SEC Filing - Tenable, Inc.

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tenb-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 10-Q

__________________


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, 2022


☐			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 001-38600

__________________

TENABLE HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

__________________


Delaware						47-5580846
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

6100 Merriweather Drive, Columbia, Maryland 21044

(Address of principal executive offices, including zip code)

(410) 872-0555

(Registrant’s telephone number, including area code)

__________________

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	TENB	The Nasdaq Stock Market LLC

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 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, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Emerging growth company

☐

Smaller reporting 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 ☒

The number of shares of the Registrant's common stock outstanding as of July 29, 2022 was 111,644,129.

TENABLE HOLDINGS, INC.

TABLE OF CONTENTS


		Page
PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets	3
	Consolidated Statements of Operations	4
	Consolidated Statements of Comprehensive Loss	5
	Consolidated Statements of Stockholders' Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
	1. Business and Summary of Significant Accounting Policies	8
	2. Revenue	9
	3. Cash Equivalents and Short-Term Investments	10
	4. Fair Value Measurements	11
	5. Property and Equipment, Net	12
	6. Acquisitions, Goodwill and Intangible Assets	12
	7. Leases	14
	8. Debt	15
	9. Commitments and Contingencies	16
	10. Stock-Based Compensation	16
	11. Income Taxes	18
	12. Net Loss Per Share	18
	13. Geographic Information	19

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 6.	Exhibits	69
	Signatures	70

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TENABLE HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS


	June 30, 2022		December 31, 2021
(in thousands, except per share data)	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	267,859	$	278,000
Short-term investments	243,047		234,292
Accounts receivable (net of allowance for doubtful accounts of $467 and $524 at June 30, 2022 and December 31, 2021, respectively)	109,354		136,601
Deferred commissions	40,670		40,311
Prepaid expenses and other current assets	49,444		60,234
Total current assets	710,374		749,438
Property and equipment, net	43,372		36,833
Deferred commissions (net of current portion)	59,330		59,638
Operating lease right-of-use assets	36,906		38,530
Acquired intangible assets, net	81,536		71,536
Goodwill	316,787		261,614
Other assets	26,737		31,230
Total assets	$	1,275,042	$	1,248,819

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	16,882	$	16,254
Accrued compensation	41,199		54,051
Deferred revenue	415,378		407,498
Operating lease liabilities	5,014		2,320
Other current liabilities	4,592		3,759
Total current liabilities	483,065		483,882
Deferred revenue (net of current portion)	132,677		123,387
Term loan, net of issuance costs (net of current portion)	363,404		364,728
Operating lease liabilities (net of current portion)	52,158		55,046
Other liabilities	6,213		6,463
Total liabilities	1,037,517		1,033,506

Stockholders’ equity:
Common stock (par value: $0.01; 500,000 shares authorized; 111,574 and 108,929 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively)	1,116		1,089
Additional paid-in capital	944,799		869,059
Accumulated other comprehensive loss	(1,856)		(306)
Accumulated deficit	(706,534)		(654,529)
Total stockholders’ equity	237,525		215,313
Total liabilities and stockholders’ equity	$	1,275,042	$	1,248,819

The accompanying notes are an integral part of these consolidated financial statements.

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TENABLE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2022		2021		2022		2021
Revenue	$	164,341	$	130,259	$	323,709	$	253,448
Cost of revenue	36,037		26,425		70,967		48,498
Gross profit	128,304		103,834		252,742		204,950
Operating expenses:
Sales and marketing	88,426		65,678		169,996		124,313
Research and development	36,228		28,201		70,518		55,039
General and administrative	26,870		21,836		52,996		43,281
Total operating expenses	151,524		115,715		293,510		222,633
Loss from operations	(23,220)		(11,881)		(40,768)		(17,683)
Interest expense, net	(2,895)		(42)		(6,221)		(70)
Other expense, net	(1,863)		(471)		(2,807)		(537)
Loss before income taxes	(27,978)		(12,394)		(49,796)		(18,290)
(Benefit) provision for income taxes	(479)		(756)		2,209		1,096
Net loss	$	(27,499)	$	(11,638)	$	(52,005)	$	(19,386)

Net loss per share, basic and diluted	$	(0.25)	$	(0.11)	$	(0.47)	$	(0.18)
Weighted-average shares used to compute net loss per share, basic and diluted	111,041		105,869		110,287		105,203

The accompanying notes are an integral part of these consolidated financial statements.

