Momentive GLOBAL INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The following discussion and analysis of our financial condition and results of
operations should be read in conjunction with our unaudited condensed
consolidated financial statements and related notes included elsewhere in this
Quarterly Report on Form 10-Q. As discussed in the section titled
"Forward-Looking Statements,", the following discussion and analysis contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from those discussed below. Additionally, our
unaudited results for the interim periods presented may not be indicative of the
results to be expected for any full year period. Factors that could cause or
contribute to such differences include, but are not limited to, those identified
below and those discussed in the section titled "Risk Factors" under Part II,
Item 1A in this Quarterly Report on Form 10-Q.

We were founded under the name "SurveyMonkey" in 1999 and provide SaaS solutions
that enable organizations to collect and analyze market, customer and employee
sentiment data quickly and at scale. Our artificial intelligence powered
solutions help more than 345,000 organizations build market leadership, delight
their customers, and engage their employees.

We deliver these solutions through three major product categories: Surveys,
Customer Experience, and Market Research. We believe our solutions are
competitively differentiated through their ease of use and flexibility, speed in
delivering sentiment data-driven insights and ability to share insights across
an organization through integrations with leading business intelligence,
collaboration, and customer relationship management platforms. Our solutions are
powered by a technology stack that simplifies the processes for creating
surveys, collecting high quality data, and surfacing and sharing insights across
an organization to drive action.

We have transformed from our roots as a provider of digital survey tools sold
through the Internet to an enterprise SaaS company that leverages both
product-led and sales-led go-to-market motions. To help us engage more deeply
with enterprise customers, we rebranded ourselves as "Momentive" in June 2021,
and changed our legal name from "SVMK Inc." to "Momentive Global Inc." In
February 2022, we announced plans to consolidate our product portfolio under two
brands and web surfaces-Momentive and SurveyMonkey. The Momentive brand will
represent our suite of upmarket solutions, while SurveyMonkey will support our
complementary products for value-oriented customers who prioritize speed and
ease of use.


We are executing on a two-part growth strategy. First, we are delivering new
features and product tiers that capitalize on the virality of our core platform
and the scale of business to drive overall platform usage and increase the
conversion of free users to paid subscribers in our self-serve channel. Second,
we are investing further in product innovation and go-to-market initiatives to
expand the percentage of our revenue generated through our sales-assisted
channel. Specifically, our sales-assisted go-to-market motion focuses on
converting existing self-serve subscribers to sales-assisted customers, selling
directly to new customers, and expanding our relationships with existing
customers. As we execute on this strategy and sell more of our products into
enterprises directly, we believe we can accelerate our revenue growth profile
and increase our customer retention rates over time. We believe our existing
user base represents a significant opportunity to expand our business and
increase our revenue. During the nine months ended September 30, 2022,
approximately 37% of our total revenue was generated from customers who
purchased software through our sales-assisted channel, up from 31% in the first
nine months of 2021.


Our core survey platform is inherently viral, as existing users send surveys and
share survey results that introduce potential new users and customers to our
products. This virality, combined with the ease-of-use and price-disruptive
nature of our products and the strength of our brands, has enabled us to build
an efficient, online self-serve channel for selling versions of our survey
products, which we are enhancing with our sales-assisted go-to-market motion. We
have a broad and diverse customer base and no customer represented more than 10%
of our revenue in any of the periods presented.

We operate as a single operating segment. Our chief operating decision maker
("CODM") is our Chief Executive Officer, who reviews our operating results on a
consolidated basis in order to make decisions about allocating resources and
assessing performance for the entire company. Our CODM uses one measure of
profitability and does not segment our business for internal reporting.


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Impact of COVID-19

The COVID-19 pandemic has caused economic instability and global uncertainty. As
a result of the COVID-19 pandemic, we modified certain aspects of our business,
including transitioning to a hybrid work model where most of our employees have
the flexibility to determine the amount of time they work from home and in our
offices, and transitioning our employee onboarding and training processes to
remote or online programs, among other modifications. We continue to actively
monitor and evaluate the situation and may take further actions that alter our
business operations as may be required by federal, state, or local authorities
or that we determine are in the best interests of our employees, customers,
partners, and stockholders. The effects of these operational modifications are
unknown and may not be realized until further reporting periods as we continue
to evaluate and refine our hybrid work model and real estate needs.

Although many jurisdictions have relaxed their guidelines and restrictions, in
some cases, these have been, or may in the future be, reinstated. The full
impact of the rapidly changing market and economic conditions due to the
COVID-19 pandemic is uncertain as the businesses of our customers and partners
have been, and in some cases continue to be, disrupted. While we have not
experienced significant disruptions from the COVID-19 pandemic thus far, we are
unable to accurately predict the full impact that the COVID-19 pandemic will
have due to numerous uncertainties, including the severity and spread of new or
existing variants of the virus between regions, changes in infection and
vaccination rates in each region, the duration of the pandemic globally and
regionally, additional actions that may be taken by governmental authorities,
the impact to the businesses of our customers and partners, individuals' and
companies' risk tolerance regarding health matters going forward, and other
factors identified in Part I, Item 1A "Risk Factors" in this Quarterly Report on
Form 10-Q. The extent to which the COVID-19 pandemic may materially impact our
financial condition, liquidity, or results of operations is uncertain, and the
effect of the COVID-19 pandemic may not be fully reflected in our results of
operations until future periods, even after the COVID-19 pandemic has subsided.
We are continuously evaluating the nature and extent of the impact to our
business, including our real estate needs, consolidated results of operations,
and financial condition.

