million), including stock-based compensation expense, due to the hiring of additional personnel who were directly engaged in acquiring new customers and in marketing our products and services, and a $0.9 million increase in shared overhead costs. Our average sales and marketing headcount during the six months ended December 31, 2019 increased by 52% compared to the same period in fiscal 2019. The increase was also attributed to a $1.7 million increase in various marketing initiatives and activities, such as engaging consultants and attending marketing events, and a $1.6 million increase in advertising spend, as we continued to increase our effort in promoting our products and services and in increasing brand awareness.

As a percentage of total revenue, sales and marketing expenses increased to 29% during the six months ended December 31, 2019 from 26% during the six months ended December 31, 2018, due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue.

~~General and Administrative Expenses~~

~~General and administrative expenses during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):~~

Six months ended
December 31,

Change

2019

2018

Amount

%

General and administrative expenses

$
23,283

$
12,341

$
10,942

89
%
Percentage of revenue

32
%

26
%

General and administrative expenses increased to $23.3 million during the six months ended December 31, 2019 from $12.3 million during the six months ended December 31, 2018, an increase of $11.0 million or 89%. The increase was due primarily to a $6.8 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional executive employees and administrative personnel. Our average general and administrative headcount during the six months ended December 31, 2019 increased by 77% compared to the same period in fiscal 2019. The increase was also due to a $1.2 million increase in professional and consulting fees as we obtained additional external assistancevaluation allowance in connection with the ~~overall growth~~acquisition of our business and our preparation to operate as a public company, a $1.1 million increase in money transfer license fees and credit card processing fees and a $0.8 million increase in shared overhead costs due to the overall growth of our business, and a $0.7 million increase in recruiting fees and temporary staffing costs as we engaged external help to recruit employees or to temporarily fill certain roles within the organization.

As a percentage of total revenue, general and administrative expenses increased to 32% during the six months ended December 31, 2019 from 26% during the six months ended December 31, 2018 due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue

~~Table of Contents~~

~~Other Income, Net~~

~~Other income, net during the six months ended December 31, 2019 and 2018 was as follows (amounts in thousands):~~

Invoice2go.

Other income, net, which slightly decreased during the six months ended December 31, 2019, consisted primarily of a $1.0 million loss on revaluation of redeemable convertible preferred warrant liabilities, partially offset by a $0.8 million increase in interest earned on corporate funds that we invested in money market instruments and highly liquid short-term investments.

~~Provision for (benefit from) income taxes during the six months ended December 31, 2019 and 2018 was as follows (amounts in thousands):~~

The provision for income taxes during the six months ended December 31, 2019 pertains primarily to state income taxes. The benefit from income taxes during the six months ended December 31, 2018 pertains primarily to the income tax benefit that is reported on the condensed consolidated statements of operations and is offset against the income tax on the unrealized gain on investments in available-for-sale securities that is shown on the condensed consolidated statements of comprehensive loss.

•ease of ~~Contents~~

•

~~ease of integration with leading accounting and banking technology infrastructures;~~

integration with leading accounting and banking technology infrastructures;

•ability to automate processes;

•cloud-based delivery architecture;

•advanced security and control features;

•regulatory compliance leadership, as evidenced by money transmitter licenses in all required USU.S. and Canadian jurisdictions;

•brand recognition; and

•pricing and total cost of ownership.

Our competitors vary in size, breadth, and scope of the products and services offered. Many of our competitors and potential competitors have greater name recognition, longer operating histories, more established customer relationships, larger marketing budgets, and greater resources than us. Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, and customer requirements. For example, an existing competitor or new entrant could introduce new technology that reduces demand for our platform.

In addition, the market for our products and services is competitive, and we expect the market to attract increased competition, which could make it difficult for us to succeed. We currently face competition for our offerings from a range of companies that continue to develop additional products and to become more sophisticated and effective. As a result, our competitors might be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements. Certain competitors have long-standing exclusive, or nearly exclusive, relationships with financial services provider partners to accept payment cards and other services that compete with what we offer. Competing services tied to established brands may engender greater confidence in the safety and efficacy of their services. If we are unable to differentiate ourselves from and successfully compete with our competitors, our business will be materially and adversely affected.

For these reasons, we may not be able to compete successfully against our current or future competitors, and this competition could result in the failure of our platform to continue to achieve or maintain market acceptance, any of which would harm our business, operating results, and financial condition.

Table of Contents

We transfer large sums of customer funds daily, and are subject to numerous associated risks which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results.

Excluding Divvy spending businesses and Invoice2go subscribers, we had over 190,000 customers on our platform as of March 31, 2023. Excluding the card payment volume by the spending businesses using Divvy cards and payment volume transacted by Invoice2go subscribers, the TPV processed by our customers on our platform was $61.0 billion and $55.1 billion during the three months ended March 31, 2023 and 2022, respectively, and $186.4 billion and $158.3 billion during the nine months ended March 31, 2023 and 2022, respectively. For the purposes of measuring our key business metrics, we define customers as entities that are either billed directly by us or for which we bill our partners for BILL products during a particular period. We have grown rapidly and seek to continue to grow, and although we maintain a robust and multi-faceted risk management process, our business is always subject to the risk of financial losses as a result of credit losses, operational errors, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors on our platform. As a provider of accounts payable, accounts receivable, spend and expense management and payment solutions, we collect and transfer funds on behalf of our customers. Software errors in our platform and operational errors by our employees may also expose us to losses.

Moreover, our trustworthiness and reputation are fundamental to our business. As a provider of cloud-based software for complex back-office financial operations, the occurrence of any credit losses, operational errors, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors on our platform could result in financial losses to our business and our customers, loss of trust, damage to our reputation, or termination of our agreements with financial institution partners and accountants, each of which could result in:

•loss of customers;

•lost or delayed market acceptance and sales of our platform;

•legal claims against us, including warranty and service level agreement claims;

•regulatory enforcement action; or

•diversion of our resources, including through increased service expenses or financial concessions, and increased insurance costs.

Although our terms of service allocate to our customers the risk of loss resulting from our customers’ errors, omissions, employee fraud, or other fraudulent activity related to their systems, in some instances we may cover such losses for efficiency or to prevent damage to our reputation. Although we maintain insurance to cover losses resulting from our errors and omissions, there can be no assurance that our insurance will cover all losses or our coverage will be sufficient to cover our losses. If we suffer significant losses or reputational harm as a result, our business, operating results, and financial condition could be adversely affected.

We, our partners, our customers, and others who use our services obtain and process a large amount of sensitive data. Any real or perceived improper or unauthorized use of, disclosure of, or access to such data could harm our reputation as a trusted brand, as well as have a material adverse effect on our business.

We, our partners, our customers, and the third-party vendors and data centers that we use, obtain and process large amounts of sensitive data, including data related to our customers and their transactions, as well as other data of the counterparties to their payments. We face risks, including to our reputation as a trusted brand, in the handling and protection of this data, and these risks will increase as our business continues to expand to include new products and technologies.

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sophisticated cyber criminals. State-sponsored cybersecurity attacks on the U.S. financial system or U.S. financial service providers could also have a material adverse effect on our business. A cybersecurity incident or breach could result in disclosure of confidential information and intellectual property, or cause production downtimes and compromised data. We have in the past experienced cybersecurity incidents of limited scale. We may be unable to anticipate or prevent techniques used in the future to obtain unauthorized access or to sabotage systems because they change frequently and often are not detected until after an incident has occurred. As we increase our customer base and our brand becomes more widely known and recognized, third parties may increasingly seek to compromise our security controls or gain unauthorized access to our sensitive corporate information or our customers’ data.

We have administrative, technical, and physical security measures in place, and we have policies and procedures in place to contractually require service providers to whom we disclose data to implement and maintain reasonable privacy, data protection, and information security measures. However, if our privacy protection, data protection, or information security measures or those of the previously mentioned third parties are inadequate or are breached as a result of third-party action, employee or contractor error, malfeasance, malware, phishing, hacking attacks, system error, software bugs, or defects in our products, trickery, process failure, or otherwise, and, as a result, there is improper disclosure of, or someone obtains unauthorized access to or exfiltrates funds or sensitive information, including personally identifiable information, on our systems or our partners’ systems, or if we suffer a ransomware or advanced persistent threat attack, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged. Recent high-profile security breaches and related disclosures of sensitive data by large institutions suggest that the risk of such events is significant, even if privacy, data protection, and information security measures are implemented and enforced. If sensitive information is lost or improperly disclosed or threatened to be disclosed, we could incur significant costs associated with remediation and the implementation of additional security measures, and may incur significant liability and financial loss, and be subject to regulatory scrutiny, investigations, proceedings, and penalties.

In addition, our financial institution partners conduct regular audits of our cybersecurity program, and if any of them were to conclude that our systems and procedures are insufficiently rigorous, they could terminate their relationships with us, and our financial results and business could be adversely affected. Under our terms of service and our contracts with certain partners, if there is a breach of payment information that we store, we could be liable to the partner for their losses and related expenses. Additionally, if our own confidential business information were improperly disclosed, our business could be materially and adversely affected. A core aspect of our business is the reliability and security of our platform. Any perceived or actual breach of security, regardless of how it occurs or the extent of the breach, could have a significant impact on our reputation as a trusted brand, cause us to lose existing partners or other customers, prevent us from obtaining new partners and other customers, require us to expend significant funds to remedy problems caused by breaches and implement measures to prevent further breaches, and expose us to legal risk and potential liability including those resulting from governmental or regulatory investigations, class action litigation, and costs associated with remediation, such as fraud monitoring and forensics. Any actual or perceived security breach at a company providing services to us or our customers could have similar effects. Further, as the current COVID-19 pandemic continues to result in a significant number of people working from home, these cybersecurity risks may be heightened by an increased attack surface across our business and those of our partners and service providers. We have heightened monitoring in the face of such risks, but cannot guarantee that our efforts, or the efforts of those upon whom we rely and partner with, will be successful in preventing any such information security incidents.

While we maintain cybersecurity insurance, our insurance may be insufficient or may not cover all liabilities incurred by such attacks. We also cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

Customer funds that we hold for the benefit of our customers are subject to market, interest rate, foreign exchange, and liquidity risks, as well as general political and economic conditions. The loss of

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these funds could have a material adverse effect on our business, financial condition, and results of operations.

We invest funds that we hold for the benefit of our customers, including funds being remitted to suppliers, in highly liquid, investment-grade marketable securities, money market securities, and other cash equivalents. Nevertheless, our customer fund assets are subject to general market, interest rate, credit, foreign exchange, and liquidity risks. These risks may be exacerbated, individually or in the aggregate, during periods of heavy financial market volatility, such as that experienced in 2008 and 2022, that may result from the COVID-19 or other pandemics, from high inflation, high interest rate or recessionary environments, from actual or perceived instability in the U.S. and global banking systems, or from war (such as the war in Ukraine) or other geopolitical conflicts. As a result, we could be faced with a severe constriction of the availability of liquidity, which could impact our ability to fulfill our obligations to move customer money to its intended recipient. For example, instability in the U.S. banking system led to the closure of SVB by banking regulators in March 2023 and at that time we held FBO Funds at SVB and processed a portion of customer payments through SVB. In light of the federal government’s response to the SVB closure, including the FDIC’s resolution of SVB in a manner that fully protected all depositors, we did not experience material issues with accessing these FBO Funds, were able to move substantially all of these FBO Funds to large multinational financial institutions and were able to redirect substantially all customer payment processing previously made through SVB to one of our multinational bank processors. However, to the extent there continues to be actual or perceived instability in the U.S. banking system that results in reduced or limited liquidity for, defaults or non-performance by or other adverse developments with respect to any of the financial institutions through which we process customer payments, it may adversely impact our ability to access FBO Funds held at such institutions or process customer payments through such institutions. In addition, cash held at banks and financial institutions is subject to applicable FDIC deposit insurance limits and as such if one of the financial institutions through which we process customer payments enters into receivership or becomes insolvent, any FBO Funds being processed or held in accounts at such financial institutions that are above insured limits, or are held in investments, which are not covered by FDIC insurance, may be unrecoverable. Additionally, we rely upon certain banking partners and third parties to originate payments, process checks, execute wire transfers, and issue virtual cards, which could be similarly affected by a liquidity shortage and further exacerbate our ability to operate our business. Any loss of or inability to access customer funds could have an adverse impact on our cash position and results of operations, could require us to obtain additional sources of liquidity, and could have a material adverse effect on our business, financial condition, and results of operations. In addition to the risks related to customer funds, we are also exposed to interest-rate risk relating to our investments of our corporate cash.

We are licensed as a money transmitter in all required U.S. states and registered as a Money Services Business with the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN). In certain jurisdictions where we operate, we are required to hold eligible liquid assets, as defined by the relevant regulators in each jurisdiction, equal to at least 100% of the aggregate amount of all customer balances. Our ability to manage and accurately account for the assets underlying our customer funds and comply with applicable liquid asset requirements requires a high level of internal controls. As our business continues to grow and we expand our product offerings, we will need to scale these associated internal controls. Our success requires significant public confidence in our ability to properly manage our customers’ balances and handle large and growing transaction volumes and amounts of customer funds. Any failure to maintain the necessary controls or to accurately manage our customer funds and the assets underlying our customer funds in compliance with applicable regulatory requirements could result in reputational harm, lead customers to discontinue or reduce their use of our products, and result in significant penalties and fines, possibly including the loss of our state money transmitter licenses, which would materially harm our business.

Our business depends, in part, on our relationships with accounting firms.

Our relationships with our more than 6,000 firm partners account for a significant portion of our consolidated revenue. We market and sell our products and services through accounting firms. We also have a partnership with CPA.com to market our products and services to accounting firms, which then enroll their customers directly onto our platform. Although our relationships with accounting firms are independent of one another, if our reputation in the accounting industry more broadly were to suffer, or if we were unable to establish relationships with new accounting firms and grow our relationships with existing accounting firm partners, our growth prospects would weaken and our business, financial position, and operating results may be adversely affected.

Our business depends, in part, on our business relationships with financial institutions.

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We enter into partnering relationships with financial institutions pursuant to which they offer our services to their customers. These relationships involve risks that may not be present or that are present to a lesser extent with sales to our direct SMB customers. Launching a product offering with our financial institution partners entails integrating our platform with our partners’ websites and apps, which requires significant engineering resources and time to design, deploy and maintain, and requires developing associated sales and marketing strategies and programs. With financial institution partners, the decision to roll out our product offering typically requires several levels of management and technical personnel approval by our partners and is frequently subject to budget constraints. Delays in decision making, unplanned budget constraints or changes in our partners’ business, business priorities or internal resource allocations may result in significant delays to the deployment of our platform and its availability to their customers. Significant delays in the deployment of our platform to our partners’ customers could cause us to incur significant expenditures for platform integration and product launch without generating anticipated revenue in the same period or at all and could adversely impact our results of operations. In addition, once we have successfully launched a product offering with a financial institution partner, lower than anticipated customer adoption or unanticipated ongoing system integration costs could result in lower than anticipated profit margins, which could have an adverse impact on our business, financial position and operating results Moreover, if our partners or their customers experience problems with the operation of our platform, such as service outages or interruptions or security breaches or incidents, our relationship with the partner and our reputation could be harmed and our results of operations may suffer.

We may not be able to attract new financial institution partners if our potential partners favor our competitors’ products or services over our platform or choose to compete with our products directly. Further, many of our existing financial institution partners have greater resources than we do and could choose to develop their own solutions to replace ours. Moreover, certain financial institutions may elect to focus on other market segments and decide to terminate their SMB-focused services. If we are unsuccessful in establishing, growing, or maintaining our relationships with financial institution partners, our ability to compete in the marketplace or to grow our revenue could be impaired, and our results of operations may suffer.

We are subject to oversight by our financial institution partners and they conduct audits of our operations, information security controls, and compliance controls. To the extent an audit were to identify material gaps or evidence of noncompliance in our operations or controls it could violate contractual terms with the financial institution partner, which could materially and adversely impact our commercial relationships with that partner.

Our spend and expense management products are dependent on our relationship with our Issuing Banks, Cross River Bank and WEX Bank.

The extensions of credit facilitated through our platform are originated through Cross River Bank and WEX Bank (Issuing Banks), and we rely on these entities to comply with various federal, state and other laws. There has been significant recent U.S. Congressional and federal administrative agency lawmaking and ruling in the area of program agreements between banks and non-banks involving extensions of credit and the regulatory environment in this area remains unsettled. There has also been significant recent government enforcement and litigation challenging the validity of such arrangements, including disputes seeking to re-characterize lending transactions on the basis that the non-bank party rather than the bank is the “true lender” or “de facto lender”, and in case law upholding the “valid when made” doctrine, which holds that federal preemption of state interest rate limitations are not applicable in the context of certain bank - non-bank partnership arrangements. If the legal structure underlying our relationship with our Issuing Banks were to be successfully challenged, our extension of credit offerings through these banks may be determined to be in violation of state licensing requirements and other state laws. In addition, Issuing Banks engaged in this activity have been subject to increased regulatory scrutiny recently. Adverse orders or regulatory enforcement actions against our Issuing Banks, even if unrelated to our business, could impose restrictions on our Issuing banks’ ability to continue to extend credit through our platform or on current terms, or could result in our Issuing Banks increasing their oversight or imposing tighter controls over our underwriting practices or compliance procedures or subjecting any new products to be offered through our Issuing Banks to more rigorous reviews.

