falseQ20001321655--12-31P3Y10 yearsDeferred revenue as of June 30, 2021 and December 31, 2020 includes $53.2 million and $68.2 million, respectively, from Palantir Technologies Japan, K.K. See Note 6. Equity Method Investments, for more information.Excludes stock-based compensation expense.No other country represents 10% or more of total revenue for the three months ended June 30, 2021 or 2020.No other country represents 10% or more of total revenue for the six months ended June 30, 2021 or 2020.Commercial contract contains termination for convenience clauses in the event the proposed business combination and/or the Company’s proposed investment is not completed.The Company’s investment closed during July 2021.Reflected as commitment in Footnote 8. 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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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:
001-39540
 
 
Palantir Technologies Inc.
(Exact Name of Registrant as Specified in its Charter)
 
 
 
Delaware
 
68-0551851
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
   
1555 Blake Street, Suite 250
Denver, Colorado
 
80202
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (720)
358-3679
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading
Symbol(s)
 
Name of each exchange
on which registered
Class A Common Stock, par value $0.001 per share
 
PLTR
 
New York Stock Exchange
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  ☒    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  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large accelerated filer
 
  
Accelerated filer
 
       
Non-accelerated filer
 
  
Smaller 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 August 5, 2021, there were 1,866,000,060 shares of the registrant’s Class A common stock outstanding, 86,117,515 shares of the registrant’s Class B common stock outstanding, and 1,005,000 shares of the registrant’s Class F common stock outstanding.
 
 
 

Table of Contents
TABLE OF CONTENTS
 
 
 
 
  
Page  
 
 
PART I. FINANCIAL INFORMATION
  
 
     
Item 1.        
 
  
3
     
 
 
  
4
     
 
 
  
5
     
 
 
  
6
     
 
 
  
7
     
 
 
  
9
     
 
 
  
10
     
Item 2.
 
  
25
     
Item 3.
 
  
43
     
Item 4.
 
  
43
 
 
  
 
     
Item 1.
 
  
44
     
Item 1A.
 
  
44
     
Item 2.
 
  
92
     
Item 3.
 
  
92
     
Item 4.
 
  
92
     
Item 5.
 
  
92
     
Item 6.
 
  
93
 
2

Table of Contents
ITEM 1.
FINANCIAL STATEMENTS (UNAUDITED)
 
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Table of Contents
Palantir Technologies Inc.
Condensed Consolidated Balance Sheets
(in thousands, except per share amounts)
(unaudited)
 
                               
                               
 
 
     As of June 30,     
 
  As of December 31,  
 
 
2021
 
2020
Assets
 
 
Current assets:
 
 
Cash and cash equivalents
    $ 2,341,156         $ 2,011,323     
Restricted cash
     36,750          37,285     
A
c
counts receivable
     242,998          156,932     
Prepaid expenses and other current assets
     41,648          51,889     
    
 
 
   
 
 
 
Total current assets
     2,662,552          2,257,429     
Property and equipment, net
     24,824          29,541     
 
 
 
Restricted cash, noncurrent
     61,914          79,538     
 
 
 
Operating lease
right-of-use
assets
     209,243          217,075     
 
 
 
Other assets
     117,135          106,921     
 
 
 
 
 
 
 
 
 
 
 
 
Total assets
    $     3,075,668         $     2,690,504     
 
 
 
Liabilities and Stockholders’ Equity
                
 
 
 
Current liabilities:
                
Accounts payable
    $ 30,914         $ 16,358     
Accrued liabilities
     166,252          158,546     
Deferred revenue
(1)
     194,511          189,520     
Customer deposits
     257,747          210,320     
Operating lease liabilities
     33,162          29,079     
    
 
 
   
 
 
 
 
 
 
 
 
 
 
 
 
Total current liabilities
     682,586          603,823     
Deferred revenue, noncurrent
(1)
     40,518          50,525     
 
 
 
Customer deposits, noncurrent
     62,732          81,513     
 
 
 
Debt, noncurrent, net
     —          197,977     
 
 
 
Operating lease liabilities, noncurrent
     216,630          229,800     
 
 
 
Other noncurrent liabilities
     4,239          4,316     
 
  
 
 
   
 
 
 
 
 
 
Total liabilities
     1,006,705          1,167,954     
 
  
 
 
   
 
 
 
 
 
 
Commitments and Contingencies (Note 8)
                
 
 
 
Stockholders’ equity:
                
Preferred stock, par value $0.001: 2,000,000 shares authorized and 0 issued and outstanding as of June 30, 2021 and December 31, 2020
                    
Common stock, $0.001 par value: 20,000,000 Class A shares authorized as of June 30, 2021 and December 31, 2020;
1,855,143 shares issued and outstanding as of June 30, 2021, and 1,542,058 shares issued and outstanding as of
December 31, 2020; 2,700,000 Class B shares authorized as of June 30, 2021 and December 31, 2020; 80,430 shares issued
and outstanding as of June 30, and 249,077 shares issued and outstanding as of December 31, 2020; and 1,005 Class F
shares authorized, issued, and outstanding as of June 30, 2021 and December 31, 2020
     1,937          1,792     
 
Additional
paid-in
capital
     7,294,369          6,488,857     
 
Accumulated other comprehensive income (loss)
     65          (2,745)     
 
Accumulated deficit
     (5,227,408)         (4,965,354)    
    
 
 
   
 
 
 
 
 
