MNTV Momentive Global Inc

Momentive (NASDAQ: MNTV), the maker of SurveyMonkey, today reported first quarter results for the period ended March 31, 2023.

Q1 2023 Key Results

• Total revenue was $118.8 million, an increase of approximately 2% year-over-year.
• Sales-assisted channel revenue was $46.7 million, an increase of 13% year-over-year. Sales-assisted channel revenue accounted for approximately 39% of total revenue, up from approximately 35% in Q1 2022. We ended the quarter with approximately 13,200 sales-assisted channel customers, down approximately 4% from roughly 13,700 in Q1 2022.
• Self-serve channel revenue was $72.1 million, a decrease of 5% year-over-year.
• Deferred revenue was $216.5 million, flat year-over-year. Remaining performance obligations were $245.5 million, flat year-over-year.
• Paying users totaled approximately 878,600, a decrease of 2% from roughly 894,400 in Q1 2022. Approximately 92% of our paying users were on annual plans, up from 91% a year ago.
• Average revenue per user was approximately $546, up 2% from approximately $535 in Q1 2022.
• GAAP operating margin was negative 17.9% and non-GAAP operating margin was 11.9%.
• GAAP net loss was $23.8 million and GAAP diluted net loss per share was $0.16. Non-GAAP net income was $12.1 million and non-GAAP diluted net income per share was $0.08.
• Net cash used in operating activities was $7.9 million and free cash flow was negative $10.0 million.
• Cash and cash equivalents totaled $199.1 million and total debt was $184.3 million for net cash of approximately $14.7 million as of March 31, 2023.

For a detailed explanation of the company’s non-GAAP measures, please refer to the appendix section of this press release. For more information on the company’s first quarter 2023 financial results, please visit the Momentive investor relations website at investor.momentive.ai.

Transaction with Symphony Technology Group

On March 13, 2023, Momentive announced it had entered into a definitive agreement to be acquired by an investor consortium led by Symphony Technology Group (STG) in an all cash transaction that values Momentive at approximately $1.5 billion. On April 27, 2023, the Company filed its definitive proxy statement related to the proposed acquisition and announced it will hold a special meeting of stockholders via live webcast on May 31, 2023 at 9:00 a.m. PT to approve the transaction.

The transaction is expected to close in the second or third quarter of 2023, subject to customary closing conditions, including approval by Momentive shareholders and the receipt of required regulatory approvals. The transaction is not subject to a financing condition.

In light of the Company’s pending acquisition, Momentive will not host a conference call or live webcast to discuss these financial results. Additionally, the Company is not providing financial guidance for Q2 2023 and full year 2023.

About Momentive

Momentive (NASDAQ: MNTV), maker of SurveyMonkey, empowers people with the insights they need to make business decisions with speed and confidence. Our fast, intuitive experience and insights management solutions connect millions of users at more than 330,000 organizations worldwide with AI-powered technology and up-to-the-minute insights, so they can shape what’s next for their products, industries, customers, employees, and the market. Ultimately, our vision is to raise the bar for human experiences by amplifying individual voices. Learn more at momentive.ai.

MOMENTIVE GLOBAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

 

(in thousands)

 

March 31, 2023

 

 

December 31, 2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

199,080

 

 

$

202,816

 

Accounts receivable, net

 

 

31,760

 

 

 

33,656

 

Deferred commissions, current

 

 

9,965

 

 

 

9,775

 

Prepaid expenses and other current assets

 

 

15,769

 

 

 

17,207

 

Total current assets

 

 

256,574

 

 

 

263,454

 

Property and equipment, net

 

 

630

 

 

 

1,006

 

Operating lease right-of-use assets

 

 

31,232

 

 

 

32,252

 

Capitalized internal-use software, net

 

 

29,942

 

 

 

29,595

 

Acquisition intangible assets, net

 

 

4,785

 

 

 

5,156

 

Goodwill

 

 

460,979

 

 

 

459,817

 

Deferred commissions, non-current

 

 

13,595

 

 

 

14,307

 

Other assets

 

 

4,459

 