Cross River Bank, WEX Bank are subject to oversight by the FDIC and state banking regulators and must comply with applicable federal and state banking rules, regulations and examination requirements. As a service provider to Cross River Bank and WEX Bank, we are subject to audit by these banks in accordance with FDIC guidance related to management of service providers and other bank specific requirements pursuant to the terms of our agreements with these banks. We are also subject to the examination and enforcement authority of the FDIC under the Bank Service Company Act and state regulators in our capacity as a service

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provider for these banks. If we fail to comply with requirements applicable to us by law or contract, or if audits by our Issuing Banks were to conclude that our processes and procedures are insufficient, we may be subject to fines or penalties or our Issuing Banks could terminate their relationships with us.

In the event of a challenge to the legal structure underlying our program agreements with our Issuing Banks, or if one or both of our Issuing Banks were to suspend, limit, or cease its operations, or were to otherwise terminate for any reason (including, but not limited to, the failure by an Issuing Bank to comply with regulatory actions or an Issuing Bank experiencing financial distress, entering into receivership or becoming insolvent), we would need to identify and implement alternative, compliant, bank relationships or otherwise modify our business practices in order to be compliant with prevailing law or regulation, which could result in business interruptions or delays, force us to incur additional expenses and potentially interfere with our existing customer and spending business relationships or make us less attractive to potential new customers and spending businesses, any of which could have a material adverse effect on our business.

We rely on a variety of funding sources to support Divvy’s business model. If our existing funding arrangements are not renewed or replaced, or if our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, it could have a material adverse effect on our business, results of operations, financial condition, cash flows, and future prospects.

To support Divvy’s business model and the growth of our Divvy business, we must maintain a variety of funding arrangements, including warehouse facilities and from time-to-time purchase arrangements with financial institutions. In particular, we have financing arrangements in place pursuant to which we purchase from our Issuing Banks participation interests in the accounts receivables generated when Divvy spending businesses make purchases using our cards. We typically fund some portion of these participation interest purchases by borrowing under credit facilities with our finance partners, although we may also fund participation purchases using corporate cash. Typically, we immediately sell a portion of the participation interests we have purchased to a warehousing subsidiary which funds the purchases through loans provided by our financing partners, and we may sell a portion of the participation interests to third-party institution pursuant to a purchase arrangements.

If our finance partners terminate or interrupt their financing or purchase of participation interests or are unable to offer terms which are acceptable to us, we may have to fund these purchases using corporate cash, which we have a limited ability to do and may place significant stress on our cash resources. An inability to purchase participation interests from our Issuing Banks, whether funded through financing or corporate cash, could result in the banks’ limiting extensions of credit to Divvy spending businesses or ceasing to extend credit for our cards altogether, which would interrupt or limit our ability to offer our card products and materially and adversely affect our business.

We cannot guarantee that these funding arrangements will continue to be available on favorable terms or at all, and our funding strategy may change over time, depending on the availability of such funding arrangements. In addition, our funding sources may curtail access to uncommitted financing capacity, fail to renew or extend facilities, or impose higher costs to access funding upon reassessing their exposure to our industry or in light of changes to general economic, market, credit or liquidity conditions. Further, our funding sources may experience financial distress, enter into receivership or become insolvent, which may prevent us from accessing financing from these sources. In addition, because our borrowings under current and future financing facilities may bear interest based on floating rate interest rates, our interest costs may increase if market interest rates rise. Moreover, there can be no assurances that we would be able to extend or replace our existing funding arrangements at maturity, on reasonable terms or at all.

If our existing funding arrangements are not renewed or replaced or our existing funding sources are unwilling or unable to provide funding to us on terms acceptable to us, or at all, we may need to secure additional sources of funding or reduce Divvy’s operations significantly. Further, as the volume of credit facilitated through our platform increases, we may need to expand the funding capacity under our existing funding arrangements or add new sources of capital. The availability and diversity of our funding arrangements depends on various factors and are subject to numerous risks, many of which are outside of our control. If we are unable to maintain access to, or to expand, our network and diversity of funding arrangements, our business, results of operations, financial condition, and future prospects could be materially and adversely affected.

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If we do not or cannot maintain the compatibility of our platform with popular accounting software solutions or offerings of our ~~strategic~~ partners, our revenue and growth prospects will decline.

To deliver a comprehensive solution, our platform integrates with popular accounting software ~~providers~~solutions including Intuit QuickBooks, Oracle NetSuite, ~~and~~ Sage Intacct, Xero, Microsoft Dynamics 365 Business Central and Microsoft Dynamics GP, through application program interfaces (APIs) made available by these software providers. We automatically synchronize ~~customers, suppliers, clients,~~certain data between our platform and these accounting software systems relating to invoices and payment transactions between our ~~platform~~customers and ~~these systems.~~their suppliers and clients. This two-way sync ~~eliminates duplicate~~saves time for our customers by reducing duplicative manual data entry and provides the basis for managing ~~cash- flow~~cash-flow through an integrated solution for accounts ~~payables,~~payable, accounts receivable, spend and expense management and payments.

If any of the accounting software providers change the features of their APIs, discontinue their support of such APIs, restrict our access to their APIs, or alter the terms or practices governing their use in a manner that is adverse to our business, we ~~will~~may be restricted or may not be able to provide synchronization capabilities, which could significantly diminish the value of our platform and harm our business, operating results, and financial condition.

~~The functionality~~ In addition, if any of these accounting software providers reconfigure their platforms in a manner that no longer supports our integration with their accounting software we would lose customers and ~~popularity of~~ our ~~platform depends, in part, on our ability to integrate our platform with the offerings of our strategic partners. Critically, our financial institution strategic partners must~~business would be able to integrate our platform into their existing offerings. These strategic partners periodically update and change their systems, and although we have been able to adapt our platform to their evolving needs in the past, there can be no guarantee that we will be able to do so in the future. In particular, ifadversely affected.

If we are unable to ~~adapt to the needs~~increase adoption of our ~~strategic partners’ platforms,~~platform with customers of these accounting software solutions our ~~strategic partners~~growth prospects may ~~terminate their agreements~~be adversely affected. In addition, any of these accounting software providers may seek to develop a payment solution of its own, acquire a solution to compete with usours, or decide to partner with other competing applications, any of which its SMB customers may select over ours, thereby harming our growth prospects and ~~we may lose access to large numbers~~reputation and adversely affecting our results of ~~customers as a result.~~

operations.

We depend ~~upon several~~on third-party service providers ~~for processing~~to process transactions on our ~~transactions. If any~~platform and to provide other services important to the operation of our ~~agreements with~~business. Any significant disruption in services provided by these vendors could prevent us from processing transactions on our ~~processing providers are terminated, we could experience service interruptions.~~

platform, result in other interruptions to our business and have a material adverse effect on our operations, results of operations and financial condition.

We depend on banks, including JPMorgan Chase, ~~The Bancorp Bank, and Silicon Valley Bank,~~ to process ACH transactions and checks for our customers. We ~~have entered into treasury services~~also rely on third-party providers to support other aspects of our business, including, for example, for card transaction processing, check printing, real-time payments, virtual and physical card issuance and our cross-border funds transfer capabilities. If we are unable to effectively manage our third-party relationships, we are unable to comply with security, compliance or ~~similar~~operational obligations to which we are subject under agreements with these providers, these providers are unable to meet their obligations to us, or we experience substantial disruptions in these relationships, including as a result of the closure or insolvency of banks ~~for payment processing and related services. Those agreements include significant security, compliance, and operational obligations. If we are not able to comply~~ with those obligations or our agreements with the processing banks are terminated for any reason, we could experience service interruptions as well as delays and additional expenses in arranging new services.

Similarly, we have an agreement with Cambridge Mercantile Corp., under which Cambridge provides us with cross-border wire transfer capabilities. This arrangement has enabled us to offer our cross-border payments service, which we ~~view as~~do business, our operations, results of operations and financial condition could be adversely impacted. In addition, in some cases a ~~significant growth opportunity for our business. Finally, we have an agreement with Comdata Inc., under which Comdata acts as our program manager~~provider may be the sole source, or one of a limited number of sources, of the services they provide to us and ~~card issuer processor for our virtual card program.~~

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~~If any of our banking agreements related to ACH transactions or checks, or our agreements with Cambridge or Comdata are terminated,~~ we may experience ~~business interruptions~~increased costs and ~~delays,~~difficulties in replacing those providers and replacement services may not be ~~forced to incur additional expenses, potentially interfering with our existing customer relationships~~available on commercially reasonable terms, on a timely basis, or ~~making us less attractive to potential new customers.~~

at all.

Interruptions or delays in the services provided by AWS or other third-party data centers or internet service providers could impair the delivery of our platform and our business could suffer.

We host our platform using third-party cloud infrastructure services, including co-location facilities at Coresite, Equinix, and Iron ~~Mountain, and Digital West.~~Mountain. We also use public cloud hosting with Amazon Web Services (AWS). All of our products utilize resources operated by us through these providers. We therefore depend on our third-party cloud providers’ ability to protect their data centers against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, and similar events. Our operations depend on protecting the cloud infrastructure hosted by such providers by maintaining their respective configuration, architecture, and interconnection specifications, as well as the information stored in these virtual data centers and transmitted by third-party internet service providers. We have periodically experienced service disruptions in the past, and we cannot assure you that we will not experience interruptions or delays in our service in the future. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the data storage services we use. Although we have disaster recovery plans that utilize

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multiple data storage locations, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, military actions, terrorist attacks, negligence, and other similar events beyond our control could negatively affect our platform. Any prolonged service disruption affecting our platform for any of the foregoing reasons could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers, or otherwise harm our business. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.

System failures or outages, including any potential disruptions due to significantly increased global demand on certain cloud-based systems during the COVID-19 pandemic, could compromise our ability to perform these functions in a timely manner, which could harm our ability to conduct business or delay our financial reporting. Such failures could adversely affect our operating results and financial condition.

Our platform is accessed by many customers, often at the same time. As we continue to expand the number of our customers and products available to our customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service. In addition, the failure of data centers, internet service providers, or other third-party service providers to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to grow our business and scale our operations. If our third-party infrastructure service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity, or damage to data centers, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services

Moreover, we are in the process of ~~gradually~~ migrating our systems from internal data centers and smaller vendors to AWS. AWS provides us with computing and storage capacity pursuant to an agreement that continues until terminated by either party. We have a limited history of operating on AWS. As we migrate our data from our servers to AWS’ servers, we may experience some duplication and incur additional costs. If our data migration is not successful, or if AWS unexpectedly terminates our agreement, we would be forced to incur additional expenses to locate an alternative provider and may experience outages or disruptions to our service. Any service disruption affecting our platform during such migration or while operating on the AWS cloud infrastructure could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers, or otherwise harm our business.

We operate in an emerging and evolving market, which may develop more slowly or differently than we expect. If our market does not grow as we expect, or if we cannot expand our platform to meet the demands of this market, our revenue may decline or fail to grow, and we may incur additional operating losses.

Our primary competition remains the legacy manual processes that SMBs have relied on for generations. Our success will depend, to a substantial extent, on the widespread adoption of our cloud- based back-office solutions as an alternative to existing solutions or adoption by customers that are not using any such solutions at all. Some organizations may be reluctant or unwilling to use our platform for several reasons, including concerns about additional costs, uncertainty regarding the reliability and security of cloud-based offerings, or lack of awareness of the benefits of our platform. Our ability to expand sales of our platform depends on several factors, including prospective customers’ awareness of our platform, the timely completion, introduction, and market acceptance of enhancements to our platform or new products that we may introduce, the effectiveness of our marketing programs, the costs of our platform, and the success of our competitors. If we are unsuccessful in developing and marketing our platform, or if organizations do not perceive or value the benefits of our platform as an alternative to legacy systems, the market for our platform may not continue to develop or may develop more slowly than we expect, either of which would harm our growth prospects and operating results.

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Payments and other financial services-related regulations and oversight are material to our business. Our failure to comply could materially harm our business.

The local, state, and federal laws, rules, regulations, licensing schemes, and industry standards that govern our business include, or may in the future include, those relating to banking, deposit-taking, cross-border and domestic money transmission, foreign exchange, payments services (such as licensed money transmission, payment processing, and settlement services), lending, anti-money laundering, combating terrorist financing, escheatment, international sanctions regimes, and compliance with the Payment Card Industry Data Security Standard, a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect ~~cardholder~~spending business data. ~~We do not directly collect~~In addition, Divvy is required to maintain loan brokering or ~~store payment~~servicing licenses in a number of states in which it conducts business and is contractually obligated to comply with FDIC federal banking regulations, as well as Visa and MasterCard network rules as a card ~~information; instead, we rely on a third-party payment processor to do so.~~program manager. These laws, rules, regulations, licensing schemes, and standards are enforced by multiple authorities and governing bodies in the ~~United States,~~U.S., including the Department of the Treasury, the ~~Federal Deposit Insurance Corporation,~~FDIC, the SEC, self-regulatory organizations, and numerous state and local agencies. As we expand into new jurisdictions, the number of foreign laws, rules, regulations, licensing schemes, and standards governing our business will expand as well. In addition, as our business and products continue to develop and expand, we may become subject to additional laws, rules, regulations, licensing schemes, and standards. We may not always be able to accurately predict the scope or applicability of certain laws, rules, regulations, licensing schemes, or standards to our business, particularly as we expand into new areas of operations, which could have a significant negative effect on our existing business and our ability to pursue future plans.

Our subsidiary, Bill.com, LLC, ~~has obtained~~maintains licenses, ~~or made registrations,~~ as applicable, to operate as a money transmitter (or its equivalent) in the ~~United States,~~U.S., in the District of Columbia, the Commonwealth of Puerto Rico, and, to the best of our knowledge, in all the states where such licensure or registration is required for our business. In addition, our subsidiary, Bill.com Canada, LLC is a Foreign Money Services Business in Canada and the regulations

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applicable to our activity in Canada are enforced by FINTRAC and Quebec’s Autorité Des Marchés Financiers (Financial Markets Authority). As a licensed money transmitter in the U.S., we are subject to obligations and restrictions with respect to the investment of customer funds, reporting requirements, bonding requirements, minimum capital requirements, and ~~inspection~~examinations by state and federal regulatory agencies concerning various aspects of our business. As a licensed Foreign Money Services business in Canada, we are subject to Canadian compliance regulations applicable to money movement and sanctions requirements.

Evaluation of our compliance efforts in the U.S. and Canada, as well as ~~the~~ questions ofas to whether and to what extent our products and services are considered money transmission, are matters of regulatory interpretation and could change over time. In the past, ~~regulators have identified violations and~~ we have been subject to fines and other penalties by regulatory authorities ~~due to their interpretations and applications to our business~~for violations of ~~their respective~~ state money transmission laws. Regulators and third-party auditors have also identified gaps in our anti-money laundering ~~program.~~and sanctions program, which we have addressed through remediation processes. In the future, as a result of the regulations applicable to our business, we could be subject to investigations and resulting liability, including governmental fines, restrictions on our business, or other sanctions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain additional licenses or regulatory approvals. There can be no assurance that we will be able to obtain or maintain any such licenses, and, even if we were able to do so, there could be substantial costs and potential product changes involved in maintaining such licenses, which could have a material and adverse effect on our business. In addition, there are substantial costs and potential product changes involved in maintaining and renewing such licenses, certifications, and approvals, and we could be subject to fines or other enforcement action if we are found to violate disclosure, reporting, anti-money laundering, capitalization, corporate governance, or other requirements of such licenses. These factors could impose substantial additional costs, involve considerable delay to the development or provision of our products or services, require significant and costly operational changes, or prevent us from providing our products or services in any given market.

Government agencies may impose new or additional rules on money transmission, including regulations that:

•prohibit, restrict, and/or impose taxes or fees on money transmission transactions in, to or from certain countries or with certain governments, individuals, and entities;

•impose additional customer and spending business identification and customer or spending business due diligence requirements;

•impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring;

•limit the types of entities capable of providing money transmission services, or impose additional licensing or registration requirements;

•impose minimum capital or other financial requirements;

•limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer funds, transaction fees, and revenue derived from foreign exchange;

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•

~~require enhanced disclosures to our money transmission customers;~~

•require enhanced disclosures to our money transmission customers;

•require the principal amount of money transmission originated in a country to be invested in that country or held in trust until paid;

•restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country or region.

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Our business and operations have been and may continue to be affected by the global outbreak of the COVID-19 pandemic.

