UNITED STATES
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Ordinary shares, no par value | WKME | The Nasdaq Stock Market LLC |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Large accelerated filer | ☒ Accelerated filer | ☐ Non-accelerated filer | ☒ Emerging growth company |
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
☒ U.S. GAAP | ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board | ☐ Other |
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A. | [Reserved.] | 3 |
B. | Capitalization and Indebtedness | 3 |
C. | Reasons for the Offer and Use of Proceeds | 3 |
D. | Risk Factors | 3 |
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A. | History and Development of the Company | 50 |
B. | Business Overview | 50 |
C. | Organizational Structure | 68 |
D. | Property, Plants and Equipment | 69 |
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A. | Operating Results | 77 |
B. | Liquidity and Capital Resources | 82 |
C. | Research and Development, Patents and Licenses, Etc. | 85 |
D. | Trend Information | 85 |
E. | Critical Accounting Estimates | 85 |
89 | ||
A. | Directors and Senior Management | 89 |
B. | Compensation | 94 |
C. | Board Practices | 103 |
D. | Employees | 116 |
E. | Share Ownership | 116 |
F. | Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation | 116 |
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A. | Major Shareholders | 116 |
B. | Related Party Transactions | 120 |
C. | Interests of Experts and Counsel | 122 |
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A. | Consolidated Statements and Other Financial Information | 122 |
B. | Significant Changes | 123 |
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A. | Offer and Listing Details | 123 |
B. | Plan of Distribution | 123 |
C. | Markets | 123 |
D. | Selling Shareholders | 123 |
E. | Dilution | 123 |
F. | Expenses of the Issue | 123 |
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A. | Share Capital | 123 |
B. | Memorandum and Articles of Association | 123 |
C. | Material Contracts | 124 |
D. | Exchange Controls | 124 |
E. | Taxation | 124 |
F. | Dividends and Paying Agents | 134 |
G. | Statement by Experts | 134 |
H. | Documents on Display | 135 |
I. | Subsidiary Information | 135 |
J. | Annual Report to Security Holders | 135 |
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F-1 |
• | our future financial performance, including our expectations regarding our revenue, cost of revenue, gross margin, operating expenses, cash flow and deferred revenue; |
• | our ability to manage our growth effectively, sustain our historical growth rate in the future or achieve or maintain profitability; |
• | the growth and expansion of the markets for our offerings and our ability to adapt and respond effectively to evolving market conditions and demands; |
• | our estimates of, and future expectations regarding, our market opportunity; |
• | the impact of adverse macro-economic changes on our business, financial condition and results of operations; |
• | our ability to attract new customers as well as to retain and expand our revenue from existing customers; |
• | our ability to keep pace with technological and competitive developments and develop or otherwise introduce new products and solutions and enhancements to our existing offerings; |
• | our ability to maintain the interoperability of our offerings across devices, operating systems and third-party applications and to maintain and expand our relationships with third-party technology partners; |
• | the effects of increased competition in our target markets and our ability to compete effectively; |
• | the success of our sales and marketing operations, including our ability to realize efficiencies and reduce customer acquisition costs as well as our ability to effectively develop and expand our marketing and sales capabilities; |
• | our ability to meet the service-level commitments under our customer agreements and the effects on our business if we are unable to do so; |
• | our relationships with, and dependence on, various third-party service providers; |
• | our ability to maintain and enhance awareness of our brand; |
• | our ability to offer high quality customer support; |
• | our ability to maintain the sales prices of our offerings and the effects of pricing fluctuations; |
• | our ability to attract and retain the executive leadership and employee talent that we need to be successful; |
• | the sustainability of, and fluctuations in, our gross margin; |
• | risks related to our international operations and our ability to expand our international business operations; |
• | the effects of currency exchange rate fluctuations on our results of operations; |
• | challenges and risks related to our sales to government entities; |
• | our ability to consummate acquisitions at our historical rate and at acceptable prices, to enter into other strategic transactions and relationships, and to manage the risks related to these transactions and arrangements; |
• | our ability to protect our proprietary technology, or to obtain, maintain, protect and enforce sufficiently broad intellectual property rights therein; |
• | our ability to maintain the security and availability of our platform, products and solutions; |
• | our ability to comply with the privacy laws of the various jurisdictions in which we operate; |
• | our ability to comply with current and future legislation and governmental regulations to which we are subject or may become subject in the future; |
• | changes in applicable tax law, the stability of effective tax rates and adverse outcomes resulting from examination of our income or other tax returns; |
• | risks related to political, economic and security conditions in Israel; |
• | the effects of unfavorable conditions in our industry or the global economy or reductions in information technology spending; and |
• | factors that may affect the future trading prices of our ordinary shares. |
A. | [Reserved.] |
B. | Capitalization and Indebtedness |
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
• | innovating and advancing our platform; |
• | acquiring new customers; |
• | increasing usage by and spend from our existing customers; |
• | international expansion; and |
• | expansion of our ecosystem and go-to-market partnerships. |
• | breadth of applications and technology integrations supported; |
• | support for cross-application guidance, automation and analytics; |
• | expertise in third-party application implementations; |
• | integration of robust analytics and visualization capabilities; |
• | cross-platform support for workflows including mobile native applications (iOS and Android) and desktop (Windows and macOS); |
• | ease of implementation and use; |
• | performance, security, scalability and reliability; |
• | quality of customer support; |
• | total cost of ownership; and |
• | brand recognition and reputation. |
• | Non-adoption from enterprises maintaining the status quo of offline, internally developed, or non-dynamic, FAQ-centric application guidance and workflow support; |
• | Point solutions embedded natively or as an add-on to software provided by diversified enterprise software companies such as SAP, Oracle, Microsoft, and Salesforce; and |
• | Providers of software for specific in-app guidance or analytics use cases for SaaS applications. |
• | our ability to attract and retain new customers and expand sales within our existing customer base; |
• | the loss of existing customers; |
• | subscription renewals and the timing of such renewals; |
• | fluctuations in customer usage of our products from period to period; |
• | customer satisfaction with our products and platform capabilities and customer support; |
• | mergers and acquisitions or other transactions affecting our customer base, including the consolidation of affiliates’ multiple accounts into a single account; |
• | mix of our revenue between subscription and professional services; |
• | our ability to gain new partners and retain existing partners, and any changes in the economic terms of our agreements with such partners; |
• | increases or decreases in the number of users or applications in our subscriptions or pricing changes upon any renewals of customer agreements; |
• | fluctuations in share-based compensation expense; |
• | decisions by potential customers to purchase alternative solutions or develop in-house technologies as alternatives to our products; |
• | the amount and timing of operating expenses related to the maintenance and expansion of our business and operations, including investments in research and development, sales and marketing, including the capacity of our sales team, and general and administrative resources; |
• | our ability to manage our cloud services infrastructure costs; |
• | technical disruptions or network outages; |
• | developments or disputes concerning our intellectual property or proprietary rights, our platform or products, or third-party intellectual property or proprietary rights; |
• | negative publicity about our Company, our offerings or our partners, including as a result of actual or perceived breaches of, or failures relating to, data privacy, data protection or data security; |
• | the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies; |
• | general economic, industry and market conditions; |
• | the impact of the COVID-19 pandemic, or any other pandemic, epidemic, outbreak of infectious disease or other global health crises on our business, the businesses of our customers and partners and general economic conditions; |
• | the impact of political uncertainty or unrest, including the war in Ukraine and recent political uncertainty in Israel, where our headquarters are located; |
• | changes in our pricing policies or those of our competitors; |
• | fluctuations in the growth rate of the overall markets that our products address; |
• | seasonality in the underlying businesses of our customers, including budgeting cycles and purchasing practices, and any changes in customer spending patterns; |
• | the business strengths or weakness of our customers; |
• | our ability to collect timely on invoices or receivables; |
• | the cost and potential outcomes of litigation or other disputes; |
• | future accounting pronouncements or changes in our accounting policies; |
• | our overall effective tax rate, including impacts caused by any reorganization in our corporate tax structure and any new legislation or regulatory developments; |
• | our ability to successfully expand our business in the U.S. and internationally; |
• | fluctuations in foreign currency exchange rates; |
• | legal and regulatory compliance costs in new and existing markets; and |
• | the timing and success of new products or product features introduced by us or our competitors or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or partners. |
• | recruiting and retaining talented and capable employees outside of Israel and the United States, and maintaining our Company culture across all of our offices; |
• | providing our platform and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to reflect local languages and to ensure that they are culturally appropriate and relevant in different countries; |
• | slower than anticipated availability and adoption of cloud and technology infrastructures by international businesses; |
• | the applicability of evolving and potentially inconsistent international laws and regulations, including laws and regulations with respect to tariffs, privacy, data protection, data security, consumer protection and unsolicited email, and the risk of penalties to our customers, users and individual members of our executive leadership team or other employees if our practices are deemed to be out of compliance; |
• | operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States; |
• | our need to rely on local partners including in connection with joint venture or other arrangements like our Japanese subsidiary, WalkMe K.K., to penetrate certain geographic regions, which may make us dependent on such local partners to implement our growth strategy. See Item 5. “Operating and Financial Review and Prospects-Commitments and Contractual Obligations-WalkMe K.K.”; |
• | compliance by us and our business partners with anti-corruption laws, import and export control laws, tariffs, trade barriers, economic sanctions and other regulatory limitations on our ability to provide our platform in certain international markets; |
• | global political, social and economic instability including instability arising from the war in Ukraine; |
• | fluctuations in currency exchange rates; |
• | double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of Israel, the United States or the international jurisdictions in which we operate, including the complexities of foreign value added tax (or other tax) systems, and restrictions on the repatriation of earnings; |
• | higher costs of doing business internationally, including increased accounting, travel, infrastructure and legal compliance costs; |
• | different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations; |
• | the effects of the COVID-19 pandemic, or any other pandemic, epidemic or outbreak of infectious disease, including uncertainty regarding what measures the United States or foreign governments will take in response; |
• | the implementation of exchange controls, including restrictions promulgated by the United States Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), and other similar trade protection regulations and measures in the United States, Israel or in other jurisdictions; |
• | reduced ability to timely collect amounts owed to us by our customers in countries where our recourse may be more limited; |
• | limitations on our ability to reinvest earnings from operations derived from one country to fund the capital needs of our operations in other countries; |
• | potential changes in laws, regulations, and costs affecting our United Kingdom (“UK”) operations and personnel due to Brexit; |
• | as an Israeli company, we are subject to Israeli laws concerning governmental access to data and the risk, or perception of risk, of such access may making our platform less attractive to organizations outside Israel, and compliance with such Israeli laws may conflict with legal obligations that we, or other organizations on our platform, may be subject to in other countries; and |
• | exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions. |
• | cease selling or using products or technology that incorporate or cover the intellectual property rights that we allegedly infringe, misappropriate or otherwise violate; |
• | make substantial payments for royalty or license fees, legal fees, settlement payments or other costs or damages; |
• | obtain a license, which may not be available on reasonable terms or at all, to sell or use the relevant technology or intellectual property; or |
• | redesign the allegedly infringing products or technology to avoid infringement, misappropriation or other violation, which could be costly, time-consuming or impossible. |
• | implement usage-based pricing; |
• | discount pricing for competitive products; |
• | otherwise materially change their pricing rates or schemes; |
• | charge us to deliver our traffic at certain levels or at all; |
• | throttle traffic based on its source or type; |
• | implement bandwidth caps or other usage restrictions; or |
• | otherwise try to monetize or control access to their networks. |
• | it is an “orthodox” investment company because it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or |
• | it is an inadvertent investment company because, absent an applicable exemption, (i) it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis, or (ii) it owns or proposes to acquire investment securities having a value exceeding 45% of the value of its total assets (exclusive of U.S. government securities and cash items) and/or more than 45% of its income is derived from investment securities on a consolidated basis with its wholly owned subsidiaries. |
• | actual or anticipated changes or fluctuations in our results of operations; |
• | the guidance we may provide to the public, and any changes in, or our failure to perform in line with, such guidance; |
• | announcements by us or our competitors of significant business developments, new offerings or new or terminated significant contracts, commercial relationships or capital commitments; |
• | industry or financial analyst or investor reaction to our press releases, other public announcements, and filings with the SEC; |
• | rumors and market speculation involving us or other companies in our industry; |
• | future sales or expected future sales of our ordinary shares; |
• | investor perceptions of us and the industries and markets in which we operate; |
• | price and volume fluctuations in the overall stock market from time to time; |
• | changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular; |
• | failure of industry or financial analysts to maintain coverage of us, changes in financial estimates by any analysts who follow our Company, or our failure to meet these estimates or the expectations of investors; |
• | actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally; |
• | litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; |
• | developments or disputes concerning our intellectual property rights or our solutions, or third-party proprietary rights; |
• | announced or completed acquisitions of businesses or technologies by us or our competitors; |
• | actual or perceived breaches of, or failures relating to, privacy, data protection or data security; |
• | new laws or regulations or new interpretations of existing laws or regulations applicable to our business; |
• | actual or anticipated changes in our executive leadership team or our board of directors; |
• | general economic conditions such as inflation, higher interest rates and slow or negative growth of our target markets; and |
• | other events or factors, including those resulting from pandemics, war, incidents of terrorism or responses to these events. |
• | the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act; |
• | the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; |
• | the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specified information, or current reports on Form 8-K, upon the occurrence of specified significant events; and |
• | Regulation Fair Disclosure (“Regulation FD”), which regulates selective disclosures of material information by issuers. |
• | the Companies Law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased; |
• | the Companies Law requires special approvals for certain transactions involving directors, officers or certain significant shareholders and regulates other matters that may be relevant to these types of transactions; |
• | the Companies Law does not provide for shareholder action by written consent for public companies, thereby requiring all shareholder actions to be taken at a general meeting of shareholders; |
• | our amended and restates Articles of Association divide our directors into three classes, each of which is elected once every three years, and accordingly, each of our directors serves until the third annual general meeting following his or her election or re-election or until he or she is removed; |
• | an amendment to our amended and restates Articles of Association will generally require, in addition to the approval of our board of directors, a vote of the holders of a majority of our outstanding ordinary shares entitled to vote and present and voting on the matter at a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions, such as the provision dividing our directors into three classes, requires a vote of the holders of at least 65% of the total voting power of our shareholders; |
• | our amended and restates Articles of Association do not permit a director to be removed except by a vote of the holders of at least 65% of the total voting power of our shareholders and any amendment to such provision shall require the approval of at least 65% of the total voting power of our shareholders; and |
• | our amended and restates Articles of Association provide that director vacancies may be filled by our board of directors. |
We have never declared or paid any cash dividends on our ordinary shares. We currently intend to retain all available funds and any future earnings to finance the operation and expansion of our business and do not anticipate paying any dividends on our ordinary shares in the foreseeable future. Consequently, investors who purchase ordinary shares may be unable to realize a gain on their investment except by selling such shares after price appreciation, which may never occur.
