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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________________

FORM 10-Q
__________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
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: 001-38285 
BANDWIDTH INC.
(Exact name of registrant as specified in its charter)
__________________________________
 
Delaware56-2242657
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
900 Main Campus Drive
Raleigh, NC 27606
(Address of principal executive offices) (Zip Code) 
(800) 808-5150
(Registrant’s telephone number, including area code)
__________________________________

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, par value $0.001 per shareBANDNASDAQ 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 
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 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
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.     
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No 
As of April 30, 2021, 22,879,349 shares of the registrant’s Class A common stock and 2,215,170 shares of registrant’s Class B common stock were outstanding, respectively.





BANDWIDTH INC.
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Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements contained in this Quarterly Report on Form 10-Q, other than statements of historical fact, are forward-looking statements. Forward-looking statements generally can be identified by the words “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “would,” “project,” “plan,” “estimate,” or “continue,” or the negative of these words or other similar terms or expressions that concern our expectations strategy, plans or intentions. Forward looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
our ability to attract and retain customers, including large enterprises;
our approach to identifying, attracting and keeping new and existing customers, as well as our expectations regarding customer turnover;
our beliefs regarding network traffic growth and other trends related to the usage of our products and services;
our expectations regarding revenue, costs, expenses, gross margin, dollar based net retention rate, adjusted EBITDA, non-generally accepted accounting principles in the United States of America (“GAAP”) net income and capital expenditures;
our beliefs regarding the growth of our business and how that impacts our liquidity and capital resources requirements;
the sufficiency of our cash and cash equivalents to meet our liquidity needs;
our ability to attract, train, and retain qualified employees and key personnel;
our beliefs regarding the expense and productivity of and competition for our sales force;
our expectations regarding headcount;
our ability to maintain and benefit from our corporate culture;
our plans to further invest in and grow our business, including international offerings, and our ability to effectively manage our growth and associated investments;
our ability to introduce new products and services and enhance existing products and services;
our ability to successfully integrate and benefit from any strategic acquisitions, including our acquisition of Voxbone (as defined herein), or future strategic acquisitions or investments;
our ability to effectively manage our international operations and expansion;
our ability to compete successfully against current and future competitors;
the evolution of technology affecting our products, services and markets;
the impact of certain new accounting standards and guidance, as well as the time and cost of continued compliance with existing rules and standards;
our beliefs regarding the use of Non-GAAP financial measures;
our ability to comply with modified or new industry standards, laws and regulations applicable to our products, services and business, including the General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act of 2018 and other privacy regulations that may be implemented in the future, and Secure
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Telephone Identity Revisited (“STIR”) and Signature-based Handling of Asserted Information Using toKENs (“SHAKEN”) (together, “STIR/SHAKEN”) and other robocalling prevention and anti-spam standards and increased costs associated with such compliance;
our customers’ violation of our policies or other misuse of our platform;
our ability to manage fees that have been or may be instituted by network providers that increase our costs;
our ability to maintain, protect and enhance our intellectual property;
our expectations regarding litigation and other pending or potential disputes;
our ability to service the interest on our Convertible Notes (as defined herein) and repay such Convertible Notes, to the extent required;
our expectations about the impact of public health epidemics, such as COVID-19 (as defined herein), or natural disasters on the global economy and our business, results of operations and financial condition; and
risks relating to our indebtedness.
We caution you that the foregoing list may not contain all the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

BANDWIDTH INC.
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
As of December 31,As of March 31,
20202021
Assets
Current assets:
Cash and cash equivalents$72,163 $319,731 
Restricted cash9,274 9,527 
Other investments40,000 10,000 
Accounts receivable, net of allowance for doubtful accounts55,243 51,458 
Prepaid expenses and other current assets14,508 13,386 
Deferred costs2,411 2,572 
Total current assets193,599 406,674 
Property and equipment, net51,645 50,660 
Operating right-of-use asset, net19,491 18,008 
Intangible assets, net248,055 232,804 
Deferred costs, non-current3,604 3,795 
Other long-term assets1,975 2,029 
Goodwill372,239 356,379 
Total assets$890,608 $1,070,349 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$11,665 $9,360 
Accrued expenses and other current liabilities63,065 55,884 
Current portion of deferred revenue6,515 6,519 
Advanced billings5,429 4,242 
Operating lease liability, current5,515 5,594 
Total current liabilities92,189 81,599 
Other liabilities1,707 1,635 
Operating lease liability, net of current portion17,202 15,609 
Deferred revenue, net of current portion6,386 6,592 
Deferred tax liability61,005 57,328 
Convertible senior notes282,196 464,848 
Total liabilities460,685 627,611 
Stockholders’ equity:
Class A and Class B common stock24 25 
Additional paid-in capital451,463 492,778 
Accumulated deficit(49,505)(54,821)
Accumulated other comprehensive income27,941 4,756 
Total stockholders’ equity429,923 442,738 
Total liabilities and stockholders’ equity$890,608 $1,070,349 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BANDWIDTH INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(Unaudited)