Our Products

Our products address business use cases across five major categories: 1) Market
Insights; 2) Brand Insights; 3) Customer Experience; 4) Employee Experience; and
5) Product Experience.

We generate revenue by subscription or transaction, depending on the product. We offer three major product categories – surveys, customer experience and market research.

Surveys: Our leading survey software products enable a wide range of customers
to collect, analyze and take action on stakeholder sentiments. We have designed
products that optimize the quality of stakeholder feedback and maximize response
rates to help organizations improve customer experiences, develop and retain a
diverse and high-performing workforce, and grow their business. We offer our
basic survey plan to individuals at no charge. We also offer multiple tiers of
subscriptions to individual paying users, with pricing based on functionality,
including advanced survey logic; branding and customization tools; analysis
features; and support options. We offer SurveyMonkey team plans for small teams
and departments that need to collaborate on survey projects. In addition to the
features available in paid plans for individuals, SurveyMonkey team plans
provide advanced collaboration features for survey creation and analysis,
centralized team administration, and a team library for survey themes,
templates, and brand assets. Team plans start at three users per team, billed
annually on a subscription basis, and include flexible roles and pricing for
survey creators and analysts. For organizations, we offer SurveyMonkey
Enterprise, which extends our survey platform with enterprise-grade security and
an enhanced set of capabilities (including managed user accounts, customized
company branding, collaboration capabilities, and deep integrations with a broad
set of leading software applications) that enable users to support multiple,
advanced feedback use cases across the organization. Revenue from Surveys is
generated primarily on a subscription basis.

Customer Experience: Our Customer Experience offering enables companies to
leverage in-the-moment customer feedback to deliver exceptional experiences that
engage and retain their customers. Our Customer Experience offering simplifies
customer feedback collection and analysis through its integration with customer
relationship management ("CRM") data to help companies better understand key
customer segments, and its accessibility within the systems companies already
use to help them take action quickly in service of their customers. Our Customer
Experience offering captures a company's customer feedback

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from across key digital channels and within offline or proprietary business
systems, combines this feedback with operational customer data to build a deeper
understanding of their customers and their preferences, and automates
feedback-based actions through integrations with that company's existing system
of record and other key business systems. We differentiate our Customer
Experience offering in the market based on our software's ease-of-implementation
and use, time-to-value relative to alternative solutions, and rich integration
across the Salesforce ecosystem. Our Customer Experience offering is sold
through our sales-assisted channel. Revenue from Customer Experience is
generated primarily on a subscription basis.

Market Research: Our Market Research solutions are the underlying software
products powering the Market Insights, Brand Insights, and Product Experience
categories of solutions. Our market research offerings enable customers to
quickly collect and analyze actionable insights from a targeted audience on a
number of market research needs, including analyzing market opportunities,
measuring brand and campaign effectiveness, and gaining insights on existing and
future product lines. Our Market Research solutions are sold through our
sales-assisted channel. Revenue from Market Research is generated primarily on a
transactional basis, with our customers having the option to preload Market
Research Credits that can be used to pay for projects, solutions, and services
throughout a 12-month term.

Professional Services: For clients who need assistance implementing and optimizing the use of our products, we offer the following categories of professional services, including:

o

Surveys: survey design, programming, language translation and analysis of results;

o
Customer Experience: customer journey mapping, customer experience key metrics,
measurement and planning, return-on-investment ("ROI") impact of CSAT and NPS
programs, analytics and customer experience related workshops; and

o
Market Research: program methodology consulting, survey programming and language
translation, brand tracking program development and execution, product concept
testing, due diligence analysis, and custom reporting and analytics.

Revenue from the professional services business is primarily transactional.

Other dedicated solutions: In addition to our three major product categories, we also offer other products such as:

o
Customer Advocacy: TechValidate is our marketing content automation solution.
TechValidate collects customer feedback at scale, automatically converting it
into validated marketing content, including statistics, charts, testimonials,
and case studies.

o

Grant application management: SurveyMonkey Apply is our application management solution primarily used by educational institutions and non-profit organizations seeking to allocate scholarships and grants; and

o

Forms: Wufoo is our easy-to-use form builder that helps users create web and mobile forms, collect file uploads, and receive online payments.

We offer certain tiers of our Survey and Market Research product categories on a
self-serve basis through our website, and we offer a suite of enterprise-grade
experience management solutions from all three primary product categories
through our direct sales force.


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As of December 31, 2021, we had over 17 million active users. As of September
30, 2022 and 2021, we had approximately 897,500 and 877,100 paying users,
respectively, which we define as an individual customer of our survey platform
or form-based application, a seat within a SurveyMonkey Enterprise deployment or
a subscription to one of our purpose-built solutions. Of our paying users as of
September 30, 2022 and 2021, we had approximately 15,400 and 10,500 customers,
respectively, who purchased our software through our sales-assisted channel. Our
average revenue per paying user ("ARPU") was $533 and $539 for the three and
nine months ended September 30, 2022, respectively, and $524 and $514 for the
three and nine months ended September 30, 2021, respectively. We calculate ARPU
as revenue during a given period divided by the average number of paying users
during that period. We calculate the average number of paying users by adding
the number of paying users as of the end of the prior period to the number of
paying users as of the end of the current period, and then dividing by two. For
interim periods, we use annualized revenue which is calculated by dividing the
revenue for the period by the number of days in that period and multiplying this
value by 365 days.