 

 

4,568

 

Total assets

 

$

802,196

 

 

$

810,155

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

9,688

 

 

$

16,418

 

Accrued expenses and other current liabilities

 

 

26,759

 

 

 

24,969

 

Accrued compensation

 

 

23,605

 

 

 

31,893

 

Deferred revenue, current

 

 

215,865

 

 

 

206,728

 

Operating lease liabilities, current

 

 

8,033

 

 

 

8,046

 

Debt, current

 

 

1,900

 

 

 

1,900

 

Total current liabilities

 

 

285,850

 

 

 

289,954

 

Deferred revenue, non-current

 

 

641

 

 

 

719

 

Deferred tax liabilities

 

 

6,641

 

 

 

6,337

 

Debt, non-current

 

 

182,441

 

 

 

182,916

 

Operating lease liabilities, non-current

 

 

37,874

 

 

 

39,584

 

Other non-current liabilities

 

 

3,890

 

 

 

3,885

 

Total liabilities

 

 

517,337

 

 

 

523,395

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

 

Preferred stock

 

 

—

 

 

 

—

 

Common stock

 

 

2

 

 

 

1

 

Additional paid-in capital

 

 

1,018,529

 

 

 

997,621

 

Accumulated other comprehensive loss

 

 

(2,420

)

 

 

(3,425

)

Accumulated deficit

 

 

(731,252

)

 

 

(707,437

)

Total stockholders’ equity

 

 

284,859

 

 

 

286,760

 

Total liabilities and stockholders’ equity

 

$

802,196

 

 

$

810,155

 

MOMENTIVE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

 

 

 

Three Months Ended March 31,

(in thousands, except per share amounts)

 

2023

 

 

2022

 

Revenue

 

$

118,821

 

 

$

116,986

 

Cost of revenue (1)(2)(3)

 

 

20,557

 

 

 

22,903

 

Gross profit

 

 

98,264

 

 

 

94,083

 

Operating expenses:

 

 

 

 

Research and development (1)(3)

 

 

32,665

 

 

 

36,716

 

Sales and marketing (1)(2)(3)

 

 

47,919

 

 

 

59,636

 

General and administrative (1)(3)

 

 

31,737

 

 

 

27,917

 

Restructuring (1)(2)

 

 

7,197

 

 

 

4,883

 

Total operating expenses

 

 

119,518

 

 

 

129,152

 

Loss from operations

 

 

(21,254

)

 

 

(35,069

)

Interest expense

 

 

4,148

 

 

 

2,226

 

Other non-operating income, net

 

 

(2,038

)

 

 

(134

)

Loss before income taxes

 

 

(23,364

)

 

 

(37,161

)

Provision for income taxes

 

 

451

 

 

 

216

 

Net loss

 

$

(23,815

)

 

$

(37,377

)

Net loss per share, basic and diluted

 

$

(0.16

)

 

$

(0.25

)

Weighted-average shares used in computing basic and diluted net loss per share

 

 

149,345

 

 

 

150,262

 

 

(1) Includes stock-based compensation, net of amounts capitalized as follows:

 

 

Three Months Ended March 31,

(in thousands)

 

2023

 

2022

Cost of revenue

 

$

1,241

 

$

1,409

Research and development

 

 

7,734

 

 

8,644

Sales and marketing

 

 

4,075

 

 

6,065

General and administrative

 

 

7,352

 

 

7,375

Restructuring

 

 

—

 

 

2,761

Stock-based compensation, net of amounts capitalized

 

$

20,402

 

$

26,254

 

(2) Includes amortization of acquisition intangible assets as follows:

 

 

Three Months Ended March 31,

 

(in thousands)

 

2023

 

 

2022

 

Cost of revenue

 

$

—

 

 

$

1,414

 

Sales and marketing

 

 

371

 

 

 

1,452

 

Restructuring

 

 

—

 

 

 

45

 

Amortization of acquisition intangible assets

 

$

371

 

 

$

2,911

 

 