Three months ended March 31,
20202021
Revenue$68,518 $113,479 
Cost of revenue36,359 61,328 
Gross profit32,159 52,151 
Operating expenses:
Research and development9,530 13,333 
Sales and marketing9,417 11,992 
General and administrative16,096 26,863 
Total operating expenses35,043 52,188 
Operating loss(2,884)(37)
Other expense, net(906)(5,611)
Loss before income taxes(3,790)(5,648)
Income tax benefit2,732 332 
Net loss$(1,058)$(5,316)
Net loss per share, basic and diluted$(0.04)$(0.21)
Weighted average number of common shares outstanding, basic and diluted23,563,569 25,015,948 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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BANDWIDTH INC.
Condensed Consolidated Statements of Comprehensive Loss
(In thousands)
(Unaudited)

Three months ended March 31,
20202021
Net loss$(1,058)$(5,316)
Other comprehensive loss
Foreign currency translation, net of income taxes(96)(23,185)
Other comprehensive loss(96)(23,185)
Total comprehensive loss$(1,154)$(28,501)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BANDWIDTH INC.
Condensed Consolidated Statements of Changes in Stockholders Equity
(In thousands, except share amounts)
(Unaudited)

Class A voting
common stock
Class B voting
common stock
Additional paid-in capitalAccumulated other comprehensive income (loss)Accumulated deficitTotal stockholders’ equity
SharesAmountSharesAmount
Balance at December 31, 201918,584,478 $19 4,927,401 $5 $275,553 $41 $(5,528)$270,090 
Issuance of debt conversion option— — — — 104,553 — — 104,553 
Debt conversion option issuance costs, net of tax— — — — (3,731)— — (3,731)
Capped call option purchase price— — — — (43,320)— — (43,320)
Exercises of vested stock options32,059 — — — 244 — — 244 
Vesting of restricted stock units103,824 — — — — — — — 
Equity awards withheld for tax liability(14,411)— — — (1,021)— — (1,021)
Conversion of Class B voting common stock to Class A voting common stock500,250 — (500,250)(1)— — — (1)
Foreign currency translation— — — — — (96)— (96)
Stock based compensation— — — — 2,499 — — 2,499 
Net loss— — — — — — (1,058)(1,058)
Balance at March 31, 202019,206,200 19 4,427,151 4 334,777 (55)(6,586)328,159 
Debt conversion option issuance costs, net of tax— — — — (11)— — (11)
Exercises of vested stock options502,182 1 — — 3,296 — — 3,297 
Vesting of restricted stock units21,871 — — — — — — — 
Equity awards withheld for tax liability(2,133)— — — (272)— — (272)
Conversion of Class B voting common stock to Class A voting common stock827,597 — (827,597)— — — — — 
Foreign currency translation— — — — — (23)— (23)
Stock based compensation— — — — 2,425 — — 2,425 
Net loss— — — — — — (20,641)(20,641)
Balance at June 30, 202020,555,717 20 3,599,554 4 340,215 (78)(27,227)312,934 
Exercises of vested stock options44,848 — — — 386 — — 386 
Vesting of restricted stock units17,948 — — — — — — — 
Equity awards withheld for tax liability(2,002)— — — (350)— — (350)
Conversion of Class B voting common stock to Class A voting common stock606,418 1 (606,418)(1)— — —  
Foreign currency translation— — — — — 139 — 139 
Stock based compensation— — — — 2,382 — — 2,382 
Net loss— — — — — — (2,352)(2,352)
Balance at September 30, 202021,222,929 21 2,993,136 3 342,633 61 (29,579)313,139 
Exercises of vested stock options13,995 — — — 149 — — 149 
Vesting of restricted stock units17,424 — — — — — — — 
Equity awards withheld for tax liability(1,749)— — — (273)— — (273)
Conversion of Class B voting common stock to Class A voting common stock497,011 — (497,011)(1)— — — (1)
Equity consideration for Voxbone acquisition663,394 1 — — 106,379 — — 106,380 
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BANDWIDTH INC.
Condensed Consolidated Statements of Changes in Stockholders Equity
(In thousands, except share amounts)
(Unaudited)
Class A voting
common stock
Class B voting
common stock
Additional paid-in capitalAccumulated other comprehensive income (loss)Accumulated deficitTotal stockholders’ equity
SharesAmountSharesAmount
Foreign currency translation— — — — — 27,880 27,880 
Stock based compensation— — — — 2,575 — — 2,575 
Net loss— — — — — — (19,926)(19,926)
Balance at December 31, 202022,413,004 22 2,496,125 2 451,463 27,941 (49,505)429,923 
Issuance of debt conversion option— — — — 66,908 — — 66,908 
Debt conversion option issuance costs, net of tax— — — — (2,049)— — (2,049)
Capped call option purchase price— — — — (25,500)— — (25,500)
Exercises of vested stock options57,817 — — — 753 — — 753 
Vesting of restricted stock units141,707 — — — — — — — 
Equity awards withheld for tax liability(19,879)— — — (3,187)— — (3,187)
Conversion of Class B voting common stock to Class A voting common stock280,955 1 (280,955)— — — — 1 
Foreign currency translation— — — — — (23,185)— (23,185)
Stock based compensation— — — — 4,390 — — 4,390 
Net loss— — — — — — (5,316)(5,316)
Balance at March 31, 202122,873,604 $23 2,215,170 $2 $492,778 $4,756 $(54,821)$442,738 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BANDWIDTH INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)