 
Total stockholders’ equity
     2,068,963          1,522,550     
    
 
 
   
 
 
 
 
 
 
Total liabilities and stockholders’ equity
    $ 3,075,668         $ 2,690,504     
    
 
 
   
 
 
 
(1)
Deferred revenue as of June 30, 2021 and December 31, 2020 includes $53.2 million and $68.2 million, respectively, from Palantir Technologies Japan, K.K. See
Note 6.
Equity Method Investments,
for more information.
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
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Table of Contents
Palantir Technologies Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
(unaudited)
 
 
  
Three Months Ended June 30,
 
Six Months Ended June 30,
 
  
2021
 
2020
 
2021
 
2020
 
Revenue
  
$
375,642
 
  
$
251,889  
  
$
716,876
 
  
$
481,216
 
 
 
Cost of revenue
  
 
90,926
 
  
 
68,410
 
  
 
165,037
 
  
 
132,704
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross profit
  
 
284,716
 
  
 
183,479
 
  
 
551,839
 
  
 
348,512
 
 
Operating expenses:
  
 
 
 
  
 
 
 
  
 
 
 
  
 
 
 
Sales and marketing
  
 
162,379
 
  
 
102,518
 
  
 
298,476
 
  
 
201,171
 
Research and development
  
 
110,524
 
  
 
86,815
 
  
 
208,995
 
  
 
152,615
 
 
General and administrative
  
 
157,961
 
  
 
93,291
 
  
 
304,530
 
  
 
164,056
 
Total operating expenses
  
 
430,864
 
  
 
282,624
 
  
 
812,001
 
  
 
517,842
 
 
 
Loss from operations
  
 
(146,148
  
 
(99,145
  
 
(260,162
)
 
  
 
(169,330
Interest income
  
 
372
 
  
 
551
 
  
 
748
 
  
 
3,818
 
Interest expense
  
 
(590
  
 
(5,646
  
 
(2,430
)
 
  
 
(10,240
Change in fair value of warrants
  
 
 
  
 
(3,683
  
 
 
  
 
10,012
 
Other income (expense), net
  
 
2,125
 
  
 
(1,589
)
 
  
 
(2,769
)
 
  
 
4,511
 
 
 
Loss before provision (benefit) for income taxes
  
 
(144,241
  
 
(109,512
)
 
  
 
(264,613
)
 
  
 
(161,229
 
 
Provision (benefit) for income taxes
  
 
(5,661
)  
  
 
943
 
  
 
(2,559
)
  
  
 
3,500
 
 
 
Net loss
  
$
    (138,580
)  
  
$
    (110,455
)
 
  
$
   (262,054
)
  
  
$
    (164,729
 
 
Net loss per share attributable to common stockholders, basic
  
$
(0.07
  
$
(0.17
)
 
  
$
(0.14
)
 
  
$
(0.27
 
 
Net loss per share attributable to common stockholders, diluted
  
$
(0.07
  
$
(0.17
)
 
  
$
(0.14
)
 
  
$
(0.28
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding used in computing net loss per share attributable to
common stockholders, basic
  
 
1,894,606
 
  
 
640,450
 
  
 
1,858,085
 
  
 
616,150
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted-average shares of common stock outstanding used in computing net loss per share attributable to
common stockholders, diluted
  
 
1,894,606
 
  
 
640,669
 
  
 
1,858,085
 
  
 
618,635
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
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Table of Contents
Palantir Technologies Inc.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands)
(unaudited)
 
 
  
Three Months Ended June 30,
 
Six Months Ended June 30,
 
  
2021
 
2020
 
2021
 
2020
  
Net loss
  
 
$
 
 
 
(138,580 )
  
 
$
 
 
 
(110,455
  
 
$
 
 
 
(262,054
)
 
  
 
$
 
 
 
(164,729
  Other comprehensive income:
        
Foreign currency translation adjustments
  
 
(800 )
  
 
577
 
 
  
 
2,810
 
 
  
 
1,603
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Comprehensive loss
 
$
 
 
 
(139,380
)
  
$
 
 
 
(109,878
$
 
 
 
(259,244
)
  
 
$
 
 
 
(163,126
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
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Table of Contents
Palantir Technologies Inc.
Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)
 
 
  
Common Stock
 
  
Additional
Paid-in

Capital
 
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 
Accumulated
Deficit
 
 
Total
Stockholders’
Equity
 
  
Shares
 
  
Amount
 
 
  Balance as of March 31, 2021
     1,860,607      $ 1,860      $ 6,892,046      $ 865      $ (5,088,828    $ 1,805,943  
 Issuance of common stock from the exercise of stock options
     59,171        59        167,769                      167,828  
 Issuance of common stock upon vesting of restricted stock units (“RSUs”)
     12,872        13        (13                     
 Issuance of common stock upon net exercise of common stock warrants and other
     3,928        5        1,707                      1,712  
 Stock-based compensation
                   232,860                      232,860  
 Other comprehensive loss
                              (800             (800
 
Net loss
                                 (138,580      (138,580
  Balance as of June 30, 2021
     1,936,578      $
 
 
 
 
    1,937
     $     7,294,369      $ 65      $     (5,227,408    $     2,068,963  
    
  
 
 
 