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TENABLE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Net loss	$	(27,499)	$	(11,638)	$	(52,005)	$	(19,386)
Other comprehensive loss, net of tax:
Unrealized losses on available-for-sale securities	(493)		(24)		(1,550)		(26)
Other comprehensive loss	(493)		(24)		(1,550)		(26)
Comprehensive loss	$	(27,992)	$	(11,662)	$	(53,555)	$	(19,412)

The accompanying notes are an integral part of these consolidated financial statements.

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TENABLE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)


				Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income				Total Stockholders’ Equity
	Common Stock							Accumulated Deficit
(in thousands)	Shares	Amount
Balance at March 31, 2022	110,287	$	1,103	$	906,263	$	(1,363)	$	(679,035)	$	226,968
Exercise of stock options	639	6		6,083		—		—		6,089
Vesting of restricted stock units	648	7		(7)		—		—		—

Stock-based compensation	—	—		32,460		—		—		32,460
Other comprehensive loss	—	—		—		(493)		—		(493)
Net loss	—	—		—		—		(27,499)		(27,499)
Balance at June 30, 2022	111,574	$	1,116	$	944,799	$	(1,856)	$	(706,534)	$	237,525

Balance at December 31, 2021	108,929	$	1,089	$	869,059	$	(306)	$	(654,529)	$	215,313
Exercise of stock options	932	9		8,667		—		—		8,676
Vesting of restricted stock units	1,457	15		(15)		—		—		—
Issuance of common stock under employee stock purchase plan	256	3		8,879		—		—		8,882
Stock-based compensation	—	—		58,209		—		—		58,209
Other comprehensive loss	—	—		—		(1,550)		—		(1,550)
Net loss	—	—		—		—		(52,005)		(52,005)
Balance at June 30, 2022	111,574	$	1,116	$	944,799	$	(1,856)	$	(706,534)	$	237,525

Balance at March 31, 2021	105,513	$	1,055	$	786,476	$	8	$	(615,600)	$	171,939
Exercise of stock options	605	6		4,683		—		—		4,689
Vesting of restricted stock units	392	4		(4)		—		—		—

Stock-based compensation	—	—		20,489		—		—		20,489
Other comprehensive loss	—	—		—		(24)		—		(24)
Net loss	—	—		—		—		(11,638)		(11,638)
Balance at June 30, 2021	106,510	$	1,065	$	811,644	$	(16)	$	(627,238)	$	185,455

Balance at December 31, 2020	103,715	$	1,037	$	757,470	$	10	$	(607,852)	$	150,665
Exercise of stock options	1,212	12		8,692		—		—		8,704
Vesting of restricted stock units	1,184	12		(12)		—		—		—
Issuance of common stock under employee stock purchase plan	399	4		8,042		—		—		8,046
Stock-based compensation	—	—		37,452		—		—		37,452
Other comprehensive loss	—	—		—		(26)		—		(26)
Net loss	—	—		—		—		(19,386)		(19,386)
Balance at June 30, 2021	106,510	$	1,065	$	811,644	$	(16)	$	(627,238)	$	185,455

The accompanying notes are an integral part of these consolidated financial statements.

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TENABLE HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(in thousands)	2022		2021
Cash flows from operating activities:
Net loss	$	(52,005)	$	(19,386)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	10,141		6,807
Stock-based compensation	57,311		37,421
Other	665		(268)
Changes in operating assets and liabilities:
Accounts receivable	27,664		18,985
Prepaid expenses and other assets	16,765		5,077
Accounts payable, accrued expenses and accrued compensation	(14,250)		985
Deferred revenue	16,075		6,665
Other current and noncurrent liabilities	1,014		(1,126)
Net cash provided by operating activities	63,380		55,160

Cash flows from investing activities:
Purchases of property and equipment	(9,563)		(2,595)
Purchases of short-term investments	(119,619)		(87,624)
Sales and maturities of short-term investments	108,858		76,000
Business combinations, net of cash acquired	(66,993)		(98,489)
Net cash used in investing activities	(87,317)		(112,708)