Our business and operations have been and may continue to be affected by the COVID-19 pandemic and variants thereof. Based on prevailing vaccination rates and public health guidance, most of our employees returned to the office on a hybrid basis in 2022, adhering to any government requirements in effect locally. We continue to monitor the situation and will take action to adjust office attendance policies as circumstances warrant in order to protect the health and safety of our employees. For so long as the COVID-19 pandemic persists, responsive restrictions and policies implemented by governments and companies may have negative implications not only for our business, but also on general business activity and consumer spending, domestic and international supply chains, transportation, the labor market, global capital markets and the global economy, and could result in a prolonged economic downturn. To the extent that these conditions adversely impact the operations and business of our customers, it may have a material adverse impact on our customer growth, payment and transaction volumes, revenues and financial condition. Even after the COVID-19 pandemic has subsided, we may experience material and adverse impacts to our business as a result of any resulting economic downturns, including bankruptcies or insolvencies of customers. To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

Our primary competition remains the legacy manual processes that SMBs have relied on for generations. Our success will depend, to a substantial extent, on the widespread adoption of our cloud-based automated back-office solution as an alternative to existing solutions or adoption by customers that are not using any such solutions at all. Some organizations may be reluctant or unwilling to use our platform for several reasons, including concerns about additional costs, uncertainty regarding the reliability and security of cloud-based offerings, or lack of awareness of the benefits of our platform. Our ability to expand sales of our platform depends on several factors, including prospective customers’ awareness of our platform, the timely completion, introduction, and market acceptance of enhancements to our platform or new products that we may introduce, the effectiveness of our marketing programs, the costs of our platform, and the success of our competitors. If we are unsuccessful in developing and marketing our platform, or if organizations do not perceive or value the benefits of our platform as an alternative to legacy systems, the market for our platform may not continue to develop or may develop more slowly than we expect, either of which would harm our growth prospects and operating results.

If we lose our founder or key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.

Our success and future growth depend upon the continued services of our management team and other key employees. Our founder and Chief Executive Officer, René Lacerte, is critical to our overall management, as well as the continued development of our products, ~~strategic~~our partnerships, our culture, our relationships with accounting firms, and our ~~strategic direction.~~strategy. From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. In addition, we may face challenges retaining senior management of acquired businesses. Our senior management and key employees are employed on an at-will basis. We currently do not have “key person” insurance onfor any of our employees. Certain of our key employees have been with us for a long period of time and have fully vested stock options or other long-term equity incentives that may become valuable and ~~will be~~are publicly tradable now that we are a public company. The loss of our founder, or one or more of our senior management, key members of senior management of acquired companies or other key employees could harm our business, and we may not be able to find adequate replacements. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees or that we would be able to timely replace members of our senior management or other key employees should any of them depart.

In addition, to execute our business strategy, we must attract and retain highly-qualified personnel. We compete with many other companies for software developers with high levels of experience in designing,

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developing, and managing cloud-based software and payments systems, as well as for skilled legal and compliance and risk operations professionals. Competition for software developers, compliance and risk management personnel and other key employees in our industry and locations is intense and increasing and may be exacerbated in tight labor markets. We may also face increased competition for personnel from other companies which adopt approaches to remote work that differ from ours. In addition, the current regulatory environment related to immigration is uncertain, including with respect to the availability of H1-B and other visas. If a new or revised visa program is implemented, it may impact our ability to recruit, hire, retain or effectively collaborate with qualified skilled personnel, including in the areas of artificial intelligence and machine learning, and payment systems and risk management, which could adversely impact our business, operating results and financial condition. Many of the companies with which we compete for experienced personnel have greater resources than we do and can frequently offer such personnel substantially greater compensation than we can offer. If we fail to identify, attract, develop and integrate new personnel, or fail to retain and motivate our current personnel, our growth prospects would be adversely affected.

Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition.

We have in the past and may in the future seek to acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities. For example, in November 2022 we completed the acquisition of Finmark Financial, Inc. (Finmark), to augment our financial planning product offerings, However, we have limited experience in acquiring other businesses, and we may not successfully identify desirable acquisition targets in the future. Moreover, an acquisition, investment, or business relationship may not further our business strategy or result in the economic benefits or synergies as expected or may result in unforeseen operating difficulties and expenditures, including disrupting our ongoing operations, diverting management from their primary responsibilities, subjecting us to additional liabilities, increasing our expenses, and adversely impacting our business, financial condition, and operating results.

In addition, the technology and information security systems and infrastructure of businesses we acquire may be underdeveloped or subject to vulnerabilities, subjecting us to additional liabilities. We could incur significant costs related to the implementation of enhancements to or the scaling of information security systems and infrastructure of acquired businesses and related to the remediation of any related security breaches. If security, data protection and information security measures in place at businesses we acquire are inadequate or breached, or are subject to cybersecurity attacks, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged and we could be subject to regulatory scrutiny, investigations, proceedings, and penalties. We may also acquire businesses whose operations may not be fully compliant with all applicable law, including economic and trade sanctions and anti-money laundering, counter-terrorist financing and privacy laws, subjecting us to potential liabilities and requiring us to spend considerable time, effort, and resources to address.

Moreover, we may acquire businesses whose management or compliance functions require significant investments to support current and anticipated future product offerings, or that have underdeveloped internal control infrastructures or procedures or with respect to which we discover significant deficiencies or material weaknesses. The costs that we may incur to implement or improve such functions, controls and procedures may be substantial and we could encounter unexpected delays and challenges related to such activity.

Given the complexity of our platform and the integration that we offer to our accounting firm customers and financial institution partners, it may be critical that certain businesses or technologies that we acquire be successfully and fully integrated into our platform. In addition, some acquisitions may require us to spend considerable time, effort, and resources to integrate employees from the acquired business into our teams, and acquisitions of companies in lines of business in which we lack expertise may require considerable management time, oversight, and research before we see the desired benefit of such acquisitions. Therefore, we may be exposed to unknown liabilities and the anticipated benefits of any acquisition, investment, or business relationship may not be realized, if, for example, we fail to successfully integrate such acquisitions, or the technologies associated with such acquisitions, into our company. The challenges and costs of integrating and achieving anticipated synergies and benefits of transactions, and the risk that the anticipated benefits of the proposed transaction may not be fully realized or take longer to realize than expected, may be compounded

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where we attempt to integrate multiple acquired businesses within similar timeframes, as was the case with the concurrent integration efforts related to our acquisitions of the Divvy and Invoice2go businesses.

Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, as well as unfavorable accounting treatment and exposure to claims and disputes by third parties, including intellectual property claims. We also may not generate sufficient financial returns to offset the costs and expenses related to any acquisitions. In addition, if an acquired business fails to meet our expectations, our business, operating results, and financial condition may suffer.

If we fail to offer high-quality customer support, or if our support is more expensive than anticipated, our business and reputation could suffer.

Our customers rely on our customer support services ~~which we refer to as customer success,~~ to resolve issues and realize the full benefits provided by our platform. High-quality support is also important for the renewal and expansion of our subscriptions with existing customers. We ~~primarily~~ provide customer support ~~over~~via chat email, and ~~email, with limited phone-based support.~~phone. If we do not help our customers quickly resolve issues and provide effective ongoing support, or if our support personnel or methods of providing support are insufficient to meet the needs of our customers, our ability to retain customers, increase adoption by our existing customers, and acquire new customers could suffer, and our reputation with existing or potential customers could be harmed. If we are not able to meet the customer support needs of our customers ~~by chat and email~~ during the hours that we currently provide support, we may need to increase our support coverage ~~and~~or provide additional ~~phone-based~~ support, which may reduce our profitability.

If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing business needs, requirements, or preferences, our products may become less competitive.

The market for SMB software financial back-office solutions is relatively new and subject to ongoing technological change, evolving industry standards, payment methods and changing regulations, and changing customer needs, requirements, and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis, including launching new products and services. In addition, the market for our Divvy spend and expense management solution is new and fragmented, and it is uncertain whether we will achieve and sustain high levels of demand and market adoption. The success of any new product and service, or any enhancements or modifications to existing products and services, depends on several factors, including the timely completion, introduction, and market acceptance of such products and services, enhancements, and modifications. If we are unable to enhance our platform, add new payment methods, or develop new products that keep pace with technological and regulatory change and achieve market acceptance, or if new technologies emerge that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently, or more securely than our products, our business, operating results, and financial condition would be adversely affected.

Furthermore, modifications to our existing platform or technology will increase our research and development expenses. Any failure of our services to operate effectively with existing or future network platforms and technologies could reduce the demand for our services, result in customer or spending business dissatisfaction and adversely affect our business.

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If the prices we charge for our services are unacceptable to our customers, our operating results will be harmed.

We generate revenue by charging customers a fixed monthly rate per user for subscriptions as well as transaction fees. As the market for our platform matures, or as new or existing competitors introduce new products or services that compete with ours, we may experience pricing pressure and be unable to renew our agreements with existing customers or attract new customers at prices that are consistent with our pricing model and operating budget. Our pricing strategy for new products we introduce, including our virtual card and cross-border payment products, may prove to be unappealing to our customers, and our competitors could choose to bundle certain products and services competitive with ours. If this were to occur, it is possible that we would have to change our pricing strategies or reduce our prices, which could harm our revenue, gross profits, and operating results.

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We typically provide service level commitments under our ~~strategic~~financial institution partner agreements. If we fail to meet these contractual commitments, we could be obligated to provide credits or refunds for prepaid amounts related to unused subscription services or face contract terminations, which could adversely affect our ~~revenue~~.

revenue.

Our agreements with our ~~strategic~~financial institution partners typically contain service level commitments evaluated on a monthly basis. If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our platform, we may be contractually obligated to provide these partners with service credits, up to 10% of the partner’s subscription fees for the month in which the service level was not met. In addition, we could face contract terminations, in which case we would be subject to refunds for prepaid amounts related to unused subscription services. Our revenue could be significantly affected if we suffer unexcused downtime under our agreements with our partners.

Further, any extended service outages could adversely affect our reputation, revenue, and operating results.

We may not be able to scale our business quickly enough to meet our customers’ growing needs, and if we are not able to grow efficiently, our operating results could be harmed.

As usage of our platform grows and we sign additional ~~strategic~~ partners, we will need to devote additional resources to improving and maintaining our infrastructure and computer network and integrating with third-party applications to maintain the performance of our platform. In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support, risk and compliance operations, and professional services, to serve our growing customer base.

Any failure of or delay in these efforts could result in service interruptions, impaired system performance, and reduced customer satisfaction, resulting in decreased sales to new customers, lower subscription renewal rates by existing customers, the issuance of service credits, or requested refunds, all of which could hurt our revenue growth. If sustained or repeated, these performance issues could reduce the attractiveness of our platform to customers and could result in lost customer opportunities and lower renewal rates, any of which could hurt our revenue growth, customer loyalty, and our reputation. Even if we are successful in these efforts to scale our business, they will be expensive and complex, and require the dedication of significant management time and attention. We could also face inefficiencies or service disruptions as a result of our efforts to scale our internal infrastructure. We cannot be sure that the expansion and improvements to our internal infrastructure will be effectively implemented on a timely basis, if at all, and such failures could adversely affect our business, operating results, and financial condition.

~~The failure to attract and retain additional qualified personnel and any restrictions on the movement of personnel could prevent us from executing our business strategy and growth plans.~~

To execute our business strategy, we must attract and retain highly qualified personnel. Competition for executive officers, software developers, compliance and risk management personnel and other key employees in our industry and location is intense and increasing. We compete with many other companies for software developers with high levels of experience in designing, developing, and managing cloud-based software and payment systems, as well as for skilled legal and compliance and risk operations professionals. The current regulatory environment related to immigration may increase the likelihood that immigration laws may be modified to further limit the availability of H1-B and other visas. If a new or revised visa program is implemented, it may impact our ability to recruit, hire, retain or effectively collaborate with qualified skilled personnel, including in the areas of artificial intelligence and machine learning, and payment systems and risk management, which could adversely impact our business, operating results and financial condition. Many of the companies with which we compete for experienced personnel have greater resources than we do and can frequently offer such personnel substantially greater compensation than we can offer. If we fail to identify, attract, develop and integrate new personnel, or fail to retain and motivate our current personnel, our growth prospects would be adversely affected.

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Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products.

Our ability to increase our customer base and achieve broader market acceptance of our platform will depend to a significant extent on our ability to expand our sales and marketing organizations, and to deploy our sales and marketing resources efficiently. WeAlthough we will adjust our sales and marketing spend levels as needed in response to changes in the economic environment, we plan to continue expanding our direct-to-SMB sales force as well as our sales force focused on identifying new ~~strategic partners.~~partnership opportunities. We also dedicate significant resources to sales and marketing programs, including digital advertising through services such as Google AdWords. The effectiveness and cost of our online advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use, and changes in the search algorithms used by major search engines. These efforts will require us to invest significant financial and other resources.

In addition, our ability to broaden the spending business base for our Divvy spend and expense management offerings and achieve broader market acceptance of these products will depend to a significant extent on the ability of our sales and marketing organizations to work together to drive our sales pipeline and cultivate spending business and partner relationships to drive revenue growth. If we are unable to recruit, hire, develop, and retain talented sales or marketing personnel, if our new sales or marketing personnel and partners are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs are not effective, our ability to broaden our spending business base and achieve broader market acceptance of our platform could be harmed. Moreover, our Divvy marketing efforts depend significantly on our ability to call on our current spending businesses to provide positive references to new, potential spending

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business customers. Given our limited number of long-term spending businesses, the loss or dissatisfaction of any spending business could substantially harm our brand and reputation, inhibit the market adoption of our offering and impair our ability to attract new spending businesses and maintain existing spending businesses.

Our business and operating results will be harmed if our sales and marketing efforts do not generate significant increases in revenue. We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs and advertising are not effective.

We are subject to governmental regulation and other legal obligations, particularly those related to privacy, data protection, and information security, and our actual or perceived failure to comply with such obligations could harm our business, by resulting in litigation, fines, penalties, or adverse publicity and reputational damage that may negatively affect the value of our business and decrease the price of our common stock. Compliance with such laws could also result in additional costs and liabilities to us or inhibit sales of our products.

Our customers, their suppliers, ~~customers~~ and other users store personal and business information, financial information and other sensitive information on our platform. In addition, we receive, store, and process personal and business information and other data from and about actual and prospective customers and users, in addition to our employees and service providers. Our handling of data is subject to a variety of laws and regulations, including regulation by various government agencies, such as the U.S. Federal Trade Commission (FTC), and various state, local, and foreign agencies. Our data handling also is subject to contractual obligations and industry standards.

The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, distribution, use, and storage of data relating to individuals and businesses, including the use of contact information and other data for marketing, advertising, and other communications with individuals and businesses. In the ~~United States,~~U.S., various laws and regulations apply to the collection, processing, disclosure, and security of certain types of data, including ~~the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act,~~ the Gramm Leach Bliley Act and state laws relating to privacy and data security. Additionally, the FTC and many state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the online collection, use, dissemination, and security of data. For example, in June 2018, California enacted the California Consumer Privacy Act (CCPA), which became operative on January 1, 2020 and broadly defines personal information, gives California residents expanded privacy rights and protections, and provides for civil penalties for violations and a private right of action for data breaches. The CCPA was amended several times after its enactment, most recently by the California Privacy Rights Act (CPRA) which, as of its effective date of January 1, 2023, gives California residents expanded privacy rights, including the right to opt out of certain personal information sharing, the use of “sensitive personal information,” and the use of personal information for automated decision-making or targeted advertising. The CCPA and CPRA provide for civil penalties and a private right of action for data breaches that is expected to increase data breach litigation. Many aspects of the ~~California Consumer Privacy Act~~CCPA, the CPRA, and ~~its~~their interpretation remain unclear, and ~~its~~their full impact on our business and operations remains uncertain. ~~The~~Following the lead of California, several other states, including Colorado, Utah, Virginia and Connecticut have each enacted laws similar to the CCPA/CPRA and other states are considering enacting privacy laws as well. Accordingly, the laws and regulations relating to privacy, data protection, and ~~data~~information security are evolving, can be subject to significant change, and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.

In addition, several foreign countries and governmental bodies, including the European Union (EU) and the United Kingdom (UK), have laws and regulations dealing with the handling and processing of personal information obtained from their residents, which in certain cases are more restrictive than those in the ~~United States.~~U.S. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure, and security of various types of data, including data that identifies or may be used to identify an individual, such as names, email addresses, and in some jurisdictions, Internet Protocol (IP) addresses. ~~While we believe that the products~~Our current and ~~services that we currently offer do not~~prospective service offerings subject us to ~~such~~the EU's General Data Protection Regulation (GDPR), the UK GDPR, Australian and Canadian privacy laws ~~or regulations in~~and the privacy laws of many other foreign ~~jurisdictions, such~~jurisdictions. Such laws and regulations may be modified or subject to new or different interpretations, and new laws and regulations may be enacted in the future.

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For example, the GDPR and the UK GDPR impose stringent operational requirements for controllers and processors of personal data of individuals within the European ~~Union,~~Economic Area and the ~~General Data Protection Regulation (GDPR), significantly increases the level of sanctions for~~UK, respectively, and non-compliance ~~from those in existing EU data protection law~~can trigger robust regulatory enforcement and ~~imposes direct obligations on data processors in addition to data controllers. EU data protection authorities have the power to impose administrative~~ fines ~~for violations of the GDPR~~ of up to ~~a maximum~~the greater of €20 million or 4% of the annual global revenues. Among other requirements, these laws regulate transfers of personal data ~~controller’s~~to third countries that have not been found to provide adequate protection to such personal data, including the United States. The efficacy and longevity of current transfer mechanisms between the EU or ~~data processor’s total worldwide global turnover for~~ the ~~preceding fiscal year, whichever is higher,~~UK and ~~violations~~the United States remains uncertain. Violations of the GDPR or the UK GDPR may also lead to damages claims by data controllers and data ~~subjects. Such penalties are~~subjects, in addition to ~~any~~ civil litigation claims by data

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controllers, customers, and data subjects. While we believe that the products and services that we currently offer do not subject us to the GDPR, the GDPR and other laws and regulations relating to privacy, data protection, and information security may be modified or subject to new or different interpretations or may be modified in the future, or modifications or enhancements that we make to our products may subject us to GDPR, or we otherwise may become, or have it asserted that we are, subject to the GDPR or other laws or regulations relating to privacy, data protection, or information security. If we are, or are asserted to be, subject to the GDPR, we may need to take steps to cause our processes to be compliant with applicable portions of the GDPR, but we cannot assure you that we will be able to implement changes in a timely manner or without significant disruption to our business, or that such steps will be effective, and we may face the risk of liability under the GDPR.