  
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
Common Stock
 
  
Additional
Paid-in

Capital
 
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 
Accumulated
Deficit
 
 
Total
Stockholders’
Equity
 
  
Shares
 
  
Amount
 
 
  Balance as of December 31, 2020
     1,792,140      $ 1,792      $ 6,488,857      $     (2,745    $ (4,965,354    $ 1,522,550  
 Issuance of common stock from the exercise of stock options
     114,471        114        376,574                      376,688  
 Issuance of common stock upon vesting of RSUs
     23,832        24        (24                     
 Issuance of common stock upon vesting of growth units
     1,471        1        (1                     
 Issuance of common stock upon net exercise of common stock warrants and other
     4,664        6        1,706                      1,712  
 Stock-based compensation
                   427,257                      427,257  
Other comprehensive income
                          2,810               2,810  
 
Net loss
                                 (262,054      (262,054
 Balance as of June 30, 2021
     1,936,578      $     1,937      $     7,294,369      $ 65      $     (5,227,408    $     2,068,963  
 
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Palantir Technologies Inc.
Condensed Consolidated Statements of Redeemable Convertible and Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands)
(unaudited)
 
 
 
Redeemable Convertible
Preferred Stock
 
 
  Convertible Preferred  
Stock
 
 
Common Stock
 
 
Additional
Paid-in

Capital
 
 
Treasury Stock
 
 
Accumulated
Other
Comprehensive
Income
 
 
Accumulated
Deficit
 
 
Total
Stockholders’
Deficit
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
  Balance as of March 31, 2020
    4,017     $   33,569       742,812     $   2,093,562       588,033     $   595     $   1,918,372       7,201     $   (42,672   $   323     $   (3,853,237   $   (1,976,619
  Issuance of Series K convertible preferred stock
                121       947                                                 —     
  Issuance of common stock from the exercise of stock options
                            30,381       31       22,083                               22,114  
  Issuance of common stock, net of issuance costs
                            118,221       118       537,731                               537,849  
  Retirement of treasury stock
                                  (7     (42,665     (7,201     42,672                    
Stock-based compensation
                                        127,833                               127,833  
  Other comprehensive income
                                                          577             577  
  Net loss
                                                                (110,455     (110,455
 
  Balance as of June 30, 2020
    4,017     $ 33,569       742,933     $ 2,094,509       736,635     $ 737     $ 2,563,354           $     $ 900     $ (3,963,692   $ (1,398,701
    
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable Convertible
Preferred Stock
 
 
  Convertible Preferred  
Stock
 
 
Common Stock
 
 
Additional
Paid-in

Capital
 
 
Treasury Stock
 
 
Accumulated
Other
Comprehensive
Income (Loss)
 
 
Accumulated
Deficit
 
 
Total
Stockholders’
Deficit
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
Shares
 
 
Amount
 
 
  Balance as of December 31, 2019
    4,017     $   33,569       742,840     $   2,093,662       581,497     $   588     $   1,857,331       6,393     $   (38,895   $   (703   $   (3,798,963   $   (1,980,642
  Conversion of Series
H-1
convertible preferred stock to common stock
                (28     (100     28             100                               100  
  Issuance of Series K convertible preferred stock
                121       947                                                  
  Repurchase of common stock, held in treasury
                            (808                 808       (3,777                 (3,777
  Issuance of common stock from the exercise of stock options
                            37,697       38       28,786                               28,824  
  Issuance of common stock, net of issuance costs
                            118,221       118       537,731                               537,849  
  Retirement of treasury stock
                                  (7     (42,665     (7,201     42,672                    
  Stock-based compensation
                                        182,071                               182,071  
  Other comprehensive income
                                                          1,603             1,603  
  Net loss
                                                                (164,729     (164,729
 
  Balance as of June 30, 2020
    4,017     $ 33,569       742,933     $ 2,094,509       736,635     $ 737     $ 2,563,354           $     $ 900     $ (3,963,692   $ (1,398,701
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
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Table of Contents
Palantir Technologies Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
(unaudited)
 
    
  Six Months Ended June 30,  
    
2021
  
2020
 
  Operating activities
                 
 
  Net loss
   $ (262,054 )      $ (164,729
 
  Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                 
 
Depreciation and amortization
     7,999        7,793  
 
Stock-based compensation
     426,473        181,955  
 
Change in fair value of warrants
            (10,012
 
Non-cash
operating lease expense
     14,435        19,831  
 
Other operating activities
     560        3,633  
 
Changes in operating assets and liabilities:
                 
 
Accounts receivable
     (83,883 )        (56,583
 
Prepaid expenses and other current assets
     12,770        (3,220
 
Other assets
     (9,522 )        (9,937
 
Accounts payable
     14,589        (35,012
 
Accrued liabilities
     9,070        (30,366
 
Deferred revenue, current and noncurrent
     (3,679 )      19,645  
 
Customer deposits, current and noncurrent
     28,668        (124,434
 
Operating lease liabilities, current and noncurrent
     (15,795 )        (25,815
 
Other noncurrent liabilities
            921  
 
  Net cash provided by (used in) operating activities
     139,631        (226,330
 
  Investing activities
                 
 
  Purchases of property and equipment
     (1,405 )      (5,945
 
  Proceeds from the sale of assets held for sale
            250  
 
  Net cash used in investing activities
     (1,405 )      (5,695
 
  Financing activities
                 
 
  Proceeds from the issuance of common stock, net of issuance costs
            542,922  
 