(3) Includes transaction expenses associated with the proposed merger with an investor consortium led by STG Partners, LLC during the three months ended March 31, 2023, and transaction expenses associated with the terminated merger with Zendesk, Inc. during the three months ended March 31, 2022:

 

 

Three Months Ended March 31,

 

(in thousands)

 

2023

 

 

2022

 

Cost of revenue

 

$

10

 

 

$

318

 

Research and development

 

 

47

 

 

 

1,770

 

Sales and marketing

 

 

23

 

 

 

1,679

 

General and administrative

 

 

7,381

 

 

 

2,733

 

Acquisition-related transaction costs

 

$

7,461

 

 

$

6,500

 

MOMENTIVE GLOBAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

 

 

 

Three Months Ended March 31,

(in thousands)

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

Net loss

 

$

(23,815

)

 

$

(37,377

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

Depreciation and amortization

 

 

5,710

 

 

 

9,354

 

Non-cash leases expense

 

 

2,182

 

 

 

3,202

 

Stock-based compensation expense, net of amounts capitalized

 

 

20,402

 

 

 

26,254

 

Deferred income taxes

 

 

304

 

 

 

217

 

Bad debt expense

 

 

497

 

 

 

644

 

Unrealized foreign currency (gains) losses, net and other

 

 

(195

)

 

 

727

 

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

 

1,334

 

 

 

(1,047

)

Prepaid expenses and other assets

 

 

(7,090

)

 

 

(8,117

)

Accounts payable and accrued liabilities

 

 

(5,024

)

 

 

(2,341

)

Accrued compensation

 

 

(8,368

)

 

 

(6,898

)

Deferred revenue

 

 

9,033

 

 

 

14,283

 

Operating lease liabilities

 

 

(2,897

)

 

 

(3,801

)

Net cash used in operating activities

 

 

(7,927

)

 

 

(4,900

)

Cash flows from investing activities

 

 

 

 

Purchases of property and equipment

 

 

(15

)

 

 

(441

)

Capitalized internal-use software

 

 

(2,079

)

 

 

(2,565

)

Proceeds from sale of a private company investment

 

 

6,753

 

 

 

—

 

Net cash provided by (used in) investing activities

 

 

4,659

 

 

 

(3,006

)

Cash flows from financing activities

 

 

 

 

Proceeds from stock option exercises

 

 

—

 

 

 

2,273

 

Payments to repurchase common stock

 

 

—

 

 

 

(36,376

)

Repayment of debt

 

 

(550

)

 

 

(25,550

)

Net cash used in financing activities

 

 

(550

)

 

 

(59,653

)

Effect of exchange rate changes on cash

 

 

213

 

 

 

393

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(3,605

)

 

 

(67,166

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

203,258

 

 

 

306,121

 

Cash, cash equivalents and restricted cash at end of period

 

$

199,653

 

 

$

238,955

 

Supplemental cash flow data:

 

 

 

 

Interest paid for term debt

 

$

3,967

 

 

$

2,009

 

Non-cash investing and financing transaction:

 

 

 

 

Stock compensation included in capitalized software costs

 

$

506

 

 

$

719

 

MOMENTIVE GLOBAL INC.

SUPPLEMENTAL DISAGGREGATED REVENUE DATA (unaudited)

 

Quarterly Disaggregated Revenue

 

 

Three Months Ended

 

(in thousands)

 

Mar. 31, 2023

 

Dec. 31, 2022

 

Sep. 30, 2022

 

Jun. 30, 2022

 

Mar. 31, 2022

 

Self-serve revenue

 

$

72,099

 

$

73,105

 

$

74,629

 

$

76,055

 

$

75,803

 

Sales-assisted revenue

 

 

46,722

 

 

49,288

 

 

46,746

 

 

44,108

 

 

41,183

 

Revenue

 

$

118,821

 

$

122,393

 

$

121,375

 

$

120,163

 

$

116,986

 

Self-serve revenues are generated from products purchased independently through our website.

Sales-assisted revenues are generated from products sold to organizations through our sales team.