The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, as a result of the rapidly evolving regulatory framework for privacy issues worldwide. For example, laws relating to the liability of providers of online services for activities of their users and other third parties are currently being tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the ads posted, or the content provided by users. As a result of the laws that are or may be applicable to us, and due to the sensitive nature of the information we collect, we have implemented policies and procedures to preserve and protect our data and our customers’ data against loss, misuse, corruption, misappropriation caused by systems failures, or unauthorized access. If our policies, procedures, or measures relating to privacy, data protection, information security, marketing, or customer communications fail to comply with laws, regulations, policies, legal obligations, or industry standards, we may be subject to governmental enforcement actions, litigation, regulatory investigations, fines, penalties, and negative publicity, and it could cause our application providers, customers, and partners to lose trust in us, and have an adverse effect on our business, operating results, and financial condition.

In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that may apply to us. Because the interpretation and application of privacy, ~~and~~ data protection and information security laws, regulations, rules, and other standards are still uncertain, it is possible that these laws, rules, regulations, and other actual or alleged legal obligations, such as contractual or self-regulatory obligations, may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the functionality of our platform. If so, in addition to the possibility of fines, lawsuits, and other claims, we could be required to fundamentally change our business activities and practices or modify our software, which could have an adverse effect on our business.

Any failure or perceived failure by us to comply with laws, regulations, policies, legal, or contractual obligations, industry standards, or regulatory guidance relating to privacy, data protection, or ~~data~~information security, may result in governmental investigations and enforcement actions, litigation, fines and penalties, or adverse publicity, and could cause our customers and partners to lose trust in us, which could have an adverse effect on our reputation and business. We expect that there will continue to be new proposed laws, regulations, and industry standards relating to privacy, data protection, information security, marketing, and consumer communications, ~~and information security,~~ and we cannot determine the impact such future laws, regulations, and standards may have on our business. Future laws, regulations, standards, and other obligations or any changed interpretation of existing laws or regulations could impair our ability to develop and market new functionality and maintain and grow our customer base and increase revenue. Future restrictions on the collection, use, sharing, or disclosure of data, or additional requirements for express or implied consent of our customers, partners, or end users for the use and disclosure of such information could require us to incur additional costs or modify our platform, possibly in a material manner, and could limit our ability to develop new functionality.

If we are not able to comply with these laws or regulations, or if we become liable under these laws or regulations, weour business, financial condition or reputation could be ~~directly~~ harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain products, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect the growth of our business. Furthermore, any costs incurred as a result of this potential liability could harm our operating results.

We, our strategic partners, our customers, and others who use our services obtain and process a large amount of sensitive data. Any real or perceived improper or unauthorized use of, disclosure of, or access to such data could harm our reputation as a trusted brand, as well as have a material adverse effect on our business.

We, our strategic partners, our customers, and the third-party vendors and data centers that we use, obtain and process large amounts of sensitive data, including data related to our customers and their transactions, as well as other data of the counterparties to their payments. We face risks, including to our reputation as a trusted brand, in the handling and protection of this data, and these risks will increase as our business continues to expand to include new products and technologies.

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Cybersecurity incidents and malicious internet-based activity continue to increase generally, and providers of cloud-based services have frequently been targeted by such attacks. These cybersecurity challenges, including threats to our own IT infrastructure or those of our customers or third-party providers, may take a variety of forms ranging from stolen bank accounts, business email compromise, customer employee fraud, account takeover, check fraud or cybersecurity attacks, to “mega breaches” targeted against cloud-based services and other hosted software, which could be initiated by individual or groups of hackers or sophisticated cyber criminals. A cybersecurity incident or breach could result in disclosure of confidential information and intellectual property, or cause production downtimes and compromised data. We have in the past experienced cybersecurity incidents of limited scale. We may be unable to anticipate or prevent techniques used in the future to obtain unauthorized access or to sabotage systems because they change frequently and often are not detected until after an incident has occurred. As we increase our customer base and our brand becomes more widely known and recognized, third parties may increasingly seek to compromise our security controls or gain unauthorized access to our sensitive corporate information or our customers’ data.

We have administrative, technical, and physical security measures in place, and we have policies and procedures in place to contractually require service providers to whom we disclose data to implement and maintain reasonable privacy and security measures. However, if our privacy protection or security measures or those of the previously mentioned third parties are inadequate or are breached as a result of third-party action, employee or contractor error, malfeasance, malware, phishing, hacking attacks, system error, software bugs or defects in our products, trickery, process failure, or otherwise, and, as a result, there is improper disclosure of, or someone obtains unauthorized access to or exfiltrates funds or sensitive information, including personally identifiable information, on our systems or our partners’ systems, or if we suffer a ransomware or advanced persistent threat attack, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged. Recent high-profile security breaches and related disclosures of sensitive data by large institutions suggest that the risk of such events is significant, even if privacy protection and security measures are implemented and enforced. If sensitive information is lost or improperly disclosed or threatened to be disclosed, we could incur significant costs associated with remediation and the implementation of additional security measures, and may incur significant liability and financial loss, and be subject to regulatory scrutiny, investigations, proceedings, and penalties.

In addition, our financial institution strategic partners conduct regular audits of our cybersecurity program, and if any of them were to conclude that our systems and procedures are insufficiently rigorous, they could terminate their relationships with us, and our financial results and business could be adversely affected. Under our terms of service and our contracts with strategic partners, if there is a breach of payment information that we store, we could be liable to the partner for their losses and related expenses. Additionally, if our own confidential business information were improperly disclosed, our business could be materially and adversely affected. A core aspect of our business is the reliability and security of our platform. Any perceived or actual breach of security, regardless of how it occurs or the extent of the breach, could have a significant impact on our reputation as a trusted brand, cause us to lose existing partners or other customers, prevent us from obtaining new partners and other customers, require us to expend significant funds to remedy problems caused by breaches and implement measures to prevent further breaches, and expose us to legal risk and potential liability including those resulting from governmental or regulatory investigations, class action litigation, and costs associated with remediation, such as fraud monitoring and forensics. Any actual or perceived security breach at a company providing services to us or our customers could have similar effects.

We currently handle cross-border payments and plan to expand our ~~offering~~payments offerings to new customers and to make payments to new countries, creating a variety of operational challenges.

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A component of our growth strategy involves our cross-border payments product and, ultimately, expanding our operations internationally. Although we do not currently ~~serve~~offer our payments products to customers outside the ~~United States,~~U.S., starting in 2018, we introduced cross-border payments, ~~through our relationship with Cambridge Mercantile,~~ and now, working with two international payment services, offer our ~~United States-based~~U.S.-based customers the ability to disburse funds to over 130 countries. We are continuing to adapt to and develop strategies to address payments to new countries. However, there is no guarantee that such efforts will have the desired effect.

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Our cross-border payments product and international ~~operations~~expansion strategy involve a variety of risks, including:

~~changes in~~•complying with financial regulations and our ability to comply and obtain any relevant ~~licenses;~~

licenses in applicable countries or jurisdictions;

•currency exchange rate fluctuations and ~~the resulting effect on~~ our ~~revenue~~cross-border payments providers' ability to provide us favorable currency exchange rates, which may impact our revenues and ~~expenses, and the cost and risk of entering into hedging transactions;~~

expenses;

•reduction or cessation in cross-border trade resulting from government sanctions, trade ~~sanctions,~~tariffs or restrictions, other trade regulations ~~and~~or strained international relations;

•potential application of more stringent regulations relating to privacy, ~~data~~information protection, and data security, and the authorized use of, or access to, commercial and personal information;

~~potential changes~~•sanctions imposed by applicable government authorities or jurisdictions, such as the U.S. Office of Foreign Assets Control, or comparable authorities in ~~trade relations, regulations, or laws;~~

other countries;

•exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act (FCPA), U.S. bribery laws, the UK Bribery Act, and similar laws and regulations in other jurisdictions; ~~and~~

•unexpected changes in tax ~~laws.~~

laws; and

•cessation of business of a cross-border payment service provider or other limitation or inability of a cross-border payment service provider to make payments into certain countries, including for the reasons set forth above.

If we invest substantial time and resources to further expand our cross-border payments offering and are unable to do so successfully and in a timely manner, our business and operating results may suffer.

~~Future acquisitions, strategic investments, partnerships, collaborations,~~

Our card payment products generate interchange revenues which exposes us to potential variability in income and other risks.

Our card payment products, including our Divvy card and our virtual card payment products, generate revenues primarily from interchange paid by the supplier accepting the cards for purchase transactions, which involve a variety of risks, including:

•interchange income fluctuations due to the variability of card acceptance practices at supplier locations, and the resulting effect on our revenue;

•changes in card network interchange rates or ~~alliances~~rules which could ~~be difficult~~dissuade new and existing card-accepting suppliers from continuing to ~~identify~~accept card payments;

•unexpected compliance and ~~integrate, divert~~risk management imposed by the ~~attention~~card networks;

•declines in the number of ~~management, disrupt~~active card-accepting suppliers due to concerns about cost or operational complexity; and

•unexpected changes in card acceptance or card issuing rules which may impact our ~~business, dilute stockholder value, and~~ability to offer this payment product.

Any of these developments could adversely affect our operating ~~results and financial condition.~~

We may in the future seek to acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities. The pursuitresults.

Table of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not such acquisitions are completed. In addition, we have no experience in acquiring other businesses, and we may not successfully identify desirable acquisition targets, or if we acquire additional businesses, we may not be able to integrate them effectively following the acquisition.

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We use open source software in our products, which could subject us to litigation or other actions.

We use open source software in our products. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate it into their products. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition, or require us to devote additional research and development resources to change our products. In addition, if we were to combine our proprietary software products with open source software in a certain manner under certain open source licenses, we could be required to release the source code of our proprietary software products. If we inappropriately use or incorporate open source software subject to certain types of open source licenses that challenge the proprietary nature of our products, we may be required to re-engineer such products, discontinue the sale of such products, or take other remedial actions.

If we fail to maintain and enhance our ~~brand,~~brands, our ability to expand our customer base will be impaired and our business, operating results, and financial condition may suffer.

We believe that maintaining and enhancing ~~the Bill.com brand is~~our brands are important to support the marketing and sale of our existing and future products to new customers and ~~strategic~~ partners and to expand sales of our ~~platform~~platforms to new and existing customers and ~~strategic~~ partners. Our ability to protect our BILL brand is limited as a result of its descriptive nature. Successfully maintaining and enhancing our ~~brand~~brands will depend largely on the effectiveness of our marketing and demand generation efforts, our ability to provide reliable products that continue to meet the needs of our customers at competitive prices, our ability to maintain our customers’ trust, our ability to continue to develop new functionality and products, and our ability to successfully differentiate our platform and products from competitive products and services. Our brand promotion activities may not generate customer awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our ~~brand,~~brands, our business could suffer.

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If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate less revenue and incur costly litigation to protect our rights.

Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws, and contractual provisions to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. While we have been issued patents in the ~~United States~~U.S. and have additional patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications. In addition, any patents issued in the future may not provide us with competitive advantages or may be successfully challenged by third parties. Any of our patents, trademarks, or other intellectual property rights may be challenged or circumvented by others or invalidated through administrative process or litigation. There can be no guarantee that others will not independently develop similar products, duplicate any of our products, or design around our patents. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours.

No assurance can be given that these agreements will be effective in controlling access to and distribution of our products and proprietary information. Further, these agreements do not prevent our competitors or partners from independently developing technologies that are substantially equivalent or superior to our platform.

We have been in the past, and may in the future be, subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.

We have been in the past and may in the future become subject to intellectual property disputes. Lawsuits are time-consuming and expensive to resolve and they divert management’s time and attention. Although we carry insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed. We cannot predict the outcome of lawsuits and cannot assure you that the results of any such actions will not have an adverse effect on our business, operating results, or financial condition.

The software industry is characterized by the existence of many patents, copyrights, trademarks, trade secrets, and other intellectual and proprietary rights. Companies in the software industry are often required to defend against litigation claims based on allegations of infringement or other violations of intellectual property rights. Our technologies may not be able to withstand any third-party claims against their use. In addition, many

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companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue, and therefore, our patents may provide little or no deterrence as we would not be able to assert them against such entities or individuals. If a third party is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we would be forced to limit or stop sales of our software or cease business activities related to such intellectual property. Any inability to license third-party technology in the future would have an adverse effect on our business or operating results and would adversely affect our ability to compete. We may also be contractually obligated to indemnify our customers in the event of infringement of a third party’s intellectual property rights. Responding to such claims, regardless of their merit, can be time consuming, costly to defend, and damaging to our reputation and brand.

Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection, and other losses.

Our agreements with ~~strategic~~financial institution partners and some larger customers include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by us to property or persons, or other liabilities relating to or arising from our platform or other contractual obligations. Some of these indemnity agreements provide for uncapped liability and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity payments could harm our business, operating results, and financial condition. Although we normally limit our liability with respect to such obligations in our contracts with direct customers and with customers acquired through our accounting firm partners, we may still incur substantial liability, and we may be required to cease use of certain functions of our platform or products, as a result of ~~IP-related~~intellectual property-related claims. Any dispute with a customer with respect to these obligations could have adverse effects on our relationship with that customer and other existing or new customers, and harm our business and operating results. In addition, although we carry insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed, or otherwise protect us from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.

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Changes to payment card networks ~~fees~~rules or ~~rules~~fees could harm our business.

We are required to comply with Mastercard, American Express, and Visa payment card network operating rules ~~in connection with~~applicable to our ~~virtual~~ card ~~payments service and our subscription billing engine.~~products. We have agreed to reimburse ~~our~~certain service providers for any fines they are assessed by payment card networks as a result of any rule violations by us. We may also be directly liable to the payment card networks for rule violations. The payment card networks set and interpret the card operating rules. The payment card networks could adopt new operating rules or interpret or reinterpret existing rules that we or our processors might find difficult or even impossible to follow, or costly to implement. We also may seek to introduce other card-related products in the future, which would entail compliance with additional operating rules. As a result of any violations of rules, new rules being implemented, or increased fees, we could be hindered or lose our ability to ~~make payments using virtual cards, or such payments could become prohibitively expensive for us or for~~provide our ~~customers. If~~card products, which would adversely affect our business. In addition, we are ~~unable~~contractually obligated to ~~make customer payments~~comply with MasterCard and Visa network rules as a card program manager. As a result of any violations of these rules or new rules being implemented, we could lose our ability or rights to ~~vendors using virtual cards, our business would be adversely affected.~~

act as a card program manager.

Our business is subject to extensive government regulation and oversight. Our failure to comply with extensive, complex, overlapping, and frequently changing rules, regulations, and legal interpretations could materially harm our business.

Our success and increased visibility may result in increased regulatory oversight and enforcement and more restrictive rules and regulations that apply to our business. We are subject to a wide variety of local, state, federal, and international laws, rules, regulations, licensing schemes, and industry standards in the ~~United States~~U.S. and in other countries in which we ~~operate.~~operate and in many of the approximately 150 countries in which Invoice2go has subscribers. These laws, rules, regulations, licensing schemes, and standards govern numerous areas that are important to our business. In addition to the payments and financial services-related regulations, and the privacy, data protection, and information security-related laws described elsewhere, our business is also subject

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to, without limitation, rules and regulations applicable to: securities, labor and employment, immigration, competition, and marketing and communications practices. Laws, rules, regulations, licensing schemes, and standards applicable to our business are subject to ~~changes~~change and evolving interpretations and application, including by means of legislative changes and/or executive orders, and it can be difficult to predict how they may be applied to our business and the way we conduct our operations, particularly as we introduce new products and services and expand into new jurisdictions. We may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair our ability to offer our existing or planned features, products, and services and/or increase our cost of doing business.

Although we have a compliance program focused on the laws, rules, regulations, licensing schemes, and industry standards that we have assessed as applicable to our business and we are continually investing more in this program, there can be no assurance that our employees or contractors will not violate such laws, rules, regulations, licensing schemes, and industry standards. Any failure or perceived failure to comply with existing or new laws, rules, regulations, licensing schemes, industry standards, or orders of any governmental authority (including changes to or expansion of the interpretation of those laws, regulations, standards or orders), may:

•subject us to significant fines, penalties, criminal and civil lawsuits, license suspension or revocation, forfeiture of significant assets, audits, inquiries, whistleblower complaints, adverse media coverage, investigations, and enforcement actions in one or more jurisdictions levied by federal, state, local or foreign regulators, state attorneys general, and private plaintiffs who may be acting as private attorneys general pursuant to various applicable federal, state, and local laws;

•result in additional compliance and licensure requirements;

•increase regulatory scrutiny of our business; and

•restrict our operations and force us to change our business practices or compliance program, make product or operational changes, or delay planned product launches or improvements.

The complexity of U.S. federal and state regulatory and enforcement regimes, coupled with the scope of our international operations and the evolving regulatory environment, could result in a single event giving rise to many overlapping investigations and legal and regulatory proceedings by multiple government authorities in different jurisdictions.