  Proceeds from issuance of debt, net of issuance costs
            149,683  
 
  Principal payments on borrowings
     (200,000 )      (250,000
 
  Proceeds from the exercise of common stock options
     376,688        28,824  
 
  Repurchase of common stock
            (3,777
 
  Other financing activities
     (1,744 )      (377
 
  Net cash provided by financing activities
     174,944        467,275  
 
  Effect of foreign exchange on cash, cash equivalents, and restricted cash
     (1,496 )      (197
 
  Net increase in cash, cash equivalents, and restricted cash
     311,674        235,053  
 
  Cash, cash equivalents, and restricted cash - beginning of period
     2,128,146        1,401,962  
 
  Cash, cash equivalents, and restricted cash - end of period
   $     2,439,820      $     1,637,015  
 
  Supplemental disclosures of cash flow information:
                 
 
  Cash paid for income taxes
   $ 3,425      $ 8,144  
 
  Cash paid for interest
     2,381        5,644  
 
  Supplemental disclosures of
non-cash
investing and financing information:
                 
 
  Common stock issuance costs included in accounts payable and accrued liabilities
  
$
    
$
5,072  
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
9

Table of Contents
Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
1. Organization
Palantir Technologies Inc.
 (including its subsidiaries, “Palantir,” or “the Company”) was incorporated in Delaware on May 6, 2003. The Company builds and deploys software platforms, Palantir Gotham and Palantir Foundry, that serve as the central operating systems for its customers.
2. Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying
 unaudited condensed consolidated financial statements have been prepared in accordance with U.S. genera
l
ly accepted accounting principles (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of Palantir Technologies Inc. and its consolidated subsidiaries. All significant intercompany balances and transactions have been eliminat
e
d in consolidation. Investments in entities where the Company holds at least a 20% ownership interest and has the ability to exercise significant influence over the investee, but d
o
es not control, are accounted for using the equity method of accounting. For such investments, the share of the investee’s results of operations is included as a component of other income (expense), net in the condensed consolidated statements of operations and the investment balance is included in other assets and classified as noncurrent in the condensed consolidated balance sheets. The Company’s fiscal year ends on December 31.
The unaudited condensed consolidated balance sheet as of December 31, 2020 included herein was derived from the audited consolidated financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. In management’s opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets and statements of operations, comprehensive loss, stockholders’ equity (deficit), and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.
The Company ceased to be an emerging growth company as of December 31, 2020, which accelerated its adoption of Accounting Standards Update (“ASU”)
2016-02,
Leases (Topic 842). As a result, certain components of cash flows used in operating activities within the Company’s condensed consolidated statements of cash flows for the six months ended June 30, 2020 have been presented to conform to the new standard. The impact to the presentation of the other statements was not material.
These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes included in its Annual Report on Form
10-K
for the year ended December 31, 2020, which was filed with the SEC on February 26, 2021.
Use of Estimates
The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.
Significant estimates and assumptions made in the accompanying condensed consolidated financial statements include, but are not limited to, identification of performance obligations in customer contracts, the valuation of deferred tax assets and uncertain tax positions, collectability of accounts receivable, useful lives of tangible assets, and the incremental borrowing rate for operating leases. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that management believes to be reasonable under the circumstances. Actual results could differ from those estimates and such differences could affect the Company’s financial position and results of operations.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in
Note 2. Significant Accounting Policies
in the notes to consolidated financial statements in its Annual Report on Form
10-K
for the year ended December 31, 2020, which was filed with the SEC on February 26, 2021. There have been no significant changes to these policies during the six months
ended June 30, 2021.
 
 
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Table of Contents
Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
Cash, Cash Equivalents, and Restricted Cash
The Company considers all highly liquid investments purchased with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents primarily consist of amounts invested in money market funds.
Restricted cash primarily consists of cash and certificates of deposit that are held as collateral against letters of credit and guarantees that the Company is required to maintain for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements.
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the amounts shown in the condensed consolidated statements of cash flows (in thousands):
 
    
As of June 30,
    
2021
  
2020
 
  Cash and cash equivalents
   $ 2,341,156       $ 1,497,591   
 
  Restricted cash
     36,750         37,069   
 
  Restricted cash, noncurrent
     61,914         102,355   
    
 
 
 
  
 
 
 
 
  Total cash, cash equivalents, and restricted cash
   $             2,439,820       $             1,637,015   
    
 
 
 
  
 
 