• | Any business, technology, product or solution that we acquire or invest in could under-perform relative to our expectations and the price that we paid or not perform in accordance with our anticipated timetable, or we could fail to operate any such business or deploy any such technology, product or solution profitably. |
• | We may incur or assume significant debt in connection with our acquisitions and other strategic transactions and relationships, which could also cause a deterioration of our credit ratings, result in increased borrowing costs and interest expense and diminish our future access to the capital markets. |
• | Acquisitions and other strategic transactions and relationships could cause our financial results to differ from our own or the investment community’s expectations in any given period, or over the long-term. |
• | Pre-closing and post-closing earnings charges could adversely impact operating results in any given period, and the impact may be substantially different from period to period. |
• | Acquisitions and other strategic transactions and relationships could create demands on our management, operational resources and financial and internal control systems that we are unable to effectively address. |
• | We could experience difficulty in integrating personnel, operations and financial and other controls and systems and retaining key employees and customers. |
• | We may be unable to achieve cost savings or other synergies anticipated in connection with an acquisition or other strategic transaction or relationship. |
• | We may assume unknown liabilities, known contingent liabilities that become realized, known liabilities that prove greater than anticipated, internal control deficiencies or exposure to regulatory sanctions resulting from the acquired company’s or investee’s activities and the realization of any of these liabilities or deficiencies may increase our expenses, adversely affect our financial position and/or cause us to fail to meet our public financial reporting obligations. |
• | In connection with acquisitions and other strategic transactions and relationships, we often enter into post-closing financial arrangements such as purchase price adjustments, earn-out obligations and indemnification obligations, which may have unpredictable financial results. |
• | As a result of our acquisitions, we have recorded significant goodwill and other assets on our balance sheet and if we are not able to realize the value of these assets, or if the fair value of our investments declines, we may be required to incur impairment charges. |
• | We may have interests that diverge from those of our strategic partners and we may not be able to direct the management and operations of the strategic relationship in the manner we believe is most appropriate, exposing us to additional risk. |
A. | History and Development of the Company |
B. | Business Overview |
• | gain visibility into the usage of the software applications stack to better understand resource allocation; |
• | create streamlined digital experiences that meet business goals for the organization; |
• | have the ability to measure return on investment in technology spend; and |
• | track software usage to gain insight into tangible business impact created by manager-led departments. |
• | intuitive and improving user experiences with technology; |
• | simplified learning curves for gaining proficiency on a new application, increasing efficiency and solving the problem of under-utilization of software; |
• | reduced breadth and variety of applications that they are required to engage with and continuously learn; and |
• | more frequent engagement with the business process, not just the software, which leads to increased retention. |
• | For CIOs and Business Leaders, our platform provides unified visibility, data and actionable insights across the organization’s software stack, to improve key business processes and drive employees and customers to action. Our data-driven insights offer strategic perspective and provide a competitive advantage to CIOs. |
• | A leading food and beverage company uses our Digital Adoption Platform to gain visibility into user behavior across applications and focus resources to target employees at the point in their journey that they need help. By automating common workflow processes and providing targeted support for others, they are realizing improved task completion rates of nearly two times prior levels, in some cases. Importantly, user satisfaction has increased and productivity gains have given employees more time to focus on higher value initiatives. |
• | For Employees, our platform provides a contextual and unified experience that can be seamlessly delivered across any application (third party, proprietary, mobile or desktop) to provide personalized process workflow guidance and automation. |
• | A global pharmacy store chain utilized our technology to drive digital adoption across multiple apps that are relied upon by more than 220,000 employees globally, resulting in an average reduction of 50% in support tickets. During the pandemic, a key driver of WalkMe’s success was its role in standing up new technology with as little friction as possible. |
• | A leading biotechnology company uses WalkMe across over 45 applications in over 11 languages to empower its workforce to be successful while continuing to deliver on its promises to employees and customers. WalkMe is used as a strategy for adoption of existing apps as well as a method of deploying new pieces of software. With WalkMe, they rolled out an enterprise wide HCM to 90,000+ employees with no formal training methods and user satisfaction ranking at 98% in some cases. |
• | For Customers, our platform can be deployed on any customer facing website or application to power self-service onboarding, feature engagement, support and more. |
• | One of the world’s largest technology and consulting companies uses WalkMe to support onboarding, mitigate support tickets, and increase success of their customers on over 20 B2B offerings. They’ve seen 6x increase in product adoption, 4x higher conversion rate, 80% revenue growth of digital offerings, and a 300% improvement in product usage consumption, and user retention. |
• | Provides Insights to Help CIOs and Business Leaders Drive Business Outcomes Horizontally Across the Organization. CIOs and business leaders use our Insights capabilities, UI Intelligence technology and integration- center to gain visibility into the enterprise technology stack, including software usage and user experiences across business processes. This analytics suite delivers metrics horizontally across departmental managers, which include tactical information such as how employees and customers engage with applications (e.g., number of active users and application and feature utilization) as well as higher level, strategic information targeted to CIOs (e.g., enterprise wide technology utilization and process adoption). Our analytics can be leveraged to manage, measure and prioritize digital projects, change user behaviors, and increase digital adoption, which drives business outcomes that align with the strategic goals of the entire organization. |
• | Delivers Immediate Value. Our technology provides CIOs and business leaders with immediate visibility into the software stack and business processes, consolidates applications for users to navigate and provides detailed guidance on how to use them effectively. From an employee and customer perspective, time to mastery of new technologies and processes is greatly reduced. In addition, managers do not have to rely on IT resources to facilitate deployment and integration with legacy systems, shortening the wait for useful insights and allowing for quick decisions. Such dynamics enable enterprises to cultivate agile and productive workforces that can rapidly adapt to changing organizational needs. By using our platform, enterprises organically understand the data-based insights and derived solutions to their issues, saving additional learning curve costs and achieving faster and increased ROI on their software spend. |
• | Optimizes Software Usage and Technology Spend. We enable enterprises to make greater use of software more efficiently. For example, many enterprises utilize their CRM tools solely as a contact database. With our Digital Adoption Platform, organizations can create easy to use business process workflows that facilitate and encourage employees to use the CRM tools as an interactive sales pipeline and forecasting system that provides comprehensive revenue generation benefits. Through our Digital Adoption Platform, organizations are able to capture this additional value from new user behavior formed around the optimal product adoption, by leveraging pre-built best practice templates and solution. |
• | Increases Employee Productivity and Reduces Support Costs. By engaging employees across software applications, employees are able to use more easily the software applications that the enterprise has deployed. This leads to improved productivity, increased data accuracy, reduced support costs and increased employee engagement. Based on the TEI Study, employees observe a 60% reduction in training time on applications and savings of 50% from reduced IT support calls and Help Desk tickets. With WalkMe, employees are able to realize the full capabilities of different applications without friction, driving better performance in their jobs and improving business outcomes for the organization. |
• | Improves Customer Engagement. Our Digital Adoption Platform improves customer engagement and retention by simplifying the end user experience. According to the TEI Study, our Digital Adoption Platform resulted in an approximate increase of 35% in customer retention and 10% growth in upsell opportunities from existing customers over three years. |
- | Enterprise analytics. WalkMe instantly provides organizations with unified observability and visibility on top of their current mesh of systems and workflows. |
- | Workflow analytics. WalkMe provides visibility into user experiences across applications, pinpoint where users struggle, and continuously optimize experiences to keep up with change. |
- | AI-Based data entry diagnostics. WalkMe’s UI Intelligence surfaces AI-based insights to help improve data integrity and efficient process completion. |
- | KPI management. WalkMe customers can prove adoption and digital transformation success by tracking and automatically reporting on KPIs defined by project leaders. |
- | Integration Center. Our Integration Center technology supports both incoming and outgoing integrations to strengthen data analysis on the one hand and create segmented and personalized user experiences on the other. Our customers integrate their most business-critical applications to and from WalkMe for better decision making and more impactful user experiences. |
- | Build. With WalkMe’s no-code editor, organizations have the agility to take data-driven action to fix what is broken across workflows and applications. |
- | Design and automate. WalkMe users are able to design automated, data-driven experiences including conversational interfaces, tooltips, on screen guidance or other changes to the UI - without having to rely on developers or release cycles. |
- | Leverage best practices and solution templates. We have built business process-specific solution templates based on thousands of implementations gathered by WalkMe across the most commonly used applications. These solution templates drive best practices, reduce customer maintenance efforts and costs and enable faster implementation and time-to-value for the most common user workflows. |
- | Simplify. WalkMe creates a transparent layer for the end-user across any software to ensure immediate and intuitive access to any application, workflow, or resource - without touching the underlying software or website. |
- | Personalize. WalkMe enables organizations to drive users to success with personalized experiences across any workflow or device, through guidance, hyper-automation, in-app engagement and help. |
- | Omni-channel experiences. WalkMe enables organizations to connect employees through a single interface to applications and user workflows within an enterprise and simplify task completion and access to knowledge through enterprise search, communication tools, and a natural-language chat interface. |
Consumer & Retail | Technology | Financial Services | Energy, Industrial, & Transportation | |||
Circle K L’Oreal Nestle Southern Glazers Ulta Overstock Walgreens Boots Alliance Gojo | LinkedIn Sprinklr HP Adobe WL Gore Okta | Bank of the West Citigroup E*trade Goldman Sachs IGM Financial Services Nasdaq Paychex Sun Life Financial Zurich Insurance Group Standard Chartered Paypal | American Airlines BMW Chevron Schneider Electric Veolia |
Healthcare & Life Science | Education & Non Profit | Communications | ||