As of September 30, 2022, over 90% of our trailing 12-month bookings were from
organizational domain-based customers, which are customers who register with us
using an email account with an organizational domain name, such as
@momentive.ai, but excludes customers with email addresses hosted on widely used
domains such as @gmail, @outlook or @yahoo. As of September 30, 2022, our
dollar-based net retention rate for organizational domain-based customers was
over 95%. We calculate bookings as the sum of the monthly and annual contract
values for contracts sold during a period for our monthly and annual customers,
respectively. We calculate organizational dollar-based net retention rate as of
a period end by starting with the trailing 12 months of bookings from the cohort
of all domain-based customers as of the 12 months prior to such period end
("Prior Period Bookings"). We then calculate the trailing 12 months of bookings
from these same customers as of the current period end ("Current Period
Bookings"). Current Period Bookings includes any upsells and is net of
contraction or attrition, but excludes bookings from new domain-based customers
in the current period. We then divide the total Current Period Bookings by the
total Prior Period Bookings to arrive at the organizational dollar-based net
retention rate.





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key business metrics

We review a number of operating and financial metrics, including the following
key metrics to evaluate our business, measure our performance, identify trends
affecting our business, formulate our business plan and make strategic
decisions. As our business continues to evolve, we may choose to report new or
additional metrics that are more closely tied to key business drivers or stop
reporting metrics that are no longer relevant.

remaining performance obligations

                                              As of September 30,
(in thousands)                                 2022         2021

Residual Performance Obligation (“RPO”) $244,493 $222,553




We define RPO as the amount of consideration allocated to unsatisfied
performance obligations related to non-cancelable contracts, which include both
the deferred revenue balance and amounts that will be invoiced and recognized as
revenue in future periods, as of the end of the reporting period. For
subscription products, we provide customers with the option of monthly, annual
or multi-year contractual terms. In general, our customers elect annual
contractual terms and we generally invoice 1 year in advance. Our contracts are
generally non-cancelable and without refund rights. Billed contractual amounts
are reported as deferred revenue in our condensed consolidated financial
statements. Unbilled contractual amounts are part of RPO and are not included in
our condensed consolidated financial statements.

RPO is intended to provide visibility into future revenue streams. Several
factors may contribute to the fluctuation of RPO including timing and frequency
of invoicing, number of multi-year non-cancelable contracts, and dollar amount
of customer contracts (including changes that we may see to customer contracts
as a result of the COVID-19 pandemic).

Non-GAAP Financial Measures

We believe that, in addition to our results determined in accordance with GAAP, free cash flow, a non-GAAP financial measure, is useful in evaluating our business, results of operations and financial condition.

free cash flow

We define free cash flow as GAAP net cash provided by 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 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.

Below is a reconciliation of free cash flow to the most comparable GAAP measure (net cash provided by operating activities):


                                                 Three Months Ended
                                                    September 30,          Nine Months Ended September 30,
(in thousands)                                   2022           2021            2022               2021

Net cash provided by operating activities $1,901 $16,747 $

             651     $    60,308
Purchases of property and equipment                    -            (65 )              (449 )          (387 )
Capitalized internal-use software                 (1,724 )       (2,032 )            (6,679 )        (6,450 )
Free cash flow                                $      177     $   14,650   $          (6,477 )   $    53,471



Free cash flow is presented for supplemental informational purposes only and
should not be considered a substitute for financial information presented in
accordance with GAAP.


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Components of Operating Results

income

We derive a substantial majority of our revenue from sales of subscriptions to
our software products in the survey and customer experience categories. We also
generate a small portion of revenue from sales of market research solutions.

We recognize subscription revenue ratably over the subscription term, generally
ranging from one month to one year, as long as all other revenue recognition
criteria have been met. Our contracts are generally non-cancellable and do not
contain refund provisions. Subscription fees are collected primarily from credit
cards through our website at the beginning of the subscription period.

Cost of Revenue and Operating Expenses

We allocate shared costs, such as depreciation on equipment shared by all
departments, facilities (including rent and utilities), employee benefit costs
and information technology costs to all departments based on headcount. As such,
allocated shared costs are reflected in each cost of revenue and operating
expense category, other than restructuring.

Cost of Revenue. Our cost of revenue consists primarily of expenses associated
with the delivery and distribution of our products to our users. These expenses
generally consist of infrastructure costs, personnel costs and other related
costs. Infrastructure costs generally include expenses related to website
hosting costs, amortization of capitalized software, payment processing fees,
external sample costs and charitable donations associated with SurveyMonkey
Audience, our market research panel solution. Personnel costs include salaries,
bonuses, stock-based compensation, other employee benefits and travel-related
expenses for employees whose primary responsibilities relate to supporting our
infrastructure and delivering user support. Other related costs include
amortization of acquired developed technology intangible assets and allocated
overhead. We plan to continue investing in additional resources to enhance the
capability and reliability of our infrastructure to support user growth and
increased use of our products. We expect that cost of revenue will increase in
absolute dollars in future periods and vary from period to period as a
percentage of revenue in the near term. We expect that cost of revenue will
decrease as a percentage of revenue in the long term.

Research and Development. Research and development expenses primarily include
personnel costs, costs for third-party consultants, depreciation of equipment
used in research and development activities and allocated overhead. Personnel
costs for our research and development organization include salaries, bonuses,
stock-based compensation, other employee benefits and travel-related expenses.
Our research and development efforts focus on maintaining and enhancing existing
products and adding new products. Except for costs associated with the
application development phase of internal-use software, research and development
costs are expensed as incurred. We expect that research and development expenses
will increase in absolute dollars in future periods and vary from period to
period as a percentage of revenue in the near term. We expect that research and
development expenses will remain relatively constant as a percentage of revenue
in the long term.

