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You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our interim condensed consolidated financial statements and the related notes included as Exhibit 99.1 to the Report on Form 6-K to which this discussion and analysis is included as Exhibit 99.2 and our audited financial statements and the related notes and the section “Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the year ended December 31, 2021.

Our interim condensed consolidated financial statements are presented in U.S. dollars and have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). None of the consolidated financial statements were prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The terms “dollar,” “USD” and “$” refer to U.S. dollars and the terms “Swiss franc” and “CHF” refer to the legal currency of Switzerland, unless otherwise indicated.

This discussion and analysis contain statements that constitute forward-looking statements. All statements other than statements of historical facts, including statements regarding our future results of operations and financial position, business strategy, technology, as well as plans and objectives of management for future operations are forward-looking statements. Many forward-looking statements can be identified by the use of forward-looking words such as “anticipate,” “believe,” “could,” “expect,” “should,” “plan,” “intend,” “estimate,” “will” and “potential,” among others. Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and actual results may differ materially from those expressed or implied in the forward-looking statements due to various factors, including, but not limited to, those identified in the “Risk Factors” section of our Annual Report on Form 20-F for the year ended December 31, 2021 and in our other Securities and Exchange Commission (“SEC”) filings. These forward-looking statements include, among others:

•our ability to enter into additional statement of works and other related agreements to support the Master Alliance Agreement with GE Precision Healthcare LLC (“GE Healthcare”) and our expectations with respect to the terms and the effect on us and our business of our current and any future statements of work and other related such agreements;

These forward-looking statements speak only as of the date of this discussion and analysis and are subject to a number of risks, uncertainties and assumptions described in the “Risk Factors” section of our Annual Form 20-F for the year ended December 31, 2021, this discussion and analysis and our other SEC filings. Because forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified and some of which are beyond our control, you should not rely on these forward-looking statements as predictions of future events. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise. You should read this discussion and analysis completely and with the understanding that our actual future results may be materially different from what we expect.

We are a cloud-native software company in the healthcare space dedicated to establishing the practice of data-driven medicine as the standard of care and for life sciences research. We purposefully built a software platform capable of analyzing data and generating insights from complex multimodal data sets and different diagnostic

modalities. Our platform standardizes, computes and analyzes digital health data and is used across decentralized locations to break down data silos. This enables healthcare institutions to share knowledge and experiences and to build a collective intelligence. We envision a future in which all clinical diagnostic test data is channeled through a decentralized analytics platform that will provide insights powered by large real-world data sets and AI. We believe that a decentralized platform is the most powerful and effective solution to create the largest network, leverage data and bring the benefits of data-driven medicine to customers and patients globally. In doing so, we can both support and benefit from growth across the healthcare ecosystem.

In 2014, we launched the first application of our platform to analyze next-generation sequencing (“NGS”) data for cancer diagnosis. In 2019, we launched our solution for radiomics data that enables longitudinal monitoring of cancer patients and tumor progression throughout their disease journey. Today, we believe that our SOPHiA Platform, commercialized under the name “SOPHiA DDM,” is one of the most widely used decentralized analytics platforms globally for clinical genomics. To date, our SOPHiA Platform has supported the analysis of more than one million genomic profiles and has been utilized in clinical trials and research projects discussed in more than 388 peer-reviewed publications. We commercialize our SOPHiA Platform and related solutions, products and services as Research Use Only (“RUO”) and Conformité Européenne (“CE”) in vitro device (“IVD”) products.

We began our operations in 2011 and launched our first application in 2014. Since then, our operations have focused on organizing and staffing our Company, business planning, conducting research and development of our SOPHiA Platform, selling and marketing our SOPHiA Platform and raising capital.

Our clinical customers primarily include academic and non-academic hospitals and reference and specialty laboratories. Our biopharma customers primarily include pharmaceutical and biotechnology companies and clinical research organizations (“CROs”). Our customers are able to access our SOPHiA Platforms through three primary access models: dry lab access, bundle access and integrated access. As of June 30, 2022, we operated a global direct sales team of more than 85 field-based commercial representatives.

