0001564590-21-010727 | 10-K | XBRL Viewer

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Document and Entity Information - USD ($)	12 Months Ended
Document and Entity Information - USD ($)	Dec. 31, 2020	Feb. 26, 2021	Jun. 30, 2020
Document And Entity Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	FY
Document Period End Date	Dec. 31, 2020
Current Fiscal Year End Date	--12-31
Entity Registrant Name	Schrodinger, Inc.
Entity Central Index Key	0001490978
Entity Tax Identification Number	95-4284541
Entity File Number	001-39206
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	120 West 45th Street
Entity Address, Address Line Two	17th Floor
Entity Address, City or Town	New York
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10036
City Area Code	212
Local Phone Number	295-5800
Title of 12(b) Security	Common stock, par value $0.01 per share
Trading Symbol	SDGR
Security Exchange Name	NASDAQ
Document Annual Report	true
Document Transition Report	false
ICFR Auditor Attestation Flag	false
Entity Public Float			$ 2,187,273,894
Documents Incorporated by Reference	The registrant intends to file a definitive proxy statement pursuant to Regulation 14A relating to the 2021 Annual Meeting of Stockholders within 120 days of the end of the registrant’s fiscal year ended December 31, 2020. Portions of such definitive proxy statement are incorporated by reference into Part III of this Annual Report on Form 10-K to the extent stated herein.
Common Stock
Document And Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		60,848,093
Limited Common Stock
Document And Entity Information [Line Items]
Entity Common Stock, Shares Outstanding		9,164,193

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 202,296	$ 25,986
Restricted cash	500	500
Marketable securities	440,395	59,844
Accounts receivable, net of allowance for doubtful accounts of $60 and $50	31,423	18,676
Unbilled and other receivables	3,955	7,062
Prepaid expenses	4,409	6,468
Total current assets	682,978	118,536
Property and equipment, net	5,140	6,268
Equity investments	45,664	15,366
Right of use assets	10,129	12,762
Other assets	2,352	2,338
Total assets	746,263	155,270
Current liabilities:
Accounts payable	8,398	3,524
Accrued payroll, taxes, and benefits	12,000	7,034
Deferred revenue	45,403	25,054
Lease liabilities	4,543	5,584
Other accrued liabilities	2,861	3,824
Total current liabilities	73,205	45,020
Deferred revenue, long-term	41,164	2,205
Lease liabilities, long-term	7,221	8,888
Other liabilities, long-term	654	900
Total liabilities	122,244	57,013
Commitments and contingencies (Note 6)
Convertible preferred stock:
Total convertible preferred stock		191,580
Stockholders’ equity (deficit):
Common stock	607	61
Additional paid-in capital	752,558	11,655
Accumulated deficit	(129,559)	(105,096)
Accumulated other comprehensive income	317	16
Total stockholders’ equity (deficit) of Schrödinger stockholders	624,015	(93,364)
Noncontrolling interest	4	41
Total stockholders’ equity (deficit)	624,019	(93,323)
Total liabilities, convertible preferred stock, and stockholders’ equity (deficit)	746,263	155,270
Series E Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		109,270
Series D Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		22,000
Series C Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		19,844
Series B Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		9,840
Series A Convertible Preferred Stock
Convertible preferred stock:
Total convertible preferred stock		$ 30,626
Limited Common Stock
Stockholders’ equity (deficit):
Common stock	92
Total stockholders’ equity (deficit)	$ 92

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2020	Dec. 31, 2019
Allowance for doubtful accounts receivable	$ 60	$ 50
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	500,000,000	425,000,000
Common stock, shares issued	60,713,534	6,121,821
Common stock, shares outstanding	60,713,534	6,121,821
Series E Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	77,150,132
Convertible preferred stock, issued	0	73,795,777
Convertible preferred stock, outstanding	0	73,795,777
Series D Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	39,540,611
Convertible preferred stock, issued	0	39,540,611
Convertible preferred stock, outstanding	0	39,540,611
Series C Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	47,242,235
Convertible preferred stock, issued	0	47,242,235
Convertible preferred stock, outstanding	0	47,242,235
Series B Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	29,468,101
Convertible preferred stock, issued	0	29,468,101
Convertible preferred stock, outstanding	0	29,468,101
Series A Convertible Preferred Stock
Convertible preferred stock, par value	$ 0.01	$ 0.01
Convertible preferred stock, authorized	0	134,704,785
Convertible preferred stock, issued	0	134,704,785
Convertible preferred stock, outstanding	0	134,704,785
Limited Common Stock
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	146,199,885
Common stock, shares issued	9,164,193	0
Common stock, shares outstanding	9,164,193	0

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Revenues:
Total revenues	$ 108,095	$ 85,543
Cost of revenues:
Total cost of revenues	44,623	36,450
Gross profit	63,472	49,093
Operating expenses:
Research and development	64,695	39,404
Sales and marketing	17,795	21,364
General and administrative	41,898	27,040
Total operating expenses	124,388	87,808
Loss from operations	(60,916)	(38,715)
Other income:
Gain on equity investments	4,108	943
Change in fair value	28,263	9,922
Interest income	2,253	1,878
Total other income	34,624	12,743
Loss before income taxes	(26,292)	(25,972)
Income tax expense (benefit)	345	(291)
Net loss	(26,637)	(25,681)
Net loss attributable to noncontrolling interest	(2,174)	(1,110)
Net loss attributable to Schrödinger common and limited common stockholders	$ (24,463)	$ (24,571)
Net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:	$ (0.41)	$ (4.09)
Weighted average shares used to compute net loss per share attributable to Schrödinger common and limited common stockholders, basic and diluted:	60,024,658	6,004,500
Software Products and Services
Revenues:
Total revenues	$ 92,530	$ 66,735
Cost of revenues:
Total cost of revenues	18,003	13,646
Drug Discovery
Revenues:
Total revenues	15,565	18,808
Cost of revenues:
Total cost of revenues	$ 26,620	$ 22,804