Any of the foregoing could, individually or in the aggregate, harm our reputation as a trusted provider, damage our brands and business, cause us to lose existing customers, prevent us from obtaining new customers, require us to expend significant funds to remedy problems caused by breaches and to avert further breaches, expose us to legal risk and potential liability, and adversely affect our results of operations and financial condition.

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We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.

We have funded our operations since inception primarily through equity and debt financings, sales of subscriptions to our products, and usage-based transaction fees. We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds. We may also seek to raise additional capital from equity or debt financings on an opportunistic basis when we believe there are suitable opportunities for doing so. Additional financing may not be available on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results, and financial condition. If we incur additional debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. Furthermore, if we issue additional equity securities, including in connection with merger and acquisition transactions, stockholders will experience ~~dilution, and the~~dilution. In addition, new equity securities could have rights senior to those of our common stock. During 2022, interest rates have increased and the trading prices for our common stock and other technology companies have been highly volatile, which may reduce our ability to access capital on favorable terms or at all. More recently, credit and capital markets have been impacted by instability in the U.S. banking system. In addition, a

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recession or depression, high inflation or other sustained adverse market event could materially and adversely affect our business and the value of our common stock. Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities. As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

As of June 30, ~~2019,~~2022, we had ~~U.S. federal~~ net operating loss (NOL) carryforwards of approximately ~~$104.2~~$1.5 billion, $1.1 billion, and $61.3 million for federal, state and foreign tax purposes, respectively, that are available to reduce future taxable income. If not utilized, the federal and state ~~net operating loss carryforwards of approximately $71.3 million. The federal and material state net operating loss~~NOL carryforwards will begin to expire in ~~2026.~~2027. As of June 30, ~~2019,~~2022, approximately $1.4 billion and $61.3 million of the federal and foreign NOL carryforwards do not expire and will carry forward indefinitely until utilized. As of June 30, 2022, we had ~~U.S. federal~~ research and development tax credit carryforwards of approximately ~~$4.7~~$40.1 million and $27.1 million for federal and state ~~research~~tax purposes, respectively. If not utilized, the federal tax credits will expire at various dates beginning in 2028. The state tax credits do not expire and ~~development tax credit carryforwards of approximately $4.3 million.~~will carry forward indefinitely until utilized. In general, under Sections 382 and 383 of the ~~United States~~U.S. Internal Revenue Code of 1986, as amended ~~or the Code,~~(the Code), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable ~~income.~~income or income tax. If it is determined that we have in the past experienced an ownership change, or if we undergo one or more ownership changes as a result of ~~this offering or~~ future transactions in our stock, then our ability to utilize NOLs and other pre-change tax attributes could be limited by Sections 382 and 383 of the Code. Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 or 383 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. For these reasons, we may not be able to utilize a material portion of the NOLs, even if we were to achieve profitability.

~~The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and significantly reforms the Code. The Tax Act, among other things, includes~~In addition, any future changes ~~to U.S. federal tax rates and the rules governing net operating loss carryforwards. For federal NOLs arising~~ in tax ~~years beginning after December 31, 2017, the Tax Act limits a taxpayer’s~~laws could impact our ability to utilize ~~NOL carryforwards to 80% of taxable income. In addition, federal~~ NOLs ~~arising~~ in future years and may result in greater tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation,liabilities than we would otherwise incur and ~~NOLs generated in tax years ending before January 1, 2018 will continue to have a two-year carryback~~adversely affect our cash flows and twenty-year carryforward period. Deferred tax assets for NOLs will need to be measured at the applicable tax rate in effect when the NOL is expected to be utilized. The changes in the carryforward/ carryback periods as well as the new limitation on use of NOLs may significantly impact our valuation allowance assessments for NOLs generated after December 31, 2017.

financial position.

We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our customers would have to pay for our offering and adversely affect our operating results.

The vast majority of states have considered or adopted laws that impose tax collection obligations on out-of-state companies. States where we have nexus may require us to calculate, collect, and remit taxes on sales in their jurisdiction. Additionally, the Supreme Court of the ~~United States~~U.S. recently ruled in South Dakota v. Wayfair, Inc. et al (Wayfair) that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may enforce laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. We may be obligated to collect and remit sales and use ~~tax~~taxes in states ~~in which~~where we have not collected and remitted sales and use ~~tax.~~taxes. A successful assertion by one or more states requiring us to collect taxes where we historically have not or presently do not do so could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a perceived competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could adversely ~~effect~~affect our business and operating results.

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Changes in our effective tax rate or tax liability may adversely ~~effect~~affect our operating results.

Our effective tax rate could increase due to several factors, including:

•changes in the relative amounts of income before taxes in the various U.S. and international jurisdictions in which we operate due to differing statutory tax rates in various jurisdictions;

•changes in tax laws, tax treaties, and regulations or the interpretation of them, including the 2017 Tax ~~Act;~~

Act as modified by the CARES Act, and the Inflation Reduction Act of 2022;

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•changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business;

•the outcome of current and future tax audits, examinations, or administrative appeals; and

•limitations or adverse findings regarding our ability to do business in some jurisdictions.

Any of these developments could adversely affect our operating results.

Natural catastrophic events, pandemics, and man-made problems such as power-disruptions, computer viruses, data security breaches, war, and terrorism may disrupt our business.

Natural disasters, orpandemics such as COVID-19, other catastrophic events and man-made problems, such as terrorism, war or economic or trade sanctions related to war (including the 2022 Russian invasion of Ukraine), may cause damage or disruption to our operations, international commerce and the global economy, and thus could harm our business. We have a large employee presence in ~~Palo Alto,~~the San Francisco Bay Area in California, ~~and a smaller presence in~~Draper, Utah, Houston, Texas and Sydney, Australia, and our data centers are located in California and Arizona. The west coast of the ~~United States~~U.S. contains active earthquake zones, ~~and~~ the Houston area frequently experiences significant ~~hurricanes.~~hurricanes and Sydney frequently experiences wildfires. In the event of a major earthquake, hurricane or catastrophic event such as fire, flooding, power loss, telecommunications failure, vandalism, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our products, breaches of data security, and loss of critical data, all of which could harm our business, operating results, and financial condition.

In addition, data centers depend on predictable and reliable energy and networking capabilities, which could be affected by a variety of factors, including climate change.

Additionally, as computer malware, viruses, and computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent, we, and third parties upon which we rely, face increased risk in maintaining the performance, reliability, security, and availability of our solutions and related services and technical infrastructure to the satisfaction of our customers. Any computer malware, viruses, computer hacking, fraudulent use attempts, phishing attacks, or other data security breaches related to our network infrastructure or information technology systems or to computer hardware we lease from third parties, could, among other things, harm our reputation and our ability to retain existing customers and attract new customers.

In addition, the insurance we maintain may be insufficient to cover our losses resulting from disasters, cyber-attacks, or other business interruptions, and any incidents may result in loss of, or increased costs of, such insurance.

~~We are obligated to develop and maintain proper and effective internal control over financial reporting, and if~~

If we fail to ~~develop and~~ maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), the Sarbanes-Oxley Act of 2002 ~~(Sarbanes-Oxley Act)~~(Sarbanes-Oxley), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the ~~NYSE,~~New York Stock Exchange (NYSE), and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming, or costly, and increase demand on our systems and ~~resources, particularly after we are no longer an emerging growth company.~~resources. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. ~~The~~ Sarbanes-Oxley ~~Act~~ requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. It may require significant resources and management oversight to maintain and, if necessary, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. Although we have already hired additional employees to comply with these requirements, we may need to hire more employees in the future or engage outside consultants, which would increase our costs and expenses. Furthermore, for fiscal 2018, we identified material weaknesses in our internal control over financial reporting relating to our financial statement close process and reconciliation of funds held for customers. While no material weaknesses were identified in fiscal 2019, our remediation efforts are still ongoing and there can be no assurance that we will not experience additional material weaknesses in the future.

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We ~~will also be~~are required, pursuant to Section 404 of ~~the~~ Sarbanes-Oxley ~~Act~~ (Section 404), to furnish a report by management on, among other things, the effectiveness of our internal control over financial ~~reporting commencing with our second annual report on Form 10-K.~~reporting. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

This assessment ~~will need~~needs to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our independent registered public accounting firm has issued an opinion on the effectiveness of our internal control over financial ~~reporting, provided that~~reporting. Section 404(b) of the Sarbanes-Oxley Act requires our independent registered public accounting firm ~~will not be required~~ to annually attest to the effectiveness of our internal control over financial reporting, ~~until our first annual report required~~which has, and will continue to, be filed with the SEC following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Exchange Act, or the date we are no longer an emerging growth company, as defined in the JOBS Act. We could be an emerging growth company for up to five years.require increased costs, expenses, and management resources. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead ~~to financial statement restatements and require~~ us to ~~incur~~restate our financial statements, which could cause investors to lose confidence in our reported financial information, have a negative effect on the ~~expense~~trading price of ~~remediation.~~our common stock, and result in additional costs to remediate such material weaknesses. We ~~will be~~are required to disclose changes made in our internal control and procedures on a quarterly basis. To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff.

We are in the early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing, and any required remediation in a timely fashion. During the evaluation and testing process, if we identify material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.

If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm ~~is unable to express~~issues an adverse opinion on the effectiveness of our internal control, ~~including as a result of the material weakness described above,~~ we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.

We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

We have identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness identified relates to the lack of formality and evidence of controls over certain IT processes.

To remediate the material weakness, we plan to enhance documentation and retain incremental evidence that supports the effectiveness of controls for certain IT processes by the end of our fiscal year 2023. We will not be able to fully remediate this material weakness until these steps have been completed and have been operating effectively for a sufficient period of time. See Part I, Item 4 “Controls and Procedures” of this quarterly report for additional information about this material weakness and our remediation efforts.

If we are unable to further implement and maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price. If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.

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Furthermore, we cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses. Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.

Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports that are filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information,which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the ~~United States.~~

U.S.

U.S. generally accepted accounting principles (GAAP) is subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported operating results and financial condition and could affect the reporting of transactions already completed before the announcement of a change.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Operating Results—Critical Accounting Policies and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant estimates and judgments involve the identification of performance obligations in revenue recognition, ~~the~~ valuation of ~~the stock- based awards, including the determination~~assets acquired and liabilities assumed in a business combination, estimation of fair value of ~~common~~a reporting unit when assessing goodwill impairment, determination of useful lives of finite-lived intangible assets, present value estimation of operating lease liabilities, valuation of stock option grants, and the period of benefit for amortizing deferred ~~commissions, among others.~~commissions. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.

Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

Market opportunity estimates and growth forecasts, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of addressable users or companies covered by our market opportunity estimates will purchase our products at all or generate any particular level of revenue for us. Any expansion in the markets in which we operate depend on a number of factors, including the cost, performance, and perceived value associated with our platforms and those of our competitors. Even if the markets in which we compete meet the size estimates and growth forecasted, our business could fail to grow at

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similar rates, if at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, our forecasts of market growth should not be taken as indicative of our future growth.

We rely on assumptions and estimates to calculate certain of our performance metrics, and real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business.

We calculate and track certain customer and other performance metrics with internal tools, which are not independently verified by any third-party. While we believe our metrics are reasonable estimates of our customer base and payment and transaction volumes for the applicable period of measurement, the methodologies used to measure these metrics require significant judgment and may be susceptible to algorithm or other technical errors. For example, the accuracy and consistency of our performance metrics may be impacted by changes to internal assumptions regarding how we account for and track customers, limitations on system implementations, and limitations on third party tools’ ability to match our database. If the internal tools we use to track these metrics undercount or overcount performance or contain algorithmic or other technical errors, the data we report may not be accurate. In addition, limitations or errors with respect to how we measure data (or the data that we measure) may affect our understanding of certain details of our business, which could affect our longer-term strategies. Further, as our business develops, we may revise or cease reporting certain metrics if we determine that such metrics are no longer accurate or appropriate measures of our performance. If our performance metrics are not accurate representations of our business, customer base, or payment or transaction volumes; if we discover material inaccuracies in our metrics; or if the metrics we rely on to track our performance do not provide an accurate measurement of our business, our reputation may be harmed, we may be subject to legal or regulatory actions, and our business, financial condition, results of operations, and prospects could be adversely affected.

Any future litigation against us could be costly and time-consuming to defend.

In addition to intellectual property litigation, we have in the past and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees, or claims for reimbursement following misappropriation of customer data. Litigation might result in substantial costs and may divert management’s attention and resources, which might seriously harm our business, overall financial condition, and operating results. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us. A claim brought against us that is uninsured or ~~underinsured~~under-insured could result in unanticipated costs, thereby reducing our operating results and leading analysts or potential investors to reduce their expectations of our performance, which could reduce the trading price of our stock.

Market opportunity estimates and growth forecasts included in the Prospectus or this Quarterly Report on Form 10-Q, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of addressable users or companies covered by our market opportunity estimates will purchase our products at all or generate any particular level of revenue for us. Any expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with our platform and those of our competitors. Even if the market in which we compete meets the size estimates and growth forecasted in the Prospectus, our business could fail to grow at similar rates, if at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, our forecasts of market growth should not be taken as indicative of our future growth.

We are subject to governmental laws and requirements regarding economic and trade sanctions, anti-money laundering, and counter-terror financing that could impair our ability to compete in international markets or subject us to criminal or civil liability if we violate them.

Although we currently only ~~operate~~offer our payment and card products to customers in the ~~United States,~~U.S. and Canada, Invoice2go has international subscribers in ~~the future~~approximately 150 countries, including Australia and several EU countries, for which payment activity is conducted through third party payment providers. As we ~~will seek~~continue to expand internationally ~~and~~we will become subject to additional laws and regulations, and will need to implement new regulatory controls to comply with applicable laws. We are currently required to comply with U.S. economic and trade sanctions administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) and we have processes in place to comply with the OFAC regulations as well as similar requirements in other ~~jurisdictions.~~jurisdictions, including the Australian Sanctions Regime, the Canadian Proceeds of Crime and Terrorist Financing Act and, to the extent we expand our offerings into the United Kingdom and the EU, EU money laundering directives. As part of our compliance efforts, we scan our customers against OFAC and other ~~watchlists. While we offer services only~~watch lists and have controls to ~~customers domiciled in the United States, our application could be accessed from anywhere in the world.~~monitor and mitigate these risks. If our ~~service is~~services are accessed from a sanctioned country in violation of the trade and economic sanctions, we could be subject to fines or other enforcement action. We are also subject to various anti-money laundering and counter-terrorist financing laws and regulations in the U.S., Canada, Australia and around the world that prohibit, among other things, our involvement in transferring the proceeds of criminal activities.

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In the United States, most of our services are subject to anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended (BSA), and similar state laws and regulations. The BSA requires, among other things, ~~requires~~ money ~~transmitters~~services businesses (MSBs) to develop and implement risk-based anti-money laundering programs, to report ~~large cash transactions and~~ suspicious activity, and in some cases, to collect and maintain information about customers who use their services and maintain other transaction records. Regulators in the United States, Canada, Australia and ~~globally~~in many other foreign jurisdictions continue to increase their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor transactions on our system, including payments to persons outside of the ~~United States.~~U.S., Canada and Australia. Regulators regularly re-examine the transaction volume thresholds at which we must obtain and keep applicable records or verify identities of customers, and any change in such thresholds could result in greater costs for compliance.

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We are subject to anti-corruption, anti-bribery, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business.

We are subject to the FCPA, U.S. domestic bribery laws, and other anti-corruption ~~laws. Anti- corruption~~laws, including Australia’s anti-bribery laws, the Canadian Criminal Code and the Canadian Corruption of Foreign Public Officials Act. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public sector. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. Although we currently only ~~maintain operations~~offer our payment and card products to customers in the ~~United States, as~~U.S. and payment services in Canada, Invoice2go has international subscribers in approximately 150 countries, including Australia and several EU countries for which payment activity is conducted through third party payment providers. As we increase our international cross-border business and expand operations abroad, we may engage with business partners and third-party intermediaries to market our services and to obtain necessary permits, licenses, and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.

We cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase our international business, our risks under these laws may increase.

Detecting, investigating, and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources, and attention from senior management. In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, operating results, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Our Senior Secured Credit Facilities Credit Agreement provides our lender with a first-priority lien against substantially all of our assets, and contains financial covenants and other restrictions on our actions, which could limit our operational flexibility and otherwise adversely affect our financial condition.

~~Our Senior Secured Credit Facilities Credit Agreement (Senior Facilities Agreement) restricts our ability to, among other things:~~

use our accounts receivable, inventory, trademarks, and most of our other assets as security in other borrowings or transactions, unless the value of the assets subject thereto does not exceed a certain threshold;

~~incur additional indebtedness;~~

~~incur liens upon our property;~~

~~dispose of certain assets;~~

~~declare dividends or make certain distributions; and~~

~~undergo a merger or consolidation or other transactions.~~

Our Senior Facilities Agreement also prohibits us during certain covered time periods from allowing Net Revenue (as defined in the Senior Facilities Agreement) for any fiscal quarter to be less than prescribed minimums. Our ability to comply with this and other covenants is dependent upon several factors, some of which are beyond our control.