AstraZeneca Christus Health Geisinger Modernizing Medicine Parexel Quest Diagnostics Syneos Health Team Health Thermo Fisher | Kaplan Make a Wish Foundation McGraw Hill Stanford University School of Medicine University of Miami University of Virginia | British Telecommunications PLC Cisco LogMeIn Lumen Technologies |
• | one application or department, after which our sales force focuses on expanding into other applications or departments, or |
• | an enterprise-wide deployment where WalkMe is used across departments, applications and use cases. |
• | CIO or VP IT who is focused on digital transformation to business efficiency, workforce agility and an overall return on software investment; |
• | VP of sales, whose priorities include sales productivity and forecast accuracy; |
• | Head of Human Resources who aims to improve the digital experience of employees, especially in a remote work environment; |
• | Head of Product who is trying to improve revenue and customer retention across an application or platform; and |
• | Head of Contact Center who is looking to reduce support overhead and improve productivity of support teams. |
• | Non-adoption from enterprises maintaining the status quo of offline, internally developed, or non-dynamic, FAQ-centric application guidance and workflow support; |
• | Point solutions embedded natively or as an add-on to software provided by diversified enterprise software companies such as SAP, Oracle, Microsoft, Salesforce; and |
• | Providers of software for specific in-app guidance or analytics use cases for SaaS applications, which lack holistic platform solutions and extensibility across applications. |
• | Breadth of applications and technology integrations supported; |
• | Support for cross-application guidance, automation and analytics; |
• | Expertise in third-party application implementations; |
• | Integration of robust analytics and visualization capabilities: in addition to analytics across WalkMe usage, our Digital Experience Analytics provides usage analytics across the underlying, third-party platforms; |
• | Cross-platform support for workflows including mobile native applications (iOS and Android) and desktop (Windows and macOS); |
• | Ease of implementation and use; |
• | Performance, security, scalability and reliability; |
• | Quality of customer support; |
• | Total cost of ownership; and |
• | Brand recognition and reputation. |
C. | Organizational Structure |
Name of Subsidiary | Place of Incorporation |
WalkMe, Inc. | Delaware |
WalkMe UK Limited | United Kingdom |
WalkMe Australia PTY Ltd. | Australia |
WalkMe Singapore PTE Ltd. | Singapore |
WalkMe K.K. | Japan |
WalkMe Canada Ltd. | Canada |
WalkMe Germany GmbH | Germany |
D. | Property, Plants and Equipment |
As of December 31, | ||||||||
2021 | 2022 | |||||||
Annualized Recurring Revenue (millions) | $ | 219.6 | $ | 262.3 |
As of December 31, | ||||||||
2021 | 2022 | |||||||
$100,000+ Customers | 454 | 514 |
As of December 31, | ||||||||
2021 | 2022 | |||||||
Dollar-Based Net Retention Rate (all customers) | 115 | % | 113 | % | ||||
Dollar Based Net Retention Rate (customers having 500 or more employees) | 121 | % | 116 | % |
As of December 31, | ||||||||
2021 | 2022 | |||||||
Remaining Performance Obligations (millions) | $ | 316.2 | $ | 374.0 |
Year Ended December 31, | ||||||||
2021 | 2022 | |||||||
Net cash used in operating activities | $ | (34.2 | ) | $ | (46.8 | ) | ||
Less: Purchases of property and equipment | (2.6 | ) | (2.9 | ) | ||||
Less: Capitalized software development costs | (3.9 | ) | (4.3 | ) | ||||
Free Cash Flow | $ | (40.8 | )* | $ | (53.9 | )* |
Year Ended December 31, | ||||||||
2021 | 2022 | |||||||
GAAP operating loss | $ | (77.8 | ) | $ | (109.8 | ) | ||
Plus: Share-based compensation expense | 27.3 | 50.1 | ||||||
Plus: Amortization and impairment of acquired intangibles | 0.3 | 1.5 | ||||||
Non-GAAP operating loss | $ | (50.2 | )* | $ | (58.3 | )* | ||
GAAP operating margin | (40 | )% | (45 | )% | ||||
Non-GAAP operating margin | (26 | )% | (24 | )% |
Year ended December 31, | ||||||||
2021 | 2022 | |||||||
(in thousands) | ||||||||
Revenue | $ | 193,303 | $ | 245,006 | ||||
Cost of revenue | 46,657 | 53,884 | ||||||
Gross profit | 146,646 | 191,122 | ||||||
Operating expenses: | ||||||||
Research and development | 48,160 | 59,468 | ||||||
Sales and marketing | 127,719 | 176,307 | ||||||
General and administrative | 48,557 | 65,188 | ||||||
Total operating expenses | 224,436 | 300,963 | ||||||
Operating loss | (77,790 | ) | (109,841 | ) | ||||
Financial income (expense), net | (9 | ) | 5,322 | |||||
Loss before income taxes | (77,799 | ) | (104,519 | ) | ||||
Income taxes | (2,494 | ) | (3,831 | ) | ||||
Net loss | $ | (80,293 | ) | $ | (108,350 | ) |
Year ended December 31, | ||||||||
2021 | 2022 | |||||||
(as a % of revenue) | ||||||||
Revenue | 100 | % | 100 | % | ||||
Cost of revenue | 24 | 22 | ||||||
Gross profit | 76 | 78 | ||||||
Operating expenses: | ||||||||
Research and development | 25 | 24 | ||||||
Sales and marketing | 66 | 72 | ||||||
General and administrative | 25 | 27 | ||||||
Total operating expenses | 116 | 123 | ||||||
Operating loss | (40 | ) | (45 | ) | ||||
Financial income (expense), net | * | 2 | ||||||
Loss before income taxes | (40 | ) | (43 | ) | ||||
Income taxes | (1 | ) | (1 | ) | ||||
Net loss | (41 | )% | (44 | )% |
Year Ended December 31, | Period-over-Period Change | |||||||||||||||
2021 | 2022 | Dollar | Percentage | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Subscription revenues | $ | 175,328 | $ | 220,972 | $ | 45,644 | 26 | % | ||||||||
Professional services revenues | 17,975 | 24,034 | 6,059 | 34 | ||||||||||||
Total revenue | $ | 193,303 | $ | 245,006 | $ | 51,073 | 27 | % |
Year Ended December 31, | ||||||||
2021 | 2022 | |||||||
Subscription revenues | 91 | % | 90 | % | ||||
Professional services revenues | 9 | 10 | ||||||
Total revenue | 100 | % | 100 | % |
Year Ended December 31, | Period-over-Period Change | |||||||||||||||
2021 | 2022 | Dollar | Percentage | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Cost of revenues: | ||||||||||||||||
Cost of subscription revenues | $ | 24,025 | $ | 25,990 | $ | 1,965 | 8 | % | ||||||||
Cost of professional services revenues | 22,632 | 27,894 | 5,262 | 23 | % | |||||||||||
Total cost of revenues | $ | 46,657 | $ | 53,884 | $ | 7,227 | 15 | % | ||||||||
Gross margin: | ||||||||||||||||
Subscription | 86 | % | 88 | % | ||||||||||||
Professional services | (26 | ) | (16 | ) | ||||||||||||
Total gross margin | 76 | % | 78 | % |
Year Ended December 31, | Period-over-Period Change | |||||||||||||||
2021 | 2022 | Dollar | Percentage | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Research and development | $ | 48,160 | $ | 59,468 | $ | 11,308 | 23 | % |
Year Ended December 31, | Period-over-Period Change | |||||||||||||||
2021 | 2022 | Dollar | Percentage | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Sales and marketing | $ | 127,719 | $ | 176,307 | $ | 48,588 | 38 | % |
Year Ended December 31, | Period-over-Period Change | |||||||||||||||
2021 | 2022 | Dollar | Percentage | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
General and administrative | $ | 48,557 | $ | 65,188 | $ | 16,631 | 34 | % |
Year Ended December 31, | Period-over-Period Change | |||||||||||||||
2021 | 2022 | Dollar | Percentage | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Financial income (expense), net | $ | (9 | ) | $ | 5,322 | $ | 5,331 | - | % |
Year Ended December 31, | Period-over-Period Change | |||||||||||||||
2021 | 2022 | Dollar | Percentage | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Income tax expenses | $ | 2,494 | $ | 3,831 | $ | 1,337 | 54 | % |
Year Ended December 31, | ||||||||
2021 | 2022 | |||||||
(in thousands) | ||||||||
Net cash used in operating activities | $ | (34,225 | ) | $ | (46,808 | ) | ||
Net cash used in investing activities | (27,523 | ) | (149,956 | ) | ||||
Net cash provided by financing activities | 276,789 | 14,791 | ||||||
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash | (685 | ) | (850 | ) | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash | 214,356 | (182,823 | ) | |||||
Cash, cash equivalents and restricted cash at beginning of year | 62,895 | 277,251 | ||||||
Cash, cash equivalents and restricted cash at end of the year | $ | 277,251 | $ | 94,428 |
• | identify the contract with a customer; |
• | identify the performance obligations in the contract; |
• | determine the transaction price; |
• | allocate the transaction price to the performance obligations in the contract; and |
• | recognize revenue when or as, we satisfy a performance obligation. |
• | Fair Value of Ordinary Shares. For the period in which our ordinary shares were not publicly traded, we estimated the fair value of our ordinary shares based on contemporaneous valuations and other factors deemed relevant by management. After the IPO, the fair value of each ordinary share was based on the closing price of our publicly traded ordinary shares as reported on the date of the grant. |
• | Expected Term. The expected term of the share options reflects the period for which we believe the option will remain outstanding. To determine the expected term, we generally apply the simplified method approach. The simplified method deems the term to be the average of the time-to-vesting and the contractual life of the options. |
• | Expected Volatility. As we do not have sufficient trading history for our ordinary shares, the selected volatility used is representative of expected future volatility. We base expected future volatility on the historical and implied volatility of comparable publicly traded companies over a similar expected term. |
• | Expected Dividend Yield. We have never declared or paid any cash dividends and do not presently intend to pay cash dividends in the foreseeable future. As a result, we used an expected dividend yield of zero. |
• | Risk-Free Interest Rates. We use the U.S. Treasury yield for our risk-free interest rate that corresponds with the expected term. |
Year Ended December 31, | ||||||||
2021 | 2022 | |||||||
Expected dividend yield | - | - | ||||||
Expected volatility | 41%-60 | % | 60%-91.9 | % | ||||
Expected term (years) | 0.57-6.55 | 0.5-6.98 | ||||||
Risk-free interest rate | 0.06-1.06 | % | 0.46-3.88 | % |
A. | Directors and Senior Management |
Name | Age | Position | ||
Executive Officers | ||||
Dan Adika | 37 | Chief Executive Officer and Director | ||
Hagit Ynon | 51 | Chief Financial Officer | ||
Scott Little | 55 | Chief Revenue Officer | ||
Non-Employee Directors | ||||
Michele Bettencourt (1) | 62 | Chairperson of the Board | ||
Haleli Barath | 48 | Director | ||
Rafael Sweary | 51 | Director | ||
Menashe Ezra (3) | 70 | Director | ||
Ron Gutler (1) (2) (3) | 65 | Director | ||
Jeff Horing (3) | 58 | Director | ||
Rory O’Driscoll (2) | 58 | Director | ||
Michael Risman (3) | 54 | Director | ||
Roy Saar (1) (2) | 52 | Director |
(1) | Member of the audit committee |
(2) | Member of the compensation committee |
(3) | Member of the nominating, governance and sustainability committee |
Board Diversity Matrix As of the date of this Annual Report | ||||
Country of Principal Executive Offices: | Israel | |||
Foreign Private Issuer | Yes | |||
Disclosure Prohibited under Home Country Law | No | |||
Total Number of Directors | 10 | |||
Female | Male | Non- Binary/Transgender | Did Not Disclose Gender | |
Part I: Gender Identity | ||||
Directors | 1 | 6 | 1 | 2 |
Part II: Demographic Background | ||||
Underrepresented Individual in Home Country Jurisdiction | 1 | |||
LGBTQ+ | 1 | |||
Did Not Disclose Demographic Background | 5 |
B. | Compensation |
• | at least a majority of the shares held by all shareholders who are not controlling shareholders and do not have a personal interest in such matter, present and voting at such meeting, are voted in favor of the compensation package, excluding abstentions; or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such matter voting against the compensation package does not exceed two percent (2%) of the aggregate voting rights in the Company. |
• | Mr. Dan Adika, Chief Executive Officer. Compensation expenses recorded in 2022 of $0.4 million in salary expenses and $0.1 million in social benefits costs. |
• | Mr. Rafael Sweary, Director and former President. Compensation expenses recorded in 2022 of $0.4 million in salary expenses and $0.1 million in social benefits costs. |
• | Ms. Hagit Ynon, Chief Financial Officer. Compensation expenses recorded in 2022 of $0.4 million in salary expenses and $0.1 million in social benefits costs. |
• | Ms. Chelsea Pyrzenski, Chief People Officer. Compensation expenses recorded in 2022 of $0.4 million in salary expenses and $0.1 million in social benefits costs. |
• | Mr. Wayne McCulloch, Chief Customer Officer. Compensation expenses recorded in 2022 of $0.4 million in salary expenses and $0.1 million in social benefits costs. |
• | 1% of the outstanding ordinary shares as of the last day of the immediately preceding fiscal year, determined on a fully diluted basis; or |
• | such other amount as our board of directors may determine. |