 
Accounts Receivable and Allowance for Credit Losses
Accounts receivable are recorded at the invoiced amount, net of an allowance for credit losses, if any. The Company generally grants
non-collateralized
credit terms to its customers. Allowance for credit losses is based on the Company’s best estimate of probable losses inherent in its accounts receivable portfolio and is determined based on expectations of the customer’s ability to pay by considering factors such as customer type (commercial or government), historical experience, financial position of the customer, age of the accounts receivable, current economic conditions, including the ongoing
COVID-19
pandemic, and reasonable and supportable forward-looking factors about its portfolio and future economic conditions. Accounts receivable are
written-off
and charged against an allowance for credit losses when the Company has exhausted collection efforts without success. Based upon the Company’s assessment as of June 30, 2021 and December 31, 2020, it did not record an allowance for credit losses as probable losses are not
expected to be material.
Concentrations of Credit Risk and Other Concentrations
Financial
 instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. Cash equivalents primarily consist of money market funds with original maturities of three months or less, which are invested primarily with U.S. financial institutions. Cash deposits with financial institutions, including restricted cash, generally exceed federally insured limits. Management believes minimal credit risk exists with respect to these financial institutions and the Company has not experienced any losses on such amounts.
The Company is exposed to concentrations of credit risk with respect to accounts receivable presented on the condensed consolidated balance sheets. The Company’s accounts receivable balances as of June 30, 2021 and December 31, 2020 were $243.0 million and $156.9 million, respectively. Customer I represented 24% of total accounts receivable as of June 30, 2021. Customer G represented 13% of total accounts receivable as of December 31, 2020. No other customer represented more than 10% of total accounts receivable as of June 30, 2021 and December 31, 2020. The Company seeks to mitigate its credit risk with respect to accounts receivable by contracting with large commercial customers and government agencies and regularly monitoring the aging of accounts receivable balances. As of June 30, 2021 and December 31, 2020, the Company had not experienced any significant losses on its accounts receivable.
For the three and six months ended June 30, 2021, no customer represented more than 10% of total revenue. For the three and six months ended June 30, 2020, Customer F, which is in the government operating segment, represented 11% of total revenue and Customer A, which is in the commercial operating segment, represented 10% of total revenue, respectively. No other customer represented more than 10% of total revenue for the three and six months ended June 30, 2020.
 
11

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Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
The Company relies on the technology, infrastructure, and software applications, including
software-as-a-service
offerings, of third parties in order to host or operate certain key products and
 functions of its
business.
Recently Adopted Accounting Pronouncements
I
n December 2019, the FASB issued ASU
2019-12,
 
Simplifying the Accounting for Income Taxes (Topic 740)
as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU
2019-12
removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU
2019-12
also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The Company adopted ASU
2019-12
as of January 1, 2021 using transition methods allowed under each aspect of the guidance. The adoption of the standard did not have a material impact on the Company’s condensed consolidated financial statements.
3. Contract Liabilities and Remaining Performance Obligations
Contract Liabilities
The Company’s contract liabilities consist of deferred revenue and customer deposits. As of June 30, 2021 and December 31, 2020, the Company’s contract liability balances were $555.5 million and $531.9 million, respectively. Revenue of $285.4 million and $301.3 million was recognized during the six months ended June 30, 2021 and 2020, respectively, that was included in the contract liability balances as of
December 31, 2020 and 2019, respectively.
Remaining Performance Obligations
The Company’s arrangements 
with its customers oft
e
n have terms that span over multiple years. However, the Company generally allows its customers to terminate contracts for convenience prior to the end of the stated term with less than twelve months’ notice. Revenue allocated to remaining performance obligations represents noncancelable contracted revenue that has not yet been recognized, which includes deferred revenue and, in certain instances, amounts that will be invoiced. The Company has elected the practical expedient allowing the Company to not disclose remaining performance obligations for contracts with original terms of twelve months or less. Cancelable contracted revenue, which includes customer deposits, is not considered a remaining performance obligation.
The Company’s remaining performance obligations were $671.9 million as of June 30, 2021, of which the Company expects to recognize approximately 49% as revenue over the next twelve months.
Disaggregation of Revenue
See
Note 13. Segment and Geographic Information
, for disaggregated revenue by customer segment and geographic region.
4. Fair Value Measurements
Financial instruments consist of money market funds and certificates of deposit included in cash equivalents and restricted cash, accounts receivable, other assets accounted for at fair value, accounts payable, and accrued liabilities. money market funds and certificates of deposit are stated at fair value on a recurring basis. Accounts receivable, accounts payable, and accrued liabilities are stated at their carrying value, which approximates fair value due to the short time to the expected receipt or payment date.
The following tables present the Company’s assets that are measured at fair value on a recurring and nonrecurring basis and indicates the fair value hierarchy of the valuation (in thousands):
 
 
  
As of June 30, 2021
 
  
Total
 
Level 1
 
 
Level 2
 
 
Level 3
  Assets:
  
     
 
     
 
     
 
     
 
Money market funds
   $ 963,873  
 
  $ 963,873       $        $   
 
 
Certificates of deposit
     65,477   
 
             65,477            
 
Total
   $     1,029,350   
 
  $     963,873       $         65,477        $                   
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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Table of Contents
Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
    
As of December 31, 2020
    
Total
 
Level 1
   
Level 2
   
Level 3
 
  Assets:
                                
 
Money market funds
   $ 1,075,783       $ 1,075,783       $        $     
 
Certificates of deposit
     74,097                  74,097             
    
 
 
 
 
 
 
   
 
 
   
 
 
 
 
  Total
   $     1,149,880       $     1,075,783       $         74,097       $                     
    
 
 
 
 
 
 
   
 
 
   
 
 
 
Certificates of Deposit
The Company’s Level 2 instruments consist of restricted cash invested in certificates of deposit. The fair value of such instruments is estimated based on valuations obtained from third-party pricing services that utilize industry standard valuation models, including both income-based and market-based approaches, for which all significant inputs are observable either directly or indirectly. These inputs include interest rate curves, foreign exchange rates, and credit ratings.
Gross unrealized gains or losses for cash equivalents as of June 30, 2021 and December 31, 2020 were not material.
5. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consisted of the following (in thousands):
 
   
As of June 30,
2021
   
As of December 31,
2020
 
  Leasehold improvements
    $ 81,057          $ 85,196     
 
  Computer equipment, software, and other
    23,199          22,275     
 
  Furniture and fixtures
    10,069          9,976     
 
  Construction in progress
    442          493     
   
 
 