Sales and Marketing. Sales and marketing expenses primarily include personnel
costs, costs related to brand campaigns, paid marketing, amortization of
acquired trade name and customer relationship intangible assets and allocated
overhead. Personnel costs for our sales and marketing organization include
salaries, bonuses, sales commissions, stock-based compensation, other employee
benefits and travel-related expenses. Sales commissions earned by our sales
personnel, including any related payroll taxes, that are considered to be
incremental and recoverable costs of obtaining a customer contract are deferred
and amortized over an estimated period of benefit of generally four years. We
expect that sales and marketing expenses will increase in absolute dollars in
future periods and increase as a percentage of revenue in the near term. We
expect that sales and marketing expenses will vary from period to period in the
long term.

General and Administrative. General and administrative expenses primarily
include personnel costs for legal, finance, human resources and other
administrative functions, as well as certain executives. Personnel costs for our
general and administrative staff include salaries, bonuses, stock-based
compensation, other employee benefits and travel-related expenses. In addition,
general and administrative expenses include outside legal, accounting and other
professional fees, non-income-based taxes and allocated overhead. We expect that
general and administrative expenses will increase in absolute dollars in future
periods and vary from period to period as a percentage of revenue

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in short term. We expect general and administrative expenses as a percentage of revenue to decline over the long term.

Restructuring. Restructuring expenses primarily include personnel costs, other
contract termination costs, and impairment of certain assets. Personnel costs
include severance payments, stock-based compensation and other benefits. Other
contract termination expenses related to restructuring include amortization of
intangibles without future economic benefit, infrastructure write-offs and lease
modifications associated with vacated facilities.

interest expense

Interest expense consists of interest on our credit facilities. For additional
information regarding our credit facilities, see Note 12 of the Notes to
Condensed Consolidated Financial Statements included elsewhere in this Quarterly
Report on Form 10-Q.

Other non-operating (income) expenses, net

Other non-operating (income) expenses, net, mainly include interest income, net foreign exchange gains and losses and other gains and losses.

Income tax (benefit) provision

Provision for (benefit from) income taxes consists of U.S. federal and state
income taxes and income taxes in certain foreign jurisdictions in which we
conduct business. We maintain a valuation allowance against deferred tax assets
in the United States and certain foreign jurisdictions that we have determined
are not realizable on a more likely than not basis. For additional information
regarding our income taxes, see Note 13 of the Notes to Condensed Consolidated
Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations The following table sets forth our results of operations for the periods indicated and the percentages of our revenue for those periods. The percentages listed in the table below may not add up due to rounding.

                                      Three Months Ended September 30,                              Nine Months Ended September 30,
(in thousands)              2022         % of Revenue       2021      % of Revenue        2022        % of Revenue       2021      % of Revenue
Revenue                  $   121,375               100 %  $ 114,754             100 %  $   358,524              100 %  $ 326,444             100 %
Cost of
revenue(1)(2)(3)              21,256                18 %     22,161              19 %       66,650               19 %     64,621              20 %
Gross profit                 100,119                82 %     92,593              81 %      291,874               81 %    261,823              80 %
Operating expenses:
Research and
development(1)(3)             35,074                29 %     33,671              29 %      107,420               30 %    100,879              31 %
Sales and
marketing (1)(2)(3)           54,976                45 %     54,118              47 %      175,910               49 %    162,179              50 %
General and
administrative(1)(3)          25,929                21 %     24,466              21 %       83,383               23 %     71,958              22 %
Restructuring(1)(2)              422                 -            -               - %        1,982                1 %          -               -
Total operating
expenses                     116,401                96 %    112,255              98 %      368,695              103 %    335,016             103 %
Loss from operations         (16,282 )             (13 )%   (19,662 )           (17 )%     (76,821 )            (21 )%   (73,193 )           (22 )%
Interest expense               3,092                 3 %      2,337               2 %        7,696                2 %      6,940               2 %
Other non-operating
expense, net                     685                 1 %        543               - %          614                - %        739               - %
Loss before income
taxes                        (20,059 )             (17 )%   (22,542 )           (20 )%     (85,131 )            (24 )%   (80,872 )           (25 )%
Provision for income
taxes                            271                 - %        361               - %        1,127                - %        915               - %
Net loss                 $   (20,330 )             (17 )% $ (22,903 )           (20 )% $   (86,258 )            (24 )% $ (81,787 )           (25 )%



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

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                                   Three Months Ended September 30,                              Nine Months Ended September 30,
(in thousands)            2022         % of Revenue       2021      % of Revenue        2022         % of Revenue       2021     % of Revenue
Cost of revenue       $      1,580                 1 %  $   1,639               1 % $      4,613                 1 %  $  4,701               1 %
Research and
development                  8,770                 7 %     10,081               9 %       26,117                 7 %    29,891               9 %
Sales and marketing          5,874                 5 %      5,672               5 %       18,297                 5 %    17,864               5 %
General and
administrative               8,087                 7 %      7,202               6 %       24,367                 7 %    21,310               7 %
Restructuring                    -                 - %          -               - %        2,761                 1 %         -               - %
Stock-based
compensation, net
of amounts
capitalized           $     24,311                20 %  $  24,594              21 % $     76,155                21 %  $ 73,766              23 %