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Statement Of Income And Comprehensive Income [Abstract]
Net loss attributable to Schrödinger common and limited common stockholders	$ (24,463)	$ (24,571)
Changes in market value of investments, net of tax:
Unrealized gain on marketable securities	301	25
Comprehensive loss	$ (24,162)	$ (24,546)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Initial Public Offering	Follow-on Offering	Series E Preferred Stock	Series D Preferred Stock	Series C Preferred Stock	Series B Preferred Stock	Series A Preferred Stock	Limited Common Stock	Common Stock	Common Stock Initial Public Offering	Common Stock Follow-on Offering	Additional Paid-In Capital	Additional Paid-In Capital Initial Public Offering	Additional Paid-In Capital Follow-on Offering	Accumulated Deficit	Accumulated Other Comprehensive Loss	Non Controlling Interest
Beginning Balance at Dec. 31, 2018	$ (71,560)									$ 59			$ 8,915			$ (80,525)	$ (9)
Convertible preferred stock, Beginning Balance, Shares at Dec. 31, 2018				53,669,659	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Beginning Balance at Dec. 31, 2018				$ 79,377	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Beginning Balance, Shares at Dec. 31, 2018										5,906,976
Change in unrealized (loss) gain on marketable securities	25																25
Issuances of Series E preferred stock, net of issuance costs				$ 29,893
Issuance of Series E preferred stock net of issuance costs, Shares				20,126,118
Issuances of common stock upon stock option exercise	$ 549									$ 2			547
Issuances of common stock upon stock option exercise, Shares	214,845									214,845
Stock-based compensation	$ 2,193												2,193
Contributions by noncontrolling interest	1,151																	$ 1,151
Net loss	(25,681)															(24,571)		(1,110)
Ending Balance at Dec. 31, 2019	(93,323)									$ 61			11,655			(105,096)	16	41
Convertible preferred stock, Ending Balance, Shares at Dec. 31, 2019				73,795,777	39,540,611	47,242,235	29,468,101	134,704,785
Convertible preferred stock, Ending Balance at Dec. 31, 2019	191,580			$ 109,270	$ 22,000	$ 19,844	$ 9,840	$ 30,626
Ending Balance, Shares at Dec. 31, 2019										6,121,821
Change in unrealized (loss) gain on marketable securities	301																301
Issuances of common stock upon stock option exercise	$ 4,183									$ 14			4,169
Issuances of common stock upon stock option exercise, Shares	1,398,177									1,398,177
Stock-based compensation	$ 10,545												10,545
Issuances of common stock upon public offering, net of issuance costs		$ 209,633	$ 325,600								$ 136	$ 53		$ 209,497	$ 325,547
Issuances of common stock upon public offering, net of issuance costs, Shares.											13,664,704	5,250,000
Conversion of convertible preferred stock into common stock	149,824									$ 303			149,521
Conversion of convertible preferred stock into common stock, Shares										30,278,832
Temporary equity, conversion of convertible preferred stock into common stock				$ (109,270)	$ (9,928)			$ (30,626)
Temporary equity, conversion of convertible preferred stock into common stock, Shares				(73,795,777)	(17,844,124)			(134,704,785)
Exchange of convertible preferred stock into limited common stock	41,756								$ 132				41,624
Exchange of convertible preferred stock into limited common stock, Shares									13,164,193
Temporary equity, exchange of convertible preferred stock into limited common stock					$ (12,072)	$ (19,844)	$ (9,840)
Temporary equity, exchange of convertible preferred stock into limited common stock, Shares					(21,696,487)	(47,242,235)	(29,468,101)
Conversion of limited common stock into common stock									$ (40)	$ 40
Conversion of limited common stock into common stock, Shares									(4,000,000)	4,000,000
Contributions by noncontrolling interest	2,137																	2,137
Net loss	(26,637)															(24,463)		(2,174)
Ending Balance at Dec. 31, 2020	$ 624,019								$ 92	$ 607			$ 752,558			$ (129,559)	$ 317	$ 4
Ending Balance, Shares at Dec. 31, 2020									9,164,193	60,713,534

Consolidated Statements of Convertible Preferred Stock and Stockholders' Equity (Deficit) (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Initial Public Offering \| Common Stock
Common stock issuance costs	$ 22,667
Follow-on Offering \| Common Stock
Common stock issuance costs	$ 20,901
Series E Preferred Stock
Issuance of preferred stock value of issuance costs		$ 127

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net loss	$ (26,637)	$ (25,681)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Gain on equity investments	(4,108)	(943)
Noncash revenue from equity investments	(397)	(186)
Fair value adjustments	(28,263)	(9,922)
Depreciation	3,658	3,640
Stock-based compensation	10,545	2,193
Noncash research and development expenses	2,137	1,051
Noncash investment accretion	646	(506)
Decrease (increase) in assets:
Accounts receivable, net	(12,747)	(5,038)
Unbilled and other receivables	3,468	(1,556)
Reduction in the carrying amount of right of use assets	5,342	4,177
Prepaid expenses and other assets	187	410
Increase (decrease) in liabilities:
Accounts payable	4,882	(294)
Accrued payroll, taxes, and benefits	4,966	2,948
Deferred revenue	59,705	6,715
Lease liabilities	(5,417)	(4,025)
Other accrued liabilities	(1,210)	958
Net cash provided by (used in) operating activities	16,757	(26,059)
Cash flows from investing activities:
Purchases of property and equipment	(2,538)	(1,836)
Purchases of equity investments	(2,869)
Distribution from equity investment	4,582	943
Purchases of marketable securities	(519,668)	(110,187)
Proceeds from sale and maturity of marketable securities	138,772	57,225
Net cash used in investing activities	(381,721)	(53,855)
Cash flows from financing activities:
Issuances of common stock upon initial public offering, net	211,491
Issuances of common stock upon follow-on public offering, net	325,600
Issuances of Series E preferred stock, net		29,893
Issuances of common stock upon stock option exercise	4,183	549
Contribution by noncontrolling interest		100
Deferred offering costs		(1,858)
Net cash provided by financing activities	541,274	28,684
Net increase (decrease) in cash and cash equivalents and restricted cash	176,310	(51,230)
Cash and cash equivalents and restricted cash, beginning of year	26,486	77,716
Cash and cash equivalents and restricted cash, end of year	202,796	26,486
Supplemental disclosure of cash flow and noncash information
Cash paid for income taxes	381	139
Supplemental disclosure of non-cash investing and financing activities
Accrued deferred offering costs		2,142
Purchases of property and equipment	8	90
Acquisitions of right of use assets in exchange for lease obligations	2,709	464
Right of use assets recognized on adoption		$ 16,475
Reclassification of deferred financing costs to additional paid-in capital	$ 1,858