MOMENTIVE GLOBAL INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA (unaudited) (1)

 

Reconciliation of GAAP to Non-GAAP (Loss) Income from operations

 

 

Three Months Ended March 31,

 

(in thousands, except percentages)

 

2023

 

 

2022

 

GAAP Loss from operations

 

$

(21,254

)

 

$

(35,069

)

GAAP Operating margin

 

 

(18

)%

 

 

(30

)%

Stock-based compensation, net

 

 

20,402

 

 

 

26,254

 

Acquisition-related transaction costs

 

 

7,461

 

 

 

6,500

 

Restructuring

 

 

7,197

 

 

 

2,077

 

Amortization of acquisition intangible assets

 

 

371

 

 

 

2,911

 

Non-GAAP Income from operations

 

$

14,177

 

 

$

2,673

 

Non-GAAP Operating margin

 

 

12

%

 

 

2

%

Reconciliation of GAAP to Non-GAAP (Loss) Income and (Loss) Income per diluted share

 

 

 

Three Months Ended March 31,

(in thousands, except per share amounts)

 

2023

 

 

2022

 

GAAP Net Loss

 

$

(23,815

)

 

$

(37,377

)

GAAP Net Loss per diluted share

 

$

(0.16

)

 

$

(0.25

)

Weighted-average shares used to compute GAAP net loss per diluted share

 

 

149,345

 

 

 

150,262

 

 

 

 

 

 

Stock-based compensation, net

 

 

20,402

 

 

 

26,254

 

Acquisition-related transaction costs

 

 

7,461

 

 

 

6,500

 

Restructuring

 

 

7,197

 

 

 

2,077

 

Amortization of acquisition intangible assets

 

 

371

 

 

 

2,911

 

Income tax effect on Non-GAAP adjustments (2)

 

 

503

 

 

 

219

 

 

 

 

 

 

Non-GAAP Net Income

 

$

12,119

 

 

$

584

 

Non-GAAP Net Income per diluted share

 

$

0.08

 

 

$

—

 

Weighted-average shares used to compute Non-GAAP net income per diluted share

 

 

149,680

 

 

 

151,657

 

(1)

Please see Appendix A for explanation of non-GAAP measures used.

(2)

Due to the full valuation allowance on our US deferred tax assets, there were no tax effects associated with the Non-GAAP adjustments for acquisition-related transaction costs and restructuring costs. Non-GAAP adjustments pertain to the income tax effects of amortization of acquisition-related intangible assets and stock-based compensation, net.

Calculation of Free Cash Flow

 

 

 

Three Months Ended March 31,

(in thousands)

 

2023

 

 

2022

 

Net cash used in operating activities

 

$

(7,927

)

 

$

(4,900

)

Purchases of property and equipment

 

 

(15

)

 

 

(441

)

Capitalized internal-use software

 

 

(2,079

)

 

 

(2,565

)

Free cash flow

$

(10,021

)

$

(7,906

)

MOMENTIVE GLOBAL INC.

RECONCILIATION OF GAAP TO NON-GAAP DATA (unaudited) (1)

 

Calculation of Constant Currency Revenue and Constant Currency Revenue Growth Rate

 

 

 

Three Months Ended March 31,

 

 

 

 

(in thousands, except percentages)

 

2023

 

 

2022

 

 

Growth Rates

 

GAAP Revenue

 

$

118,821

 

 

$

116,986

 

 

 

2

%

Effects of foreign currency exchange rates

 

 

2,930

 

 

 

 

 

 

 

Constant currency revenue

 

$

121,751

 

 

 

 

 

 

4

%

 

Supplemental GAAP and Non-GAAP Information

 

 

 

Three Months Ended March 31,

(in thousands, except percentages)

 

2023

 

 

2022

 

GAAP Gross profit

 

$

98,264

 

 

$

94,083

 

GAAP Gross margin

 

 

83

%

 

 

80

%

Stock-based compensation, net

 

 

1,241

 

 

 

1,409

 

Amortization of acquisition intangible assets

 

 

—

 

 

 

1,414

 

Acquisition-related transaction costs

 

 

10

 

 

 

318

 