(2) Includes the amortization of the following acquired intangible assets:

                                   Three Months Ended September 30,                                 Nine Months Ended September 30,
(in thousands)         2022       % of Revenue         2021          % of Revenue        2022        % of Revenue         2021        % of Revenue
Cost of revenue      $     328                - %  $       1,465                 1 % $      2,234                1 %  $      4,432                1 %
Sales and
marketing                  459                - %          1,035                 1 %        2,546                1 %         3,285                1 %
Restructuring              135                - %              -                 - %          315                - %             -                - %
Amortization of
acquisition
intangible assets    $     922                1 %  $       2,500                 2 % $      5,095                1 %  $      7,717                2 %



(3) Includes transaction expenses associated with the terminated merger with
Zendesk. See Note 1 of the Notes to Condensed Consolidated Financial Statements
included elsewhere in this Quarterly Report on Form 10-Q for additional
information.

End of three months comparison September 30, 2022 and 2021

revenue and cost of revenue

                            Three Months Ended September 30,
(dollars in thousands)         2022                 2021           $ Change     % Change
Revenue                  $         121,375    $         114,754   $    6,621            6 %
Cost of revenue                     21,256               22,161         (905 )         (4 )%
Gross profit             $         100,119    $          92,593   $    7,526            8 %
Gross margin                            82 %                 81 %



Revenue increased for the three months ended September 30, 2022 compared to the
three months ended September 30, 2021. Our number of paying users increased 2%
from approximately 877,100 as of September 30, 2021 to approximately 897,500 as
of September 30, 2022 and ARPU increased 2% from $524 for the three months ended
September 30, 2021 to $533 for the three months ended September 30, 2022.

Revenue growth was driven by an increase of $9.1 million, or 24%, in our
sales-assisted channel, as a result of the ongoing refinement of our pricing and
packaging that has driven an increase in customer upgrades and expansion, which
was slightly offset by a decrease of $2.5 million, or (3)%, in our self-serve
channel. Revenue from our sales-assisted channel accounted for 39% and 33% of
revenue for the three months ended September 30, 2022 and 2021, respectively.

Cost of revenue decreased for the three months ended September 30, 2022 compared
to the three months ended September 30, 2021, primarily due to a $2.2 million
decrease in the amortization of capitalized software and intangible assets
related to our prior acquisitions, offset by a $0.7 million increase in web
hosting costs and payment processing fees, a $0.4 million increase in personnel
costs, and a $0.2 million increase in external sample costs and charitable
donations associated with SurveyMonkey Audience, our market research panel
solution.

Our gross margin increased for the three months ended September 30, 2022 compared to the three months ending September 30, 2021mainly due to the increase in income.

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Research and development
                                       Three Months Ended September 30,
(dollars in thousands)                    2022                  2021            $ Change        % Change
Research and development            $          35,074     $          33,671   $      1,403                 4 %



Research and development expenses increased for the three months ended September
30, 2022 compared to the three months ended September 30, 2021, primarily due to
a $0.4 million increase in personnel related costs. In addition, there were
increases in professional services, IT costs and capitalized software costs of
about $0.8 million.

Sales and marketing
                            Three Months Ended September 30,
(dollars in thousands)         2022                  2021          $ Change    % Change
Sales and marketing      $          54,976     $          54,118   $     858           2 %



Sales and marketing expenses increased for the three months ended September 30,
2022 compared to the three months ended September 30, 2021, primarily due to a
$1.4 million increase in personnel related costs, which were partially offset by
a decrease in facility costs.

General and administrative
                                       Three Months Ended September 30,
(dollars in thousands)                    2022                  2021            $ Change        % Change
General and administrative          $          25,929     $          24,466   $      1,463                 6 %


Increase in general and administrative expenses for the three months ended
September 30, 2022 compared to the three months ending September 30, 2021,Mainly due to $1.7 million An increase in personnel-related expenses was partially offset by a decrease in facility expenses.

Restructuring
                            Three Months Ended September 30,
(dollars in thousands)           2022                  2021       $ Change    % Change
Restructuring            $                422       $         -   $     422         100 %



Restructuring expenses recorded for the three months ended September 30, 2022
were primarily due to the restructuring plan implemented in March 2022. For
additional information regarding our restructuring activities, see Note 15 of
the Notes to Condensed Consolidated Financial Statements included elsewhere in
this Quarterly Report on Form 10-Q.

Interest expense
                            Three Months Ended September 30,
(dollars in thousands)         2022                  2021          $ Change     % Change
Interest expense         $           3,092     $           2,337   $     755           32 %



Interest expense increased for the three months ended September 30, 2022
compared to the three months ended September 30, 2021, primarily due to a higher
average interest rate offset by a decrease in average debt balances as a result
of our repayment of principal under the Term Loan. For additional information
regarding our credit facilities, see Note 12 of the Notes to Condensed
Consolidated Financial Statements included elsewhere in this Quarterly Report on
Form 10-Q.

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Other non-operating expenses, net

                                       Three Months Ended September 30,
(dollars in thousands)                    2022                  2021           $ Change         % Change
Other non-operating expense, net    $            685      $            543   $         142               26 %




Other non-operating expense, net for the three months ended September 30, 2022
increased compared to the three months ended September 30, 2021, primarily due
to fluctuations in foreign currency exchange rates, offset by an increase in
interest income due to a higher average interest rate.

Provision for income taxes

                                       Three Months Ended September 30,
(dollars in thousands)                   2022                    2021            $ Change       % Change
Provision for income taxes          $           271         $           361
   $        (90 )           (25 )%
Effective tax rate                               (1 )%                   (2 )%




The provision for income taxes decreased for the three months ended September
30, 2022 compared to the three months ended September 30, 2021, primarily due to
an estimated increase in foreign research credits.

Comparison at the end of nine months September 30, 2022 and 2021

revenue and cost of revenue

                           Nine Months Ended September 30,
(dollars in thousands)         2022                2021         $ Change     % Change
Revenue                  $        358,524    $        326,444   $  32,080           10 %
Cost of revenue                    66,650              64,621       2,029            3 %
Gross profit             $        291,874    $        261,823   $  30,051           11 %
Gross margin                           81 %                80 %



Revenue increased for the nine months ended September 30, 2022 compared to the
nine months ended September 30, 2021. Our number of paying users increased 2%
from approximately 877,100 as of September 30, 2021 to approximately 897,500 as
of September 30, 2022 and ARPU increased 5% from $514 for the nine months ended
September 30, 2021 to $539 for the nine months ended September 30, 2022.

Revenue growth was driven by an increase of $2.8 million, or 1%, in our
self-serve channel, as well as an increase of $29.3 million, or 29%, in our
sales-assisted channel, a result of the ongoing refinement of our pricing and
packaging that has driven an increase in customer upgrades and expansion.
Revenue from our sales-assisted channel accounted for 37% and 31% of revenue for
the nine months ended September 30, 2022 and 2021, respectively.

Cost of revenue increased for the nine months ended September 30, 2022 compared
to the nine months ended September 30, 2021, primarily due to a $2.6 million
increase in personnel costs, a $1.9 million increase in web hosting costs and
payment processing fees, and a $1.2 million increase in external sample costs
and charitable donations associated with SurveyMonkey Audience, our market
research panel solution, which were offset by a $3.6 million decrease in the
amortization of capitalized software and intangible assets related to our prior
acquisitions. The increase in personnel costs was primarily due to $2.1 million
increase in employee-related expenses due to headcount growth and $0.5 million
of employee retention bonuses related to the Merger.

Our gross profit margin increased in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021 Mainly due to the increase in income.

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Research and development
                             Nine Months Ended September 30,
(dollars in thousands)           2022                2021          $ Change    % Change
Research and development   $        107,420    $        100,879   $    6,541           6 %



Research and development expenses increased for the nine months ended September
30, 2022 compared to the nine months ended September 30, 2021, primarily due to
a $4.9 million increase in personnel related costs, including a $1.9 million
increase in employee-related expenses due to headcount growth and $3.0 million
of employee retention bonuses related to the Merger. In addition, there were
increases in professional services and IT costs.

Sales and marketing
                           Nine Months Ended September 30,
(dollars in thousands)         2022                2021         $ Change    % Change
Sales and marketing      $        175,910    $        162,179   $  13,731           8 %



Sales and marketing expenses increased for the nine months ended September 30,
2022 compared to the nine months ended September 30, 2021, primarily due to a
$12.4 million increase in personnel related costs and an increase of $3.9
million in costs related to brand campaigns and paid marketing, which were
partially offset by a decrease in professional service cost related to the
company rebranding in the prior year and a decrease in facility costs. The
increase in personnel costs was primarily due to a $9.4 million increase in
employee-related expenses due to headcount growth and $3.0 million of employee
retention bonuses related to the Merger.

General and administrative
                                         Nine Months Ended September 30,
(dollars in thousands)                     2022                  2021            $ Change        % Change
General and administrative           $          83,383     $          71,958   $     11,425               16 %



General and administrative expenses increased for the nine months ended
September 30, 2022 compared to the nine months ended September 30, 2021,
primarily due to a $10.0 million increase in personnel related costs and a $2.9
million increase in office expense due to the reopening of our offices, which
were partially offset by a $1.3 million decrease in depreciation expense due to
the impairment of leasehold costs in the San Mateo, CA headquarters. The
increase in personnel costs was primarily due to a $6.9 million increase in
employee-related expenses due to headcount growth and $3.1 million of employee
retention bonuses related to the Merger.

Restructuring
                           Nine Months Ended September 30,
(dollars in thousands)            2022                 2021     $ Change    % Change
Restructuring            $                 1,982      $    -   $    1,982         100 %



Restructuring expenses recorded for the nine months ended September 30, 2022
were primarily due the restructuring plan implemented in March 2022. For
additional information regarding our restructuring activities, see Note 15 of
the Notes to Condensed Consolidated Financial Statements included elsewhere in
this Quarterly Report on Form 10-Q.

Interest expense
                            Nine Months Ended September 30,
(dollars in thousands)         2022                 2021         $ Change     % Change
Interest expense         $          7,696     $          6,940   $     756           11 %




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Interest expense increased for the nine months ended September 30, 2022 compared
to the nine months ended September 30, 2021, primarily due to a higher average
interest rate offset by a decrease in average debt balances as a result of our
repayment of principal under the Term Loan. For additional information regarding
our credit facilities, see Note 12 of the Notes to Condensed Consolidated
Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Other non-operating expenses, net

                                       Nine Months Ended September 30,
(dollars in thousands)                    2022                  2021           $ Change       % Change
Other non-operating expense, net    $            614      $            739   $       (125 )           (17 )%




Other non-operating expense, net for the nine months ended September 30, 2022
decreased compared to the nine months ended September 30, 2021, primarily due to
fluctuations in foreign currency exchange rates and an increase in interest
income due to a higher average interest rate.


Income tax provision

                                       Nine Months Ended September 30,
(dollars in thousands)                    2022                   2021           $ Change        % Change
Provision for income taxes          $           1,127        $         915    $        212               23 %
Effective tax rate                                 (1 )%                (1 )%




The provision for income taxes increased for the nine months ended September 30,
2022 compared to the nine months ended September 30, 2021, primarily due to a
change in the state blended tax rate on amortization of intangible assets.

Liquidity and Capital Resources

as September 30, 2022 and December 31, 2021our primary source of liquidity is cash and cash equivalents, totaling $193.1 million and $305.5 millionThey are bank deposits, cash receivables from customers and cash available under the line of credit, respectively.

Since our inception, we have financed our operations primarily through payments
received from our customers, borrowings under credit facilities and lines of
credit, and our initial public offering in 2018.

On February 26, 2022, our board of directors authorized a stock repurchase
program to repurchase up to $200.0 million of our common stock in the open
market or in privately negotiated transactions (through 10b5-1 trading plans or
otherwise). The stock repurchase program does not obligate us to acquire any
particular amount of common stock and may be suspended at any time at our
discretion, and the repurchase program does not have an expiration date. The
actual timing, number and value of shares repurchased will be determined by our
management at its discretion and will depend on a number of factors, including
the market price of our stock, general business and market conditions, and other
investment opportunities. During the three months ended September 30, 2022, we
repurchased approximately 1.6 million shares of common stock for approximately
$15.0 million. During the nine months ended September 30, 2022, we repurchased
approximately 6.6 million shares of common stock for approximately $83.5
million. As of September 30, 2022, our remaining share repurchase authorization
was approximately $116.5 million.

superior March 2, 2022we paid off $25 million The principal of the term loan subject to the prepayment terms of the 2018 Credit Facility.

We believe our existing cash and cash equivalents, our credit facilities and
cash provided by sales of our products will be sufficient to meet our working
capital and capital expenditure needs for at least the next 12 months. Our
future capital requirements will depend on many factors, including the timing
and amount of cash received from customers, the timing and extent of spending to
support research and development efforts, the expansion of sales


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and marketing activities, the introduction of new and enhanced product offerings
and the continuing market adoption of our products. We may in the future enter
into arrangements to acquire or invest in complementary businesses, services and
technologies, including intellectual property rights. We may be required to seek
additional equity or debt financing. In the event that additional financing is
required from outside sources, we may not be able to raise it on terms
acceptable to us or at all. If we are unable to raise additional capital or
generate cash flows necessary to expand our operations and invest in new
technologies, this could reduce our ability to compete successfully and harm our
results of operations. Additionally, we believe that our financial resources
will allow us to manage the potential impacts of COVID-19 on our business
operations for the foreseeable future, which could include reductions in revenue
and delays in payments from customers and partners. We will continue to assess
our liquidity needs as the impact of the COVID-19 pandemic on the economy and
our operations continues to evolve. Ongoing worldwide business and economic
disruptions could materially affect our future access to our sources of
liquidity, particularly our cash flows from operations, financial condition,
capitalization, and capital investments. In the event of a sustained market
deterioration, we may need additional liquidity, which would require us to
evaluate available alternatives and take appropriate actions.

A significant majority of our customers pay in advance for annual subscriptions,
which is a substantial source of cash. Deferred revenue consists of the unearned
portion of billed fees for our subscriptions, which we recognized as revenue in
accordance with our revenue recognition policy. As of September 30, 2022 and
December 31, 2021, we had deferred revenue of $213.5 million and $201.8 million,
respectively, a substantial majority of which we expect to record as revenue in
the next 12 months, provided all other revenue recognition criteria have been
met.

Cash Flows

The table below summarizes our cash flows for the periods shown:

                                                         Nine Months Ended September 30,
(in thousands)                                               2022           

2021

Net cash provided by operating activities             $              651    $        60,308
Net cash used in investing activities                             (7,128 )           (6,752 )
Net cash provided by (used in) financing activities             (104,559 )  

23,557

Effects of exchange rate changes on cash                          (1,493 )             (293 )
Net increase (decrease) in cash, cash equivalents
and restricted cash                                   $         (112,529 )  $        76,820



cash flow from operating activities

Our largest source of operating cash is cash collections from our customers for
subscriptions to our products. Our primary uses of cash in operating activities
are for employee-related expenditures, marketing expenses and third-party
hosting costs. Historically, we have generated positive cash flows from
operating activities. Net cash provided by operating activities is impacted by
our net loss adjusted for certain non-cash items, including depreciation and
amortization expenses, stock-based compensation, non-cash lease expense, bad
debt expense, deferred income taxes and other non-cash adjustments, as well as
the effect of changes in operating assets and liabilities.

During the nine months ended September 30, 2022, cash provided by operating
activities was $0.7 million, primarily due to our net loss of $86.3 million,
adjusted for non-cash charges of $108.4 million and net cash outflows of $21.4
million provided by changes in our operating assets and liabilities. Non-cash
charges primarily consisted of depreciation and amortization, stock-based
compensation, non-cash lease expense, gains on lease modifications, impairment
of property and equipment, bad debt expense, deferred income taxes and net
unrealized foreign currency (gains) losses. The primary drivers of the changes
in operating assets and liabilities related to cash provided by a $11.7 million
increase in deferred revenue, offset by a $12.3 million increase in prepaid
expenses and other assets, a $1.9 million increase in accounts receivable, a
$4.1 million decrease in accounts payable and accrued liabilities, a $4.7
million decrease in accrued compensation, and cash used for operating lease
liabilities of $10.1 million.