Description of Business

12 Months Ended

Dec. 31, 2020

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business

(1)	Description of Business

Schrödinger, Inc. (the “Company”) has developed a differentiated, physics-based software platform that enables discovery of high-quality, novel molecules for drug development and materials applications more rapidly, at lower cost, and with, the Company believes, a higher likelihood of success compared to traditional methods. The Company sells its software to biopharmaceutical and industrial companies, academic institutions, and government laboratories. The Company also applies its computational platform to a broad pipeline of drug discovery and development programs in collaboration with biopharmaceutical companies, some of which the Company co-founded. In addition, the Company uses its platform to advance a pipeline of internal drug discovery programs.

On February 10, 2020, the Company completed an initial public offering (“IPO”), in which the Company issued and sold 11,882,352 shares of its common stock at a public offering price of $17.00 per share. The underwriters fully exercised their option to purchase an additional 1,782,352 shares of the Company’s common stock at the public offering price less underwriting discounts. The Company raised $209.6 million in net proceeds after deducting underwriting discounts and commissions and offering expenses payable by the Company.

Immediately prior to the closing of the IPO, preferred stockholders voluntarily exchanged 98,406,823 shares of preferred stock for an aggregate of 13,164,193 shares of limited common stock. In addition, upon the closing of the IPO, the remaining 226,344,686 shares of preferred stock automatically converted into an aggregate of 30,278,832 shares of common stock.

On August 17, 2020, the Company completed a follow-on public offering, in which the Company issued and sold 4,500,000 shares of its common stock at a public offering price of $66.00 per share. The underwriters fully exercised their option to purchase an additional 750,000 shares of the Company’s common stock at the public offering price less underwriting discounts. The Company raised $325.6 million in net proceeds after deducting underwriting discounts and commissions and offering expenses payable by the Company. In addition, a stockholder of the Company sold 500,000 shares of common stock. The Company did not receive any proceeds from the sale of shares of common stock by the selling stockholder.

Significant Accounting Policies

12 Months Ended

Dec. 31, 2020

Accounting Policies [Abstract]

Significant Accounting Policies

(2)	Significant Accounting Policies

(a)	Recently Issued Accounting Pronouncements

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2018-13, Changes to Disclosure Requirements for Fair Value Measurements (Topic 820), which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company adopted this new standard effective January 1, 2020 with no material impact on its consolidated financial statements.

In November 2018, the FASB issued ASU No. 2018-18, Collaborative Arrangements (Topic 808) – Clarifying the Interaction between Topic 808 and Topic 606. The amendments in this ASU clarified that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606, Revenue from Contracts with Customers, when the collaborative arrangement participant is a customer in the context of a unit of account and precluded recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. The new guidance is effective for fiscal years beginning after December 15, 2019. The Company adopted the amendment on January 1, 2020, with no material impact on its consolidated financial statements.

(b)	Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of forward-looking information to calculate credit loss estimates. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to certain available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes result in earlier recognition of credit losses. The Company will adopt ASU 2016-13 as of January 1, 2021 and does not expect this adoption to have a significant impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This standard aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for annual periods beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021, with early adoption permitted. The Company has not yet adopted ASU 2018-15 and does not expect the adoption to have a significant impact on its consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes. This guidance will be effective for the Company in the first quarter of 2021 on a prospective basis, and early adoption is permitted. The Company has not yet adopted ASU 2019-12, and does not expect this adoption to have a significant impact on its consolidated financial statements.

(c)	Basis of Presentation and Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates include the assumptions used in the allocation of revenue, estimates towards the progress of completion of collaboration agreements, and the valuation of stock-based compensation. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements.

(d)	Principles of Consolidation

The Company’s consolidated financial statements include the accounts of Schrödinger, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The functional currency for foreign entities is the United States dollar. The Company accounts for investments over which it has significant influence, but not a controlling financial interest, using the equity method.

(e)	Cash and Cash Equivalents and Marketable Securities and Restricted Cash

Included in cash and cash equivalents were cash equivalents of $185,614 and $20,208 as of December 31, 2020 and 2019, respectively, which consisted of money market funds and certificates of deposit, and are stated at cost, which approximates market value. The Company classifies all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company classifies all marketable securities, which consist of fixed income securities, as available for sale securities.

At times, cash balances held at financial institutions were in excess of the Federal Deposit Insurance Corporation’s insured limits; however, the Company primarily places its temporary cash with high-credit quality financial institutions.

Restricted cash consists of a letter of credit held with the Company’s financial institution related to facility leases, and is classified as current in the Company’s balance sheets based on the maturity of the underlying letter of credit.

(f)	Accounts Receivable

Accounts receivable are stated at original invoice amount less an allowance for doubtful accounts. Management estimates the allowance for doubtful accounts by evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Account balances are considered delinquent if payment is not received by the due date. Accounts receivable are written off when deemed uncollectible. Recovery of accounts receivable previously written off is recorded when received. Changes in the balance of accounts deemed uncollectible were deemed immaterial as of December 31, 2020 and 2019. Interest is not charged on accounts receivable.