Three months ended March 31,
20202021
Cash flows from operating activities
Net loss$(1,058)$(5,316)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities
Depreciation and amortization3,298 9,043 
Right-of-use asset amortization1,158 1,347 
Amortization of debt discount and issuance costs1,753 5,186 
Stock-based compensation2,499 4,390 
Deferred taxes(2,337)(1,095)
Loss on disposal of property and equipment233 201 
Changes in operating assets and liabilities:
Accounts receivable, net of allowances(6,899)3,530 
Prepaid expenses and other assets(991)925 
Deferred costs(396)(352)
Accounts payable304 1,387 
Accrued expenses and other liabilities(4,991)(6,913)
Deferred revenue and advanced billings1,105 (953)
Operating right-of-use liability(1,285)(1,371)
Net cash (used in) provided by operating activities(7,607)10,009 
Cash flows from investing activities
Purchase of property and equipment(3,638)(6,781)
Capitalized software development costs(790)(1,103)
Proceeds from sales and maturities of other investments 30,000 
Net cash (used in) provided by investing activities(4,428)22,116 
Cash flows from financing activities
Payments on finance leases (44)
Proceeds from issuance of convertible senior notes400,000 250,000 
Payment of debt issuance costs(11,048)(7,000)
Purchase of capped call(43,320)(25,500)
Proceeds from exercises of stock options244 738 
Value of equity awards withheld for tax liabilities(960)(2,900)
Net cash provided by financing activities344,916 215,294 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(25)402 
Net increase in cash, cash equivalents, and restricted cash332,856 247,821 
Cash, cash equivalents, and restricted cash, beginning of period185,004 81,437 
Cash, cash equivalents, and restricted cash, end of period$517,860 $329,258 
Supplemental disclosure of cash flow information
Cash paid for interest$ $525 
Cash refunded for taxes, net$(229)$(394)
Supplemental disclosure of noncash investing and financing activities
Purchase of property and equipment, accrued but not paid$2,595 $1,780 
Equity awards withheld for tax liabilities, accrued but not paid$238 $531 
Payment of debt issuance costs, accrued but unpaid$875 $659 
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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BANDWIDTH INC.
Notes to Condensed Consolidated Financial Statements
(In thousands, except share and per share amounts)
(Unaudited)