We are continually developing strategic relationships and engaging in strategic transactions across the healthcare ecosystem with companies who also provide products and services to our customers. For example, we recently finalized an additional agreement with GE Healthcare to further integrate data between GE’s Edison platform and the SOPHiA DDM platform. As part of our business strategy, we have in the past and may in the future acquire complementary companies, platforms, products, or technologies that we believe fit within our business model and can address the needs of our current and potential customers.

In 2020, particularly in the second quarter of 2020, the COVID-19 pandemic had negatively affected our revenue, analysis volume and customer acquisition. Since then, we have experienced a sustained recovery, and our analysis volumes now exceed pre-pandemic levels. The COVID-19 pandemic has also created opportunities for us. For example, we collaborated with Paragon Genomics, Inc. to develop a NGS assay for COVID-19 that leverages our SOPHiA Platform’s analytical capabilities. In early 2021, we introduced our own COVID-19 bundled access product and pipeline, from which we derived $0.3 million and $0.6 million in revenues during the three months and six months ended June 30, 2022 and $0.6 million and $1.3 million for the three months and six months ended June 30, 2021. While our COVID-19 solution did not constitute a significant part of our revenue, and we do not expect it to do so in the future, we believe that our ability to develop and offer the solution in a timely fashion illustrates the flexibility and adaptability of our SOPHiA Platform.

We are continually evaluating the impact of the COVID-19 pandemic on our business and financial condition, which we believe will be primarily driven by the severity and duration of the pandemic, the pandemic’s impact on the U.S. and global economies; the timing, availability, effectiveness and acceptance of vaccines and treatments, particularly against emerging variants of the novel coronavirus; and the scope and effectiveness of national and local governmental responses to the pandemic. Those primary drivers are beyond our knowledge and control, and as a result, at this time, the ultimate impact of the COVID-19 pandemic on our business,

financial condition and results of operations for the remainder of 2022 and thereafter cannot be reasonably predicted. We are continuously assessing and adapting our working practices and business operations to ensure compliance with official guidance and containment measures related to the pandemic, and we are working proactively with our partners and other stakeholders to take steps to mitigate and minimize any negative impact of the COVID-19 pandemic on our research and development activities, commercial activities and other business operations.

We believe that our financial performance has primarily been driven by, and in the foreseeable future will continue to be primarily driven by, the factors discussed in the “Operating and Financial Review and Prospects—Operating Results—Factors Affecting Our Performance” section of our Annual Report on Form 20-F for the year ended December 31, 2021. While these factors present significant opportunities for our business, they also pose challenges that we must successfully address in order to sustain our growth and improve the results of our operations. Our ability to successfully address these challenges is subject to various risks and uncertainties described in our Annual Report on Form 20-F for the year ended December 31, 2021, particularly in the section titled “Risk Factors,” as well as in our other SEC filings.

We operate internationally, and a majority of our revenue, expenses, assets, liabilities and cash flows are denominated in currencies other than our presentation currency, the U.S. dollar. Our revenues are generated primarily in the U.S. dollar, the euro, and the Swiss franc, and, to a lesser extent, the British pound, the Australian dollar, the Brazilian real, the Turkish lira and the Canadian dollar depending on our customers’ geographic locations. Our expenses are incurred primarily in the U.S. dollar, the euro, and the Swiss franc and, to a lesser extent, the British pound, the Australian dollar and Brazilian real. We currently do not use any financial instruments to manage our exchange rate risks, which we have been partially mitigating by matching costs in the same foreign currency.

For the three months and six months ending June 30, 2022, a number of key currencies that we transact in, notably the euro, the Swiss franc, and the Turkish lira, weakened against the U.S. dollar. As a result of the unfavorable shift in foreign exchange rates, our financial performance was noticeably impacted.