Non-GAAP Gross profit

 

$

99,515

 

 

$

97,224

 

Non-GAAP Gross margin

 

 

84

%

 

 

83

%

 

 

 

 

 

GAAP Research and development

 

$

32,665

 

 

$

36,716

 

GAAP Research and development margin

 

 

27

%

 

 

31

%

Stock-based compensation, net

 

 

7,734

 

 

 

8,644

 

Acquisition-related transaction costs

 

 

47

 

 

 

1,770

 

Non-GAAP Research and development

 

$

24,884

 

 

$

26,302

 

Non-GAAP Research and development margin

 

 

21

%

 

 

22

%

 

 

 

 

 

GAAP Sales and marketing

 

$

47,919

 

 

$

59,636

 

GAAP Sales and marketing margin

 

 

40

%

 

 

51

%

Stock-based compensation, net

 

 

4,075

 

 

 

6,065

 

Amortization of acquisition intangible assets

 

 

371

 

 

 

1,452

 

Acquisition-related transaction costs

 

 

23

 

 

 

1,679

 

Non-GAAP Sales and marketing

 

$

43,450

 

 

$

50,440

 

Non-GAAP Sales and marketing margin

 

 

37

%

 

 

43

%

 

 

 

 

 

GAAP General and administrative

 

$

31,737

 

 

$

27,917

 

GAAP General and administrative margin

 

 

27

%

 

 

24

%

Stock-based compensation, net

 

 

7,352

 

 

 

7,375

 

Acquisition-related transaction costs

 

 

7,381

 

 

 

2,733

 

Non-GAAP General and administrative

 

$

17,004

 

 

$

17,809

 

Non-GAAP General and administrative margin

 

 

14

%

 

 

15

%

 

 

 

 

 

GAAP Restructuring

 

$

7,197

 

 

$

4,883

 

GAAP Restructuring margin

 

 

6

%

 

 

4

%

Stock-based compensation, net

 

 

—

 

 

 

2,761

 

Amortization of acquisition intangible assets

 

 

—

 

 

 

45

 

Other restructuring costs

 

 

7,197

 

 

 

2,077

 

Non-GAAP Restructuring

 

$

—

 

 

$

—

 

Non-GAAP Restructuring margin

 

 

0

%

 

 

0

%

 

(1) Please see Appendix A for explanation of non-GAAP measures used.

APPENDIX A

MOMENTIVE GLOBAL INC. EXPLANATION OF NON-GAAP MEASURES

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with US GAAP (“GAAP”), we use the following Non-GAAP financial measures: Non-GAAP (loss) income from operations, Non-GAAP operating margin, Non-GAAP net (loss) income, Non-GAAP net (loss) income per diluted share, Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP research and development, Non-GAAP research and development margin, Non-GAAP sales and marketing, Non-GAAP sales and marketing margin, Non-GAAP general and administrative, Non-GAAP general and administrative margin, Non-GAAP restructuring, Non-GAAP restructuring margin, free cash flow, constant currency revenue, and constant currency revenue growth rate. Our definition for each Non-GAAP measure used is provided below, however, a limitation of Non-GAAP financial measures is that they do not have uniform definitions. Accordingly, our definitions for Non-GAAP measures used will likely differ from similarly titled Non-GAAP measures used by other companies thereby limiting comparability.

Non-GAAP (loss) income from operations, Non-GAAP operating margin: We define Non-GAAP (loss) income from operations as GAAP loss from operations excluding stock-based compensation, net, amortization of acquisition intangible assets, acquisition-related transaction costs, and restructuring. Non-GAAP operating margin is defined as Non-GAAP (loss) income from operations divided by revenue.

Non-GAAP net (loss) income, Non-GAAP net (loss) income per diluted share: We define Non-GAAP net (loss) income as GAAP net loss excluding stock-based compensation, net, amortization of acquisition intangible assets, acquisition-related transaction costs, restructuring, and including the income tax effect on Non-GAAP adjustments. Non-GAAP net (loss) income per diluted share is defined as Non-GAAP net (loss) income divided by the weighted-average shares outstanding.