1. Organization and Description of Business
Bandwidth Inc. (together with its subsidiaries, “Bandwidth” or the “Company”) was founded in July 2000 and incorporated in Delaware on March 29, 2001. The Company’s headquarters are located in Raleigh, North Carolina. The Company is an international cloud-based, software-powered communications platform-as-a-service (“CPaaS”) provider that enables enterprises to create, scale and operate voice or messaging communications services across any mobile application or connected device.
The Company has two operating and reportable segments, CPaaS and Other. CPaaS revenue is derived from usage and monthly services fees charged for usage of Voice, Messaging, 911 and Phone Numbers solutions through the Company’s proprietary CPaaS software application programming interfaces. Other revenue consists of fees charged for services provided such as: SIP trunking, data resale, and a hosted Voice-over Internet Protocol (“VoIP”). The Other segment also includes revenue from traffic generated by other carriers, SMS registration fees and other miscellaneous product lines.
On November 2, 2020, the Company acquired all of the A Ordinary Shares, B Ordinary Shares and C Ordinary Shares of Voice Topco through a Share Purchase Agreement. Voice Topco directly or indirectly held all of the issued and outstanding shares of Voxbone S.A., which (with its subsidiaries) was the operating subsidiary of Voice Topco (“Voxbone)”. The transaction was valued at €446 million. As consideration for the Share Purchase, the Company (i) paid the selling stockholders approximately $400 million (or approximately €338 million based on prevailing exchange rates at the close of business on October 9, 2020) at the Closing and (ii) issued to the selling stockholders at the Closing shares of the Company’s Class A common stock, with an aggregate value of approximately €108 million (or approximately $128 million based on prevailing exchange rates at the close of business on October 9, 2020). Due to the timing and magnitude of the transaction and multi-jurisdictional nature of the net assets acquired, initial accounting for the acquisition is not complete, and further measurement adjustments may occur in fiscal year 2021. The Company will reflect measurement period adjustments in the period in which the adjustments are determined.

2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 1, 2021.
The condensed consolidated balance sheet as of December 31, 2020, included herein, was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis.
In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2021 or any future period.
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Notes to Condensed Consolidated Financial Statements (continued)
(In thousands, except share and per share amounts)






Principles of Consolidation
The condensed consolidated financial statements include the accounts of Bandwidth Inc. and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of the Company’s condensed consolidated financial statements in conformity with GAAP requires the Company to make estimates and judgments that affect the amounts reported in these financial statements and accompanying notes. These estimates in the condensed consolidated financial statements include, but are not limited to, allowance for doubtful accounts, reserve for expected credit losses, reserve for sales credits, recoverability of long lived and intangible assets, fair value of acquired intangible assets and goodwill, discount rates used in the valuation of right-of-use assets and lease liabilities, the fair value of the liability and equity components of the Company’s Convertible Notes (as defined herein), estimated period of benefit, valuation allowances on deferred tax assets, certain accrued expenses and contingencies, economic and demographic actuarial assumptions related to pension and other postretirement benefit costs and liabilities, estimated cash flows on asset retirement obligation. Although the Company believes that the estimates it uses are reasonable, due to the inherent uncertainty involved in making these estimates, actual results reported in future periods could differ from those estimates.
Cash and Cash Equivalents
The Company classifies all highly liquid investments with original stated maturities of three months or less from the date of purchase as cash equivalents and all highly liquid investments with original stated maturities of greater than three months from the date of purchase as current marketable securities, with the exception of time deposits which are classified as other investments. Cash deposits are primarily in financial institutions in the United States. However, cash for monthly operating costs of international operations are deposited in banks outside the United States. The Company has a policy of making investments only with commercial institutions that have at least an investment grade credit rating. The Company utilizes money market funds as an investment option and only invests in AAA rated funds.

Restricted Cash
Restricted cash consists primarily of the holdback amount remaining to be paid to the selling stockholders of Voxbone, employee withholding tax liability and employee benefits contributions not yet remitted. The Company has classified this asset as a short-term asset in order to match the expected period of restriction.
Accounts Receivable and Current Expected Credit Losses
Accounts receivable are stated at realizable value, net of allowances, which includes an allowance for doubtful accounts and a reserve for expected credit losses. The allowance for doubtful accounts is based on management’s assessment of the collectability of its customer accounts. The Company regularly reviews the composition of the accounts receivable aging, historical bad debts, changes in payment patterns, customer creditworthiness, current economic trends, and reasonable and supportable forecasts about the future. Relevant risk characteristics include customer size and historical loss patterns. Management has evaluated the expected credit losses related to trade accounts receivable and determined that allowances of approximately $1,203 and $1,218 for uncollectible accounts and customer balances that are disputed were required as of December 31, 2020 and March 31, 2021, respectively. Refer to Note 4, “Financial Statement Components” to these condensed consolidated financial statements, for a rollforward of the components of the allowances as of December 31, 2020 and March 31, 2021.
The Company includes unbilled receivables in its accounts receivable balance. Generally, these receivables represent services provided to customers, which will be billed in the next billing cycle. All amounts are considered
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Notes to Condensed Consolidated Financial Statements (continued)
(In thousands, except share and per share amounts)






collectible and billable. As of December 31, 2020 and March 31, 2021, unbilled receivables were $27,692 and $28,490, respectively.
Concentration of Credit Risk
Financial instruments that are exposed to concentration of credit risk consist primarily of cash and cash equivalents, other investments and trade accounts receivable. Cash deposits may be in excess of insured limits. The Company believes that the financial institutions that hold its cash deposits are financially sound and, accordingly, minimal credit risk exists with respect to these balances.
With regard to customers, credit evaluation and account monitoring procedures are used to minimize the risk of loss. The Company believes that no additional credit risk beyond amounts provided for by the allowance for doubtful accounts are inherent in accounts receivable. As of December 31, 2020, one individual customer represented approximately 11% of the Company’s accounts receivable, net of allowance for doubtful accounts. As of March 31, 2021, one individual customer represented approximately 12% of the Company’s accounts receivable, net of allowance for doubtful accounts.
For the three months ended March 31, 2020 and 2021, no individual customer represented more than 10% of the Company’s total revenue.
Debt Issuance Costs
The Company incurs debt issuance costs associated with obtaining and entering into credit agreements, including the issuances of convertible notes. These costs customarily include non-refundable structuring fees, commitment fees, up-front fees and syndication expenses. The Company has a policy of deferring and amortizing these costs based on the effective interest method over the term of the credit agreements.
Recently Adopted Accounting Standards
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted, including adoption in an interim period. The Company adopted this standard on a prospective basis, which did not have a material impact on the Company’s financial statements.
Recent Accounting Pronouncements Not Yet Adopted
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40), which is intended to address issues identified as a result of the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity. For convertible instruments, ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and enhances information transparency by making targeted improvements to the disclosures for convertible instruments and earnings-per-share (EPS) guidance on the basis of feedback from financial statement users. ASU 2020-06 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company is evaluating the effect of adopting this new accounting guidance on its financial statements and earnings per share calculations, but does not intend to early adopt.

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Notes to Condensed Consolidated Financial Statements (continued)
(In thousands, except share and per share amounts)






3. Fair Value Measurements
The carrying amounts of cash and cash equivalents, other investments, accounts receivable, accounts payable and accrued expenses approximate fair value as of December 31, 2020 and March 31, 2021 because of the relatively short duration of these instruments.
The Company evaluated its financial assets and liabilities subject to fair value measurements on a recurring basis to determine the appropriate level in which to classify them for each reporting period.
The following table summarizes the assets measured at fair value as of December 31, 2020 and March 31, 2021:
Fair value measurements on a recurring basis
December 31, 2020
Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents:
Money market account$57,517 $ $ $57,517 
Other investments:
Time deposits40,000   40,000 
Total financial assets$97,517 $ $ $97,517 
    
Fair value measurements on a recurring basis
March 31, 2021
Level 1Level 2Level 3Total
Financial assets:
Cash and cash equivalents:
Money market account$283,504 $ $ $283,504 
Time deposits15,000   15,000 
Total included in cash and cash equivalents298,504   298,504 
Other investments:
Time deposits10,000   10,000 
Total financial assets$308,504 $ $ $308,504 
As of March 31, 2021, the fair value of the 2026 and 2028 Convertible Notes, as further described in Note 8, “Debt”, was approximately $609,698 and $245,206, respectively. The fair value was determined based on the closing price for the Convertible Notes on the last trading day of the reporting period and is considered as Level 2 in the fair value hierarchy.

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Notes to Condensed Consolidated Financial Statements (continued)
(In thousands, except share and per share amounts)






4. Financial Statement Components
Accounts receivable, net of allowances consist of the following:
As of December 31,As of March 31,
20202021
Trade accounts receivable$26,504 $22,591 
Unbilled accounts receivable27,692 28,490 
Allowance for doubtful accounts and reserve for expected credit losses
(1,203)(1,218)
Other accounts receivable2,250 1,595 
Total accounts receivable, net$55,243 $51,458 

Components of allowance for doubtful accounts and reserve for expected credit losses are as follows:
Three months ended March 31,
20202021
Allowance for doubtful accounts:
Balance, beginning of period$(769)$(1,203)
Charged to bad debt expense(189)(48)
Deductions (1)75 10 
Impact of foreign currency translation 23