We regularly monitor a number of key performance indicators and metrics to evaluate our business, measure our performance, identify key operating trends and formulate financial projections and strategic plans. We believe that the following metrics are representative of our current business, but the metrics we use to measure our performance could change as our business continues to evolve. Our key performance indicators primarily focus on metrics related to our SOPHiA Platform, as platform revenue comprises the majority of our revenues.

Our clinical customers can access our platform using three different models: dry lab access, bundle access and integrated access. In the dry lab access model, our customers use the testing instruments and solutions of their choice and our SOPHiA Platform and algorithms for variant detection and identification. In the bundle access model, we bundle DNA enrichment solutions with our analytics solution to provide customers the ability to perform end-to-end workflows. In the integrated access model, our customers have their samples processed and sequenced through select SOPHiA Platform collaborators within our clinical network and access their data through our SOPHiA Platform. As used in this section, the term “customer” refers to any customer who accesses our SOPHiA Platform through the dry lab and bundle access models. We exclude from this definition any customers accessing our SOPHiA Platform using the integrated business model because they tend to use our platform in an ad hoc manner compared to our dry lab and bundle access customers who typically do so in a recurring fashion, generate an immaterial portion of our revenue and analysis volume and constitute a small part of our customer base. We also exclude from this definition customers who only use Alamut through our SOPHiA Platform.

Platform analysis volume represents a key business metric that reflects our overall business performance, as we generate revenue on a pay-per-analysis basis. Platform analysis volume measures the number of analyses that generated revenue to us and were conducted by our customers, excluding volumes generated by customers who access our SOPHiA Platform exclusively through the integrated access model. Analysis volume is a direct function of the number of active customers and usage rates across our customer base during a specified time period. While our platform analysis volume is a major driver of our revenue growth, other factors, including product pricing, access model used and customer size mix, also affect our revenue. Because of that, our revenue may increase in periods in which our analysis volume decreases and vice versa.

Analysis volume increased to 65,889 and 131,293 for the three and six months ended June 30, 2022 from 62,837 and 115,915 for the three and six months ended June 30, 2021, representing year-over-year growth of 5% and 13% for the three and six months ended June 30, 2022. This increase is primarily attributable to increased usage from our existing customers as well as new customers onboarded onto our platform. While platform analysis volume is a primary driver of our overall revenue, there are other important factors that also contribute to our revenue performance, including access model mix, Alamut license sales, biopharma service revenue, and workflow equipment and services revenue. These factors contributed to net year-over-year growth in our overall revenue in the second quarter of 2022.

We track the number of our recurring platform customers, defined as the number of customers who generated revenue during the specified time period, as a key measure of our ability to generate recurring revenue from our install base. We further define our recurring platform customers as “existing” or “new” recurring platform customers based on the year in which they first accessed our SOPHiA Platform and generated revenue for us.

The analysis excludes customers without any usage of our SOPHiA Platform over the past twelve months and customers who have executed agreements with us that have not generated any revenue to us, including customers that are in the process of being onboarded onto our SOPHiA Platform. The analysis also excludes our customers who access our SOPHiA Platform exclusively through the integrated access model.

Total recurring platform customers increased to 388 as of June 30, 2022 from 367 as of June 30, 2021. The increase is primarily attributable to continued customer acquisition momentum, which slightly decelerated year-over-year. This trend reflects the significant amount of built up demand during 2021, particularly in the first half, as hospitals and laboratories saw the return of their workforce and were able to reallocate resources to non-COVID-19-related operations as pandemic restrictions loosened.

Average revenue per platform customer is a key measure of our ability to create additional value from our existing customer relationships and the viability of our “land and expand” commercial strategy. We calculate a rolling 12-month average revenue per platform customer based on the total revenue generated by our customers divided by the total number of customers. Average revenue per platform customer is a function of analysis volume, product pricing, access model used and customer size mix.

Average revenue per platform customer increased to $91,559 as of June 30, 2022, from $84,310 as of June 30, 2021. The increase is primarily attributable to the “expand” aspect of our “land and expand” strategy through which we have been able to increase usage rates and adoption of our applications as our relationships with our customers deepen over time.

