accd-20240531

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-Q

______________________________________________________


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended May 31, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission File Number: 001-39348

ACCOLADE, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)		01-0969591 (I.R.S. Employer Identification No.)
	1201 Third Avenue, Suite 1700 Seattle, WA 98101 (Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (206) 926-8100

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


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	ACCD	The Nasdaq Stock Market LLC (The Nasdaq Global Select Market)

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

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

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


Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o

		Emerging growth company	o

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

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

As of June 17, 2024, 80,008,376 shares of the registrant’s common stock were outstanding.


		PAGE NUMBER
	Special Note Regarding Forward Looking Information	2

PART I FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of May 31, 2024 and February 2 9 , 202 4	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended May 31, 2024 and 202 3	4
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three months ended May 31, 2024 and 202 3	5
	Condensed Consolidated Statements of Cash Flows for the three months ended May 31, 2024 and 202 3	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	32
Item 4.	Controls and Procedures	33

PART II OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35


	May 31, 2024		February 29, 2024
Assets
Current assets:
Cash and cash equivalents	$	188,709	$	185,718
Marketable securities	41,931		51,315
Accounts receivable, net	20,278		21,800
Unbilled revenue	7,433		5,902
Current portion of deferred contract acquisition costs	4,252		4,369
Prepaid and other current assets	12,656		15,808
Total current assets	275,259		284,912
Property and equipment, net	19,652		19,140
Operating lease right-of-use assets	27,114		28,340
Goodwill	278,191		278,191
Intangible assets, net	156,524		165,407
Deferred contract acquisition costs	8,534		9,608
Other assets	2,095		2,553
Total assets	$	767,369	$	788,151
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	8,139	$	13,749
Accrued expenses and other current liabilities	11,065		10,736
Accrued compensation	22,037		23,392
Due to customers	11,264		18,552
Current portion of deferred revenue	38,745		34,770
Current portion of operating lease liabilities	7,192		6,651
Total current liabilities	98,442		107,850
Loans payable, net of unamortized issuance costs	208,790		208,482
Operating lease liabilities	24,613		26,077
Other noncurrent liabilities	157		156
Deferred revenue	102		121
Total liabilities	332,104		342,686
Commitments and Contingencies (note 10)
Stockholders’ equity
Common stock par value $0.0001; 500,000,000 shares authorized; 78,841,570 and 78,070,781 shares issued and outstanding at May 31, 2024 and February 29, 2024, respectively	8		8
Additional paid-in capital	1,516,982		1,499,603
Accumulated other comprehensive loss	(34)		(47)
Accumulated deficit	(1,081,691)		(1,054,099)
Total stockholders’ equity	435,265		445,465
Total liabilities and stockholders’ equity	$	767,369	$	788,151


	Three months ended May 31,
	2024		2023
Revenue	$	110,466	$	93,226
Cost of revenue, excluding depreciation and amortization	58,611		54,203
Operating expenses:
Product and technology	26,309		25,899
Sales and marketing	28,194		25,033
General and administrative	16,008		16,080
Depreciation and amortization	10,392		11,640
Total operating expenses	80,903		78,652
Loss from operations	(29,048)		(39,629)
Interest income, net	1,697		921
Other income	94		390
Loss before income taxes	(27,257)		(38,318)
Income tax expense	(335)		(91)
Net loss	$	(27,592)	$	(38,409)

Net loss per share, basic and diluted	$	(0.35)	$	(0.52)

Weighted-average common shares outstanding, basic and diluted	78,119,493		73,179,994

Other comprehensive income:
Unrealized income on marketable securities, net	$	13	$	—
Comprehensive loss	$	(27,579)	$	(38,409)


	Stockholders' Equity (Deficit)
	Common stock			Additional paid-in capital		Accumulated deficit		Total
	Shares	Amount
Balance, February 28, 2023	73,089,075	$	7	$	1,428,073	$	(954,294)	$	473,786
Exercise of stock options and vesting of restricted stock units	1,895,163	1		2,530		—		2,531
Issuance of common stock in connection with the employee stock purchase plan	280,162	—		1,992		—		1,992
Stock-based compensation expense	—	—		14,278		—		14,278
Net loss	—	—		—		(38,409)		(38,409)
Balance, May 31, 2023	75,264,400	$	8	$	1,446,873	$	(992,703)	$	454,178


Fiscal year ending February 28(29),
Remainder of 2025	$	120,104
2026	52,038
2027	13,149
2028	636
2029	258
Total	$	186,185


		As of May 31, 2024
	Useful Life	Gross Value		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Useful Life (Years)
Customer relationships	2 to 20 years	$	124,050	$	(23,450)	$	100,600	16.7
Technology	2 to 5 years	111,526		(73,857)		37,669		1.8
Supplier-based network	5 years	25,000		(16,250)		8,750		1.8
Trade name	10 years	13,700		(4,195)		9,505		6.9
Non-compete agreement	2 to 3 years	9,300		(9,300)		—		0.0
		$	283,576	$	(127,052)	$	156,524


	May 31, 2024
	Level 1		Level 2		Level 3		Fair Value
Assets
Cash equivalents:
Money market funds	$	44,831	$	—	$	—	$	44,831
Marketable securities:
United States government debt	$	19,701	$	—	$	—	$	19,701
Commercial paper	$	—	$	12,355	$	—	$	12,355
United States agency debt	$	—	$	9,875	$	—	$	9,875


	May 31, 2024		February 29, 2024
Principal	$	211,041	$	211,041
Unamortized issuance costs	(2,251)		(2,559)
Net carrying amount	$	208,790	$	208,482


	Stock Options	Weighted average exercise price		Weighted remaining contractual life in years	Aggregate intrinsic value
Balance, February 29, 2024	6,171,653	$	10.87
Exercised	(14,327)	6.25
Forfeited	(30,173)	17.51
Balance, May 31, 2024	6,127,153	$	10.83	4.3	$	7,370


			Restricted Stock Units
Balance, February 29, 2024			5,031,140
Granted			116,092
Vested			(435,627)
Forfeited			(64,551)
Balance, May 31, 2024			4,647,054


	Three Months Ended May 31,
	2024		2023
Access fees	$	76,959	$	66,597
Usage-based fees	33,507		26,629
Total	$	110,466	$	93,226


			Performance Stock Units
Balance, February 29, 2024			276,480
Granted			—
Vested			—
Forfeited			—
Balance, May 31, 2024			276,480

SEC Form 10-Q filed by Accolade Inc.