a. | providing for either (i) termination of any outstanding right in exchange for an amount of cash, or (ii) the replacement of such outstanding right with other rights or property; |
b. | providing that the outstanding rights under the ESPP shall be assumed by the successor or survivor corporation, with appropriate adjustments as to the number and kind of shares and prices; |
c. | making adjustments in the number and type of shares (or other securities or property) subject to outstanding rights under the ESPP and/or in the terms and conditions of outstanding rights and rights that may be granted in the future; |
d. | providing that participants’ accumulated payroll deductions may be used to purchase shares prior to the next occurring purchase date on such date as the administrator determines and the participants’ rights under the ongoing offering period(s) shall be terminated; and |
e. | providing that all outstanding rights shall terminate without being exercised. |
C. | Board Practices |
• | the Class I directors are Roy Saar, Michael Risman, Menashe Ezra and Dan Adika, and their terms will expire at our annual general meeting of our shareholders to be held in 2025; |
• | the Class II directors, are Michele Bettencourt, Rafael Sweary and Rory O’Driscoll, and their terms will expire at our annual general meeting of our shareholders to be held in 2023; and |
• | the Class III directors are Jeff Horing, Ron Gutler and Haleli Barath, and their terms will expire at our annual general meeting of our shareholders to be held in 2024. |
• | at least a majority of the shares of non-controlling shareholders and shareholders that do not have a personal interest in the approval voted at the meeting are voted in favor (disregarding abstentions); or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in such appointment that re voted against such appointment does not exceed two percent (2%) of the aggregate voting rights in the company. |
• | Dan Adika was appointed by a majority vote based on the number of shares held by Mr. Eyal Cohen, Brooks S.M. Projects Ltd. and Mr. Dan Adika; |
• | Haleli Barath was appointed by resolution of our board of directors; |
• | Michele Bettencourt was appointed by resolution of our board of directors; |
• | Menashe Ezra was appointed by Gemini Israel V, L.P. and Gemini Partners Investors V, L.P; |
• | Ron Gutler was appointed by unanimous consent of our board of directors; |
• | Jeff Horing was appointed by Insight Venture Partners IX, L.P., Insight Venture Partners (Cayman) IX, L.P., Insight Venture Partners IX (Co-Investors), L.P. and Insight Venture Partners (Delaware) IX, L.P.; |
• | Rory O’Driscoll was appointed by Scale Venture Partners IV, L.P.; |
• | Michael Risman was appointed by Vitruvian Directors I Limited on behalf of Ambleside S.a.r.l; |
• | Roy Saar was appointed by Mangrove III Investments S.a.r.l.; and |
• | Rafael Sweary was appointed by a majority vote based on the number of shares held by Mr. Eyal Cohen, Brooks S.M. Projects Ltd. and Mr. Dan Adika. |
• | retaining and terminating our independent auditors, subject to ratification by our board of directors, and in the case of retention, to ratification by the shareholders; |
• | pre-approving audit and non-audit services to be provided by the independent auditors and related fees and terms; |
• | overseeing the accounting and financial reporting processes of our Company and audits of our financial statements, the effectiveness of our internal control over financial reporting and making such reports as may be required of an audit committee under the rules and regulations promulgated under the Exchange Act; |
• | reviewing with management and our independent auditor our annual and quarterly financial statements prior to publication or filing (or submission, as the case may be) to the SEC; |
• | recommending to our board of directors the retention and termination of the internal auditor, and the internal auditor’s engagement fees and terms, in accordance with the Companies Law as well as approving the yearly or periodic work plan proposed by the internal auditor; |
• | reviewing policies and procedures with respect to transactions (other than transactions related to the compensation or terms of services) between us and our officers and directors, or affiliates of our officers or directors, or transactions that are not in the ordinary course of our business and deciding whether to approve such acts and transactions if so required under the Companies Law; and |
• | establishing procedures for the handling of employees’ complaints as to the management of our business and the protection to be provided to such employees. |
• | making recommendations to our board of directors with respect to the approval of the compensation policy for office holders and, once every three years, regarding any extensions to a compensation policy that was adopted for a period of more than three years; |
• | reviewing the implementation of the compensation policy and periodically making recommendations to our board of directors with respect to any amendments or updates of the compensation policy; |
• | resolving whether or not to approve arrangements with respect to the terms of office and employment of office holders; and |
• | exempting, under certain circumstances, a transaction with our Chief Executive Officer from the approval of our shareholders. |
• | recommending to our board of directors for its approval a compensation policy in accordance with the requirements of the Companies Law as well as other compensation policies, incentive-based compensation plans and equity-based compensation plans, and overseeing the development and implementation of such policies and recommending to our board of directors any amendments or modifications the committee deems appropriate, including as required under the Companies Law; |
• | reviewing and approving the granting of options and other incentive awards to our Chief Executive Officer and other executive officers, including reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, including evaluating their performance in light of such goals and objectives; |
• | Reviewing and making recommendations to the Board regarding director compensation; |
• | approving and exempting certain transactions regarding office holders’ compensation pursuant to the Companies Law; and |
• | administering our equity-based compensation plans, including without limitation, approving the adoption of such plans, amending and interpreting such plans and the awards and agreements issued pursuant thereto, and making awards to eligible persons under the plans and determining the terms of such awards. |
• | such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders and shareholders who do not have a personal interest in such compensation policy; or |
• | the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation policy and who vote against the policy does not exceed two percent (2%) of the aggregate voting rights in the Company. |
• | the education, skills, experience, expertise and accomplishments of the relevant office holder; |
• | the office holder’s position and responsibilities; |
• | prior compensation agreements with the office holder; |
• | the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost to the average and median salary of such employees of the company, as well as the impact of disparities between them on the work relationships in the company; |
• | if the terms of employment include variable components - the possibility of reducing variable components at the discretion of the board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components; and |
• | if the terms of employment include severance compensation - the term of employment or office of the office holder, the terms of the office holder’s compensation during such period, the company’s performance during such period, the office holder’s individual contribution to the achievement of the company goals and the maximization of its profits and the circumstances under which he or she is leaving the company. |
• | with regards to variable components: |
• | with the exception of office holders who report to the chief executive officer, a means of determining the variable components on the basis of long-term performance and measurable criteria; provided that the company may determine that an immaterial part of the variable components of the compensation package of an office holder shall be awarded based on non-measurable criteria, or if such amount is not higher than three months’ salary per annum, taking into account such office holder’s contribution to the company; and |
• | the ratio between variable and fixed components, as well as the limit of the values of variable components at the time of their payment, or in the case of equity-based compensation, at the time of grant; |
• | a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation policy, any amounts paid as part of the office holder’s terms of employment, if such amounts were paid based on information later to be discovered to be wrong, and such information was restated in the company’s financial statements; |
• | the minimum holding or vesting period of variable equity-based components to be set in the terms of office or employment, as applicable, while taking into consideration long-term incentives; and |
• | a limit to retirement grants. |
• | overseeing and assisting our board in reviewing and recommending nominees for election as directors; |
• | overseeing the assessment of the performance of the members of our board; |
• | establishing and maintaining effective corporate governance policies and practices, including, but not limited to, developing and recommending to our board a set of corporate governance guidelines applicable to our business; and |
• | overseeing our policies, programs and strategies related to environmental, social and governance matters (“ESG). |
• | information on the business advisability of a given action brought for his, her or its approval or performed by virtue of his, her or its position; and |
• | all other important information pertaining to such action. |
• | refrain from any act involving a conflict of interest between the performance of his, her or its duties in the company and his, her or its other duties or personal affairs; |
• | refrain from any activity that is competitive with the business of the company; |
• | refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself, herself or itself or others; and |
• | disclose to the company any information or documents relating to the company’s affairs which the office holder received as a result of his, her or its position as an office holder. |
• | an amendment to the company’s articles of association; |
• | an increase of the company’s authorized share capital; |
• | a merger; or |
• | interested party transactions that require shareholder approval. |
• | a financial liability imposed on him or her in favor of another person pursuant to a judgment, including a settlement or arbitrator’s award approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking shall detail the above mentioned events and amount or criteria; |
• | reasonable litigation expenses, including legal fees, incurred by the office holder (1) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability, such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (2) in connection with a monetary sanction; |
• | reasonable litigation expenses, including legal fees, incurred by the office holder or imposed by a court in proceedings instituted against him or her by the company, on its behalf or by a third-party or in connection with criminal proceedings in which the office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent; and |
• | expenses, including reasonable litigation expenses and legal fees, incurred by an office holder in relation to an administrative proceeding instituted against such office holder, or certain compensation payments made to an injured party imposed on an office holder by an administrative proceeding, pursuant to certain provisions of the Israeli Securities Law. |
• | a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of the duty of care to the company or to a third-party, including a breach arising out of the negligent conduct of the office holder; |
• | a financial liability imposed on the office holder in favor of a third-party; |
• | a financial liability imposed on the office holder in favor of a third-party harmed by a breach in an administrative proceeding; and |
• | expenses, including reasonable litigation expenses and legal fees, incurred by the office holder as a result of an administrative proceeding instituted against him or her, pursuant to certain provisions of the Israeli Securities Law. |
• | a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice the company; |
• | a breach of the duty of care committed intentionally or recklessly, excluding a breach arising out of the negligent conduct of the office holder; |
• | an act or omission committed with intent to derive illegal personal benefit; or |