Non-GAAP gross profit, Non-GAAP gross margin: We define Non-GAAP gross profit as GAAP gross profit excluding stock-based compensation, net, amortization of acquisition intangible assets, and acquisition-related transaction costs. Non-GAAP gross margin is defined as Non-GAAP gross profit divided by revenue.

Non-GAAP research and development, Non-GAAP research and development margin: We define Non-GAAP research and development as GAAP research and development excluding stock-based compensation, net and acquisition-related transaction costs. Non-GAAP research and development margin is defined as Non-GAAP research and development divided by revenue.

Non-GAAP sales and marketing, Non-GAAP sales and marketing margin: We define Non-GAAP sales and marketing as GAAP sales and marketing excluding stock-based compensation, net, amortization of acquisition intangible assets, and acquisition-related transaction costs. Non-GAAP sales and marketing margin is defined as Non-GAAP sales and marketing divided by revenue.

Non-GAAP general and administrative, Non-GAAP general and administrative margin: We define Non-GAAP general and administrative as GAAP general and administrative excluding stock-based compensation, net and acquisition-related transaction costs. Non-GAAP general and administrative margin is defined as Non-GAAP general and administrative divided by revenue.

Non-GAAP restructuring, Non-GAAP restructuring margin: We define Non-GAAP restructuring as GAAP Restructuring excluding stock-based compensation, net, amortization of acquisition intangible assets, and other restructuring costs. Non-GAAP Restructuring margin is defined as Non-GAAP Restructuring divided by revenue.

Free cash flow: We define free cash flow as GAAP net cash provided by or used in operating activities less purchases of property and equipment and capitalized internal-use software. We consider free cash flow to be an important measure because it measures our liquidity after deducting capital expenditures for purchases of property and equipment and capitalized software development costs, which we believe provides a more accurate view of our cash generation and cash available to grow our business. We expect to generate positive free cash flow over the long term. Free cash flow has limitations as an analytical tool, and it should not be considered in isolation or as a substitute for analysis of other GAAP financial measures, such as net cash provided by or used in operating activities. Some of the limitations of free cash flow are that free cash flow does not reflect our future contractual commitments and may be calculated differently by other companies in our industry, limiting its usefulness as a comparative measure.

Constant currency revenue, Constant currency revenue growth rate: We define constant currency revenue as GAAP revenue excluding the effects of foreign currency exchange rate fluctuations. We believe providing revenue on a constant currency basis helps our investors to better understand our underlying performance, independent of foreign currency movements. Constant currency revenue compares results between periods as if exchange rates had remained constant period over period and is calculated by translating current period foreign currency revenues using average exchange rates from prior year comparable period. Constant currency revenue growth rate is calculated by determining the percentage change in current period constant currency revenue over comparable prior period GAAP revenue.

We use these Non-GAAP measures to compare and evaluate our operating results across periods in order to manage our business, for purposes of determining executive and senior management incentive compensation, and for budgeting and developing our strategic operating plans. We believe that these Non-GAAP measures provide useful information about our operating results, enhance the overall understanding of our past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by our management in evaluating our financial performance and for operational decision making, but they are not meant to be considered in isolation or as a substitute for comparable GAAP measures and should be read only in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP.

We have excluded the effect of the following items from the aforementioned Non-GAAP measures because they are non-cash and/or are non-recurring in nature and because we believe that the Non-GAAP financial measures excluding these items provide meaningful supplemental information regarding operational performance and liquidity. We further believe these measures are useful to investors in that they allow for greater transparency to certain line items in our financial statements and facilitate comparisons to historical operating results and comparisons to peer operating results. A description of the Non-GAAP adjustments for the above measures is as follows:

• Stock-based compensation, net: We incur stock based-compensation expense on a GAAP basis resulting from equity awards granted to our employees. Although stock-based compensation is a key incentive offered to our employees, and we believe such compensation contributed to the revenues earned during the periods presented and also believe it will contribute to the generation of future period revenues, we continue to evaluate our business performance excluding stock-based compensation expenses. Stock-based compensation expenses will recur in future periods.
• Amortization of acquisition intangible assets: We incur amortization expense on intangible assets on a GAAP basis resulting from prior acquisitions. Amortization of acquired intangible assets is inconsistent in amount and frequency and is significantly affected by the timing and size of any acquisitions. Investors should note that the use of intangible assets contributed to our revenues earned during the periods presented and will contribute to our future period revenues as well. Amortization of acquisition intangible assets will recur in future periods.
• Acquisition-related transaction costs: We incur transaction costs on a GAAP basis resulting from our acquisitions, including our proposed merger with an investor consortium led by STG Partners, LLC and our terminated acquisition by Zendesk, Inc. These costs relate to advisory, legal and accounting services, retention payments to certain employees, and third-party advisory and professional fees associated with activist defense. Acquisition-related transaction costs is inconsistent in amount and frequency and is significantly affected by the timing and size of any acquisitions and are therefore excluded from our Non-GAAP results as they do not otherwise relate to our core business operations. However, we may incur these expenses in future periods in connection with any new acquisitions.
• Restructuring: Restructuring expenses consist of employee severance, lease termination charges and related gains or losses from lease modifications, impairment of certain assets, and other exit costs. We believe it is useful for investors to understand the effects of these items on our total operating expenses. We expect that restructuring costs will generally diminish over time with respect to strategic initiatives and/or past acquisitions. However, we may incur these expenses in future periods in connection with any new strategic initiatives and/or acquisitions.

For more information on the Non-GAAP financial measures, please see the “Reconciliation of GAAP to Non-GAAP Data” section of this press release. The accompanying tables provide details on the GAAP financial measures that are most directly comparable to the Non-GAAP financial measures and the related reconciliations between those financial measures.

Safe Harbor Statement

“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This press release may contain forward-looking statements about our financial outlook, the pending merger with an investor consortium led by STG Partners, LLC, restructuring initiatives, outstanding shares, products, including our investments in products, technology and other key strategic areas. The achievement of the matters covered by such forward-looking statements involves risks, uncertainties and assumptions. If any of these risks or uncertainties materialize or if any of the assumptions prove incorrect, the company’s results could differ materially from the results expressed or implied by the forward-looking statements the company makes.

The risks and uncertainties referred to above include - but are not limited to - risks related to our pending merger with an investor consortium led by STG Partners, LLC; risks related to our ability to successfully implement our cost-saving initiatives and to capture expected efficiencies; our ability to retain and upgrade customers; our revenue growth rate; our brand (including our rebranding); our marketing strategies; our self-serve business model; the length of our sales cycles; the growth and development of our salesforce; security measures; expectations regarding our ability to timely and effectively scale and adapt existing technology and network infrastructure to ensure that our products and services are accessible at all times; competition; our debt; revenue recognition; our ability to manage our growth; our culture and talent; our data centers; privacy, security and data transfer concerns, as well as changes in regulations, which could impact our ability to serve our customers or curtail our monetization efforts; litigation and regulatory issues; expectations regarding the return on our strategic investments; our ability to execute on our share repurchase program; execution of our plans and strategies, including with respect to mobile products and features and expansion into new areas and businesses; our international operations; intellectual property; the application of U.S. and international tax laws on our tax structure and any changes to such tax laws; acquisitions we have made or may make in the future; the price volatility of our common stock; and general economic conditions.

Further information on these and other factors that could affect our financial results are included in documents filed with the Securities and Exchange Commission from time to time, including the section entitled “Risk Factors” in the most recently filed Annual Report on Form 10-K and the Quarterly Report on Form 10-Q that will be filed for the quarter ended March 31, 2023, which should be read in conjunction with these financial results. These documents are or will be available on the SEC Filings section of our Investor Relations website page at investor.momentive.ai. All information provided in this release and in the attachments is as of May 4, 2023, and we undertake no obligation to update this information.

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Investor Relations Contact: Gary J. Fuges, CFA investors@momentive.ai

Media Contact: Katie Miserany pr@momentive.ai