Cash flows from financing activities:
Payments on term loan	(1,875)		—


Proceeds from stock issued in connection with the employee stock purchase plan	8,882		8,046
Proceeds from the exercise of stock options	8,676		8,704
Other financing activities	566		(5)
Net cash provided by financing activities	16,249		16,745
Effect of exchange rate changes on cash and cash equivalents and restricted cash	(2,471)		(1,463)
Net decrease in cash and cash equivalents and restricted cash	(10,159)		(42,266)
Cash and cash equivalents and restricted cash at beginning of period	278,271		178,463
Cash and cash equivalents and restricted cash at end of period	$	268,112	$	136,197

Supplemental disclosure of cash flow information:
Cash paid for interest	$	7,366	$	150
Cash paid for income taxes, net of refunds	5,870		3,553
Supplemental cash flow information related to leases:
Cash payments for operating leases	$	1,521	$	2,555

The accompanying notes are an integral part of these consolidated financial statements.

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TENABLE HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Business and Summary of Significant Accounting Policies

Business Description

Tenable Holdings, Inc. (the “Company,” “we,” "us," or “our”) is a provider of Cyber Exposure Management solutions, which is a discipline for managing, measuring and comparing cybersecurity risk in the digital era. Our platform offerings provide broad visibility into security issues such as vulnerabilities, misconfigurations, internal and regulatory compliance violations and other indicators of the state of an organization’s security across IT infrastructure and applications, cloud environments, Active Directory and industrial internet of things and operational technology environments.

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Tenable Holdings, Inc. and our wholly owned subsidiaries and have been prepared in conformity with United States generally accepted accounting principles (“GAAP”) for interim financial information. All intercompany accounts and transactions have been eliminated in consolidation.

The consolidated statements are unaudited and should be read in conjunction with the consolidated financial statements and related notes included in our 2021 Annual Report on Form 10-K ("10-K") filed with the Securities and Exchange Commission on February 25, 2022. The consolidated financial statements have been prepared on a basis consistent with the audited annual consolidated financial statements included in the 10-K and, in the opinion of management, include all adjustments of a normal recurring nature necessary to fairly state our financial position, our results of operations, and cash flows.

The results for the three and six months ended June 30, 2022 are not necessarily indicative of the operating results expected for the year ending December 31, 2022 or any other future period.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates include, but are not limited to, the determination of the estimated economic life of perpetual licenses for revenue recognition, the estimated period of benefit for deferred commissions, the useful lives of long-lived assets, the fair value of acquired intangible assets, the valuation of stock-based compensation, the incremental borrowing rate for operating leases, and the valuation of deferred tax assets. We base these estimates on historical experience and on various other assumptions that we believe to be reasonable. Actual results could differ significantly from these estimates.

Significant Accounting Policies

Our significant accounting policies are described in our 10-K. During the six months ended June 30, 2022, there were no material changes to our significant accounting policies from those described in our 10-K.

Recently Issued Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board ("FASB") issued ASU No. 2020-04 - Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients and exceptions to contract modification guidance to ease the financial reporting burden of the transition from the London Interbank Offered Rate ("LIBOR") to alternative reference rates. The ASU was effective beginning on March 12, 2020 and can be adopted prospectively through December 31, 2022. We do not expect the impact of adopting this standard to be material for our consolidated financial statements.

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2. Revenue

Disaggregation of Revenue

The following table presents a summary of revenue:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Subscription revenue	$	146,806	$	114,167	$	289,493	$	221,569
Perpetual license and maintenance revenue	12,683		12,567		25,556		24,972
Professional services and other revenue	4,852		3,525		8,660		6,907
Revenue	$	164,341	$	130,259	$	323,709	$	253,448

Concentrations

We sell and market our products and services through our field sales force that works closely with our channel partners, which includes a network of distributors and resellers, in developing sales opportunities. We use a two-tiered channel model whereby we sell our products and services to our distributors, which in turn sell to resellers, which then sell to end-users. We derived 92% of revenue through our channel network in the three and six months ended June 30, 2022 and 2021. One of our distributors accounted for 38% of revenue in the three and six months ended June 30, 2022 and 40% of revenue in the three and six months ended June 30, 2021. That same distributor accounted for 34% and 32% of accounts receivable at June 30, 2022 and December 31, 2021, respectively.