(g)	Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities.

(h)	Property and Equipment

Property and equipment are stated at cost. Maintenance and repairs are expensed as incurred.

Depreciation is calculated using the straight‑line method over the estimated useful lives of the assets, which range from 3 to 7 years. Amortization of leasehold improvements is calculated using the straight‑line method over the remaining life of the lease or the useful life of the asset, whichever is shorter.

Property and equipment are reviewed for impairment as discussed below under Accounting for the Impairment of Long‑Lived Assets. The Company did not capitalize any interest during 2020 and 2019.

(i)	Accounting for the Impairment of Long‑Lived Assets

Long-lived assets, such as property and equipment subject to amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for potential impairment, the Company first compares undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that carrying value exceeds fair value. Fair value is determined using various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, depending on the nature of the asset. No impairment was identified for the years ended December 31, 2020 and 2019.

(j)	Warranties

The Company typically warrants that its products will perform in a manner consistent with the product specifications provided to the customer for a period of 30 days. Historically, the Company has not been required to make payments under these obligations. Therefore, no liabilities for such obligations are presented in the consolidated financial statements.

(k)	Concentrations

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade receivables.

The Company does not require customers to provide collateral to support accounts receivable. If deemed necessary, credit reviews of significant new customers may be performed prior to extending credit. The determination of a customer’s ability to pay requires judgment, and failure to collect from a customer can adversely affect revenue, cash, and net income. The Company maintains an allowance for doubtful accounts.

As of December 31, 2020, two customers accounted for 17% and 14% of total accounts receivable, respectively. As of December 31, 2019, one customer accounted for 10% of total accounts receivable. For the year ended December 31, 2020, no customer accounted for more than 10% of total revenues. For the year ended December 31, 2019, one customer accounted for 12% of total revenues.

(l)

Royalties

Royalties represent a component of cost of revenues and consist of royalties paid to owners of intellectual property used in or bundled with the Company’s software. Generally, royalties are incurred and recorded at the time a customer enters into a binding purchase agreement, although some royalty agreements are based instead on cash collections. Royalty expense was $7,663 and $7,352 for the years ended December 31, 2020 and 2019, respectively.

(m)	Software Development Costs

Costs to develop new software products and substantial enhancements to existing software products are expensed as incurred. Historically, the Company has not capitalized any software development costs because the software development process was essentially completed concurrent with the establishment of technological feasibility.

(n)	Research and Development and Advertising

Research and development and advertising costs are expensed as incurred. The Company did not incur any significant advertising costs in 2020 or 2019.

(o)	Stock‑Based Compensation

The Company calculates stock‑based compensation expense utilizing fair value–based methodologies and recognizes expense over the vesting period of such awards.

(p)	Commissions

Commissions represent a component of sales and marketing expense and consist of the variable compensation paid to the Company’s sales representatives. Generally, sales commissions are earned and recorded as expense at the time that a customer has entered into a binding purchase agreement. Commissions paid to sales representatives are recoverable only in the case that the Company cannot collect against any invoiced fee associated with a sales order. Commission expense was $1,362 and $754 in 2020 and 2019, respectively.

(q)	Income Taxes

The Company records deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax basis of the assets and liabilities. Deferred tax assets are reduced by a valuation allowance when it is estimated to become more likely than not that a portion of the deferred tax assets will not be realized. Accordingly, the Company currently maintains a full valuation allowance against existing net deferred tax assets.

The Company recognizes the effect of income tax positions only if such positions are deemed “more likely than not” capable of being sustained. Interest and penalties accrued on unrecognized tax benefits are included within income tax expense in the consolidated financial statements.

(r)	Comprehensive Loss

Comprehensive loss includes net loss and changes in equity related to changes in unrealized gains or losses on marketable securities.

(s)	Equity Investments

The Company has entered into collaboration agreements with Nimbus Therapeutics, LLC (“Nimbus”), Morphic Therapeutic, Inc., a wholly owned subsidiary of Morphic Holding, Inc. (“Morphic”), Petra Pharma Corporation (“Petra”), and Relay Therapeutics, Inc. (“Relay”) to perform drug design services in exchange for minority ownership, which are included within equity investments in the Company’s consolidated balance sheets.

The Company has concluded that the carrying value of its equity investment in Nimbus should reflect its contractual rights to substantive profits. The Company further determined that the hypothetical liquidation at book value method (“HLBV method”) for valuing contractual rights to substantive profits provides the best representation of its financial position in Nimbus. During 2020, the Company continued to value Nimbus using the HLBV method.

The HLBV method is a balance sheet-oriented approach to equity method accounting. Under the HLBV method, the Company determines its share of earnings or losses by comparing its claim on the book value at the beginning and end of each reporting period. This claim is calculated as the amount that the Company would receive (or be obligated to pay) if the investee were to liquidate all of its assets at recorded amounts, determined as of the balance sheet date in accordance with U.S. GAAP, and distribute the resulting cash to creditors and investors in accordance with their respective priorities.

Upon the completion of Morphic’s initial public offering in June 2019, the Company changed the valuation methodology used to value the Morphic investment. As there is a readily available public market for Morphic’s common stock, the Company values its investment based on the closing price of Morphic’s common stock as of the reporting date.

Upon the completion of Relay’s initial public offering in July 2020, the Company changed the valuation methodology used to value the Relay investment. As there is a readily available public market for Relay’s common stock, the Company values its investment based on the closing price of Relay’s common stock as of the reporting date.

Prior to May 2020, the Company had concluded that its equity investment in Petra should be valued using the historical cost method, as the Company does not exercise significant influence over Petra. During May 2020, Petra merged with a third party. For further information regarding the Company’s equity investments, see Note 5, Fair Value Measurements and Note 12, Equity Investments.