We track net dollar retention for our dry lab and bundle access customers as a measure of our ability to grow the revenue generated from our recurring platform customers through our “land and expand” strategy net of revenue churn, which we define as the annualized revenues we estimate to have lost from customers who access our platform through our dry lab access and bundle access models and have not generated revenue over the past twelve months in that period based on their average quarterly revenue contributions from point of onboarding as a percentage of total recurring platform revenue. To calculate net dollar retention, we first specify a measurement period consisting of the trailing two-year period from our fiscal period end. Next, we define a measurement cohort consisting of platform customers who use our dry lab access and bundle access models from whom we have generated revenues during the first month of the measurement period, which we believe is generally representative of our overall dry lab access and bundle access customer base. We then calculate our net dollar retention as the ratio between the U.S. dollar amount of revenue generated from this cohort in the second year of the measurement period and the U.S. dollar amount of revenue generated in the first year. Any customer in the cohort that did not use our platform in the second year are included in the calculation as having contributed zero revenue in the second year.

Net dollar retention decreased to 121% as of June 30, 2022 from 129% as of June 30, 2021. The year-over-year decrease is attributable to unfavorable foreign exchange movements for revenue generated in key transactional currencies other than the U.S. dollar, particularly the euro, Swiss franc, and Turkish lira, as a result of the challenging global macroeconomic and geopolitical environment; a slightly elevated annualized revenue churn rate of 7%, which is still within the range of what we would consider standard; and a decrease in COVID-19-related revenues as our customers reduced their COVID-19-related operations and business.


	Three months ended June 30,				Change
(Amounts in USD thousands, except %)	2022		2021		$		%
Revenue	$	11,667	$	10,178	$	1,489	15	%
Cost of revenue	(4,047)		(3,948)		(99)		3	%
Gross profit	7,620		6,230		1,390		22	%
Research and development costs	(8,990)		(6,385)		(2,605)		41	%
Selling and marketing costs	(8,235)		(7,573)		(662)		9	%
General and administrative costs	(14,697)		(8,224)		(6,473)		79	%
Other operating income, net	223		28		195		696	%
Operating loss	(24,079)		(15,924)		(8,155)		51	%
Finance (expense) income, net	(608)		(2,426)		1,818		(75)	%
Loss before income taxes	(24,687)		(18,350)		(6,337)		35	%
Income tax benefit (expense)	6		(40)		46		(115)	%
Loss for the period	$	(24,681)	$	(18,390)	(6,291)		34	%

Revenue was $11.7 million for the three months ended June 30, 2022 as compared to $10.2 million for the three months ended June 30, 2021. This increase was primarily attributable to an increase in SOPHiA Platform revenue, partially offset by $1.5 million in foreign exchange impact in the second quarter of 2022 related to unfavorable movements in exchange rates between key transactional currencies, particularly the euro, the Swiss franc, and the Turkish lira, and our reporting currency, the U.S. dollar. SOPHiA Platform revenue was $11.2 million for the three months ended June 30, 2022 as compared to $9.8 million for the three months ended June 30, 2021. This increase was primarily attributable to new customers onboarded onto our platform and improved usage rates across our existing customers, partially offset by unfavorable movements in exchange rates between key transactional currencies, particularly the euro, the Swiss franc, and the Turkish lira, and the U.S. dollar. Workflow equipment and services revenue was $0.4 million for the three months ended June 30, 2022 as compared to $0.4 million for the three months ended June 30, 2021. Workflow equipment and services

Cost of revenue was $4.0 million for the three months ended June 30, 2022 as compared to $3.9 million for the three months ended June 30, 2021. This increase was primarily attributable to an increase in computational and storage-related costs of $0.2 million in line with the increase in usage and revenue. The increase in gross profit margin to 65% for the three months ended June 30, 2022 from 61% for the three months ended June 30, 2021 was driven by a favorable shift in product mix and economies of scale.