• | a fine, monetary sanction or forfeit levied against the office holder. |
D. | Employees |
E. | Share Ownership |
F. | Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
A. | Major Shareholders |
Name of Beneficial Owner | Number | % | ||||||
Principal Shareholders: | ||||||||
Entities Affiliated with Insight Partners(1) | 24,253,823 | 27.6 | ||||||
Entities Affiliated with StepStone Group(2) | 10,366,855 | 11.8 | ||||||
Scale Venture Partners IV, LP(3) | 9,429,021 | 10.7 | ||||||
Entities Affiliated with Mangrove Capital Partners(4) | 6,278,354 | 7.1 | ||||||
Entities Affiliated with Gemini Israel Ventures(5) | 7,730,048 | 8.8 | ||||||
Entities Affiliated with AMBLESIDE S.À R.L.(6) | 5,462,245 | 6.2 | ||||||
Executive Officers and Directors: | ||||||||
Dan Adika(7) | 3,244,447 | 3.6 | ||||||
Hagit Ynon (8) | 246,354 | * | ||||||
Scott Little | 32,971 | * | ||||||
Michele Bettencourt(9) | 23,333 | * | ||||||
Haleli Barath (10) | 109,328 | * | ||||||
Rafael Sweary(11) | 3,056,433 | 3.4 | ||||||
Menashe Ezra(12) | 7,739,543 | 8.8 | ||||||
Ron Gutler(13) | 39,609 | * | ||||||
Jeff Horing(14) | 9,495 | * | ||||||
Rory O’Driscoll(15) | 9,435,228 | 10.7 | ||||||
Michael Risman(16) | - | - | ||||||
Roy Saar(17) | 196,735 | * | ||||||
All directors and executive officers as a group (12 individuals) | 24,133,476 | 26.0 |
* | Indicates ownership of less than 1%. |
(1) | Pursuant to Schedule 13G filed with the SEC on February 11, 2022, consists of (i) 14,719,862 ordinary shares held of record by Insight Venture Partners IX, L.P., (ii) 293,822 ordinary shares held of record by Insight Venture Partners IX (Co-Investors), L.P., (iii) 7,313,935 ordinary shares held of record by Insight Venture Partners (Cayman) IX, L.P., (iv) 1,559,564 ordinary shares held of record by Insight Venture Partners (Delaware) IX, L.P., (v) 163,070 ordinary shares held of record by Insight Partners (Cayman) XI, L.P., (vi) 21,747 ordinary shares held of record by Insight Partners (Delaware) XI, L.P., (vii) 20,202 ordinary shares held of record by Insight Partners (EU) XI, S.C.Sp., (viii) 3,568 ordinary shares held of record by Insight Partners XI (Co-Investors) (B), L.P., (ix) 2,589 ordinary shares held of record by Insight Partners XI (Co-Investors), L.P., and (x) 155,464 shares held of record held by Insight Partners XI, L.P. The general partner of Insight Venture Partners IX, L.P., Insight Venture Partners IX (Co-Investors), L.P., Insight Venture Partners (Cayman) IX, L.P., and Insight Venture Partners (Delaware) IX, L.P. is Insight Venture Associates IX, L.P., (“IVA IX LP”), whose general partner is Insight Venture Associates IX, Ltd., (“IVA IX Ltd”). The general partner of Insight Partners (Cayman) XI, L.P., Insight Partners (Delaware) XI, L.P., Insight Partners XI (Co-Investors) (B), L.P., Insight Partners XI (Co-Investors), L.P. and Insight Partners XI, L.P. is Insight Associates XI, L.P., (“IA XI LP”), whose general partner is Insight Associates XI, Ltd. (“IA XI Ltd”). The general partner of Insight Partners (EU) XI, S.C.Sp. is Insight Associates (EU) XI, S.a.r.l., (“IA EU XI”). The sole shareholder of IVA IX Ltd, IA XI Ltd and IA EU XI is Insight Holdings Group, LLC. Mr. Horing, one of the Company’s directors, is a managing director at Insight Venture Partners. The address for these entities is c/o Insight Partners, 1114 Avenue of the Americas, 36th Floor, New York, NY 10036. |
(2) | Pursuant to Schedule 13/G filed with the SEC on September 20, 2022, consists of (i) 10,366,855 ordinary shares held by StepStone Group LP. (“StepStone”); (ii) 3,013,139 ordinary shares held by StepStone VC Global Partners VI-A, L.P. (“Global Partners VI-A”); (iii) 1,203,629 ordinary shares held by StepStone VC Global Partners VI-C, L.P. (“Global Partners VI-C”); (iv) 4,216,768 ordinary shares held by StepStone VC General Partner VI, L.P. (“Partners VI GP”); (v) 5,948,813 ordinary shares held by StepStone VC Opportunities III, L.P. (“Opportunities III”); (vi) 5,948,813 ordinary shares held by StepStone VC Opportunities General Partner III, L.P. (“Opportunities III GP”); (vii) 201,274 ordinary shares held by StepStone VC Secondaries Fund IV, L.P. (“Secondaries Fund IV,” and together with Global Partners VI and Opportunities III, the “Funds”) and (viii) 201,274 ordinary shares held by StepStone VC Secondaries General Partner IV, L.P (“Secondaries IV GP”). Partners VI GP is the general partner of Global Partners VI-A and Global Partners VI-C, Opportunities III GP is the general partner of Opportunities III, and Secondaries IV GP is the general partner of Secondaries Fund IV. StepStone is the investment manager of the Funds. StepStone Group Holdings LLC (“StepStone Group Holdings”) is the general partner of StepStone, and StepStone Group Inc. is the sole managing member of StepStone Group Holdings. On September 20, 2021, StepStone Group Inc., a Delaware corporation, and StepStone Group LP, a Delaware limited partnership, completed the acquisition of Greenspring Associates, LLC and certain of its affiliates or subsidiaries (the “StepStone Acquisition”). As a result of the Stepstone Acquisition, StepStone Group LP became the investment manager of the Funds. The address of these entities is 4225 Executive Square, Suite 1600, La Jolla, CA 90237. |
(3) | Pursuant to Schedule 13G/A filed with the SEC on February 13, 2023, consists of 9,429,021 ordinary shares held of record by Scale Venture Partners IV, L.P. (“SVP IV”). The general partner of SVP IV is Scale Venture Management IV, L.P. whose general partner is Scale Venture Management IV, LLC (“Scale IV LLC”). Rory O’Driscoll, one of our directors, Andrew Vitus and Stacey Bishop are managers of Scale IV LLC and share voting and dispositive power with respect to the ordinary shares held by SVP IV. The address for these entities is c/o Scale Venture Partners, 950 Tower Lane, Suite 1150, Foster City, California 94404. |
(4) | Pursuant to Schedule 13G filed with the SEC on January 19, 2022, consists of (i) 5,638,420 ordinary shares held by Mangrove III Investments S.à r.l (“Mangrove III”) and (ii) 639,934 ordinary shares held by Mangrove V Investments S.à r.l (“Mangrove V”). Mangrove III S.C.A. SICAR is the owner of 100% of the share capital of Mangrove III, and Mangrove V (SCA), RAIF is the owner of 100% of the share capital of Mangrove V. Mangrove III Management S.A. is the liquidator of Mangrove III S.C.A. SICAR. The members of the board of directors of Mangrove III Management S.A. are Mark Tluszcz, Hans-Jurgen Schmitz and Willibrord Ehses. As a result of these relationships, each of Mangrove III S.C.A. SICAR, Mangrove III Management S.A. and Messrs. Tluszcz, Schmitz and Ehses may be deemed to share voting and dispositive power with respect to the securities held by Mangrove III. Mangrove Capital Partners S.A. is the manager of Mangrove V (SCA), RAIF. The members of the board of directors of Mangrove Capital Partners S.A. are Mark Tluszcz, Hans-Jürgen Schmitz, Michael Rabinowicz and Gerardo Lopez Fojaca. As a result of these relationships, each of Mangrove V (SCA), RAIF, Mangrove Capital Partners S.A. and Messrs. Tluszcz, Schmitz, Rabinowicz and Lopez Fojaca may be deemed to share voting and dispositive power with respect to the securities held by Mangrove V. Roy Saar, one of our directors, is a partner at Mangrove Capital Partners. The address for these entities is 31 Boulevard Joseph II, L-1840, Luxembourg. |
(5) | Pursuant to Schedule 13G filed with the SEC on February 14, 2023, consists of (i) 7,652,748 ordinary shares held of record by Gemini Israel V Limited Partnership (“Gemini V”) and (ii) 77,300 ordinary shares held of record by Gemini Partners Investors V L.P. (“Gemini Partners”). Gemini Capital Associates V LP (“Gemini Associates LP”) is the general partner of Gemini V and Gemini Capital Associates V GP, Ltd. (“Gemini Associates GP”) is the general partner of Gemini Associates LP. Gemini Israel Funds IV Ltd. is the general partner of Gemini Partners. Yossi Sela and Menashe Ezra are the managing partners of Gemini Associates GP, and Gemini Israel Funds IV Ltd. The address for these entities is 1 Abba Eban Avenue, Merkazim 2001, Bldg A, 3rd Floor, Herzliya Israel. |
(6) | Pursuant to Schedule 13D/A filed with the SEC on December 17, 2021, consists of: (i) 3,404,955 ordinary shares held or record by Ambleside S.à r.l. (“Ambleside”) and (ii) 2,057,290 ordinary shares held of record by Ambleside Lux S.à r.l. (“Ambleside Lux”). Vitruvian III Luxembourg S.à r.l. (“Vitruvian Luxembourg”), is the sole shareholder of Ambleside. VIP III Cortex-B S.à r.l. (“VIP III Cortex-B”) is the sole shareholder of Ambleside Lux. VIP III Nominees Limited (“VIP Nominees”) is the nominee for and on behalf of VIP III LP, and VIP III Co-Invest LP (collectively, the “Funds”), and sole legal shareholder of Vitruvian Luxembourg and VIP III Cortex-B. Vitruvian Partners LLP (“Vitruvian Partners”) is the manager of the Funds and sole shareholder of VIP Nominees. Michael Risman, one of our directors, is a managing partner of Vitruvian Partners. The address of the principal business office of VIP Nominees, VIP III LP and Vitruvian Partners is 105 Wigmore Street, London W1U 1QY, the address of the principal business office of VIP III Co-Invest LP is 12 Castle Street St Helier Jersey JE2 3RT and the address of the principal business office of Ambleside, Ambleside Lux, Vitruvian Luxembourg and VIP III Cortex-B is 21, rue Philippe II, L-2340 Luxembourg. |
(7) | Consists of 2,876,125 ordinary shares underlying options exercisable within 60 days of February 28, 2023. |
(8) | Consists of 208,854 ordinary shares underlying options exercisable within 60 days of February 28, 2023. |
(9) | Consists of 23,333 ordinary shares underlying options exercisable within 60 days of February 28, 2023. |
(10) | Consists of 23,328 ordinary shares underlying options exercisable within 60 days of February 28, 2023. |
(11) | Includes (a) 1,133,305 ordinary shares held by Brooks S.M. Projects Ltd. and (b) 1,915,628 ordinary shares underlying options exercisable within 60 days of February 28, 2023. |
(12) | Includes (a) ordinary shares beneficially held by entities affiliated with Gemini Israel Ventures as set forth in footnote (5) above, (b) 3,288 ordinary shares and (c) 6,207 ordinary shares underlying options exercisable within 60 days of February 28, 2023. |
(13) | Consists of 39,609 ordinary shares underlying options exercisable within 60 days of February 28, 2023. |
(14) | Consists of 6,207 ordinary shares underlying options exercisable within 60 days of February 28, 2023. Does not include the ordinary shares beneficially held by entities affiliated with Insight Partners as set forth in footnote (1) above. |
(15) | Includes (a) ordinary shares beneficially held by entities affiliated with Scale Venture Partners IV, LP as set forth in footnote (3) above, and (b) 6,207 ordinary shares underlying options exercisable within 60 days of February 28, 2023. |
(16) | Does not include the ordinary shares beneficially held by entities affiliated with Ambleside as set forth in footnote (6) above |
(17) | Consists of 6,207 ordinary shares underlying options exercisable within 60 days of February 28, 2023. Does not include the ordinary shares beneficially held by entities affiliated with Mangrove Capital Partners as set forth in footnote (4) above. |
B. | Related Party Transactions |
Series F Preferred Shares | ||||||||
Shareholder(1) | Shares Purchased | Aggregate Purchase Price | ||||||
Entities Affiliated with Insight Partners(2) | 911,886 | $ | 20.0 million | |||||
Entity Affiliated with Vitruvian Partners(3) | 3,191,601 | $ | 70.0 million |
(1) | Additional details regarding certain of these shareholders and their equity holdings are provided in this Annual Report under the caption “Major Shareholders.” |
(2) | Jeff Horing, a member of our board of directors, is a member of the board of managers of Insight Holdings Group LLC. |
(3) | Michael Risman, a member of our board of directors, is the managing partner of Vitruvian Partners. |
C. | Interests of Experts and Counsel |
A. | Consolidated Statements and Other Financial Information |
B. | Significant Changes |
A. | Offer and Listing Details |
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
A. | Share Capital |
B. | Memorandum and Articles of Association |
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
• | The expenditures are approved by the relevant Israeli government ministry, determined by the field of research; |
• | The research and development must be for the promotion of the company; and |
• | The research and development is carried out by or on behalf of the company seeking such tax deduction. |
• | banks, financial institutions or insurance companies; |
• | real estate investment trusts or regulated investment companies; |
• | dealers or brokers; |
• | traders that elect to mark to market; |
• | tax-exempt entities or organizations; |
• | “individual retirement accounts” and other tax-deferred accounts; |
• | certain former citizens or long-term residents of the United States; |