Contract Balances

We generally bill our customers in advance and accounts receivable are recorded when we have the right to invoice the customer. Contract liabilities consist of deferred revenue and include customer billings and payments received in advance of performance under the contract. In the three months ended June 30, 2022 and 2021 and the six months ended June 30, 2022 and 2021, we recognized revenue of $148.2 million, $119.0 million, $260.6 million and $210.5 million, respectively, that was included in the deferred revenue balance at the beginning of each of the respective periods.

Remaining Performance Obligations

At June 30, 2022, the future estimated revenue related to unsatisfied performance obligations was $567.7 million, of which approximately 75% is expected to be recognized as revenue over the succeeding twelve months, and the remainder is expected to be recognized over the four years thereafter.

Deferred Commissions

The following summarizes the activity of deferred incremental costs of obtaining a contract:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Beginning balance	$	99,263	$	77,300	$	99,949	$	78,876
Capitalization of contract acquisition costs	12,073		10,222		22,403		17,446
Amortization of deferred contract acquisition costs	(11,336)		(9,025)		(22,352)		(17,825)
Ending balance	$	100,000	$	78,497	$	100,000	$	78,497

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3. Cash Equivalents and Short-Term Investments

The following tables summarize the amortized cost, unrealized gain and loss and estimated fair value of cash equivalents and short-term investments:


	June 30, 2022
(in thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Cash equivalents
Money market funds	$	155,012	$	—	$	—	$	155,012

Total cash equivalents	$	155,012	$	—	$	—	$	155,012

Short-term investments

Commercial paper	$	108,062	$	—	$	(564)	$	107,498
Corporate bonds	45,820		—		(300)		45,520
Asset backed securities	21,419		—		(174)		21,245
Certificates of deposit	20,000		—		(22)		19,978
Supranational bonds	8,567		—		(125)		8,442
U.S. Treasury and agency obligations	41,035		—		(671)		40,364
Total short-term investments	$	244,903	$	—	$	(1,856)	$	243,047


	December 31, 2021
(in thousands)	Amortized Cost		Unrealized Gain		Unrealized Loss		Estimated Fair Value
Cash equivalents
Money market funds	$	178,518	$	—	$	—	$	178,518
Total cash equivalents	$	178,518	$	—	$	—	$	178,518

Short-term investments
Commercial paper	$	134,165	$	—	$	(47)	$	134,118
Corporate bonds	27,169		—		(41)		27,128
Asset backed securities	27,464		—		(53)		27,411
Certificates of deposit	10,000		—		(8)		9,992
Supranational bonds	8,632		—		(33)		8,599
U.S. Treasury and agency obligations	27,168		—		(124)		27,044
Total short-term investments	$	234,598	$	—	$	(306)	$	234,292

We considered the extent to which any unrealized losses on our short-term investments were driven by credit risk and other factors, including market risk, and if it is more-likely-than-not that we would have to sell the securities before the recovery of the amortized cost basis. At June 30, 2022, our unrealized losses were due to rising market interest rates compared to when the investments were initiated. We do not believe any unrealized losses represent credit losses, and it is unlikely we would sell the investments before we would recover their amortized cost basis.

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The contractual maturities of our short-term investments are as follows:


	June 30, 2022
(in thousands)	Amortized Cost		Estimated Fair Value
Due within one year	$	234,088	$	232,468
Due between one and two years	10,815		10,579
Total short-term investments	$	244,903	$	243,047

At June 30, 2022 and December 31, 2021, cash and cash equivalents included $5.8 million of restricted cash primarily related to collateral for our outstanding letters of credit and excluded $0.3 million of restricted cash related to an account established as collateral for a lease arrangement, which is included in other assets on the consolidated balance sheets.

4. Fair Value Measurements

We measure certain financial instruments at fair value using a fair value hierarchy. In the hierarchy, assets are classified based on the lowest level inputs used in valuation into the following categories:

•Level 1 — Quoted prices in active markets for identical assets and liabilities;

•Level 2 — Observable inputs including quoted market prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in inactive markets, or inputs that are corroborated by observable market data; and

•Level 3 — Unobservable inputs.