	Three months ended June 30,				Change
(Amounts in USD thousands, except %)	2022		2021		$		%
Research and development costs	(8,990)		(6,385)		$	(2,605)	41	%
Selling and marketing costs	(8,235)		(7,573)		(662)		9	%
General and administrative costs	(14,697)		(8,224)		(6,473)		79	%
Other operating income, net	223		28		195		696	%
Total operating expenses	$	(31,699)	$	(22,154)	$	(9,545)	43	%

Research and development ("R&D") costs were $9.0 million for the three months ended June 30, 2022 as compared to $6.4 million for the three months ended June 30, 2021. This increase was primarily attributable to an increase in employee-related expenses of $2.2 million, as we increased headcount to support the development of new products and applications, and an increase of $0.9 million in professional services-related expenses, partially offset by an increase of $0.7 million in capitalized development costs.

Selling and marketing costs were $8.2 million for the three months ended June 30, 2022 as compared to $7.6 million for the three months ended June 30, 2021. This increase was primarily attributable to a $0.7 million increase in variable expenses, including marketing and travel-related expenses, as COVID-19 restrictions continue to be loosened.

scale-up of our organization, the development of quality-related initiatives to support a potential expansion of our business into more regulated markets, an increase of $3.4 million in employee-related expenses attributable to an increase in headcount and share-based compensation, and an increase of $1.1 million in public company-related expenses.

Finance expense, net was $0.6 million for the three months ended June 30, 2022 as compared to $2.4 million for the three months ended June 30, 2021. The decrease was primarily attributable to the movement in the valuation of the fee payable to TriplePoint Capital LLC (“TriplePoint”) no longer being recorded on our financial statements, as the fee was paid upon the completion of our IPO in July 2021.


	Six months ended June 30,				Change
(Amounts in USD thousands, except %)	2022		2021		$		%
Revenue	$	22,528	$	19,154	$	3,374	18	%
Cost of revenue	(8,197)		(7,307)		(890)		12	%
Gross profit	14,331		11,847		2,484		21	%
Research and development costs	(18,465)		(12,565)		(5,900)		47	%
Selling and marketing costs	(16,099)		(12,455)		(3,644)		29	%
General and administrative costs	(29,078)		(16,857)		(12,221)		72	%
Other operating income, net	211		52		159		306	%
Operating loss	(49,100)		(29,978)		(19,122)		64	%
Finance expense, net	(841)		(865)		24		(3)	%
Loss before income taxes	(49,941)		(30,843)		(19,098)		62	%
Income tax expense	(227)		(215)		(12)		6	%
Loss for the period	$	(50,168)	$	(31,058)	$	(19,110)	62	%

Revenue was $22.5 million for the six months ended June 30, 2022 as compared to $19.2 million for the six months ended June 30, 2021. This increase was primarily attributable to an increase in SOPHiA Platform revenue, partially offset by $2.3 million in foreign exchange impact in the first quarter of 2022 related to unfavorable movements in exchange rates between key transactional currencies, particularly the euro, the Swiss franc, and the Turkish lira, and our principal reporting currency, the U.S. dollar. SOPHiA Platform revenue was $21.7 million for the six months ended June 30, 2022 as compared to $18.6 million for the six months ended June 30, 2021. This increase was primarily attributable to new customers onboarded onto our platform and improved usage rates across our existing customers, partially offset by unfavorable movements in exchange rates between key transactional currencies, particularly the euro, the Swiss franc, and the Turkish lira, and the U.S. dollar. Workflow equipment and services revenue was $0.9 million for the six months ended June 30, 2022 as compared to $0.6 million for the six months ended June 30, 2021. This increase was attributable to an increase in setup-related revenue.

Cost of revenue was $8.2 million for the six months ended June 30, 2022 as compared to $7.3 million for the six months ended June 30, 2021. This increase was primarily attributable to an increase in revenue, including a $0.3 million increase in amortization of capitalized development costs and a $0.4 million increase in computational and storage-related costs.


(Amounts in USD thousands, except %)	Six months ended June 30,				Change
	2022		2021		$		%
Research and development costs	$	(18,465)	$	(12,565)	$	(5,900)	47	%
Selling and marketing costs	(16,099)		(12,455)		(3,644)		29	%
General and administrative costs	(29,078)		(16,857)		(12,221)		72	%
Other operating income, net	211		52		159		306	%
Total operating expenses	$	(63,431)	$	(41,825)	$	(21,606)	52	%

Research and development ("R&D") costs were $ 18.5 million for the six months ended June 30, 2022 as compared to $12.6 million for the six months ended June 30, 2022. This increase was primarily attributable to expenses related to our continued product development activities, including an increase of $4.2 million in employee-related expenses as we increased our headcount, an increase of $1.4 million in lab supplies, and an increase of $1.3 million in professional services-related expenses, partially offset by an increase of $1.1 million in capitalized development costs.

Selling and marketing costs were $16.1 million for the six months ended June 30, 2022 as compared to $12.5 million for the six months ended June 30, 2021. This increase was primarily attributable to a $2.1 million increase in employee-related expenses as we scaled up our sales force and a $0.9 million increase in variable expenses, including marketing and travel-related expenses, as COVID-19 restrictions continued to be loosened.

General and administrative costs were $29.1 million for six months ended June 30, 2022 as compared to $16.9 million for the six months ended June 30, 2021. This increase was primarily attributable to the continued scale-up of our organization, the development of quality-related initiatives to support a potential expansion of our business into more regulated markets, an increase of $7.6 million in employee-related expenses as a result of an increase in headcount and share-based compensation, and an increase of $1.5 million in public company-related expenses.

Finance expense, net was $0.8 million for the six months ended June 30, 2022 as compared to $0.9 million for the six months ended June 30, 2021. This change was primarily attributable to an increase in foreign exchange losses arising from transactions with vendors and customers offset by the movement in the valuation of the fee payable to TriplePoint no longer being recorded on our financial statements, as the fee was paid upon the completion of our IPO in July 2021.

Our principal sources of liquidity were cash and cash equivalents totaling $178.9 million and $193.0 million as of June 30, 2022 and December 31, 2021, respectively, which were held for a variety of growth initiatives and investments in our SOPHiA Platform and related solutions, products and services as well as working capital purposes. Our cash and cash equivalents are comprised of bank and short-term deposits with maturities up to three months. Separately, we held term deposits and short-term investments with maturities between three and twelve months totaling $37.7 million and $72.4 million as of June 30, 2022 and December 31, 2021, respectively.

On June 21, 2022 we entered into a credit agreement (“the Credit Facility”) with Credit Suisse Group AG for up to CHF 5.0 million. Borrowings under the credit facility will bear interest at a rate to be established between us and Credit Suisse at the time of each draw down. Borrowings under the Credit Facility have no restrictions related to its use. As of June 30, 2022, we had no borrowings outstanding under the Credit Facility.

We have funded our operations primarily through equity financing and, to a lesser extent, through revenue generated from the sale of access to our SOPHiA Platform and related licenses, solutions, products and services. Invoices for our products and services are a substantial source of revenue for our business, which are included on our consolidated balance sheet as trade receivables prior to collection. Accordingly, collections from our customers have a material impact on our cash flows from operating activities. As we expect our revenue to

We expect to continue to incur net losses for the foreseeable future as we continue to devote substantial resources to research and development, in particular, to further expand the applications and modalities of our SOPHiA Platform in order to accommodate multimodal data analytics capabilities across a wide range of disease areas; selling and marketing efforts for our SOPHiA Platform to establish and maintain relationships with our collaborators and customers; and obtaining regulatory clearances or approvals for our SOPHiA Platform and our products and services. We believe that our existing cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months.