(t)	Net Loss per Share Attributable to Common and Limited Common Stockholders

Following the completion of the Company’s IPO in February 2020, the outstanding equity of the Company consists of common stock and limited common stock. Under the Company’s certificate of incorporation, the rights of the holders of common stock and limited common stock are identical, except with respect to voting and conversion. Holders of limited common stock are precluded from voting such shares in any election of directors or on the removal of directors. Limited common stock may be converted into common stock at any time at the option of the stockholder.

Undistributed earnings allocated to the participating securities are subtracted from net income in determining net loss attributable to common and limited common stockholders. Basic net loss per share is computed by dividing net loss attributable to common and limited common stockholders by the weighted-average number of shares of common and limited common stock outstanding during the period.

For the calculation of diluted net loss, net income attributable to common and limited common stockholders for basic net loss is adjusted by the effect of dilutive securities, including awards under the Company’s equity compensation plans. Diluted net loss per share attributable to common and limited common stockholders is computed by dividing the resulting net income attributable to common and limited common stockholders by the weighted-average number of fully diluted shares of common and limited common stock outstanding. For purposes of this calculation, stock options are considered common stock equivalents but have been excluded from the calculation of net loss per share attributable to common and limited stockholders as their effect is anti-dilutive. For years ended December 31, 2020 and 2019, the computation of basic and diluted net loss per share is presented on a combined basis for common and limited common stock because the results are identical.

Revenue Recognition

12 Months Ended

Dec. 31, 2020

Revenue From Contract With Customer [Abstract]

Revenue Recognition

(3)	Revenue Recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over time or at a point in time.

The following table illustrates the timing of the Company’s revenue recognition:

	Year Ended December 31,
	2020			2019
Software products and services – point in time		55.0	%		49.9	%
Software products and services – over time		30.6			28.1
Drug Discovery – point in time		6.7			8.6
Drug Discovery – over time		7.7			13.4

(a)	Software Products and Services

The Company enters into contracts that can include various combinations of licenses, products and services, some of which are distinct and are accounted for as separate performance obligations. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis. Revenue is recognized net of any sale and value-added taxes collected from customers and subsequently remitted to governmental authorities.

The Company’s software business derives revenue from five sources: (i) on-premise software license fees, (ii) hosted software subscription fees, (iii) software maintenance fees, (iv) professional services fees, and (v) contributions.

On-premise software. The Company’s on-premise software license arrangements grant customers the right to use its software on their own in-house servers or their own cloud instances for a specified term, typically for one year. The Company recognizes revenue for on-premise software license fees upfront, either upon delivery of the license or the effective date of the agreement, whichever is later. In instances where the timing of delivery differs from the timing of invoicing, the Company considers whether a significant financing component exists. The Company has elected the practical expedient to not assess for significant financing where the term is less than one year. The Company’s updates and upgrades are not integral to maintaining the utility of the software licenses. Payments typically are received upfront or annually.

Hosted software. Hosted software revenue consists primarily of fees to provide the Company’s customers with hosted licenses, which allows these customers to access the Company’s cloud-based software solution on their own hardware without taking control of licenses. Hosted software is recognized ratably over the term of the arrangement.

Software maintenance. Software maintenance includes technical support, updates, and upgrades. Software maintenance revenue is considered to be a separate performance obligation and is recognized ratably over the term of the arrangement.

Professional services. Professional services, such as training, technical support and installation or assisting customers with modeling, generally are not related to the functionality of the Company’s software and may be recognized as resources are consumed or over the term of the arrangement, depending on the terms of the underlying agreement. The Company has historically estimated project status with relative accuracy, although a number of internal and external factors can affect such estimates, including labor rates, utilization and efficiency variances. Payments for services are due in advance or upon consumption of resources.

Contribution. Contribution revenue consists of funds received under a non-reciprocal agreement with Gates Ventures, LLC. The agreement is an unconditional non-exchange contribution without restrictions and the initial contribution was invoiced upon execution of the agreement. Revenue was recognized upon execution of the agreement when invoiced in accordance with Accounting Standards Codification (“ASC”) Topic 958, Not-for-Profit Entities, as the agreement is not an exchange transaction.

The following table presents the revenue recognized from the five sources of the software products and services revenue:

	Year Ended December 31,
	2020		2019
On-premise software	$	58,311	$	42,647
Hosted software		9,192		7,418
Software maintenance		14,465		11,643
Professional services		9,562		5,027
Revenue from contracts with customers		91,530		66,735
Contribution		1,000		—
Total software revenue	$	92,530	$	66,735

(b)	Contribution Revenue

During the year ended December 31, 2020, the Company recognized contribution revenue related to an agreement with Gates Ventures, LLC, which covers the period from June 23, 2020 through June 22, 2023 for total consideration of up to $3,000. The Company received $1,000 in connection with its entry into the agreement, and the Company is entitled to receive additional $1,000 payments on or around the first and second anniversary of its entry into the agreement, subject to the Company providing certain progress reports to the Trustees of Columbia University in the City of New York. As of December 31, 2020, the Company had no deferred revenue balance related to this agreement. During the year ended December 31, 2020, the Company recognized $1,000 of contribution revenue.

(c)	Drug Discovery

Revenue from drug discovery and collaboration services contracts is recognized either over time, typically by using costs incurred or hours expended to measure progress, or at a point in time based on the achievement of milestones. Payments for services are generally due upon achieving milestones stated in a contract, upfront at the start of a contract, or upon consumption of resources. Services may at times include variable consideration and milestone payments. The Company has estimated the amount of consideration that is variable using the most likely amount method. The Company evaluates milestones on a case-by-case basis, including whether there are factors outside the Company’s control that could result in a significant reversal of revenue, and the likelihood and magnitude of a potential reversal. If achievement of a milestone is not considered probable, the Company constrains (reduces) variable consideration to exclude the milestone payment until it is probable to be achieved. As of December 31, 2020 and 2019, milestones not yet achieved that were determined to be probable of achievement totaled $250 and $1,500, respectively, and $85 and $1,500 of those milestones were recognized as revenue for the years ended December 31, 2020 and 2019.