The following tables summarize assets that are measured at fair value on a recurring basis:


	June 30, 2022
(in thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	155,012	$	—	$	—	$	155,012

Total cash equivalents	$	155,012	$	—	$	—	$	155,012

Short-term investments

Commercial paper	$	—	$	107,498	$	—	$	107,498
Corporate bonds	—		45,520		—		45,520
Asset backed securities	—		21,245		—		21,245
Certificates of deposit	—		19,978		—		19,978
Supranational bonds	—		8,442		—		8,442
U.S. Treasury and agency obligations	—		40,364		—		40,364
Total short-term investments	$	—	$	243,047	$	—	$	243,047

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	December 31, 2021
(in thousands)	Level 1		Level 2		Level 3		Total
Cash equivalents
Money market funds	$	178,518	$	—	$	—	$	178,518
Total cash equivalents	$	178,518	$	—	$	—	$	178,518

Short-term investments
Commercial paper	$	—	$	134,118	$	—	$	134,118
Corporate bonds	—		27,128		—		27,128
Asset backed securities	—		27,411		—		27,411
Certificates of deposit	—		9,992		—		9,992
Supranational bonds	—		8,599		—		8,599
U.S. Treasury and agency obligations	—		27,044		—		27,044
Total short-term investments	$	—	$	234,292	$	—	$	234,292

We did not have any liabilities measured and recorded at fair value on a recurring basis at June 30, 2022 and December 31, 2021.

5. Property and Equipment, Net

Property and equipment, net consisted of the following:


(in thousands)	June 30, 2022		December 31, 2021
Computer software and equipment	$	40,502	$	29,203
Furniture and fixtures	5,722		5,944
Leasehold improvements	26,711		26,713
Right-of-use assets under finance leases	1,332		1,343
Total	74,267		63,203
Less: accumulated depreciation and amortization	(30,895)		(26,370)
Property and equipment, net	$	43,372	$	36,833

Depreciation and amortization related to property and equipment was $2.4 million, $2.5 million, $4.9 million and $4.7 million in the three months ended June 30, 2022 and 2021 and the six months ended June 30, 2022 and 2021, respectively.

6. Acquisitions, Goodwill and Intangible Assets

Business Combinations

In June 2022, we acquired Bit Discovery, a leader in external attack surface management (EASM). Adding Bit Discovery's EASM capabilities to our solutions provides customers with a comprehensive view of their attack surface and helps identify and eliminate areas of risk. We acquired 100% of Bit Discovery's equity for $44.0 million in cash, net of cash acquired of $2.2 million, through a share purchase agreement.

In February 2022, we acquired Cymptom, a platform that proactively measures, maps and prioritizes probable attack paths, and enables security teams to preemptively focus response ahead of and during breaches. Through a share purchase agreement, we acquired 100% of Cymptom's equity in exchange for cash consideration, net of cash acquired, for $23.0 million.

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Cash consideration, net of cash acquired, was preliminarily allocated as follows:


(in thousands)	Bit Discovery		Cymptom



Intangible assets	$	11,100	$	4,113
Goodwill	36,213		18,960


Deferred tax (liabilities) assets, net	(2,501)		128
Other liabilities, net	(779)		(241)
Total purchase price	$	44,033	$	22,960

We are still finalizing the allocations of the purchase price, which may change as additional information becomes available related to acquired intangible assets, working capital and income taxes for Bit Discovery and income taxes for Cymptom.

Acquired intangible assets and their estimated useful lives at the date of acquisition are as follows:


	Bit Discovery			Cymptom
	Intangible Assets			Intangible Assets
(dollars in thousands)	Cost		Estimated Useful Life	Cost		Estimated Useful Life
Acquired technology	$	11,000	7 years	$	4,113	7 years
Trade name	100		1 year	—
Acquired intangible assets	$	11,100		$	4,113

The results of operations of Bit Discovery and Cymptom are included in our consolidated statements of operations from the acquisition date and were not material. Pro forma results of operations are not presented as they are not material to the consolidated statements of operations.

In general and administrative expense, we recognized $0.7 million, $1.5 million, $2.0 million and $3.7 million of acquisition-related transaction costs in the three months ended June 30, 2022 and 2021 and the six months ended June 30, 2022 and 2021, respectively.

Goodwill and Acquired Intangible Assets

The changes in the carrying amount of goodwill are as follows:


(in thousands)
Balance at December 31, 2021	$	261,614
Acquired goodwill	55,173
Balance at June 30, 2022	$	316,787

The excess purchase consideration over the fair value of acquired assets and liabilities is recorded as goodwill. The acquired goodwill reflects the synergies we expect from marketing and selling new capabilities from Bit Discovery and Cymptom to our customers. The acquired goodwill from both acquisitions is not tax deductible.