During the nine months ended September 30, 2021, cash provided by operating
activities was $60.3 million, primarily due to our net loss of $81.8 million,
adjusted for non-cash charges of $118.2 million and net cash inflows of $23.9
million provided by changes in our operating assets and liabilities. Non-cash
charges primarily consisted of depreciation and amortization, stock-based
compensation, non-cash lease expense, bad debt expense, deferred


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income taxes and net unrealized foreign currency (gains) losses. The primary
drivers of the changes in operating assets and liabilities related to cash
provided by a $27.0 million increase in deferred revenue, a $13.6 million
increase in accounts payable and accrued liabilities, and a $7.1 million
increase in accrued compensation, partially offset by cash used for operating
lease liabilities of $11.2 million, prepaid expenses and other assets of $9.9
million, and a $2.7 million increase in accounts receivable.

cash flow from investing activities

Our primary investing activities have consisted of capital expenditures to
purchase equipment necessary to support our network and other operations and
capitalization of internal-use software necessary to deliver significant new
features and functionality in our survey platform which provides value to our
customers. As our business grows, we expect our capital expenditures to continue
to increase.

Net cash used in investing activities during the nine months ended September 30,
2022 of $7.1 million was primarily attributable to cash used for the development
of internal-use software of $6.7 million that is capitalized and purchases of
property and equipment of $0.4 million.

Net cash used in investing activities during the nine months ended September 30,
2021 of $6.8 million was primarily attributable to cash used for the development
of internal-use software of $6.4 million that is capitalized and purchases of
property and equipment of $0.4 million.

cash flow from financing activities

Net cash used in financing activities during the nine months ended September 30,
2022 of $104.6 million was primarily attributable to payments for share
repurchases of $83.5 million and principal payments on our credit facilities of
$26.7 million, partially offset by proceeds from the exercise of stock options
of $2.8 million and shares purchased under our employee stock purchase plan of
$2.8 million.

Net cash provided by financing activities during the nine months ended September
30, 2021 of $23.5 million was primarily attributable to proceeds from the
exercise of stock options of $21.3 million and shares purchased under our
employee stock purchase plan of $3.9 million, partially offset by the principal
payments on our credit facilities of $1.7 million.

contractual obligations

Our principal commitments consist of obligations under our credit facilities and
leases for office space. As of September 30, 2022, the future non-cancelable
minimum payments under these commitments were as follows:

                                                       Payments Due by Period
                                    Remainder of
(in thousands)            Total         2022         2023       2024       2025        2026      Thereafter
Credit facilities(1)    $ 186,200   $        550   $  2,200   $  2,200   $ 181,250   $      -   $          -
Interest payments on
credit facilities(1)       38,654          3,269     12,873     12,755       9,757          -              -
Operating leases(2)        61,344          2,813     11,074      9,579       9,233      9,505         19,140
Purchase
commitments(3)             24,367          3,870     15,844      4,546          61         46              -
Total contractual
obligations             $ 310,565   $     10,502   $ 41,991   $ 29,080   $ 200,301   $  9,551   $     19,140



(1)
Represents the principal balances and related interest payments to be paid in
connection with our 2018 Credit Facility. Interest payments on our 2018 Credit
Facility are based upon the applicable interest rates as of September 30, 2022
and are subject to change in future periods. For additional information
regarding our credit facilities, see Note 12 of the Notes to Condensed
Consolidated Financial Statements included elsewhere in this Quarterly Report on
Form 10-Q.

(2)

Primarily consists of future non-cancelable minimum rental payments under
operating leases for our corporate headquarters and our other facilities. The
amounts above exclude expected sublease payments to be received of approximately
$2.6 million. For additional information regarding our operating lease
obligations, see Note 10 of the Notes to Condensed Consolidated Financial
Statements included elsewhere in this Quarterly Report on Form 10-Q.


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(3)

It mainly includes open non-cancellable purchase orders for data center hosting services and procurement of goods and services in the ordinary course of business.

Off-balance sheet arrangements

As of September 30, 2022, we did not have any relationships with unconsolidated
organizations or financial partnerships, such as structured finance or special
purpose entities, which would have been established for the purpose of
facilitating off-balance sheet arrangements or other contractually narrow or
limited purposes.

Critical Accounting Policies and Estimates

We prepare our condensed consolidated financial statements in accordance with
GAAP. In the preparation of these condensed consolidated financial statements,
we are required to make judgements, estimates and assumptions that affect the
reported amounts of assets, liabilities, revenue, costs and expenses, and
related disclosures. To the extent that there are material differences between
these judgements, estimates and actual results, our financial condition or
results of operations would be affected. We base our judgements and estimates on
past experience and other assumptions that we believe are reasonable under the
circumstances, and we evaluate these estimates on an ongoing basis. We refer to
accounting judgements and estimates of this type as critical accounting policies
and estimates, which we discuss below. There have been no material changes to
our critical accounting policies and estimates for the three and nine months
ended September 30, 2022, as compared to those disclosed in our Annual Report on
Form 10-K for the year ended December 31, 2021.

Recent Accounting Announcements

See Note 2 of the Notes to Condensed Consolidated Financial Statements included
elsewhere in this Quarterly Report on Form 10-Q for discussion of recently
adopted accounting pronouncements and recently issued accounting pronouncements
not yet adopted.





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