(d)	Collaboration and License Agreement

On November 22, 2020, the Company entered into an exclusive, worldwide collaboration and license agreement with Bristol-Myers Squibb Company (“BMS”), pursuant to which the Company and BMS have agreed to collaborate in the discovery, research and preclinical development of new small molecule compounds for disease indications in oncology, neurology, and immunology therapeutics areas. The Company will be responsible, at its own cost and expense, for the discovery of small molecule compounds directed to five specified biological targets pursuant to a mutually agreed research plan for each such target. The targets include HIF-2 alpha and SOS1/KRAS, which are two of the Company’s internal programs. Once a development candidate meeting specified criteria for a target under the agreement has been identified by the Company, BMS will be solely responsible for the further development, manufacturing and commercialization of such development candidate at its own cost and expense.

Under the terms of the agreement, BMS paid the Company an initial upfront fee payment of $55,000. The Company also is entitled to receive up to $2.7 billion in total milestone payments across all potential targets, consisting of: a) up to $585,000 in milestone payments per oncology target, including $360,000 in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $225,000 in the aggregate for the achievement of certain specified commercial milestones; and b) up to $482,000 million in milestone payments per neurology and immunology target, including $257,000 in the aggregate for the achievement of certain specified research, development, and regulatory milestones and $225,000 in the aggregate for the achievement of certain specified commercial milestones.

The Company is also entitled to a tiered percentage royalty on annual net sales ranging from mid-single digits to low-double digits, subject to certain specified reductions. Royalties are payable by BMS on a licensed product-by-licensed product and country-by-country basis until the later of the expiration of the last valid claim covering the licensed product in such country, expiration of all applicable regulatory exclusivities in such country for such licensed product and the tenth anniversary of the first commercial sale of such licensed product in such country.

The Company assessed the collaboration and license agreement in accordance with ASC 606, Revenue from Contracts with Customers (Topic 606), and concluded that BMS is a customer based on the agreement structure. At inception, the Company identified one performance obligation for each of the five programs under the agreement, which includes research activities for each program and a license grant for the underlying intellectual property. The Company determined that the license grant for intellectual property is not separable from the research activities, as the research activities are expected to significantly modify or enhance the license grant over the period of service, and therefore are not distinct in the context of the contract.

The Company determined that the transaction price at the onset of the agreement is $55,000. Additional consideration to be paid to the Company upon the achievement of future milestone payments were excluded from the transaction price as they represent milestone payments that are not considered probable as of the inception date such that there is not a significant risk of revenue reversal.

The Company has allocated the transaction price of $55,000 to each performance obligation based on the relative stand-alone selling price of each performance obligation at inception, which was determined based on each performance obligation’s estimated stand-alone selling price. The Company determined the estimated stand-alone selling price at contract inception of the research activities based on internal estimates of the costs to perform the services, inclusive of a reasonable profit margin. Significant inputs used to determine the total costs to perform the research activities included the length of time required, the internal hours expected to be incurred on the services and the number and costs of various studies that will be performed to complete the research plan.

Revenue associated with the research activities is recognized on a proportional performance basis over the period of service for research activities, using input based measurements of total costs of research incurred to estimate the proportion performed. Progress towards completion is remeasured at the end of each reporting period.

During the year ended December 31, 2020, the Company recognized $988 associated with the agreement based on the research activities performed subsequent to the contract start date. As of December 31, 2020, there was $54,012 of deferred revenue related to the agreement, which was classified as either current or non-current in the consolidated balance sheet based on the period the services are expected to be performed. There was no outstanding receivable for this collaboration as of December 31, 2020.

(e)	Significant Judgments

Significant judgments and estimates are required under ASC Topic 606. Due to the complexity of certain contracts, the actual revenue recognition treatment required under Topic 606 for the Company’s arrangements may be dependent on contract-specific terms and may vary in some instances.

The Company’s contracts with customers often include promises to transfer multiple software products and services, including training, professional services, technical support services, and rights to unspecified updates. Determining whether licenses and services are distinct performance obligations that should be accounted for separately, or are not distinct and therefore should be accounted for together, requires significant judgment. In some arrangements, such as most of the Company’s term-based software license arrangements, the Company has concluded that the licenses and associated services are distinct from each other. In other arrangements, including collaboration services arrangements, the licenses and certain services may not be distinct from each other. The Company’s time-based software arrangements may include multiple software licenses and a right to updates or upgrades to the licensed software products, and technical support. The Company has concluded that such promised goods and services are separate distinct performance obligations.

The Company is required to estimate the total consideration expected to be received from contracts with customers, including any variable consideration. Once the estimated transaction price is established, amounts are allocated to the performance obligations that have been identified. The transaction price is allocated to each separate performance obligation on a relative stand-alone selling price (“SSP”) basis.

Judgment is required to determine the SSP for each distinct performance obligation. The Company rarely licenses or sells products on a standalone basis, so the Company is required to estimate the range of SSPs for each performance obligation. In instances where the SSP is not directly observable because the Company does not sell the license, product, or service separately, the Company determines the SSP using information that includes historical discounting practices, market conditions, cost-plus analysis, and other observable inputs. The Company typically has more than one SSP for individual performance obligations due to the stratification of those items by classes of customers and circumstances. In these instances, the Company may use information such as the size and geographic region of the customer in determining the SSP. Professional service revenue is recognized as costs and hours are incurred, and judgment is required in estimating both the project status and the costs incurred or hours expended.

If a group of agreements are so closely related to each other that they are, in effect, part of a single arrangement, such agreements are deemed to be one arrangement for revenue recognition purposes. The Company exercises significant judgment to evaluate the relevant facts and circumstances in determining whether the separate agreements should be accounted for separately or as, in substance, a single arrangement. The Company’s judgments about whether a group of contracts comprises a single arrangement can affect the allocation of consideration to the distinct performance obligations, which could have an effect on results of operations for the periods involved.