Acquired intangible assets subject to amortization are as follows:


	June 30, 2022						December 31, 2021
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Acquired technology	$	97,037	$	(15,650)	$	81,387	$	81,924	$	(10,499)	$	71,425
Trade name	490		(341)		149		390		(279)		111
	$	97,527	$	(15,991)	$	81,536	$	82,314	$	(10,778)	$	71,536

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Amortization of acquired intangible assets was $2.8 million, $1.4 million, $5.2 million and $2.0 million in the three months ended June 30, 2022 and 2021 and the six months ended June 30, 2022 and 2021, respectively. At June 30, 2022, our acquired intangible assets are expected to be amortized over an estimated weighted average period of 7.1 years.

At June 30, 2022, estimated future amortization of acquired intangible assets is as follows:


(in thousands)
Year ending December 31,
2022(1)	$	6,160
2023	12,252
2024	12,175
2025	12,175
2026	11,990
Thereafter	26,784
Total	$	81,536

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(1) Represents the six months ending December 31, 2022.

7. Leases

We have operating leases for office facilities and finance leases for office equipment. The components of lease expense were as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Operating lease cost	$	1,770	$	1,907	$	3,587	$	3,776

Rent expense for short-term leases and finance lease costs in the three and six months ended June 30, 2022 and 2021 were not material.

Supplemental information related to leases was as follows:


	June 30, 2022	December 31, 2021
Operating leases
Weighted average remaining lease term	8.9 years	9.2 years
Weighted average discount rate	5.6%	5.5%

In the three and six months ended June 30, 2022, we obtained $0.4 million of right-of-use assets related to operating lease liabilities. In the three and six months ended June 30, 2021, we did not obtain any right-of-use assets in exchange for lease liabilities.

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Maturities of operating lease liabilities at June 30, 2022 were as follows:


(in thousands)
Year ending December 31,
2022(1)	$	3,898
2023	8,271
2024	8,308
2025	8,078
2026	7,375
Thereafter	37,411
Total lease payments	73,341
Less: Imputed interest	(16,169)

Total	$	57,172

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(1) Represents the six months ending December 31, 2022.

8. Debt

Credit Agreement

In July 2021, we entered into a credit agreement ("Credit Agreement") which is comprised of:

•a $375.0 million senior secured term loan facility ("Term Loan"); and

•a $50.0 million senior secured revolving credit facility ("Revolving Credit Facility").

The table below summarizes the carrying value of the Term Loan:


(in thousands)	June 30, 2022
Term loan	$	373,125
Less: Unamortized debt discount and issuance costs	(7,077)
Term loan, net of issuance costs	366,048
Less: Term loan, net, current (1)	(2,644)
Term loan, net of issuance costs (net of current portion)	$	363,404

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(1) Term loan, net current is included in other current liabilities on our consolidated balance sheets.

The Term Loan bears interest at a rate of 2.75% per annum over LIBOR, subject to a 0.50% floor. The Term Loan is being amortized at 1% per annum in equal quarterly installments until the final payment of $350.6 million on the July 7, 2028 maturity date.

Our Term Loan is recorded at its carrying value. At June 30, 2022, the fair value of our Term Loan was approximately $353 million. In the fair value hierarchy, our Term Loan is classified as Level 2 as it is traded in less active markets.

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The maturities of the Term Loan at June 30, 2022 were as follows:


(in thousands)
Year ending December 31,
2022(1)	$	1,875
2023	3,750
2024	3,750
2025	3,750
2026	3,750
Thereafter	356,250
Total	$	373,125

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(1) Represents the six months ending December 31, 2022.

We may be subject to mandatory Term Loan prepayments related to the excess cash flow provisions beginning in 2023. These prepayments would only be required if our first lien net leverage ratio (as defined in our Credit Agreement) exceeds 3.5, and at June 30, 2022, our first lien net leverage ratio was below that threshold.

The Revolving Credit Facility bears interest at a rate, depending on first lien net leverage, ranging from 2.00% to 2.50% over LIBOR and matures on July 7, 2026. Additionally, we will pay a commitment fee during the term ranging from