• | persons that are resident or ordinarily resident in or have a permanent establishment in a jurisdiction outside the United States; |
• | persons that acquired our ordinary shares pursuant to the exercise of any employee share option or otherwise as compensation for the performance of services; |
• | persons holding our ordinary shares as part of a “hedging,” “integrated” or “conversion” transaction or as a position in a “straddle” for United States federal income tax purposes; |
• | persons subject to special tax accounting as a result of any item of gross income with respect to the ordinary shares being taken into account in an applicable financial statement; |
• | partnerships or other pass-through entities and persons holding the ordinary shares through partnerships or other pass-through entities; or |
• | holders that own directly, indirectly or through attribution 10% or more of the total voting power or value of all of our outstanding shares. |
• | an individual who is a citizen or resident of the United States; |
• | a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized in or under the laws of the United States or any state thereof, including the District of Columbia; |
• | an estate the income of which is subject to United States federal income taxation regardless of its source; or |
• | a trust if such trust has validly elected to be treated as a United States person for United States federal income tax purposes or if (1) a court within the United States is able to exercise primary supervision over its administration and (2) one or more United States persons have the authority to control all of the substantial decisions of such trust. |
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
I. | Subsidiary Information |
J. | Annual Report to Security Holders |
Year ended December 31, | ||||||||
2021 | 2022 | |||||||
(in thousands) | ||||||||
Audit Fees | $ | 1,110 | $ | 500 | ||||
Audit Related Fees | - | |||||||
Tax Fees | 65 | 39 | ||||||
All Other Fees | 23 | - | ||||||
Total | $ | 1,198 | $ | 539 |
Incorporation by Reference | ||||||||||||
Filed / | ||||||||||||
Exhibit No. | Description | Form | File No. | Exhibit No. | Filing Date | Furnished | ||||||
20-F | 001-40490 | 1.1 | 3/24/2022 | |||||||||
20-F | 001-40490 | 2.1 | 3/24/2022 | |||||||||
F-1/A | 333-256219 | 4.1 | 6/7/2021 | |||||||||
F-1/A | 333-256219 | 10.5 | 6/7/2021 | |||||||||
F-1/A | 333-256219 | 10.1 | 5/17/2021 | |||||||||
F-1/A | 333-256219 | 10.2 | 5/17/2021 | |||||||||
F-1/A | 333-256219 | 10.3 | 5/17/2021 | |||||||||
F-1/A | 333-256219 | 10.4 | 5/17/2021 | |||||||||
F-1/A | 333-256219 | 4.2 | 6/14/2021 | |||||||||
* | ||||||||||||
* | ||||||||||||
** | ||||||||||||
** | ||||||||||||
* | ||||||||||||
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 Definition Linkbase Document. | * | ||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. | * | ||||||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | * | ||||||||||
104 | Inline XBRL for the cover page of this Annual Report on Form 20-F, included in the Exhibit 101 Inline XBRL Document Set. | * |
* | Filed herewith. |
** | Furnished herewith. |
† | Indicates management contract or compensatory plan or arrangement. |
WALKME LTD. | |||
Date: March 14, 2023 | By: | /s/ Dan Adika | |
Name: | Dan Adika | ||
Title: | Chief Executive Officer | ||
Date: March 14, 2023 | By: | /s/ Hagit Ynon | |
Name: | Hagit Ynon | ||
Title: | Chief Financial Officer |
Page | |
F - 2 | |
F - 3 - F - 4 | |
F - 5 | |
F - 6 | |
F - 7 | |
F - 8 | |
F - 9 - F - 30 |
Kost Forer Gabbay & Kasierer 144 Menachem Begin Road, Building A, Tel-Aviv 6492102, Israel | Tel: +972-3-6232525 Fax: +972-3-5622555 ey.com |
December 31, | ||||||||
2022 | 2021 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash and cash equivalents | $ | 94,105 | $ | 276,889 | ||||
Short-term deposits | 125,231 | 65,478 | ||||||
Short-term marketable securities | 42,187 | - | ||||||
Trade receivables, net of allowances of $2,557 and $2,588 | 45,024 | 37,754 | ||||||
Prepaid expenses and other assets | 32,207 | 28,064 | ||||||
Short-term restricted deposits | 323 | 295 | ||||||
Total current assets | 339,077 | 408,480 | ||||||
NON-CURRENT ASSETS: | ||||||||
Other assets | 40,524 | 36,412 | ||||||
Long-term marketable securities | 43,334 | - | ||||||
Long-term restricted deposits | 170 | 544 | ||||||
Property and equipment, net | 13,268 | 10,885 | ||||||
Operating lease right-of-use assets | 7,003 | - | ||||||
Intangible assets, net | 349 | 1,815 | ||||||
Goodwill | 1,481 | 1,481 | ||||||
Total non-current assets | 106,129 | 51,137 | ||||||
TOTAL ASSETS | $ | 445,206 | $ | 459,617 |
December 31, | ||||||||
2022 | 2021 | |||||||
LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Trade payables | $ | 5,957 | $ | 6,592 | ||||
Employees and payroll accruals | 30,720 | 34,648 | ||||||
Accrued expenses and other liabilities | 17,685 | 14,662 | ||||||
Operating lease liabilities short-term | 5,009 | - | ||||||
Deferred revenues | 108,097 | 86,024 | ||||||
Total current liabilities | 167,468 | 141,926 | ||||||
NON-CURRENT LIABILITIES: | ||||||||
Deferred revenues | 1,613 | 1,288 | ||||||
Deferred tax liabilities, net | 7,330 | 4,795 | ||||||
Other liabilities | 2,708 | 2,097 | ||||||
Operating lease liabilities Long-term | 3,833 | - | ||||||
Total non-current liabilities | 15,484 | 8,180 | ||||||
TOTAL LIABILITIES | 182,952 | 150,106 | ||||||
COMMITMENTS AND CONTINGENT LIABILITIES (note 7) | ||||||||
REDEEMABLE NON-CONTROLLING INTEREST | 8,080 | 23,901 | ||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Ordinary shares of no par value - Authorized: 900,000,000 shares at December 31, 2022 and 2021; Issued and outstanding: 86,780,082 and 83,754,006 shares at December 31, 2022 and 2021, respectively | - | - | ||||||
Additional paid-in capital | 688,636 | 610,193 | ||||||
Accumulated other comprehensive income (loss) | (1,817 | ) | 455 | |||||
Accumulated deficit | (432,645 | ) | (325,038 | ) | ||||
Total shareholders’ equity | 254,174 | 285,610 | ||||||
TOTAL LIABILITIES, REDEEMABLE NON-CONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY | $ | 445,206 | $ | 459,617 |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Revenues | ||||||||||||
Subscription | $ | 220,972 | $ | 175,328 | $ | 130,303 | ||||||
Professional services | 24,034 | 17,975 | 18,003 | |||||||||
Total revenues | 245,006 | 193,303 | 148,306 | |||||||||
Cost of revenues | ||||||||||||
Subscription | 25,990 | 24,025 | 19,141 | |||||||||
Professional services | 27,894 | 22,632 | 20,017 | |||||||||
Total cost of revenues | 53,884 | 46,657 | 39,158 | |||||||||
Gross profit | 191,122 | 146,646 | 109,148 | |||||||||
Research and development | 59,468 | 48,160 | 31,560 | |||||||||
Sales and marketing | 176,307 | 127,719 | 87,208 | |||||||||
General and administrative | 65,188 | 48,557 | 33,541 | |||||||||
Total operating expenses | 300,963 | 224,436 | 152,309 | |||||||||
Operating loss | (109,841 | ) | (77,790 | ) | (43,161 | ) | ||||||
Financial income (expense), net | 5,322 | (9 | ) | (156 | ) | |||||||
Loss before income taxes | (104,519 | ) | (77,799 | ) | (43,317 | ) | ||||||
Income taxes | (3,831 | ) | (2,494 | ) | (1,708 | ) | ||||||
Net loss | (108,350 | ) | (80,293 | ) | (45,025 | ) | ||||||
Net loss attributable to non-controlling interest | (743 | ) | (1,169 | ) | (1,311 | ) | ||||||
Adjustment attributable to non-controlling interest | (14,979 | ) | 16,689 | 5,487 | ||||||||
Deemed dividend to ordinary shareholders | - | - | 4,569 | |||||||||
Net loss attributable to WalkMe Ltd. | (92,628 | ) | (95,813 | ) | (53,770 | ) | ||||||
Net loss per share attributable to WalkMe Ltd. basic and diluted | $ | (1.09 | ) | $ | (1.85 | ) | $ | (4.07 | ) | |||
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted | 85,116,424 | 51,763,032 | 13,217,183 |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Net loss | $ | (108,350 | ) | $ | (80,293 | ) | $ | (45,025 | ) | |||
Other comprehensive income (loss): | ||||||||||||
Foreign currency translation adjustments | (202 | ) | (546 | ) | 205 | |||||||
Change in net unrealized gains on marketable securities | 11 | - | - | |||||||||
Unrealized gain (loss) on cash flow hedge | (2,180 | ) | 602 | - | ||||||||
Other comprehensive income (loss) | (2,371 | ) | 56 | 205 | ||||||||
Comprehensive loss | (110,721 | ) | (80,237 | ) | (44,820 | ) | ||||||
Less comprehensive loss attributable to redeemable non-controlling interest: | ||||||||||||
Net loss attributable to redeemable non-controlling interest | (743 | ) | (1,169 | ) | (1,311 | ) | ||||||
Foreign currency translation adjustments attributable to redeemable non-controlling interest | (99 | ) | (266 | ) | 100 | |||||||
Comprehensive loss attributable to redeemable non-controlling interest | (842 | ) | (1,435 | ) | (1,211 | ) | ||||||
Comprehensive loss attributable to WalkMe Ltd. | $ | (109,879 | ) | $ | (78,802 | ) | $ | (43,609 | ) |
Additional paid-in | Accumulated other comprehensive | |||||||||||||||||||||||||||||||
Convertible preferred shares | Ordinary shares | Accumulated | Total shareholder's | |||||||||||||||||||||||||||||
Number | Amount | Number | Amount | capital | Income (loss) | deficit | equity (deficit) | |||||||||||||||||||||||||
Balance as of December 31, 2019 | 56,969,441 | $ | 261,995 | 12,481,053 | $ | - | $ | 7,636 | $ | 26 | $ | (197,631 | ) | $ | (189,969 | ) | ||||||||||||||||
Issuance of Series F convertible preferred shares, net | 1,755,139 | 38,495 | - | - | - | - | - | - | ||||||||||||||||||||||||
Exercise of share options | - | - | 1,291,947 | - | 789 | - | - | 789 | ||||||||||||||||||||||||
Share-based compensation | - | - | - | - | 14,017 | - | - | 14,017 | ||||||||||||||||||||||||
Deemed dividend to ordinary shareholders | - | - | - | - | 4,569 | - | (4,569 | ) | - | |||||||||||||||||||||||
Other comprehensive income | - | - | - | - | - | 105 | - | 105 | ||||||||||||||||||||||||
Net loss attributable to WalkMe Ltd. including adjustment to redeemable non-controlling interest | - | - | - | - | (5,487 | ) | - | (43,714 | ) | (49,201 | ) | |||||||||||||||||||||
Balance as of December 31, 2020 | 58,724,580 | $ | 300,490 | 13,773,000 | $ | - | $ | 21,524 | $ | 131 | $ | (245,914 | ) | $ | (224,259 | ) | ||||||||||||||||
Issuance of Series F convertible preferred shares, net | 455,942 | 10,000 | - | - | - | - | - | |||||||||||||||||||||||||
Issuance of ordinary shares in connection with asset acquisition | - | - | 33,150 | - | 776 | - | - | 776 | ||||||||||||||||||||||||
Conversion of convertible preferred shares to ordinary shares upon initial public offering | (59,180,522 | ) | (310,490 | ) | 59,180,522 | - | 310,490 | - | - | 310,490 | ||||||||||||||||||||||
Issuance of ordinary shares upon initial public offering, net of underwriting discounts and commissions and other issuance costs | - | - | 9,250,000 | - | 263,911 | - | - | 263,911 | ||||||||||||||||||||||||
Exercise of share options and vested RSUs | - | - | 1,517,334 | - | 2,849 | - | - | 2,849 | ||||||||||||||||||||||||
Share-based compensation | - | - | - | - | 27,332 | - | - | 27,332 | ||||||||||||||||||||||||
Other comprehensive income | - | - | - | - | 324 | - | 324 | |||||||||||||||||||||||||
Net loss attributable to WalkMe Ltd. including adjustment to redeemable non-controlling interest | - | - | - | - | (16,689 | ) | - | (79,124 | ) | (95,813 | ) | |||||||||||||||||||||
Balance as of December 31, 2021 | - | $ | - | 83,754,006 | $ | - | $ | 610,193 | $ | 455 | $ | (325,038 | ) | $ | 285,610 | |||||||||||||||||
Exercise of share options and vested RSUs | - | - | 2,358,586 | - | 5,036 | - | - | 5,036 | ||||||||||||||||||||||||
Issuance of ordinary shares under Employee Share Purchase Plan | - | - | 667,490 | - | 7,656 | - | - | 7,656 | ||||||||||||||||||||||||
Share-based compensation | - | - | - | - | 50,772 | - | - | 50,772 | ||||||||||||||||||||||||
Other comprehensive loss | - | - | - | - | - | (2,272 | ) | - | (2,272 | ) | ||||||||||||||||||||||
Net loss attributable to WalkMe Ltd. including adjustment to redeemable non-controlling interest | - | - | - | - | 14,979 | - | (107,607 | ) | (92,628 | ) | ||||||||||||||||||||||
Balance as of December 31, 2022 | - | $ | - | 86,780,082 | $ | - | $ | 688,636 | $ | (1,817 | ) | $ | (432,645 | ) | $ | 254,174 |
U.S. dollars in thousands (except share and per share data)
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net loss | $ | (108,350 | ) | $ | (80,293 | ) | $ | (45,025 | ) | |||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
Share-based compensation | 50,104 | 27,332 | 14,017 | |||||||||
Depreciation, amortization and impairments | 7,878 | 4,773 | 4,710 | |||||||||
Operating lease right-of-use assets and liabilities, net | (551 | ) | - | - | ||||||||
Finance income | (1,758 | ) | (59 | ) | (189 | ) | ||||||
Amortization of premium and accretion of discount on marketable securities, net | (370 | ) | - | - | ||||||||
Decrease (increase) in trade receivables, net | (7,417 | ) | (6,976 | ) | 1,657 | |||||||
Increase in prepaid expenses and other assets | (8,882 | ) | (29,763 | ) | (6,981 | ) | ||||||
Increase (decrease) in trade payables | (354 | ) | 906 | 4,450 | ||||||||
Increase (decrease) in employees and payroll accruals | (5,782 | ) | 15,010 | 5,003 | ||||||||
Increase in accrued expenses and other liabilities | 3,215 | 4,574 | 7,941 | |||||||||
Increase in deferred revenues | 22,924 | 28,577 | 5,220 | |||||||||
Deferred taxes, net | 2,535 | 1,694 | 544 | |||||||||
Net cash used in operating activities | (46,808 | ) | (34,225 | ) | (8,653 | ) | ||||||
Cash flows from investing activities: | ||||||||||||
Purchase of intangible assets | - | (1,338 | ) | - | ||||||||
Capitalization of software development costs | (4,260 | ) | (3,912 | ) | (1,530 | ) | ||||||
Purchase of property and equipment | (2,867 | ) | (2,642 | ) | (822 | ) | ||||||
Investment in short-term deposits | (170,500 | ) | (66,260 | ) | (44,000 | ) | ||||||
Proceeds from short-term deposits | 112,257 | 45,003 | - | |||||||||
Investment in restricted deposits | - | (1,298 | ) | - | ||||||||
Proceeds from restricted deposits | 295 | 2,924 | 623 | |||||||||
Investment in marketable securities | (84,881 | ) | - | - | ||||||||
Net cash used in investing activities | (149,956 | ) | (27,523 | ) | (45,729 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from initial public offering, net of underwriting discounts and commissions and other issuance costs | - | 263,922 | - | |||||||||
Proceeds from exercise of options | 5,074 | 2,867 | 789 | |||||||||
Proceeds from employees share purchase plan | 9,717 | - | - | |||||||||
Investment from redeemable non-controlling interest | - | - | 2,330 | |||||||||
Issuance of preferred shares, net of issuance costs | - | 10,000 | 38,495 | |||||||||
Net cash provided by financing activities | 14,791 | 276,789 | 41,614 | |||||||||
Effect of foreign currency exchange rate changes on cash, cash equivalents, and restricted cash | (850 | ) | (685 | ) | 248 | |||||||
Increase (decrease) in cash, cash equivalents and restricted cash | (182,823 | ) | 214,356 | (12,520 | ) | |||||||
Cash, cash equivalents and restricted cash - beginning of year | 277,251 | 62,895 | 75,415 | |||||||||
Cash, cash equivalents and restricted cash - end of year | $ | 94,428 | $ | 277,251 | $ | 62,895 | ||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Cash paid for income taxes, net of refunds | $ | (572 | ) | $ | 365 | $ | - | |||||
Supplemental disclosures of noncash investing and financing activities: | ||||||||||||
Lease liabilities arising from obtaining right-of-use-assets | $ | 14,240 | $ | - | $ | - | ||||||
Purchase of property and equipment, accrued but not paid | $ | 268 | $ | 180 | $ | 191 | ||||||
Issuance of ordinary shares in connection with asset acquisition | $ | - | $ | 776 | $ | - | ||||||
Conversion of convertible preferred shares | $ | - | $ | 310,490 | $ | - | ||||||
Reconciliation of cash, cash equivalents and restricted cash within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above: | ||||||||||||
Cash and cash equivalents | $ | 94,105 | $ | 276,889 | $ | 62,328 | ||||||
Restricted cash – included in short-term and long-term restricted deposits. | $ | 323 | $ | 362 | $ | 567 | ||||||
$ | 94,428 | $ | 277,251 | $ | 62,895 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
a. | Principles of consolidation: |
b. | Use of estimates: |
c. | Foreign currency: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
d. | Cash and cash equivalents: |
e. | Short-term bank deposits: |
f. | Restricted deposits: |
g. Investments in marketable securities:
The Company accounts for investments in marketable securities in accordance with ASC No. 320, “Investments - Debt Securities”. Management determines the appropriate classification of its investments at the time of purchase and reevaluates such determinations at each balance sheet date. The Company classifies all of its marketable securities as available-for-sale (“AFS”) as the Company may sell these securities at any time for use in its current operations or for other purposes, even prior to maturity. Available-for-sale securities are carried at fair value, with the unrealized gains and losses, reported in accumulated other comprehensive income (loss) in shareholders' equity. Realized gains and losses on sale of investments are included in financial income, net and are derived using the specific identification method for determining the cost of securities sold.
The amortized cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization together with interest on securities is included in financial income, net. For unrealized losses in marketable securities that the Company does not intend to sell before maturity, the Company further evaluates whether declines in fair value below amortized cost are due to credit or non-credit related factors. As of December 31, 2022 there was no other-than-temporary-impairment charge for any unrealized losses.
h. | Fair value of financial instruments: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
i. | Concentration of credit Risk: |
j. | Derivative Financial Instruments |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
k. | Trade receivables: |
l. | Property and equipment: |
% | ||
Software, computers and peripheral equipment | 33 | |
Office furniture and equipment | 10-33 | |
Capitalized development costs | 33 | |
Leasehold improvement | By the shorter of remaining lease term or estimated useful life of the asset |
n. Leases:
On January 1, 2022, the Company adopted ASU No. 2016-02, Leases (ASC 842). The Company determines if an arrangement is a lease and the classification of that lease at inception based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefits from the use of the asset throughout the period, and (3) whether the Company has a right to direct the use of the asset.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
The Company elected to not recognize a lease liability and a right-of-use (“ROU”) asset for leases with a term of twelve months or less. The Company also elected the practical expedient to not separate lease and non-lease components for its leases.
ROU assets represent the right to use an underlying asset for the lease term and lease liabilities represent the obligation to make minimum lease payments arising from the lease. ROU assets are initially measured at amounts, which represents the present value of the lease payments over the lease, plus any initial direct costs incurred. The lease liability is initially measured at lease commencement date based on the present value of lease payments over the lease term. The implicit rate within the operating leases is generally not determinable, therefore the Company uses the Incremental Borrowing Rate (“IBR”) based on the information available at commencement date in determining the present value of lease payments. The Company’s IBR is estimated to approximate the interest rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset is located. Certain leases include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset and lease liability when it is reasonably certain that the Company will exercise that option. An option to terminate is considered unless it is reasonably certain that the Company will not exercise the option.
Payments under the Company’s lease arrangements are primarily fixed, however, certain lease agreements contain variable payments, which are expensed as incurred and not included in the operating lease right-of-use assets and liabilities. Variable lease payments are primarily comprised of payments affected by CPI and utility charges. Lease expenses are recognized on a straight-line basis over the lease term.
o. | Business combinations: |
p. | Goodwill and intangible assets: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
q. | Severance pay: |
r. U.S. defined contribution plan:
The U.S. subsidiary has a 401(k) defined contribution plan covering certain employees in the U.S. Effective January 1, 2022. The Company matches 100% of employee contributions to the plan up to a limit of 5% of their eligible compensation. For the year ended December 31, 2022 the U.S. subsidiary recorded expenses for matching contributions of $2,211.
s. | Contingencies: |
t. | Revenue recognition: |
1. | Identification of the contract, or contracts, with a customer; | |
2. | Identification of the performance obligations in the contract; | |
3. | Determination of the transaction price; | |
4. | Allocation of the transaction price to the performance obligations in the contract; and | |
5. | Recognition of revenue when, or as, the performance obligations are satisfied. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
u. | Cost to obtain a contract: |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Beginning balance | $ | 56,374 | $ | 29,729 | $ | 20,769 | ||||||
Additions to deferred contract acquisition costs | 33,711 | 41,396 | 17,160 | |||||||||
Amortization of deferred contract acquisition costs | (23,688 | ) | (14,751 | ) | (8,200 | ) | ||||||
Ending balance | $ | 66,397 | $ | 56,374 | $ | 29,729 | ||||||
Deferred contract acquisition costs (to be recognized in next 12 months) | $ | 26,287 | $ | 20,405 | $ | 10,712 | ||||||
Deferred contract acquisition costs, non-current | $ | 40,110 | $ | 35,969 | $ | 19,017 |
v. | Deferred revenues and remaining performance obligations: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
w. | Software development costs: |
x. | Research and development: |
y. | Advertising expenses: |
z. | Basic and diluted net loss per share: |
aa. | Share-based compensation: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
bb. | Income taxes: |
cc. | Recently adopted accounting pronouncements: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.)
dd. | Accounting pronouncements not yet adopted: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 3: REDEEMABLE NON-CONTROLLING INTEREST (Cont.)
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Balance, beginning of period | $ | 23,901 | $ | 8,647 | $ | 2,041 | ||||||
Investment by redeemable non-controlling interest | - | - | 2,330 | |||||||||
Net loss attributable to redeemable non-controlling interest | (743 | ) | (1,169 | ) | (1,311 | ) | ||||||
Adjustment to redeemable non-controlling interest | (14,979 | ) | 16,689 | 5,487 | ||||||||
Foreign currency translation | (99 | ) | (266 | ) | 100 | |||||||
Balance, end of period | $ | 8,080 | $ | 23,901 | $ | 8,647 |
NOTE 4: MARKETABLE SECURITIES
The following table summarize the amortized cost, unrealized gains and losses, and fair value of available-for-sale marketable securities as of December 31, 2022. As of December 31, 2021 the Company did not hold any marketable securities.
| As of December 31, 2022 | |||||||||||||||
|
Amortized cost | Gross unrealized losses | Gross unrealized gains | Fair Value | ||||||||||||
| ||||||||||||||||
U.S. Treasuries | $ | 68,084 | $ | (64 | ) | $ | 86 | $ | 68,106 | |||||||
U.S. Government Agencies | 17,426 | (30 | ) | 19 | 17,415 | |||||||||||
| ||||||||||||||||
Total | $ | 85,510 | $ | (94 | ) | $ | 105 | $ | 85,521 |
The following table summarizes the amortized cost and fair value of available-for-sale marketable securities as of December 31, 2022 by contractual years-to maturity:
| As of December 31, 2022 | |||||||
| Amortized cost | Fair Value | ||||||
| ||||||||
Due within one year | $ | 42,214 | $ | 42,187 | ||||
Due between one and three years | 43,296 | 43,334 | ||||||
| ||||||||
Total | $ | 85,510 | $ | 85,521 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
December 31, | ||||||||
2022 | 2021 | |||||||
Cost: | ||||||||
Software, computers and peripheral equipment | $ | 8,378 | $ | 6,388 | ||||
Office furniture and equipment | 887 | 883 | ||||||
Capitalized development costs | 18,750 | 13,795 | ||||||
Leasehold improvements | 3,999 | 3,971 | ||||||
32,014 | 25,037 | |||||||
Accumulated depreciation | 18,746 | 14,152 | ||||||
Depreciated cost | $ | 13,268 | $ | 10,885 |
December 31, | ||||||||
2022 | 2021 | |||||||
Acquired technology | $ | 3,004 | $ | 3,004 | ||||
Accumulated amortization and Impairment | 2,655 | 1,189 | ||||||
Depreciated cost | $ | 349 | $ | 1,815 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 6: INTANGIBLE ASSETS, NET (Cont.)
Year ended December 31, | Future Amortization expenses | |||
2023 | $ | 269 | ||
2024 | 80 | |||
$ | 349 |
a. | Legal contingencies: |
b. | Non-cancellable material commitments: |
c. | Pledges and bank guarantees: |
d. | Revolving Credit Facility: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 8: LEASES
The Company adopted the new accounting standard ASC 842 “Leases” and all related amendments effective as of January 1, 2022.
The Company entered into non-cancelable operating lease agreements with various expiration dates through fiscal 2026. Certain lease agreements include options to renew or terminate the lease. The Company does not assume renewals in its determination of the lease term unless the renewals are considered as reasonably assured at lease commencement.
The operating lease cost for the year ended December 31, 2022 was $7,049. The amount includes an impairment of $1,267 related to certain right-of-use assets.