Our failure to comply with the covenants or payment requirements, or the occurrence of other events specified in our Senior Facilities Agreement, could result in an event of default under the Senior Facilities Agreement, which would give our lender the right to terminate its commitments to provide additional loans under the Senior Facilities Agreement and to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable. In addition, we have granted our lender first-priority liens against all of our assets as collateral. Failure to comply with the covenants or other restrictions in the Senior Facilities Agreement could result in a default. If the debt under our Senior Facilities Agreement was to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay it, which would have an immediate adverse effect on our business and operating results.

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If we cannot maintain our company culture as we grow, our success and our business may be harmed.

We believe our culture has been a key contributor to our success to date and that the critical nature of the platform that we provide promotes a sense of greater purpose and fulfillment in our employees. Inorganic growth through mergers and acquisitions may pose significant challenges to assimilating the company cultures of acquired companies. Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our corporate objectives. As we grow and develop the infrastructure of a public company, we may find it difficult to maintain these important aspects of our culture. If we fail to maintain our company culture, our business and competitive position may be adversely affected.

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We ~~expect fluctuations~~are exposed to foreign currency exchange risk relating to our Australian operations.

We are exposed to foreign currency exchange risk relating to our Australian operations and Australian subsidiary. A change in foreign currency exchange rates, particularly in Australian dollars to U.S. dollars, can affect our financial results ~~making it difficult~~due to ~~project future results,~~transaction gains or losses related to the remeasurement of certain monetary asset and ifmonetary liability balances that are denominated in currencies other than U.S. dollars, which is the functional currency of our Australian subsidiary. In addition, we ~~fail~~expect our exposure to ~~meet the expectations of securities analysts or investors with respect to our operating results, our stock price and the value of your investment could decline.~~

~~Our operating results have fluctuated in the past and are expected to fluctuate~~foreign currency rate risks in the future to increase as our international operations increase.

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Risks Related to Our Indebtedness

Our debt service obligations, including the Notes, may adversely affect our financial condition and results of operations.

As of March 31, 2023, we had $1.15 billion aggregate principal amount of the 0% Convertible Notes outstanding (the 2025 Notes) due on December 1, 2025, $575.0 million aggregate principal amount of the 0% convertible senior notes outstanding due on April 1, 2027 (the 2027 Notes) and had drawn $135.0 million under our Revolving Credit Facility, as described in Note 7 to ~~a variety~~the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Our ability to make payments of the principal of, to pay interest on or to refinance our indebtedness, including the 2025 Notes and 2027 Notes (collectively, the Notes) and our Revolving Credit Facility, depends on our future performance, which is subject to economic, financial, competitive, and other factors ~~many of which are outside of~~beyond our control. ~~As a result,~~Moreover, our ~~past results~~obligations under the Revolving Credit Facility are secured by our Divvy credit card receivables and certain other collateral. Our business may not generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt, or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be ~~indicative~~able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, any of our future ~~performance.~~ debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt.

In addition, our indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences. For example, it could:

•make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation;

•limit our flexibility in planning for, or reacting to, changes in our business and our industry;

•place us at a disadvantage compared to our competitors who have less debt;

•limit our ability to borrow additional amounts to fund acquisitions, for working capital, and for other general corporate purposes; and

•make an acquisition of our company less attractive or more difficult.

Any of these factors could harm our business, results of operations, and financial condition. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase. We are also required to comply with the covenants set forth in the Indentures governing the Notes. Our ability to comply with these covenants may be affected by events beyond our control. If we breach any of the covenants and do not obtain a waiver from the note holders or lenders, then, subject to applicable cure periods, any outstanding indebtedness may be declared immediately due and payable. In addition, changes by any rating agency to our credit rating may negatively impact the value and liquidity of our securities. Downgrades in our credit ratings could restrict our ability to obtain additional financing in the future and could affect the terms of any such financing.

We may not have the ability to raise the funds necessary for cash settlement upon conversion of the Notes or to repurchase the Notes for cash upon a fundamental change, and our future debt may contain limitations on our ability to pay cash upon conversion of the Notes or to repurchase the Notes.

Holders of the Notes have the right to require us to repurchase their notes upon the occurrence of a fundamental change (as defined in the Indentures governing the 2025 Notes and 2027 Notes, respectively) at a repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plusaccrued and unpaid special interest, if any. In addition, upon conversion of the Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the Notes being converted. However, we may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of the Notes surrendered or the Notes being converted. In addition, our ability to repurchase the Notes or to pay cash

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upon conversions of the Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness.

In addition to the Notes, we and our subsidiaries may incur substantial additional debt in the future, subject to the restrictions contained in our current and future debt instruments, some of which may be secured debt. We are not restricted under the terms of the Indentures governing the Notes from incurring additional debt, securing existing or future debt, recapitalizing our debt or taking a number of other ~~risks described herein, factors~~actions that ~~may affect our operating results include~~could have the ~~following:~~

~~fluctuations in demand for or pricing~~effect of ~~our platform;~~

diminishing our ability to ~~attract new customers;~~

make payments on the Notes when due.

~~our ability~~Our failure to ~~retain and grow engagement with~~repurchase the Notes at a time when the repurchase is required by the applicable Indenture or to pay any cash payable on future conversions of the Notes as required by such Indenture would constitute a default under that Indenture. A default under one of the Indentures or the fundamental change itself could also lead to a default under the other Indenture or other agreements governing our existing ~~customers;~~

or future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof.

The conditional conversion feature of the Notes, when triggered, may adversely affect our ~~ability~~financial condition and operating results.

Prior to ~~expand our relationships with our accounting firm partners, financial institution partners, and accounting software partners, or identify and attract new partners;~~

~~customer expansion rates;~~

~~changes in customer preference for cloud-based services as a result~~the close of ~~security breaches~~business on the business day immediately preceding September 1, 2025, in the ~~industry or privacy concerns, or other security or reliability concerns regarding our products;~~

~~fluctuations or delays in purchasing decisions in anticipation~~case of ~~new products or product enhancements by us or our competitors;~~

~~changes in customers’ budgets~~the 2025 Notes, and January 1, 2027, in the ~~timing~~case of the 2027 Notes, the holders of the applicable Notes may elect to convert their ~~budget cycles and purchasing decisions;~~

~~potential and existing customers choosing our competitors’ products or developing their own solutions in-house;~~

Notes during any calendar quarter (and only during such calendar quarter) if the development or introduction of new platforms or services that are easier to use or more advanced than our current suite of services, especially related to the application of artificial intelligence-based services;

~~our failure to adapt to new forms of payment that become widely accepted, including cryptocurrency;~~

~~the adoption or retention of more entrenched or rival services in the international markets where we compete;~~

~~our ability to control costs, including our operating expenses;~~

~~the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including commissions;~~

~~the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges;~~

~~the amount and timing of costs associated with recruiting, training, and integrating new employees, and retaining and motivating existing employees;~~

~~fluctuation in market interest rates, which impacts interest earned on funds held for customers;~~

~~the effects of acquisitions and their integration;~~

~~general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate;~~

~~the impact of new accounting pronouncements;~~

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~~changes in the competitive dynamics of our market;~~

~~security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform; and~~

~~awareness of our brand and our reputation in our target markets.~~

Any of these and other factors, or the cumulative effect of some of these factors, may cause our operating results to vary significantly. In addition, we expect to incur significant additional expenses due to the increased costs of operating as a public company. If our quarterly operating results fall below the expectations of investors and securities analysts who follow our stock, thelast reported sale price of our common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day (Conversion Condition). The Conversion Condition for the 2025 Notes was not triggered as of March 31, 2023, but had been triggered in several prior quarters. In the event the Conversion Condition is triggered, holders of the Notes will be entitled to convert the Notes at any time during specified periods at their option. If one or more holders elect to convert their Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could ~~decline substantially,~~adversely affect our liquidity. In addition, even if holders do not elect to convert their Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The Capped Calls may affect the value of our Notes and our common stock.

In connection with the sale of each of the 2025 Notes and the 2027 Notes, we entered into privately negotiated Capped Call transactions (collectively, the Capped Calls) with certain financial institutions (option counterparties). The Capped Call transactions are expected generally to reduce the potential dilution upon conversion of the Notes and/or offset any cash payments we are required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap.

The option counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to our common stock and/or purchasing or selling our common stock or other securities of ours in secondary market transactions prior to the applicable maturity of the 2025 Notes and the 2027 Notes (and are likely to do so following any conversion, repurchase, or redemption of the Notes, to the extent we exercise the relevant election under the Capped Calls). This activity could also cause or avoid an increase or a decrease in the market price of our common stock or the Notes, which could affect note holders’ ability to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of the Notes, it could affect the number of shares and value of the consideration that note holders will receive upon conversion of the Notes.

We do not make any representation or prediction as to the direction or magnitude of any potential effect that the transactions described above may have on the price of the Notes or our common stock. In addition, we do not make any representation that the option counterparties will engage in these transactions or that these transactions, once commenced, will not be discontinued without notice.

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We are subject to counterparty risk with respect to the Capped Calls.

The option counterparties are financial institutions, and we ~~could face costly lawsuits, including securities class action suits.~~

are subject to the risk that any or all of them might default under the Capped Calls. Our exposure to the credit risk of the option counterparties will not be secured by any collateral. Past global economic conditions have resulted in the actual or perceived failure or financial difficulties of many financial institutions. If an option counterparty becomes subject to insolvency proceedings, we will become an unsecured creditor in those proceedings with a claim equal to our exposure at that time under the Capped Calls with such option counterparty. Our exposure will depend on many factors but, generally, an increase in our exposure will be correlated to an increase in the market price and in the volatility of our common stock. In addition, upon a default by an option counterparty, we may suffer adverse tax consequences and more dilution than we currently anticipate with respect to our common stock. We can provide no assurance as to the financial stability or viability of the option counterparties.

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Risks Related to Ownership of Our Common Stock

The stock price of our common stock has been, and will likely continue to be volatile, and you may lose part or all of your investment.

The market for our common stock has been, and will likely continue to be, volatile. In addition to the factors discussed in this ~~Quarterly Report on Form 10-Q,~~report, the market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

•overall performance of the equity markets;

•actual or anticipated fluctuations in our revenue and other operating results;

•changes in the financial projections we may provide to the public or our failure to meet these projections;

•failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

•recruitment or departure of key personnel;

•the economy as a whole and market conditions in our ~~industry;~~

industry, such as high inflation, high interest rate and recessionary environments;

•the global macroeconomic impact of the COVID-19 pandemic;

•negative publicity related to the real or perceived quality of our platform, as well as the failure to timely launch new products and services that gain market acceptance;

•rumors and market speculation involving us or other companies in our industry;

•announcements by us or our competitors of new products or services, commercial relationships, or significant technical innovations;

•acquisitions, ~~strategic~~ partnerships, joint ventures, or capital commitments;

•new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

•lawsuits threatened or filed against us, litigation involving our industry, or both;

•developments or disputes concerning our or other parties’ products, services or intellectual property rights;

•changes in accounting standards, policies, guidelines, interpretations, or principles;

•interpretations of any of the above or other factors by trading algorithms, including those that employ natural language processing and related methods to evaluate our public disclosures;

•other events or factors, including those resulting from war (such as the war in Ukraine), incidents of terrorism, or responses to these events;

•instability in the U.S. and global banking systems;

•the expiration of contractual lock-up ~~or market stand-off~~ agreements; and

•sales of shares of our common stock by us or our stockholders.

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In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies, and technology companies in particular, have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it

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could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

~~Concentration of ownership of our common stock among our existing executive officers, directors, and principal stockholders may prevent new investors from influencing significant corporate decisions.~~

As of December 31, 2019, our executive officers, directors, and current beneficial owners of 5% or more of our common stock, in the aggregate, beneficially own approximately 61% of our outstanding common stock. These persons, acting together, may be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of this group of stockholders may not coincide with the interests of other stockholders.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and affect the market price of our common stock.

Provisions in our restated certificate of incorporation and amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management. Our restated certificate of incorporation and amended and restated bylaws include provisions that:

•authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;

•require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent;

•specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer;

•establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

•establish that our board of directors is divided into three classes, with each class serving ~~three- year~~three-year staggered terms;

•prohibit cumulative voting in the election of directors;

•provide that our directors may be removed for cause only upon the vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock;

•provide that vacancies on our board of directors may be filled only by a majority vote of directors then in office, even though less than a quorum; and

•require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.

In addition, our restated certificate of incorporation ~~provides~~and our amended and restated bylaws provide that the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, will be the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law (DGCL), our restated certificate of incorporation, or our amended and restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine. ~~This~~These choice of forum ~~provision~~provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. ~~This~~These exclusive forum ~~provision~~provisions will not apply to claims that are vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, or for which the Court of Chancery of the State of Delaware does not have subject matter jurisdiction. For instance, ~~the provision~~these provisions would not preclude the filing of claims brought to enforce any liability or duty created by the ~~Securities~~ Exchange Act ~~of 1934, as amended,~~ or ~~the~~ Securities Act ~~of 1933, as amended (Securities Act)~~ or the rules and regulations thereunder in federal court.

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Moreover, Section 203 of the DGCL may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock.

We are an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including the auditor attestation requirements of Section 404 reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our condensed consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our common stock less attractive to investors. In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more, (iii) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities, and (iv) the last day of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of December 31st, our second fiscal quarter, of such fiscal year.

We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future operating results may not be as comparable to the operating results of certain other companies in our industry that adopted such standards. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

We have incurred and will continue to incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.

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As a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company, which we expect to further ~~increase after we are no longer an “emerging growth company.” The~~increase. Sarbanes-Oxley, ~~Act,~~ the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly compared to when we were a private company.

Our management team has limited experience managing a public company.

Our management team has limited experience managing a publicly traded company, interacting with public company investors and securities analysts, and complying with the increasingly complex laws pertaining to public companies. These new obligations and constituents require significant attention from our management team and could divert their attention away from the day-to-day management of our business, which could harm our business, operating results, and financial condition.

~~Table of Contents~~

We do not intend to pay dividends for the foreseeable ~~future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.~~

future.

We have never declared or paid any cash dividends on our capital stock, and we do not intend to pay any cash dividends in the foreseeable future. ~~In addition, our Senior Credit Facilities Agreement contains restrictions on our ability to pay cash dividends on our capital stock.~~ Any determination to pay dividends in the future will be at the discretion of our board of directors. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our stock price and trading volume could decline.

Our stock price and trading volume is heavily influenced by the way analysts and investors interpret our financial information and other disclosures. If securities or industry analysts do not publish research or reports about our business, downgrade our common stock, or publish negative reports about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our common stock.

~~Future sales~~

Sales of substantial amounts of our common stock in the public ~~market~~markets, particularly sales by our directors, executive officers, and significant stockholders, or the perception that these sales could occur, could cause the market price of our common stock to ~~decline.~~

~~Sales~~decline and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate.

The market price of our common stock could decline as a result of sales of a ~~substantial~~large number of shares of our common stock in the ~~public or the~~market. The perception that these sales might occur ~~could depress~~may also cause the market price of our common stock ~~and could impair our ability~~ to ~~raise capital through the sale~~decline. We had a total of ~~additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price~~106,688,372 shares of our common ~~stock.~~

~~All~~stock outstanding as of our directors and officers and the holders of substantially all of our capital stock and securities convertible into our capital stock are subject to lock-up agreements that restrict their ability to transferMarch 31, 2023. All shares of our ~~capital~~common stock are either freely tradable, generally without restrictions or further registration under the Securities Act, or have been registered for ~~180 days from~~resale under the ~~date of~~Securities Act by us, subject to certain exceptions for shares held by our “affiliates” as defined in Rule 144 under the ~~Prospectus. These lock-up agreements limit the number of~~Securities Act.

In addition, we have filed registration statements on Form S-8 to register shares ~~of capital stock that may be sold immediately following this offering.~~reserved for future issuance under our equity compensation plans. Subject to ~~certain limitations, approximately 60,730,863 shares~~the satisfaction of common stock will become eligible for sale upon expiration of the 180-day lock-up period. Goldman Sachs & Co. LLC may, in their sole discretion, permit our stockholders who are subject to these lock-up agreements to sell shares prior to the expiration of the lock-up agreements.

~~In addition, there were 12,126,114 shares of common stock issuable upon the exercise of options outstanding as of December 31, 2019. We registered all of~~vesting conditions, the shares ~~of common stock issuable~~issued upon exercise of outstanding stock options or ~~other equity incentives~~settlement of outstanding restricted stock units will be available for immediate resale in the United States in the open market.

In addition, we have in the past, and may ~~grant~~ in the future, for public resale under the Securities Act. The shares of common stock will become eligible for sale in the public market to the extent such options are exercised, subject to the lock-up agreements described above and compliance with applicable securities laws.

Based on shares outstanding as of December 31, 2019, holders of up to approximately 52,560,875 shares, or 74%, of our common stock will have rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

~~We may~~ issue our shares of common stock or securities convertible into our common stock from time to time in connection with financings, acquisitions, investments, or otherwise. We also expect to grant additional equity awards to employees and directors under our 2019 Equity Incentive Plan and rights to purchase our common stock under our 2019 Employee Stock Purchase Plan. Any such ~~issuance~~issuances could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.

Table of Contents

~~Item 2:~~ ~~Unregistered Sales~~

The timing and amount of ~~Equity Securities and Use~~any repurchases under our Share Repurchase Program are subject to a number of ~~Proceeds~~

~~Recent Sales~~uncertainties.