   
 
 
 
 
Total property and equipment, gross
                114,767                  117,940     
 
  Less: accumulated depreciation and amortization
    (89,943)         (88,399)    
   
 
 
   
 
 
 
 
Total property and equipment, net
    $ 24,824          $ 29,541     
   
 
 
   
 
 
 
Depreciation and amortization expense related to property and equipment, net was $3.1 million and $3.2 million for the three months ended June 30, 2021 and 2020, respectively, and $6.3 million and $6.8 million for the s
i
x months ended June 30, 2021 and 2020, respectively.
Accrued Liabilities
Accrued liabilities consisted of the following (in thousands):
 
   
As of June 30,
2021
   
As of December 31,
2020
  Accrued payroll and related expenses
    $ 95,574          $ 85,466     
 
  Accrued other liabilities
    70,678          73,080     
   
 
 
   
 
 
 
 
Total accrued liabilitie
s
    $             166,252          $         158,546     
   
 
 
   
 
 
 
6. Equity Method Investments
Palantir Technologies Japan, K.K.
During November 2019, the Company and SOMPO Holdings, Inc. (“SOMPO”) created a Japanese Kabushiki Kaisha (“K.K.”), Palantir Technologies Japan, K.K. (“Palantir Japan”), to distribute Palantir platforms to the Japanese market. Upon closing of the transaction with SOMPO, the Company purchased a total of 100,000 shares of Palantir Japan common stock for $25.0 million. The shares the Company received in exchange represent a 50% voting interest in Palantir Japan. The remaining 50% of the voting interest is held by SOMPO. The Company’s investment in Palantir Japan is accounted for as an equity method investment as the Company is able to exercise significant influence over, but does not control, the investee.
 
13

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Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
7. Debt
2014 Credit Facility
In October 2014, the Company entered into an unsecured revolving credit facility which has been subsequently amended (the “2014 Credit Facility”). The 2014 Credit Facility incurred interest at the London Interbank Offered Rate (“LIBOR”) plus a margin of 2.75% per annum, subject to certain adjustments, and incurs a commitment fee of 0.375% assessed on the daily average undrawn p
o
rtion of revolving commitments. Interest and commitment fees are payable at the end of an interest period or at each three-month interval if the interest period is longer than three months. The 2014 Credit Facility, as amended, matures on June 4, 2023
During April 2021, the Company entered into an amendment to the 2014 Credit Facility, which provided for an increase of $200.0 million to the revolving commitments of the existing lenders under the 2014 Credit Facility, for total revolving commitments of $400.0 million, and which also provided for an incremental loan facility for additional loans in an agg
r
egate principal amount of up to $100.0 million with one or more existing or new lenders upon mutual agreement between the Company and such lenders. Upon entering into the amendment, the Company repaid its outstanding term loans of $200.0 million. As of June 30, 2021, the Company had no amounts outstanding under the 2014 Credit Facility and a $400.0 million undrawn revolving credit facility.
The 2014 Credit Facility contains customary representations and warranties, and certain financial and nonfinancial covenants, including but not limited to maintaining minimum liquidity of $50.0 million, and certain limitations on liens and indebtedness. The Company was in compliance with all covenants associated with the 2014 Credit Facility as of June 30, 2021.
8. Commitments and Contingencies
Purchase Commitments
In December 2019, the Company entered into, and subsequently amended during December 2020, a minimum annual commitment to purchase cloud hosting services of at least $1.49 billion over six contract years, with an optional carryover period through June 30, 2029, in exchange for various discounts on such services. If the spend does not meet the minimum annual commitment each year or at the end of the term, the Company is obligated to make a return payment. If the difference is greater than $30.0 million for each of the first three contract years or $50.0 million for each of the contract years thereafter (“relief amounts”), the Company has the option to pay the respective relief amount for that year for services to be utilized in the future and the excess amount of the difference above the relief amount would be added to the minimum annual commitment of the following year through the end of the contract. The Company satisfied its $126.0 
million commitment for the contract year ended June 30, 2021. The commitment amount for the contract year ended
June 30, 2022 is
 $167.0 million.
In June 2020, the Company entered into an additional commitment to purchase at least $45.0 million of cloud hosting services over a period of five years commencing on June 1, 2020 and ending on May 31, 2025. If the spend commitment is not met at the end of the term, the Company is obligated to pay the full amount of the outstanding balance (“shortfall payment”). The shortfall payment may be applied as a prepayment against consumption during an additional twelve-month coverage period expiring on May 31, 2026, at which time any unused amount would be forfeited. As of June 30, 2021, the Company had satisfied $6.0 
million of its commitment.
 