Supplemental cash flow information related to operating leases was as follows:
| Year ended December 31, 2022 | |||
Cash paid for amounts included in the measurement of lease operating liabilities | $ | 5,399 |
Supplemental balance sheet information related to operating leases is as follows:
| As of December 31, 2022 | |||
Operating lease ROU assets | $ | 7,003 | ||
Operating lease liabilities | $ | 5,009 | ||
Operating lease liabilities, long-term | $ | 3,833 | ||
Weighted average remaining lease term (in years) | 1.8 | |||
Weighted average discount rate | 1 | % |
Maturities of operating lease liabilities as of December 31, 2022 are as follows:
As of December 31, | ||||
2023 | $ | 5,069 | ||
2024 | 3,391 | |||
2025 | 433 | |||
2026 | 28 | |||
| ||||
Total undiscounted lease payments | 8,921 | |||
Less: imputed interest | (79 | ) | ||
| ||||
| $ | 8,842 |
In February 2023, an amendment to the Tel-Aviv office agreement was signed, which extends the lease period for additional thirty-six (36) months and an option to extend the term of the lease for an additional periods of up to forty-eight (48) months.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 9: FAIR VALUE MEASUREMENTS
The following tables present the fair value of money market funds and marketable securities for the year ended December 31, 2022:
| December 31, 2022 | December 31, 2021 | ||||||||||||||
| Level 1 | Level 2 | Level 1 | Level 2 | ||||||||||||
Financial Assets: | ||||||||||||||||
Money market funds | $ | 290 | $ | - | $ | - | $ | - | ||||||||
Foreign currency derivative contracts | - | - |
| - | 602 | |||||||||||
Marketable securities: | ||||||||||||||||
U.S. Treasuries | - | 68,106 | - | - | ||||||||||||
U.S. Government Agencies | - | 17,415 | - | - | ||||||||||||
Total assets measured at fair value | $ | 290 | $ | 85,521 | $ | - | $ | 602 | ||||||||
Financial Liabilities | ||||||||||||||||
Foreign currency derivative contracts |
| - |
| (1,577 | ) |
| - |
| - | |||||||
Total liabilities measured at fair value | $ | - | $ | (1,577 | ) | $ | - | $ | - |
a. | Composition of share capital |
December 31, 2022 | December 31, 2021 | |||||||||||||||
Authorized | Issued and outstanding | Authorized | Issued and outstanding | |||||||||||||
Number of shares no par value | ||||||||||||||||
Ordinary shares | 900,000,000 | 86,780,082 | 900,000,000 | 83,754,006 |
b. | Ordinary shares: |
c. | Convertible preferred shares: |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 10: CONVERTIBLE PREFERRED SHARES, SHAREHOLDERS’ EQUITY AND EQUITY INCENTIVE PLAN (Cont.)
d. | Share option plan: |
Number of options | Weighted average exercise price | Weighted average remaining contractual term (in years) | Aggregate Intrinsic value | |||||||||||||
Balance as of December 31, 2021 | 14,160,792 | $ | 8.38 | 7.67 | $ | 159,366 | ||||||||||
Granted | 1,201,247 | $ | 13.35 | |||||||||||||
Forfeited | (1,425,431 | ) | $ | 12.87 | ||||||||||||
Exercised | (1,524,411 | ) | $ | 3.31 | $ | 12,217 | ||||||||||
Balance as of December 31, 2022 | 12,412,197 | $ | 8.96 | 6.93 | 49,209 | |||||||||||
Exercisable options at end of year | 7,446,960 | $ | 6.30 | 5.95 | $ | 43,957 |
As of December 31, 2022 and 2021, there were no outstanding options granted to non-employees.
Year ended December 31, | ||||||
2022 | 2021 | 2020 | ||||
Expected volatility | 60% | 60% | 60% | |||
Expected dividend yield | - | - | - | |||
Expected term (in years) | 5.5-6.98 | 5-6.55 | 6.08 | |||
Risk free interest | 1.98%-3.88% | 0.49%-1.06% | 0.28%-1.45% |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 10: CONVERTIBLE PREFERRED SHARES, SHAREHOLDERS’ EQUITY AND EQUITY INCENTIVE PLAN (Cont.)
Number of RSUs | Weighted- Average Grant Date Fair Value Per Share | |||||||
Balance as of December 31, 2021 | 2,366,373 | $ | 26.22 | |||||
Granted | 6,466,740 | $ | 14.24 | |||||
Forfeited | (1,439,112 | ) | $ | 19.88 | ||||
Exercised | (834,175 | ) | $ | 22.84 | ||||
Balance as of December 31, 2022 | 6,559,826 | $ | 16.23 |
e. | Employee Share Purchase Plan |
Year ended December 31, | Year ended | |||||||
2022 | 2021 | |||||||
Expected volatility | 77%-91.9% | 41% | ||||||
Expected dividend yield | - | - | ||||||
Expected term (in years) | 0.5 | 0.57 | ||||||
Risk free interest | 0.46%-2.85% | 0.06% |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 10: CONVERTIBLE PREFERRED SHARES, SHAREHOLDERS’ EQUITY AND EQUITY INCENTIVE PLAN (Cont.)
f. | Share-based compensation expense by award type was as follows: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Share options | $ | 20,167 | $ | 21,359 | $ | 14,017 | ||||||
RSUs | 27,001 | 4,842 | - | |||||||||
ESPP | 2,936 | 1,131 | - | |||||||||
$ | 50,104 | $ | 27,332 | $ | 14,017 |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Cost of revenues | $ | 3,896 | $ | 1,804 | $ | 201 | ||||||
Research and development | 7,285 | 3,863 | 1,596 | |||||||||
Sales and marketing | 19,126 | 8,205 | 1,105 | |||||||||
General and administrative | 19,797 | 13,460 | 11,115 | |||||||||
$ | 50,104 | $ | 27,332 | $ | 14,017 |
g. | Third-party share transactions: |
a. | Ordinary taxable income in Israel is subject to a corporate tax rate of 23%. |
• | A 12% capital gains tax rate on the sale of a preferred intangible asset to a foreign affiliated enterprise, provided that the asset was initially purchased from a foreign resident at an amount of NIS 200 million or more. |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 11: TAXES ON INCOME (Cont.)
• | A withholding tax rate of 20% for dividends paid from PTE income (with an exemption from such withholding tax applying to dividends paid to an Israeli company) may be reduced to 4% on dividends paid to a foreign resident company, subject to certain conditions regarding percentage of foreign ownership of the distributing entity. |
b. | Loss before income taxes is comprised as follows: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Israel | $ | 102,013 | $ | 68,924 | $ | 38,941 | ||||||
Foreign | 2,506 | 8,875 | 4,376 | |||||||||
$ | 104,519 | $ | 77,799 | $ | 43,317 |
c. | Income taxes are comprised as follows: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Current: | ||||||||||||
Israel | $ | (93) | $ | 103 | $ | 153 | ||||||
Foreign | 1,389 | 697 | 1,011 | |||||||||
Total current taxes | 1,296 | 800 | 1,164 | |||||||||
Deferred: | ||||||||||||
Israel | - | - | - | |||||||||
Foreign | 2,535 | 1,694 | 544 | |||||||||
Total deferred taxes | 2,535 | 1,694 | 544 | |||||||||
Total income taxes | $ | 3,831 | $ | 2,494 | $ | 1,708 |
d. | A reconciliation of the Company's theoretical income tax benefit to actual income tax expense is as follows: |
Year ended December 31 | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Loss before income taxes | $ | 104,519 | $ | 77,799 | $ | 43,317 | ||||||
Statutory tax rate | 23 | % | 23 | % | 23 | % | ||||||
Theoretical income tax benefit | $ | (24,039 | ) | $ | (17,894 | ) | $ | (9,963 | ) | |||
Preferred technology enterprise | 11,221 | 7,582 | 4,284 | |||||||||
Foreign rate differential | (300 | ) | (597 | ) | 213 | |||||||
Unrecognized tax benefits | 1,348 | 3,159 | 1,272 | |||||||||
Changes in valuation allowance | 11,421 | 7,498 | 3,827 | |||||||||
Share-based compensation | 3,745 | 2,519 | 1,327 | |||||||||
Non-deductible expenses | 513 | 234 | 790 | |||||||||
Other | (78 | ) | (7 | ) | (42 | ) | ||||||
Actual tax expense | $ | 3,831 | $ | 2,494 | $ | 1,708 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 11: TAXES ON INCOME (Cont.)
e. | The following table presents the significant components of the Company's deferred taxes: |
December 31, | ||||||||
2022 | 2021 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carryforwards | $ | 43,437 | $ | 36,373 | ||||
Research and development expenses | 5,398 | 4,304 | ||||||
Accruals and reserves | 2,088 | 2,541 | ||||||
Issuance costs | 914 | 1,827 | ||||||
Share-based compensation | 4,318 | 1,576 | ||||||
Operating lease liability | 2,115 | - | ||||||
Other deferred assets | 805 | 636 | ||||||
Gross deferred tax assets | 59,075 | 47,257 | ||||||
Valuation allowance | (51,164 | ) | (40,019 | ) | ||||
Total deferred tax assets | 7,911 | 7,238 | ||||||
Deferred tax liabilities: | ||||||||
Deferred contract costs | (13,313 | ) | (11,687 | ) | ||||
Operating lease ROU asset | (1,667 | ) | - | |||||
Other deferred tax liabilities | (261 | ) | (346 | ) | ||||
Gross deferred tax liabilities | (15,241 | ) | (12,033 | ) | ||||
Net deferred taxes | $ | (7,330 | ) | $ | (4,795 | ) |
f. | Net operating losses carry forward: |
g. | Tax assessments |
h. | Unrecognized tax benefits |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 11: TAXES ON INCOME (Cont.)
Unrecognized Tax Benefits | ||||
Balance - December 31, 2019 | 437 | |||
Increases related to prior years’ tax positions | 209 | |||
Increases related to current years’ tax positions | 1,063 | |||
Balance - December 31, 2020 | 1,709 | |||
Increases related to prior years’ tax positions | 175 | |||
Increases related to current years’ tax positions | 2,984 | |||
Balance - December 31, 2021 | 4,868 | |||
Decrease related to prior years’ tax positions | (287 | ) | ||
Increases related to current years’ tax positions | 1,635 | |||
Balance - December 31, 2022 | $ | 6,216 |
a. | Operating segments |
b. | Geographical information |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
United States | 172,733 | 135,291 | 105,321 | |||||||||
Rest of world | 71,510 | 56,914 | 42,138 | |||||||||
Israel | 763 | 1,098 | 847 | |||||||||
$ | 245,006 | $ | 193,303 | $ | 148,306 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands (except share and per share data)
NOTE 12: REPORTING SEGMENTS AND GEOGRAPHIC INFORMATION (Cont.)
Year ended December 31, | ||||||||
2022 | 2021 | |||||||
Israel | $ | 11,537 | $ | 8,829 | ||||
United States | 6,800 | 1,778 | ||||||
Rest of world | 1,934 | 278 | ||||||
Total long-lived assets, net | $ | 20,271 | $ | 10,885 |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Numerator: | ||||||||||||
Net loss | $ | (108,350 | ) | $ | (80,293 | ) | $ | (45,025 | ) | |||
Net loss attributable to non-controlling interest | (743 | ) | (1,169 | ) | (1,311 | ) | ||||||
Adjustment attributable to non-controlling interest | (14,979 | ) | 16,689 | 5,487 | ||||||||
Deemed dividend to ordinary shareholders | - | - | 4,569 | |||||||||
Net loss attributable to WalkMe Ltd. | $ | (92,628 | ) | $ | (95,813 | ) | $ | (53,770 | ) | |||
Denominator: | ||||||||||||
Weighted-average shares used in computing net loss per share attributable to ordinary shareholders, basic and diluted | 85,116,424 | 51,763,032 | 13,217,183 | |||||||||
Net loss per share attributable to ordinary shareholders, basic and diluted | $ | (1.09 | ) | $ | (1.85 | ) | $ | (4.07 | ) |
Year ended December 31, | ||||||||||||
2022 | 2021 | 2020 | ||||||||||
Convertible preferred shares | - | 26,972,186 | 58,724,580 | |||||||||
RSU’s | 5,759,365 | 732,157 | - | |||||||||
Outstanding share options and share purchase rights under ESPP | 13,676,853 | 14,143,816 | 10,428,813 | |||||||||
Total | 19,436,218 | 41,848,159 | 69,153,393 |