In January 2023, our Board of ~~Unregistered Equity Securities~~

~~From October 1, 2019 through December 12, 2019 (the date~~Directors approved our Share Repurchase Program of ~~the filing~~up to $300 million of ~~our registration statement on Form S-8, File No. 333-235459), we issued and sold to our employees an aggregate of 154,916~~ shares of common ~~stock upon~~stock. Under the ~~exercise~~Share Repurchase Program, repurchases can be made from time to time using a variety of ~~options under our 2006 Equity Incentive Plan (2006 Plan) and our 2016 Equity Incentive Plan (2016 Plan), at exercise prices ranging from $0.48 to $8.76 per share,~~methods, through open market purchases or ~~a weighted-average exercise price of $3.44 per share.~~

~~From October 1, 2019~~privately negotiated transactions, including through ~~December 12, 2019 (the date~~Rule 10b5-1 plans, in compliance with the rules of the ~~filing~~SEC and other applicable legal requirements. The Share Repurchase Program does not obligate us to acquire any particular amount of shares, and the Share Repurchase Program may be suspended or discontinued at any time at our discretion.

The Inflation Reduction Act, enacted on August 16, 2022, among other things, imposes a 1% non-deductible, excise tax on net repurchases of shares by U.S. corporations whose stock is traded on an established securities market. The excise tax is imposed on repurchases that occur after December 31, 2022. We do not believe the excise tax will apply to repurchases of our ~~registration statement on Form S-8, File No. 333-235459),~~shares made during our fiscal year 2023. To the extent the excise tax applies to any repurchases of our shares we ~~granted~~make in future fiscal years, it may increase the cost to ~~our employees~~us of making repurchases and ~~other service providers an aggregate~~may cause us to reduce the number of ~~1,192,000~~ shares ~~of stock options under our 2006 Plan, 2016 Plan and 2019 Equity Incentive Plan, at exercise prices ranging from $15.62 to $22.00 per share, or a weighted-average exercise price of $17.37 per share.~~

The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act or Regulation D promulgated thereunder or Rule 701 promulgated under the Securities Act as transactions by an issuer not involving a public offering or under benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixedrepurchased pursuant to the ~~securities issued in these transactions. Each~~Share Repurchase Program.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchase of Equity Securities by the ~~recipients~~Issuer

In January 2023, our Board of ~~securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business, or other relationships,~~Directors approved our Share Repurchase Program of up to ~~information about us.~~

~~Use~~$300 million of ~~Proceeds~~

~~On December 16, 2019, we closed our IPO, in which we issued 11,297,058~~ shares of common ~~stock at~~stock. The timing and actual number of shares repurchased will depend on a ~~public offering~~variety of factors, including price, general business and market conditions, and alternative investment opportunities. Under the Share Repurchase Program, repurchases can be made from time to time using a variety of ~~$22.00 per share, which included 1,473,529 shares of common stock issued pursuant to~~methods, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans, in compliance with the ~~exercise in full~~rules of the ~~over-allotment option by the underwriters. We received $225.5 million in net proceeds from the IPO, after deducting underwriting discounts and commissions of $17.4 million~~SEC and other ~~offering costs~~applicable legal requirements. The Share Repurchase Program has term of ~~$5.6 million.~~ ~~There has been no material change in the planned use of proceeds from our IPO as described in~~ ~~our final prospectus filed with the SEC on December~~ 12 ~~2019 pursuant to Rule 424(b)(4) (Prospectus). The managing underwriters of our IPO were Goldman Sachs & Co. LLC, BofA Securities, Inc.~~months and ~~Jefferies LLC. No payments were made by~~does not obligate us to ~~directors, officers~~acquire any particular amount of shares, and it may be suspended or ~~persons owning ten percent or more~~discontinued at any time at our discretion.

The following table provides shares repurchase activity during the three months ended March 31, 2023:


Period	Total number of shares purchased (1)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs (1)	Approximate dollar value of shares that may yet be purchased under the plans or programs (1)
January 1 - January 31, 2023	—	$	—	—	$	—
February 1 - February 28, 2023	—	$	—	—	$	—
March 1 - March 31, 2023	358,947	$	75.22	358,947	$	273,000,007
Total	358,947			358,947	$	273,000,007

(1) See Note 8, in Notes to Condensed Consolidated Financial Statements in Item 1 of ~~our common stock or to their associates, or to our affiliates, in connection with the issuance and sale~~Part I of ~~the securities registered.~~

~~There has been no material change in the planned use of proceeds from our IPO as described in the Prospectus.~~

this Report.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

Table of Contents

~~Item 6: Exhibi~~ts

Incorporated by Reference

Exhibit
Number

Description

Form

File No.

Exhibit

Filing Date

Filed
Herewith

3.1

Restated Certificate of Incorporation

X

3.2

Restated Bylaws

X

10.1

Form of Indemnification Agreement by and between Bill.com and each of its directors and executive officers

S-1

333-234730

10.1

November 15, 2019

10.2

Bill.com, Inc. 2006 Equity Incentive Plan, including form of equity agreements thereunder

S-1

333-234730

10.2

November 15, 2019

10.3

Bill.com Holdings, Inc. 2016 Equity Incentive Plan, including form of equity agreements thereunder

S-1

333-234730

10.3

November 15, 2019

10.4

Bill.com Holdings, Inc. 2019 Equity Incentive Plan, including form of equity agreements thereunder

S-1/A

333-234730

10.4

December 2, 2019

10.5

Bill.com Holdings, Inc. 2019 Employee Stock Purchase Plan, and forms of subscription agreement thereunder

S-1/A

333-234730

10.5

December 2, 2019

10.6

Office Lease Between US ER America Center 4, LLC (as Landlord) and Bill.com LLC (as Tenant)

X

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

X

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

X

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

X

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

X

101.INS

XBRL Instance Document

X

101.SCH

XBRL Taxonomy Extension Schema Document

X

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

X

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

X

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

X

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

X

ITEM 6. EXHIBITS

~~The certifications furnished in Exhibits 32.1~~

Incorporated by Reference

Exhibit
Number

Description

Form

File No.

Exhibit
Number

Filing Date

Filed
Herewith

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing15d-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

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

†	~~Registrant is requesting or has previously been granted confidential treatment with respect to certain portions of this Exhibit.~~

*The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act of the Exchange Act.

Table of Contents

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


~~February 11, 2020~~ May 15, 2023	By:	/s/ René Lacerte
(Date)		René Lacerte
		Chief Executive Officer
		(Principal Executive Officer)

~~February 11, 2020~~	~~By:~~
May 15, 2023	By:	/s/ John Rettig
(Date)		John Rettig
		Chief Financial Officer and Executive Vice President, Finance and Operations
		(Principal Financial ~~and Accounting~~ Officer)

~~Delaware~~	~~83-2661725~~
Delaware		83-2661725

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

~~1810 Embarcadero Road,~~ ~~Palo Alto,~~6220 America Center Drive, Suite 100, San Jose, CA		~~94303~~ 95002

(Address of principal executive offices)		(Zip Code)

	~~Page~~
			Page
Special Note Regarding Forward-Looking Statements				1

Part 1. FINANCIAL INFORMATION				3
Item 1.			Financial Statements (Unaudited)		3
			Condensed Consolidated Balance Sheets ~~as of December 31, 2019 and June 30, 2019~~		3
			Condensed Consolidated Statements of Operations ~~for the Three and Six Months Ended December 31, 2019 and 2018~~		4
			Condensed Consolidated Statements of Comprehensive ~~Income (Loss) for the Three and Six Months Ended December 31, 2019 and 2018~~Loss		5
			Condensed Consolidated Statements of ~~Redeemable Convertible Preferred Stock and~~ Stockholders' Equity ~~(Deficit) for the Three and Six Months Ended December 31, 2019 and 2018~~		6
			Condensed Consolidated Statements of Cash Flows ~~for the Six Months Ended December 31, 2019 and 2018~~		8
			Notes to Condensed Consolidated Financial Statements		9
		Note 1 – The Company and Its Significant Accounting Policies	9
		Note 2 – Revenue	11

		Note 3 – Fair Value Measurement	12
		Note 4 – Short-Term Investments	15
		Note 5 – Funds Held for Customers	16
		Note 6 – Acquired Card Receivables	18
		Note 7 – Debt and Borrowings	21
		Note 8 – Stockholders’ Equity	25
		Note 9 – Other Income (Expenses), Net	27
		Note 10 – Income Taxes	27
		Note 11 – Leases	27
		Note 12 – Commitments and Contingencies	28
		Note 13 – Net Loss Per Share Attributable to Common Stockholders	29

Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations		22 31
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		38 46
Item 4.			Controls and Procedures		39 48

Part II. OTHER INFORMATION				50
Item 1.			Legal Proceedings		41 50
Item 1A.			Risk Factors		41 51
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		68 92
Item 3.			D~~efaults~~Defaults Upon Senior Securities		68 92
Item 4.			M~~ine~~Mine Safety Disclosures		68 92
Item 5.		Other Information	~~Other Information~~92		68
Item 6.			Exhibits		69 93

~~Signatures~~SIGNATURES				70 94

	December 31,			June 30,
	2019			2019				March 31, 2023		June 30, 2022
ASSETS							ASSETS
Current assets:							Current assets:
Cash and cash equivalents	$	314,894		$	90,306		Cash and cash equivalents	$	1,590,560	$	1,596,542
Short-term investments		68,135			71,969		Short-term investments	1,073,013		1,108,493
Accounts receivable, net		4,791			4,398		Accounts receivable, net	34,065		24,045
Unbilled revenue		5,909			4,795
Acquired card receivables, net							Acquired card receivables, net	431,114		256,392
Prepaid expenses and other current assets		15,768			12,326		Prepaid expenses and other current assets	170,120		151,258
Funds held for customers		1,491,763			1,329,306		Funds held for customers	3,106,360		3,142,660
Total current assets		1,901,260			1,513,100		Total current assets	6,405,232		6,279,390
Non-current assets:							Non-current assets:
Operating lease right-of-use assets, net							Operating lease right-of-use assets, net	70,331		76,445
Property and equipment, net		7,511			6,557		Property and equipment, net	77,465		56,985
Intangible assets, net							Intangible assets, net	381,648		432,583
Goodwill							Goodwill	2,396,509		2,362,893
Other assets		6,353			6,641		Other assets	49,700		47,730
Total assets	$	1,915,124		$	1,526,298		Total assets	$	9,380,885	$	9,256,026

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDERS' EQUITY							LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:						��	Current liabilities:
Accounts payable	$	6,018		$	5,063		Accounts payable	$	9,144	$	9,948
Accrued compensation and benefits		6,379			4,333		Accrued compensation and benefits	20,639		29,004
Other accrued and current liabilities		9,872			6,556
Redeemable convertible preferred stock warrant liabilities	—				688
Deferred revenue		4,274			3,469		Deferred revenue	28,084		31,868
Other accruals and current liabilities							Other accruals and current liabilities	171,234		120,080
Borrowings from revolving credit facility, net							Borrowings from revolving credit facility, net	—		75,097
Customer fund deposits		1,491,763			1,329,306		Customer fund deposits	3,106,360		3,142,660
Total current liabilities		1,518,306			1,349,415		Total current liabilities	3,335,461		3,408,657
Deferred revenue, non-current		2,091			1,786
Non-current liabilities:							Non-current liabilities:
Deferred revenue							Deferred revenue	1,257		2,159
Operating lease liabilities							Operating lease liabilities	75,631		82,728
Borrowings from revolving credit facility, net							Borrowings from revolving credit facility, net	135,058		—
Convertible senior notes, net							Convertible senior notes, net	1,703,083		1,697,985
Other long-term liabilities		1,375			1,447		Other long-term liabilities	26,058		20,803
Total liabilities		1,521,772			1,352,648		Total liabilities	5,276,548		5,212,332
Commitments and contingencies (Note 11)
Redeemable convertible preferred stock: none authorized, issued and outstanding at December 31, 2019; 106,090 shares authorized, and 52,435 shares issued and outstanding at June 30, 2019	—				276,307
Stockholders' equity (deficit):
Preferred stock: $0.00001 par value per share; 10,000 shares authorized; none issued and outstanding	—			—
Common stock; $0.00001 par value per share; 500,000 and 169,300 shares authorized; 72,267 and 8,154 shares issued and outstanding at December 31, 2019 and June 30, 2019, respectively		2			1
Commitments and contingencies (Note 12)							Commitments and contingencies (Note 12)
Stockholders' equity:							Stockholders' equity:
Common stock							Common stock	2		2
Additional paid-in capital		524,260			14,672		Additional paid-in capital	4,887,200		4,598,737
Accumulated other comprehensive income		20			326
Accumulated other comprehensive loss							Accumulated other comprehensive loss	(3,183)		(10,217)
Accumulated deficit		(130,930	)		(117,656	)	Accumulated deficit	(779,682)		(544,828)
Total stockholders' equity (deficit)		393,352			(102,657	)
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)	$	1,915,124		$	1,526,298
Total stockholders' equity							Total stockholders' equity	4,104,337		4,043,694
Total liabilities and stockholders' equity							Total liabilities and stockholders' equity	$	9,380,885	$	9,256,026


	Three months ended December 31,						Six months ended December 31,							Three Months Ended March 31,				Nine Months Ended March 31,
	2019			2018			2019			2018				2023		2022		2023		2022
Revenue													Revenue	$	272,555	$	166,911	$	762,485	$	441,738
Subscription and transaction fees	$	32,964		$	20,444		$	61,512		$	38,614
Interest on funds held for customers		6,116			5,555			12,748			9,809
Total revenue		39,080			25,999			74,260			48,423
Cost of revenue		9,787			7,175			18,934			13,516		Cost of revenue
Service costs													Service costs	37,897		27,176		109,683		72,227
Depreciation and amortization of intangible assets (1)													Depreciation and amortization of intangible assets (1)	10,953		10,166		31,742		29,336
Total cost of revenue													Total cost of revenue	48,850		37,342		141,425		101,563
Gross profit		29,293			18,824			55,326			34,907		Gross profit	223,705		129,569		621,060		340,175
Operating expenses													Operating expenses
Research and development		12,992			6,154			24,507			11,578		Research and development	78,761		59,649		232,791		152,910
Sales and marketing		11,491			6,856			21,758			12,800		Sales and marketing	115,350		81,142		398,658		204,667
General and administrative		12,748			6,404			23,283			12,341		General and administrative	71,719		60,008		207,837		182,488
Depreciation and amortization of intangible assets (1)													Depreciation and amortization of intangible assets (1)	12,093		11,953		36,149		33,573
Total operating expenses		37,231			19,414			69,548			36,719		Total operating expenses	277,923		212,752		875,435		573,638
Loss from operations		(7,938	)		(590	)		(14,222	)		(1,812	)	Loss from operations	(54,218)		(83,183)		(254,375)		(233,463)
Other income, net		360			686			999			1,003
(Loss) income before (benefit from) provision for income taxes		(7,578	)		96			(13,223	)		(809	)
(Benefit from) provision for income taxes		—			(6	)		51			(27	)
Net (loss) income	$	(7,578	)	$	102		$	(13,274	)	$	(782	)
Other income (expenses), net													Other income (expenses), net	23,622		(4,416)		46,591		(12,891)
Loss before provision for (benefit from) income taxes													Loss before provision for (benefit from) income taxes	(30,596)		(87,599)		(207,784)		(246,354)
Provision for (benefit from) income taxes													Provision for (benefit from) income taxes	542		(879)		70		(4,935)
Net loss													Net loss	$	(31,138)	$	(86,720)	$	(207,854)	$	(241,419)

Net (loss) income per share attributable to common stockholders:
Net loss per share attributable to common stockholders:													Net loss per share attributable to common stockholders:
Basic and diluted	$	(0.34	)	$	—		$	(0.87	)	$	(0.10	)	Basic and diluted	$	(0.29)	$	(0.84)	$	(1.96)	$	(2.39)
Weighted-average number of common shares used to compute net income (loss) per share attributable to common stockholders:
Weighted-average number of common shares used to compute net loss per share attributable to common stockholders:													Weighted-average number of common shares used to compute net loss per share attributable to common stockholders:
Basic and diluted		22,306			7,739			15,268			7,581		Basic and diluted	106,597		103,830		105,843		100,856


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net loss	$	(31,138)	$	(86,720)	$	(207,854)	$	(241,419)
Other comprehensive income (loss):
Net unrealized gain (loss) on investments in available-for-sale securities	3,178		(5,649)		7,034		(7,399)
Comprehensive loss	$	(27,960)	$	(92,369)	$	(200,820)	$	(248,818)

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

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


			(Registrant’s telephone number, including area code)

			(Former name, former address and former fiscal year, if changed since last report )

	Three months ended December 31, 2019
	Redeemable												Accumulated
	convertible										Additional		other						Total
	preferred stock						Common stock				paid-in		comprehensive			Accumulated			stockholders'
	Shares			Amount			Shares		Amount		capital		income			deficit			equity (deficit)
Balance at September 30, 2019		52,435		$	276,307			8,296	$	1	$	17,242	$	128		$	(123,352	)	$	(105,981	)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering		(52,435	)		(276,307	)		52,435		1		276,306		—			—			276,307
Reclassification of redeemable convertible preferred stock warrant liabilities to additional paid-in capital upon initial public offering		—			—			—		—		1,405		—			—			1,405
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs		—			—			11,297		—		225,481		—			—			225,481
Exercise of stock options		—			—			174		—		607		—			—			607
Exercise of stock warrants		—			—			65		—		144		—			—			144
Employee stock-based compensation		—			—			—		—		3,075		—			—			3,075
Other comprehensive loss, net of tax		—			—			—		—		—		(108	)		—			(108	)
Net loss		—			—			—		—		—		—			(7,578	)		(7,578	)
Balance at December 31, 2019		—		$	—			72,267	$	2	$	524,260	$	20		$	(130,930	)	$	393,352