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Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
Investment Commitments
The Company approved and entered into certain agreements (“Investment Agreements”) to purchase, or commit to purchase, shares of various entities, including special purpose acquisition companies and/or other privately-held or publicly-traded entities (each, an “Investee,” and such purchases, or commitments to purchase, the “Investments”). As of June 30, 2021, the Company had outstanding commitments, subject to the applicable terms and conditions, to purchase a total of
 
25.0 
million shares for an aggregate purchase price of 
$250.0 
million. The closings of certain of such Investments are contingent upon the completion of a proposed business combination between the applicable Investee and other applicable parties.
As of June 30, 2021, none of such Investments had closed.
Additionally, in connection with signing the Investment Agreements, each Investee or an associated entity and the Company entered into a commercial contract for access to the Company’s products and services. The maximum potential revenue from these commercial contracts is $428 million, which is inclusive of $73 million from contractual options, and the terms of such contracts, including these contractual options, range from
three
to
ten
years
. The majority of these commercial contracts are subject to various termination provisions, including for convenience in the event a proposed business combination is not completed.
The Company assessed the concurrent agreements under the
non-monetary
guidance within Accounting Standards Codification (“ASC”)
606
- Revenue from Contracts with Customers
and the total revenue recognized from
such
 commercial contracts during the three and six months ended June 30, 2021 was
$3.0 million.
The following table presents details related to the Company’s investment commitments as of June 30, 2021 (in thousands):
 
     
                        
     
                        
     
                        
 
Entity
  
Investment
    Agreement Date    
 
  
Committed
    Share Amount    
 
    Committed
Investment Amount
Lilium
  
 
March 30, 2021
 
  
 
4,100
    
 
$
41,000
    
   
 
 
 
 
Sarcos Robotics
 
(1)
  
 
April 5, 2021
 
  
 
2,100
 
 
 
21,000
 
   
 
 
 
 
Roivant Sciences
  
 
May 1, 2021
 
  
 
3,000
 
 
 
30,000
 
   
 
 
 
 
Celularity
(1)(2)
  
 
May 5, 2021
 
  
 
2,000
 
 
 
20,000
 
   
 
 
 
 
Mobility company
  
 
May 11, 2021
 
  
 
2,000
 
 
 
20,000
 
   
 
 
 
 
Wejo
  
 
May 28, 2021
 
  
 
3,500
 
 
 
35,000
 
   
 
 
 
 
Babylon Health
(1)
  
 
June 3, 2021
 
  
 
3,500
 
 
 
35,000
 
   
 
 
 
 
Boxed
(1)
  
 
June 13, 2021
 
  
 
2,000
 
 
 
20,000
 
   
 
 
 
 
Pear Therapeutics
  
 
June 21, 2021
 
  
 
1,000
 
 
 
10,000
 
   
 
 
 
 
Autonomous vehicle company
(1)
  
 
June 22, 2021
 
  
 
1,800
 
 
 
18,000
 
       
 
  
     
  
 
 
 
 
 
 
 
Total
  
     
  
 
25,000
 
 
$
250,000
 
 
  
     
  
 
 
 
 
 
 
 
(1)
 
Commercial contract contains termination for convenience clauses in the event the proposed business combination and/or the Company’s proposed investment is not completed.
(2)
 
The Company’s investment closed during July 2021.
Litigation and Legal Proceedings
From time to time, third parties may assert paten
t
 infringement claims against the Company. In addition, from time to time, the Company may be subject to other legal proceedings and claims in the ordinary course of business, including claims of alleged infringement of trademarks, copyrights, and other intellectual property rights; employment claims; securities claims; investor claims; corporate claims; class action claims; and general contract, tort, or other claims. The Company may from time to time also be subject to various legal or government claims, disputes, or investigations. Such matters may include, but not be limited to, claims, disputes, allegations, or investigations related to warranty; refund; breach of contract; breach, leak, or misuse of personal data or confidential information; employment; government procurement; intellectual property; government regulation or compliance (including but not limited to anti-corruption requirements, export or other trade controls, data privacy or data protection, cybersecurity requirements, or antitrust/competition law requirements); securities; investor; corporate; or other matters. The Company is unable to predict whether or when any such matters may arise, the outcome of these matters, or the ultimate legal and financial liability, and cannot reasonably estimate the possible loss or range of loss at this time and accordingly has not accrued a related liability
.
On December 14, 2017, members of KT4 Partners LLC (Managing Member Marc Abramowitz) and Sandra Martin Clark, as trustee for the Marc Abramowitz Irrevocable Trust Number 7 (together, “KT4 Plaintiffs”), filed an action in the Delaware Superior Court against the Company and Disruptive Technology Advisers LLC. The complaint alleges tortious interference with prospective economic advantage and civil conspiracy in connection with a potential sale of stock by the KT4 Plaintiffs to a third party. The KT4 Plaintiffs seek compensatory and punitive damages, interest,
fees, and costs
.
 