Based on our current business plan, we believe that our existing cash and cash equivalents and forecasted revenues will enable us to fund our operating expenses and capital expenditure requirements into 2025. We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our future capital requirements will depend on many factors, which are outlined in our Annual Report on Form 20-F for the year ended December 31, 2021 and our subsequent filings with the SEC.


	Six months ended June 30,
(Amounts in USD thousands)	2022		2021
Net cash provided by/(used in):
Operating activities	$	(36,945)	$	(26,345)
Investing activities	26,703		(2,956)
Financing activities	(179)		533
Net decrease in cash and cash equivalents	$	(10,421)	$	(28,768)
Effect of exchange rate differences on cash and cash equivalents	$	(3,640)	$	(3,370)

For the six months ended June 30, 2022, net cash used in operating activities was $36.9 million, primarily attributable to our net loss of $50.2 million, which was reflective of our continued research and development of and commercialization activities for our SOPHiA Platform, partially offset by $7.4 million of non-cash share-based compensation expense.

For the six months ended June 30, 2022, net cash provided by investing activities was $26.7 million, primarily attributable to the maturity of $42.3 million of term deposits, partially offset by $10.6 million of reinvestment in term deposits and $2.8 million of capitalized development costs.

For the six months ended June 30, 2021, net cash used in investing activities was $3.0 million, primarily attributable to capital expenditures to support research and development and revenue-generating activities as well as capitalized costs related to our research and development activities.

For the six months ended June 30, 2021, net cash provided by financing activities was $0.5 million, primarily attributable to $4.5 million in proceeds from the exercise of share options, partially offset by the repayment of COVID-19 loan obligations to Credit Agricole Pyrénées Gascogne and Credit Suisse (Switzerland) Ltd. and payment of IPO-related expenses.

On January 25, 2022, the Company entered into an amendment to the lease for office space in Rolle, Switzerland. The amendment provides the Company with an additional floor of approximately 21,258 square feet starting on April 1, 2022. Upon commencement of the lease, we recorded a right-of-use asset of $4.5 million and a lease liability of $4.5 million.

A company’s internal control over financial reporting is a process designed by, or under the supervision of, a company’s principal executive and principal financial officers, or persons performing similar functions, and effected by a company’s board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

In connection with the preparation of our consolidated financial statements and audit process for the years ended December 31, 2020 and December 31, 2019, we and our independent registered public accounting firm have identified material weaknesses in our internal controls related to financial reporting. For each of the fiscal years ended December 31, 2020 and 2019, we have determined that we did not:

•design or maintain an effective control environment commensurate with our financial reporting requirements due to lack of sufficient accounting professionals with the appropriate level of skill, experience and training. Specifically, we lack sufficient financial reporting and accounting personnel with appropriate knowledge of IFRS to address complex technical accounting issues and to prepare consolidated financial statements and related disclosures;

•design and maintain formal accounting policies, procedures and controls to achieve complete, accurate and timely financial accounting, year-end reporting and disclosures, including controls over the preparation and review of account reconciliations, journal entries and period end financial reporting; and

•design and maintain effective controls over certain information technology general controls for IT systems that are relevant to the preparation of our consolidated financial statements. Specifically, we did not design and maintain: (a) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to financial applications, programs, and data to appropriate personnel, (b) program change management controls to ensure that IT program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately, and (c) testing and approval controls for program development to ensure that new software development is aligned with business and IT requirements.

Since our IPO, we have taken and continue to take steps to remediate the aforementioned material weaknesses and to enhance our overall control environment. Regarding the material weakness related to the lack of sufficient accounting professionals with the appropriate level of skill, experience and training, we have hired a number of key employees in our accounting department, including a new Controller and director of technical accounting and reporting, to support our Chief Financial Officer and retained accounting consultants to provide additional support to our technical accounting and financial reporting capabilities and support our finance department in the design and implementation of an improved internal controls system. We have also begun the process of reviewing and documenting our accounting and financial processes and internal controls, improving and formalizing accounting and reporting policies, and building out the appropriate technical, financial management and reporting systems infrastructure to automate and standardize such policies.