	Six months ended December 31, 2019
	Redeemable												Accumulated
	convertible										Additional		other						Total
	preferred stock						Common stock				paid-in		comprehensive			Accumulated			stockholders'
	Shares			Amount			Shares		Amount		capital		income			deficit			equity (deficit)
Balance at June 30, 2019		52,435		$	276,307			8,154	$	1	$	14,672	$	326		$	(117,656	)	$	(102,657	)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering		(52,435	)	$	(276,307	)		52,435		1		276,306	$	—			—			276,307
Reclassification of redeemable convertible preferred stock warrant liabilities to additional paid-in capital upon initial public offering		—			—			—		—		1,405		—			—			1,405
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs		—			—			11,297		—		225,481		—			—			225,481
Exercise of stock options		—			—			316		—		901		—			—			901
Exercise of stock warrants		—			—			65		—		144		—			—			144
Employee stock-based compensation		—			—			—		—		5,351		—			—			5,351
Other comprehensive loss, net of tax		—			—			—		—		—		(306	)		—			(306	)
Net loss		—			—			—		—		—		—			(13,274	)		(13,274	)
Balance at December 31, 2019		—		$	—			72,267	$	2	$	524,260	$	20		$	(130,930	)	$	393,352

	Three months ended December 31, 2018
	Redeemable										Accumulated
	convertible								Additional		other						Total
	preferred stock				Common stock				paid-in		comprehensive			Accumulated			stockholders'
	Shares		Amount		Shares		Amount		capital		loss			deficit			deficit
Balance at September 30, 2018		47,131	$	191,147		7,645	$	1	$	9,731	$	(72	)	$	(111,226	)	$	(101,566	)
Issuance of Series H redeemable convertible preferred stock, net of issuance costs		4,214		67,101		—		—		—		—			—			—
Exercise of stock options		—		—		234		—		491		—			—			491
Employee stock-based compensation		—		—		—		—		594		—			—			594
Other comprehensive income, net of tax		—		—		—		—		—		21			—			21
Net income		—		—		—		—		—		—			102			102
Balance at December 31, 2018		51,345	$	258,248		7,879	$	1	$	10,816	$	(51	)	$	(111,124	)	$	(100,358	)


	Six months ended December 31, 2018
	Redeemable										Accumulated
	convertible								Additional		other						Total
	preferred stock				Common stock				paid-in		comprehensive			Accumulated			stockholders'
	Shares		Amount		Shares		Amount		capital		loss			deficit			deficit
Balance at June 30, 2018		47,131	$	191,147		7,345	$	1	$	8,614	$	(177	)	$	(110,342	)	$	(101,904	)
Issuance of Series H redeemable convertible preferred stock, net of issuance costs		4,214		67,101		—		—		—		—			—			—
Exercise of stock options		—		—		534		—		949		—			—			949
Employee stock-based compensation		—		—		—		—		1,201		—			—			1,201
Issuance of stock warrants		—		—		—		—		52		—			—			52
Other comprehensive income, net of tax		—		—		—		—		—		126			—			126
Net loss		—		—		—		—		—		—			(782	)		(782	)
Balance at December 31, 2018		51,345	$	258,248		7,879	$	1	$	10,816	$	(51	)	$	(111,124	)	$	(100,358	)


	Nine Months Ended March 31,
	2023		2022
Cash flows from operating activities:
Net loss	$	(207,854)	$	(241,419)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation	255,717		140,381
Amortization of intangible assets	59,984		56,209
Depreciation of property and equipment	7,907		6,701
Amortization of capitalized internal-use software costs	3,009		1,519
Amortization of debt premium and issuance costs	5,217		3,362
Amortization of premium (accretion of discount) on investments in marketable debt securities	(23,710)		10,039
Provision for losses on acquired card receivables	23,685		15,621
Non-cash operating lease expense	7,114		6,307
Deferred income taxes	(1,169)		(4,691)
Other	1,348		—
Changes in assets and liabilities:
Accounts receivable	(9,969)		(5,846)
Prepaid expenses and other current assets	(7,477)		(2,966)
Other assets	(2,040)		(968)
Accounts payable	(1,265)		(4,435)
Other accruals and current liabilities	9,639		12,665
Operating lease liabilities	(7,711)		(5,591)
Other long-term liabilities	(272)		302
Deferred revenue	(4,740)		5,191
Net cash provided by (used in) operating activities	107,413		(7,619)
Cash flows from investing activities:
Cash paid for acquisition, net of acquired cash and cash equivalents	(28,902)		(144,541)
Purchases of corporate and customer fund short-term investments	(2,394,518)		(2,176,127)
Proceeds from maturities of corporate and customer fund short-term investments	2,510,829		1,308,650
Proceeds from sale of corporate and customer fund short-term investments	11,607		50,744
Increase in acquired card receivables, net and other	(197,289)		(103,456)
Purchases of property and equipment	(6,499)		(3,758)
Capitalization of internal-use software costs	(17,231)		(7,409)
Proceeds from beneficial interest	2,080		—
Net cash used in investing activities	(119,923)		(1,075,897)
Cash flows from financing activities:
Proceeds from issuance of common stock upon public offering, net of underwriting discounts and other offering costs	—		1,341,122
Proceeds from issuance of convertible senior notes, net of discounts and issuance costs	—		560,075
Purchase of capped calls	—		(37,893)
Increase (decrease) in customer fund deposits liability and other	(25,028)		834,591
Repurchase of common stock	(24,001)		—
Proceeds from line of credit borrowings	60,000		—
Proceeds from exercise of stock options	10,860		29,116
Proceeds from issuance of common stock under the employee stock purchase plan	17,879		12,849
Net cash provided by financing activities	39,710		2,739,860
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	12		—
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents	27,212		1,656,344
Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period	3,542,715		1,809,692
Cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	3,569,927	$	3,466,036
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows above:
Cash and cash equivalents	$	1,590,560	$	1,639,371
Restricted cash included in other current assets	96,823		28,343
Restricted cash included in other assets	6,724		6,724
Restricted cash and restricted cash equivalents included in funds held for customers	1,875,820		1,791,598
Total cash, cash equivalents, restricted cash, and restricted cash equivalents, end of period	$	3,569,927	$	3,466,036

~~Level 1 —~~	Level 1 — Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
~~Level 2 —~~	Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted 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 related assets or liabilities.
~~Level 3 —~~	Unobservable inputs that are supported by little or no market activity for the related assets or liabilities and typically reflect management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.


	December 31, 2019									March 31, 2023
	Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets									Assets
Cash equivalents:									Cash equivalents:
Money market funds	$	136,873	$	—	$	—	$	136,873	Money market funds	$	1,034,617	$	—	$	—	$	1,034,617
Corporate bonds		—		—		—		—
		136,873		—		—		136,873		1,034,617		—		—		1,034,617
Short-term investments:									Short-term investments:
Corporate bonds									Corporate bonds	—		533,195		—		533,195
U.S. treasury securities		42,686		—		—		42,686	U.S. treasury securities	411,635		—		—		411,635
Corporate bonds		—		17,382		—		17,382
U.S. agency securities									U.S. agency securities	—		38,508		—		38,508
Asset-backed securities		—		8,067		—		8,067	Asset-backed securities	—		36,889		—		36,889
Certificates of deposit									Certificates of deposit	—		52,786		—		52,786
		42,686		25,449		—		68,135		411,635		661,378		—		1,073,013
Funds held for customers:									Funds held for customers:
Restricted cash equivalents		405,186		72,428		—		477,614
Restricted cash equivalents:									Restricted cash equivalents:
Money market funds									Money market funds	256,287		—		—		256,287
Corporate bonds		—		303,773		—		303,773	Corporate bonds	—		73,354		—		73,354
Certificates of deposit		—		106,011		—		106,011	Certificates of deposit	—		3,220		—		3,220
										256,287		76,574		—		332,861
Short-term investments:									Short-term investments:
Corporate bonds									Corporate bonds	—		632,183		—		632,183
Certificates of deposit									Certificates of deposit	—		386,090		—		386,090
U.S. agency securities									U.S. agency securities	—		27,226		—		27,226
Asset-backed securities									Asset-backed securities	—		90,217		—		90,217
U.S. treasury securities		19,191		—		—		19,191	U.S. treasury securities	92,370		—		—		92,370
		424,377		482,212		—		906,589		92,370		1,135,716		—		1,228,086
Total assets measured at fair value	$	603,936	$	507,661	$	—	$	1,111,597	Total assets measured at fair value	$	1,794,909	$	1,873,668	$	—	$	3,668,577

Liabilities									Liabilities
Contingent consideration(1)									Contingent consideration(1)	$	—	$	—	$	11,066	$	11,066
Total liabilities measured at fair value									Total liabilities measured at fair value	$	—	$	—	$	11,066	$	11,066

	June 30, 2019
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	13,718	$	—	$	—	$	13,718
Short-term investments:
U.S. treasury securities		64,758		—		—		64,758
Corporate bonds		—		4,787		—		4,787
Asset-backed securities		—		2,424		—		2,424
		64,758		7,211		—		71,969
Funds held for customers:
Restricted cash equivalents		424,219		—		—		424,219
Corporate bonds		—		302,070		—		302,070
Certificates of deposit		—		105,377		—		105,377
U.S. treasury securities		30,960		—		—		30,960
		455,179		407,447		—		862,626
Total assets measured at fair value	$	533,655	$	414,658	$	—	$	948,313
Liabilities
Redeemable convertible preferred stock warrant liabilities	$	—	$	—	$	688	$	688
Total liabilities measured at fair value	$	—	$	—	$	688	$	688


	June 30, 2022
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	1,435,111	$	—	$	—	$	1,435,111
Corporate bonds	—		11,430		—		11,430
	1,435,111		11,430		—		1,446,541
Short-term investments:
Corporate bonds	—		597,204		—		597,204
U.S. treasury securities	421,728		—		—		421,728
Asset-backed securities	—		51,406		—		51,406
Certificates of deposit	—		38,155		—		38,155
	421,728		686,765		—		1,108,493
Funds held for customers:
Restricted cash equivalents:
Money market funds	34,703		—		—		34,703
Corporate bonds	—		133,557		—		133,557
	34,703		133,557		—		168,260
Short-term investments:
Corporate bonds	—		807,685		—		807,685
Certificates of deposit	—		397,533		—		397,533
Municipal bonds	—		6,516		—		6,516
Asset-backed securities	—		69,912		—		69,912
U.S. treasury securities	3,072		—		—		3,072
	3,072		1,281,646		—		1,284,718
Beneficial interest derivative on card receivables sold	—		—		398		398
Total assets measured at fair value	$	1,894,614	$	2,113,398	$	398	$	4,008,410

~~Expected term (in years)~~	~~0.57~~
~~Expected volatility~~		~~51.0~~	%
~~Risk-free interest rate~~		~~2.0~~	%
~~Expected dividend yield~~		0	%

	December 31, 2019
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value			March 31, 2023
											Amortized cost		Gross unrealized gains		Gross unrealized losses		Fair value
Corporate bonds										Corporate bonds	$	535,186	$	293	$	(2,284)	$	533,195
U.S. treasury securities	$	42,648	$	38	$	—		$	42,686	U.S. treasury securities	412,097		297		(759)		411,635
Corporate bonds		17,378		7		(3	)		17,382
Asset-backed securities		8,069		1		(3	)		8,067	Asset-backed securities	36,965		40		(117)		36,888
	$	68,095	$	46	$	(6	)	$	68,135
Certificates of deposit										Certificates of deposit	52,786		—		—		52,786
U.S. agency securities										U.S. agency securities	38,473		37		(1)		38,509
Total										Total	$	1,075,507	$	667	$	(3,161)	$	1,073,013


	June 30, 2022
	Fair value		Unrealized losses
Corporate bonds	$	392,699	$	(4,786)
U.S. treasury securities	411,787		(2,917)
Asset backed securities	51,406		(216)
Total	$	855,892	$	(7,919)


	March 31, 2023		June 30, 2022
Gross amount of acquired card receivables	$	444,709	$	261,806
Less: allowance for credit losses	(13,595)		(5,414)
Total	$	431,114	$	256,392


	March 31, 2023		June 30, 2022
Current and less than 30 days past due	$	436,792	$	257,618
30 ~ 59 days past due	2,812		1,677
60 ~ 89 days past due	2,962		1,199
90 ~ 119 days past due	1,858		1,186
Over 119 days past due	285		126
Total	$	444,709	$	261,806


	Three Months Ended March 31, 2023		Nine Months Ended March 31, 2023
Principal subject to forgiveness(1)	$	—	$	81
Principal subject to late fee forgiveness(1)	—		696
Other-than-insignificant payment delay(2)	—		2,439
Payment term extension(3)	836		1,412
Total card receivables	$	836	$	4,628


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023 (1)		2022		2023 (1)		2022
Initial fair value of consideration received:
Cash	$	—	$	394,497	$	316,477	$	1,019,704
Beneficial interest derivative	—		1,100		1,682		3,387
Total	$	—	$	395,597	$	318,159	$	1,023,091


	March 31, 2023				June 30, 2022
	2027 Notes		2025 Notes		2027 Notes		2025 Notes
Liability component:
Principal	$	575,000	$	1,150,000	$	575,000	$	1,150,000
Less: unamortized debt discount and issuance costs	(10,860)		(11,057)		(12,873)		(14,142)
Net carrying amount	$	564,140	$	1,138,943	$	562,127	$	1,135,858

Fiscal years ending June 30:	Amount
Remainder of 2020	$	1,491
2021		1,633
2022		6,768
2023		6,973
2024		7,179
Thereafter		50,547
Total	$	74,591


Fiscal years ending June 30:	Amount
Remainder of 2023	$	3,609
2024	13,831
2025	13,425
2026	13,292
2027	13,226
2028	13,590
Thereafter	35,919
Gross lease payments	106,892
Less - present value adjustments	(18,782)
Total operating lease liabilities, net	$	88,110


	March 31,
	2023	2022
Stock options	2,930	4,232
Restricted stock units	4,425	3,159
Total	7,355	7,391

								As of December 31,
								2019		2018		% Growth
Number of customers⁽¹⁾									85,900		71,600		20	%

	Three months ended December 31,							Six months ended December 31,
	2019		2018		% Growth			2019		2018		% Growth
Total Payment Volume (amounts in millions)	$	24,832	$	17,637		41	%	$	46,814	$	33,151		41	%

	Three months ended December 31,							Six months ended December 31,
	2019		2018		% Growth			2019		2018		% Growth
Transactions processed		6,257,000		4,867,000		29	%		12,192,000		9,359,000		30	%


	As of March 31,
	2023	2022	% Growth
Businesses using our solutions (1)	455,300	386,100	18%


	Three Months Ended March 31,				Change				Nine Months Ended March 31,				Change
	2023		2022		$		%		2023		2022 (1)		$		%
Revenue	$	272,555	$	166,911	$	105,644	63	%	$	762,485	$	441,738	$	320,747	73	%
Cost of revenue
Service costs (2)	37,897		27,176		10,721		39	%	109,683		72,227		37,456		52	%
Depreciation and amortization of intangible assets (3)	10,953		10,166		787		8	%	31,742		29,336		2,406		8	%
Total cost of revenue	48,850		37,342		11,508		31	%	141,425		101,563		39,862		39	%
Gross profit	223,705		129,569		94,136		73	%	621,060		340,175		280,885		83	%
Operating expenses
Research and development (2)	78,761		59,649		19,112		32	%	232,791		152,910		79,881		52	%
Sales and marketing (2)(4)	115,350		81,142		34,208		42	%	398,658		204,667		193,991		95	%
General and administrative (2)	71,719		60,008		11,711		20	%	207,837		182,488		25,349		14	%
Depreciation and amortization of intangible assets (3)	12,093		11,953		140		1	%	36,149		33,573		2,576		8	%
Total operating expenses	277,923		212,752		65,171		31	%	875,435		573,638		301,797		53	%
Loss from operations	(54,218)		(83,183)		28,965		(35)	%	(254,375)		(233,463)		(20,912)		9	%
Other income (expense), net	23,622		(4,416)		28,038		(635)	%	46,591		(12,891)		59,482		(461)	%
Loss before provision for (benefit from) income taxes	(30,596)		(87,599)		57,003		(65)	%	(207,784)		(246,354)		38,570		(16)	%
Provision for (benefit from) income taxes	542		(879)		1,421		(162)	%	70		(4,935)		5,005		(101)	%
Net loss	$	(31,138)	$	(86,720)	$	55,582	(64)	%	$	(207,854)	$	(241,419)	$	33,565	(14)	%

	Three months ended
	December 31,				Change
	2019		2018		Amount		%
Subscription and transaction fees	$	32,964	$	20,444	$	12,520		61	%
Interest on funds held for customers		6,116		5,555		561		10	%
Total revenue	$	39,080	$	25,999	$	13,081		50	%