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Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
The Company believes this lawsuit is without merit and is vigorously defending itself against it. Given the uncertainty of litigation, it may be reasonably possible that the Company will incur a loss with regards to the matter; however, it cannot currently estimate a range of possible losses. Accordingly, the Company is unable, at this time, to estimate the overall effects that may result from the lawsuit on its financial condition, results of operations, or cash flows.
As of June 30, 2021, the Company was not aware of any currently pending legal matters or claims, individually or in the aggregate, that were expected to have a material adverse impact on its condensed consolidated financial statements.
Letters of Credit and Guarantees
The Company had irrevocable standby letters of credit and guarantees, including bank guarantees, outstanding in the amounts of $98.7 million and $116.8 million as of June 30, 2021 and December 31, 2020, respectively, all of which were fully collateralized. The Company is required to maintain these letters of credit and guarantees primarily for operating lease agreements, certain customer contracts, and other guarantees and financing arrangements. As of June 30, 2021, these letters of credit and guarantees had expiration dates through August 2028.
Warranties and Indemnification
The Company generally provides a warranty for its software products and services and a service level agreement (“SLA”) for the Company’s performance of software operations via its operations and maintenance (“O&M”) services to its customers. The Company’s products are generally warranted to perform substantially as described in the associated product documentation during the subscription term or for a period of up to 90 days where the software is hosted by the customer; and the Company includes O&M services as part of its subscription and license agreements to support this warranty and maintain the operability of the software. The Company’s services are generally warranted to be performed in a professional manner and by an adequate staff with knowledge about the products. In the event there is a failure of such warranties, the Company generally is obligated to correct the product or service to conform to the warranty provision, as set forth in the applicable SLA, or, if the Company is unable to do so, the customer is entitled to seek a refund of the purchase price of the product and service (generally prorated over the contract term). Due to the absence of historical warranty claims, the Company’s expectations of future claims related to products under warranty continue to be insignificant. The Company has not recorded warranty expense or related accruals as of June 30, 2021 and December 31, 2020.
The Company generally agrees to indemnify its customers against legal claims that the Company’s software products infringe certain third-party intellectual property rights and accounts for its indemnification obligations. In the event of such a claim, the Company is generally obligated to defend its customer against the claim and to either settle the claim at the Company’s expense or pay damages that the customer is legally required to pay to the third-party claimant. In addition, in the event of an infringement, the Company generally agrees to secure the right for the customer to continue using the infringing product; to modify or replace the infringing product; or, if those options are not commercially practicable, to refund the cost of the software, as prorated over the period. To date, the Company has not been required to make any payment resulting from infringement claims asserted against its customers and does not believe that the Company will be liable for such claims in the foreseeable future. As such, the Company has not recorded a liability for infringement costs as of June 30, 2021 and December 31, 2020.
The Company has obligations under certain circumstances to indemnify each of the defendant directors and certain officers against judgments, fines, settlements, and expenses related to claims against such directors and certain officers and otherwise to the fullest extent permitted under the law and the Company’s bylaws and Amended and Restated Certificate of Incorporation
.
9. Stockholders’ Equity
The Company’s Class A, Class B, and Class F common stock (collectively, the “common stock”) all have the same rights, except with respect to voting and conversion rights. Class A and Class B common stock have voting rights of 1 and 10 votes per share, respectively. The Class F common stock has the voting rights generally described below and each share of Class F common stock is convertible at any time, at the option of the holder thereof, into one share of Class B common stock. All shares of Class F common stock are held in a voting trust established by Stephen Cohen, Alexander Karp, and Peter Thiel (
the
 “Founders”). The Class F common stock generally gives the Founders the ability to control up to 49.999999% of the total voting power of the Company’s capital stock, so long as the Founders and certain of their affiliates collectively meet a minimum ownership threshold, which was 100.0 million of the Company’s equity securities as of June 30, 2021.
Holders of common stock are entitled to dividends when, as and if declared by the Company’s Board of Directors, subject to the rights of the holders of all classes of stock outstanding having priority rights to dividends. No dividends have been declared as of June 30, 2021.
In connection with the Company’s direct listing of its Class A common stock on the New York Stock Exchange (“Direct Listing”) in September 2020, all outstanding shares of redeemable convertible preferred stock and convertible preferred stock were converted into 4,017,378 and 793,725,807 shares of Class B common stock, respectively, and 1,005,000 shares of Class B common stock held by the Founders were exchanged for an equal number of shares of
Class F common stock.
 
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Table of Contents
Palantir Technologies Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
 
The following represented the total authorized, issued, and outstanding shares for each class of common stock (in thousands):
 
    
As of June 30, 2021
   
As of December 31, 2020
    
  Authorized  
   
Issued and
  Outstanding  
   
  Authorized  
 
Issued and
  Outstanding  
 
  Common stock:
                        
 
  Class A
     20,000,000       1,855,143       20,000,000       1,542,058  
 
  Class B
     2,700,000       80,430       2,700,000       249,077  
 
  Class F
     1,005       1,005       1,005       1,005  
    
 
 
   
 
 
   
 
 
 
 
 
 
 
 
  Total
     22,701,005       1,936,578       22,701,005       1,792,140  
    
 
 
   
 
 
   
 
 
 
 
 
 
 
10. Stock-Based Compensation
Stock Options
The following table summarizes stock option activity for the six months ended June 30, 2021 (in thousands, except per share amounts):
 
   
Options
Outstanding
   
Weighted-
Average
Exercise Price
Per Share
   
Weighted-
Average
Remaining
Contractual
Life (years)
   
Aggregate
Intrinsic Value 
   
 
 
 
 
  Balance as of December 31, 2020
    535,767     $ 6.12       7.99     $ 9,340,245  
 
  Options exercised
    (114,471     3.29                  
 
  Options canceled and forfeited
    (3,622     5.17                  
   
 
 
                         
 
  Balance as of June 30, 2021
                    417,674     $ 6.90       8.49     $ 8,128,222  
   
 
 
                         
 
  Options vested and exercisable as of June 30, 2021
    213,423     $         3.92       6.41     $         4,788,520  
   
 
 
                         
As of June 30, 2021, the unrecognized expense related to options outstanding was $1.0 billion, which is expected to be recognized over a weighted-average service period of 8.07 years.
RSUs
The following table summarizes the RSU activity for the six months ended June 30, 2021 (in thousands, except per share amounts):
 
   
RSUs
Outstanding
   
Weighted Average 
Grant Date Fair 
Value per Share 
 
  Unvested and outstanding as of December 31, 2020
    184,870
 
 
  $
 
6.97
 
 
 
RSUs granted
    10,131                     27.25  
 
RSUs vested
    (