We believe that the professionals that we have hired to date have the appropriate level of skills, experience, and training to put us in the position to remediate the first aforementioned material weakness once they have been fully integrated into our control environment and operated those controls across a sufficient number of reporting periods. To address the other two aforementioned material weaknesses, we also are continuing to improve our process of reviewing and documenting our accounting and financial processes and internal controls, to improve and formalize accounting and reporting policies, and to build out the appropriate technical, financial management and reporting systems infrastructure to automate and standardize such policies.

We cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to the material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.

We had cash and cash equivalents totaling $178.9 million as of June 30, 2022, which are comprised of cash and short-term deposits with maturities up to three months. We also had term deposits and short-term investments totaling $37.7 million as of June 30, 2022. Our cash equivalents are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Due in part to these factors, our future investment income may fall short of expectation due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates.

We are exposed to credit risk from our operating activities, primarily trade receivables. Credit risk is the risk that a counterparty will be unable to meet its obligations under a financial instrument or customer contract. We assess writing off of receivables on a case-by-case basis if the outstanding balance exceeds one year.

We do not believe that credit risk had a material effect on our business, financial condition or results of operations. The largest customer balance represented 9% of trade and other receivables as of June 30, 2022. Our cash and cash equivalents are deposited with reputable financial institutions. If customers representing a significant percentage of our trade receivables are unable to meet their payment obligations to us, we may suffer harm to our business, financial condition or results of operations.

We do not believe that inflation had a material effect on our business, financial condition or results of operations. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition or results of operations.

The preparation of financial statements in conformity with IFRS requires the use of accounting estimates. It also requires management to exercise judgement in applying our accounting policies. Disclosed below are the areas which require a high degree of judgment, significant assumptions and/or estimates. The most significant assumptions used in the financial statements are the underlying assumptions used in revenue recognition, capitalized internal development costs, share-based compensation, goodwill impairment testing, defined benefit pension liabilities, expected credit loss, income taxes, and derivatives. We base estimates and assumptions on historical experience when available and on various factors that we determined to be reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

Our critical accounting policies and significant estimates that involve a higher degree of judgment and complexity are described in the “Operating and Financial Review and Prospects—Critical Accounting Estimates” section of our Annual Report on Form 20-F for the year ended December 31, 2021. There have been no material changes to our critical accounting policies and estimates as disclosed therein, with the exception of our adoption of recent accounting pronouncements, as discussed below.

In connection with our recent adoption of IFRS for the preparation of our financial statements, certain new accounting standards and interpretations have been published that are not mandatory for the December 31, 2022 reporting periods and have not been adopted early by us. These standards are not expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions. See Note 2 to the audited condensed consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2021 and Note 1 of our unaudited interim condensed consolidated financial statements included as Exhibit 99.1 to the Report on Form 6-K to which this discussion and analysis is included as Exhibit 99.2.

In April 2012, the JOBS Act was enacted. Section 107 of the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards applicable to public companies. This provision allows an emerging growth company to delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. This transition period is only applicable under U.S. GAAP. As a result, we will adopt new or revised accounting standards on the relevant dates on which adoption of such standards is required or permitted by the International Accounting Standards Board.

Subject to certain conditions, as an emerging growth company, we intend to rely on certain of these exemptions, including without limitation, (i) providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act and (ii) complying with any requirement that may be adopted by the Public Company Accounting Oversight Board, regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the critical audit matters. We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year in which we have total annual gross revenues of $1.07 billion or more; (ii) December 31, 2026; (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous three years; and (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC, which means the market value of our ordinary shares that are held by non-affiliates equals or exceeds $700.0 million as of the prior June 30th.


	As of June 30,
	2022	2021
Existing recurring SOPHiA Platform customers	372	341
New recurring SOPHiA Platform customers	16	26
Total recurring platform customers	388	367


	As of June 30,
(Amounts in USD)	2022		2021
Average revenue per SOPHiA Platform customer	$	91,559	$	84,310