Judgment is required to determine the total costs to perform research activities, which include the length of time required, the internal hours expected to be incurred on the services, and the number and costs of various studies that may be performed to complete the research plan.

Generally, the Company has not experienced significant returns or refunds to customers.

The Company’s estimates related to revenue recognition require significant judgment and the change in these estimates could have an effect on the Company’s results of operations during the periods involved.

(f)	Contract Balances

The timing of revenue recognition may differ from the timing of invoicing to customers and these timing differences result in receivables, contract assets, or contract liabilities (deferred revenue) on the consolidated balance sheets. The Company records a contract asset when revenue is recognized prior to invoicing. A deferred revenue liability is recorded when revenue is expected to be recognized subsequent to invoicing. For the Company’s time-based software agreements, customers are generally invoiced at the beginning of the arrangement for the entire term, though when the term spans multiple years the customers may be invoiced on an annual basis. For certain drug discovery agreements where the milestones are deemed probable, the Company records a contract asset for the full value of the milestone.

Contract assets are included in unbilled and other receivables within the consolidated balance sheets, and are transferred to receivables when the Company invoices the customer.

Contract balances were as follows:

	As of December 31,		As of December 31,
	2020		2019
Contract assets	$	3,589	$	6,904
Deferred revenue, short-term:
Software		28,218		23,287
Drug discovery		17,185		1,767
Deferred revenue, long-term:
Software		1,976		1,500
Drug discovery		39,188		705

For the years ended December 2020 and 2019, respectively, the Company recognized $24,921 and $17,720 of revenue that was included in deferred revenue at the end of the preceding period. All other deferred revenue activity is due to the timing of invoices in relation to the timing of revenue, as described above. The Company expects to recognize as revenue approximately 52% of its December 31, 2020 deferred revenue balance in the next 12 months and the remainder thereafter. Additionally, contracted but unsatisfied performance obligations that had not yet been billed to the customer or included in deferred revenue were $29,147 as of December 31, 2020.

Payment terms and conditions vary by contract type, although terms typically require payment within 30 to 60 days. In instances where the timing of revenue recognition differs from that of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing the Company’s products and services, not to facilitate financing arrangements.

(g)	Deferred Sales Commissions

The Company has applied the practical expedient for sales commission expense, as any compensation paid to sales representatives to obtain a contract relates to a period of one year or less. Therefore, the Company has not capitalized any costs related to sales commissions.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Property and Equipment

12 Months Ended

Dec. 31, 2020

Property Plant And Equipment [Abstract]

Property and Equipment

(4)	Property and Equipment

Property and equipment consisted of the following:

	As of December 31,
	2020			2019
Computers and equipment	$	12,718		$	11,150
Leasehold improvements		4,385			4,374
Furniture and fixtures		1,839			1,306
		18,942			16,830
Less accumulated depreciation		(13,802	)		(10,562	)
	$	5,140		$	6,268

Depreciation expense for 2020 and 2019 was $3,658 and $3,625, respectively, and is included within cost of revenues and research and development, sales and marketing, and general and administrative expenses within the consolidated statements of operations.

Fair Value Measurements

12 Months Ended

Dec. 31, 2020

Fair Value Disclosures [Abstract]

Fair Value Measurements

(5)	Fair Value Measurements

Various inputs are used in determining the fair value of the Company’s financial assets and liabilities. These inputs are summarized into the following three broad categories:

Level 1 – quoted prices in active markets for identical securities

Level 2 – other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk, etc.

Level 3 – significant unobservable inputs, including the Company’s own assumptions in determining fair value

The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Marketable securities, which consist primarily of corporate and U.S. government agency bonds, are classified as available for sale and fair value does not differ significantly from carrying value as of December 31, 2020 and 2019. The following table presents information about the Company’s assets and liabilities measured at fair value as of December 31, 2020:

	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	—	$	440,395	$	—	$	440,395
Equity investments		45,570		—		—		45,570
Total	$	45,570	$	440,395	$	—	$	485,965

The following table presents information about the Company’s assets and liabilities measured at fair value as of December 31, 2019:

	Level 1		Level 2		Level 3		Total
Assets:
Marketable securities	$	—	$	59,844	$	—	$	59,844
Equity investments		14,328		—		108		14,436
Total	$	14,328	$	59,844	$	108	$	74,280

Fair value of the Company’s investments in Morphic and Relay, classified as Level 1 in the fair value hierarchy, were determined using the respective market prices of Morphic’s and Relay’s common stock as of the close of trading on December 31, 2020.

Fair value of the Company’s investment in Nimbus, classified as Level 3 in the fair value hierarchy, was determined under the HLBV method, as further described in Note 2, Significant Accounting Policies. Significant unobservable inputs used under the HLBV method include Nimbus’ annual financial statements and the Company’s respective liquidation priority. The following table sets forth changes in fair value of the Company’s Level 3 investments:

	Amount
As of December 31, 2018	$	4,288
Unrealized loss		(4,180	)
As of December 31, 2019		108
Cash contributions		2,869
Unrealized loss		(2,977	)
As of December 31, 2020	$	—

Unrealized gains and losses arising from changes in fair value of the Company’s equity investments are classified within change in fair value in the consolidated statements of operations. During the years ended December 31, 2020 and 2019, there were no transfers between Level 1, Level 2 and Level 3 investments. See Note 12, Equity Investments, for further information.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Commitments and Contingencies

12 Months Ended

Dec. 31, 2020

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

(6)	Commitments and Contingencies

(a)

Leases

The Company leases office space under operating leases that expire at various dates through 2029. The Company adopted Topic 842, Leases as of January 1, 2019 and elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification, its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to January 1, 2019. In addition, the Company elected the short-term lease exception as a practical expedient and to combine lease and non-lease components. The Company recognizes rent expense on a straight-line basis over the life of the related lease, including any periods of free rent.

Upon inception of a lease, the Company determines if an arrangement is a lease, if it includes options to extend or terminate the lease, and if it is reasonably certain that the Company will exercise the options. Lease cost, representing lease payments over the term of the lease and any capitalizable direct costs less any incentives received, is recognized on a straight-line basis over the lease term as lease expense.

In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The Company determined lease liability amounts using a discount rate of 5.01%, which represents the Company’s incremental borrowing rate. The Company determines its incremental borrowing rate for lease liability using its current borrowing rate, adjusted for various factors including level of collateralization and lease term. As of December 31, 2020, the remaining weighted average lease term was 4 years.

During the year ended December 31, 2020, the Company entered into two new leases, which increased right-of-use (“ROU”) assets and lease liabilities by $2,709. ROU assets and lease liabilities were equal as no lease costs or incentives were associated with acquiring the leases.

Variable and short-term lease costs were immaterial for the year ended December 31, 2020. Additional details of the Company’s operating leases are presented in the following table:

	Year Ended December 31,
	2020		2019
Operating lease costs	$	5,895	$	5,181
Cash paid for operating leases		6,050		5,108

Maturities of operating lease liabilities as of December 31, 2020 under noncancelable operating leases were as follows:

Year ending December 31:
2021	$	4,622
2022		1,892
2023		1,760
2024		1,777
2025		1,328
Thereafter		962
Total future minimum lease payments		12,341
Less: imputed interest		(577	)
Present value of future minimum lease payments		11,764
Less: current portion of operating leases payments		(4,543	)
Lease liabilities, long-term	$	7,221

(b)	Legal Matters

From time to time, the Company may become involved in routine litigation arising in the ordinary course of business. While the results of such litigation cannot be predicted with certainty, management believes that the final outcome of such matters is not likely to have a material adverse effect on the Company’s financial position or results of operations or cash flows.

Income Taxes

12 Months Ended

Dec. 31, 2020

Income Tax Disclosure [Abstract]

Income Taxes

(7)	Income Taxes

Income tax expense is comprised of the following:

	Year ended December 31,
	2020		2019
Current:
Federal	$	—	$	583
State		178		(95	)
Foreign		167		(779	)
Current income tax expense (benefit)		345		(291	)
Deferred:
Federal		—		—
State		—		—
Deferred income tax expense (benefit)		—		—
	$	345	$	(291	)

Components of income (loss) before income taxes by tax jurisdiction were as follows:

	Year ended December 31,
	2020			2019
United States	$	(24,567	)	$	(25,385	)
Foreign		449			523
Loss before income taxes	$	(24,118	)	$	(24,862	)

Reconciliation of income tax expense at the applicable statutory income tax rates to the effective rate is as follows:

	Year ended December 31,
	2020			2019
Statutory federal income tax rate		21.0	%		21.0	%
State taxes, net of federal benefits		14.2			4.2
Withholding tax		—			(2.3	)
Section 162(m) limitation		(12.8	)		—
Stock compensation		68.5			0.2
Return-to-provision adjustments		(1.3	)		3.2
Research and development credit		6.2			5.2
Tax contingencies, net of reversals		(0.6	)		(0.5	)
Change in valuation allowance		(95.0	)		(31.3	)
Other		(1.6	)		(0.6	)
Effective income tax rate		(1.4	)%		(0.9	)%

The income tax expense for the year ended December 31, 2020 primarily related to state taxes and taxes in foreign jurisdictions. Income tax benefit for the year ended December 31, 2019 primarily related to alternative minimum tax credits previously utilized that are refundable under the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”).

The total change in valuation allowance for the year ended December 31, 2020 was $22,904, which primarily was due to the generation of net operating losses.

Tax effects of temporary differences that give rise to significant portions of deferred income tax assets and deferred income tax liabilities were as follows:

	As of December 31,
	2020			2019
Deferred income tax assets:
Net operating loss carryforwards	$	51,498		$	26,119
Accrued expenses		10,477			7,097
Credits		8,752			7,468
Gross deferred tax assets		70,727			40,684
Less valuation allowance		(58,155	)		(35,251	)
Net deferred tax assets		12,572			5,433
Deferred income tax liabilities:
Unrealized gain on equity investments		(10,185	)		(1,984	)
Prepaid expenses		(889	)		(441	)
Depreciation and amortization		(1,498	)		(3,008	)
Net deferred income tax assets	$	—		$	—

As of December 31, 2020, the Company had federal and state net operating loss (“NOL”) carryforwards of $206,311 and $126,729, respectively. These carryforwards, with the exception of federal NOLs generated post 2017, will expire between 2022 and 2040 if not used by the Company to reduce income taxes payable in future periods. Utilization of post 2017 federal NOL carryforwards are limited to 80% of taxable income generated in a given year and carry forward indefinitely. As of December 31, 2020, the Company had federal and state research and development tax credit carryforwards of $9,385 and $498, respectively. These carryforwards will expire between 2021 and 2040 if not used by the Company to reduce income taxes payable in future periods.

The Company has not recognized a deferred tax liability for the undistributed earnings of its foreign operations as the Company considers these earnings to be indefinitely reinvested.

In response to the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the 2017 Tax Act. Corporate taxpayers may carryback NOLs originating during 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020. Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for tax years beginning January 1, 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. The CARES Act raises the corporate charitable deduction limit to 25% of taxable income and makes qualified improvement property generally eligible for 15-year cost-recovery and 100% bonus depreciation. In addition, the CARES Act allows companies to defer making certain payroll tax payments until future years. With the enactment of the CARES Act, the Company has not recognized a quantitative or qualitative impact for the year ended December 31, 2020.

The Company classifies interest and penalties related to unrecognized tax benefits within income tax expense in the consolidated statement of operations. Following is a reconciliation of total gross unrecognized tax benefits: