SPRINT CORPORATION 
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K for the fiscal year endedJanuary 31, 2022 filed with theU.S. Securities and Exchange Commission , or theSEC , onApril 7, 2022 . This discussion, particularly information with respect to our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, includes forward-looking statements that involve risks and uncertainties as described under the heading "Special Note About Forward-Looking Statements" in this Quarterly Report on Form 10-Q. You should review the disclosure under the heading "Risk Factors" in this Quarterly Report on Form 10-Q for a discussion of important factors that could cause our actual results to differ materially from those anticipated in these forward-looking statements. Our fiscal year ends onJanuary 31 , and our fiscal quarters end onApril 30 ,July 31 ,October 31 , andJanuary 31 . Our fiscal years endedJanuary 31, 2022 andJanuary 31, 2023 are referred to herein as fiscal 2022 and fiscal 2023, respectively.
Unless the context otherwise requires, all references in this report to
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Overview
We founded
We pioneered the world's first purpose-built artificial intelligence, or
AI,-powered extended detection and response, or XDR, platform to make
cybersecurity defense truly autonomous, from the endpoint and beyond. Our
Singularity Platform instantly defends against cyberattacks - performing at a
faster speed, greater scale, and higher accuracy than otherwise possible from a
human-powered approach.
Our Singularity XDR Platform ingests, correlates, and queries petabytes of
structured and unstructured data from a myriad of ever-expanding disparate
external and internal sources in real-time. We build rich context and deliver
greater visibility by constructing a dynamic representation of data across an
organization. As a result, our AI models are highly accurate, actionable, and
autonomous. Our distributed AI models run both locally on every endpoint and
every cloud workload, as well as on our cloud platform. Our Static and
vector-agnostic Behavioral AI models, which run on the endpoints themselves,
provide our customers with protection even when their devices are not connected
to the cloud. In the cloud, our Streaming AI detects anomalies that surface when
multiple data feeds are correlated. By providing full visibility into the
Storyline of every secured device across the organization through one console,
our platform makes it very fast for analysts to easily search through petabytes
of data to investigate incidents and proactively hunt threats. We have extended
our control and visibility planes beyond the traditional endpoint to unmanaged
IoT devices.
Our Singularity Platform can be flexibly deployed on the environments that our
customers choose, including public, private, or hybrid clouds. Our feature
parity across Windows, macOS, Linux, and Kubernetes offers best-of-breed
protection, visibility, and control across today's heterogeneous IT
environments. Together, these capabilities make our platform the logical choice
for organizations of all sizes, industry verticals, and compliance requirements.
Our platform offers true multi-tenancy, which enables some of the world's
largest organizations and our managed security providers and incident response
partners with an excellent management experience. Our customers realize improved
cybersecurity outcomes with fewer people.
We generate substantially all of our revenue by selling subscriptions to our
Singularity Platform. Our subscription tiers include Singularity Core,
Singularity Control, and Singularity Complete. Additionally, customers can
extend the functionality of our platform through our subscription Singularity
Modules. We generally price our subscriptions and modules on a per agent basis,
and each agent generally corresponds with an endpoint, server, virtual machine,
or container.
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Our subscription contracts typically range from one to three years. We recognize subscription revenue ratably over the term of a contract. Most of our contracts are for terms representing annual increments, therefore contracts generally come up for renewal in the same period in subsequent years. The timing of large multi-year enterprise contracts can create some variability in subscription order levels between periods, though the impact to our revenue in any particular period is limited as a result of ratable revenue recognition. Our go-to-market strategy is focused on acquiring new customers and driving expanded usage of our platform by existing customers. Our sales organization is comprised of our enterprise sales, inside sales and customer solutions engineering teams. It leverages our global network of independent software vendors, or ISVs, alliance partners, and channel partners for prospect access. Additionally, our sales teams work closely with our customers, channel partners, and alliance partners to drive adoption of our platform, and our software solutions are fulfilled through our channel partners. Our channel partners include some of the world's largest resellers and distributors, managed service providers, or MSPs, managed security service providers, or MSSPs, managed detection and response providers, or MDRs, original equipment manufacturers, or OEMs, and incident response firms, or IR firms. Once customers experience the benefits of our platform, they often upgrade their subscriptions to benefit from the full range of our XDR and IT and security operations capabilities. Additionally, many of our customers adopt Singularity Modules over time to extend the functionality of our platform and increase their coverage footprint. The combination of platform upgrades and extended modules drives our powerful land-and-expand motion. Our Singularity Platform is used globally by organizations of all sizes across a broad range of industries. As ofApril 30, 2022 , we had over 7,450 customers, increasing from over 4,700 customers as ofApril 30, 2021 . We had 591 customers with ARR of$100,000 or more as ofApril 30, 2022 , up from 277 as ofApril 30, 2021 . As ofApril 30, 2022 , no single end customer accounted for more than 3% of our ARR. We define ARR as the annualized revenue run rate of our subscription contracts at the end of a reporting period, assuming contracts are renewed on their existing terms for customers that are under subscription contracts with us. Our revenue outside ofthe United States represented 33% and 30% for the three months endedApril 30, 2022 and 2021, respectively, illustrating the global nature of our solutions. We have grown rapidly since our inception. Our revenue was$78.3 million and$37.4 million for the three months endedApril 30, 2022 and 2021, respectively, representing year-over-year growth of 109%. During this period, we continued to invest in growing our business to capitalize on our market opportunity. As a result, our net loss for the three months endedApril 30, 2022 and 2021 was$89.8 million and$62.6 million , respectively.
Attivo Acquisition
OnMarch 15, 2022 , we signed a definitive merger agreement to acquire 100% of the issued and outstanding equity securities ofAttivo Networks, Inc. (Attivo), an identity security and lateral movement protection company. The acquisition closed onMay 3, 2022 . The aggregate consideration transferred was comprised of$351.5 million in cash, 6,032,231 shares of our Class A common stock with an aggregate value of$195.9 million , and 378,828 assumed options to purchase shares of our Class A common stock.
Impact of COVID-19
Beginning inJanuary 2020 , the COVID-19 pandemic resulted in travel restrictions, prohibitions of non-essential activities, disruption and shutdown of certain businesses worldwide, as well as greater uncertainty in global financial markets. The full extent to which the COVID-19 pandemic will directly or indirectly impact our business, operating results, cash flows, and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted. As a result of the COVID-19 pandemic, we have experienced, and may continue to experience, a modest adverse impact on certain parts of our business, including a lengthening of the sales cycle for some prospective customers and delays in the delivery of professional services and trainings to our customers. We have also experienced, and may continue to experience, a positive impact as a result of the COVID-19 pandemic. For example, in connection with the travel restrictions, shelter-in-place, and work-from-home policies resulting from the COVID-19 pandemic, we have seen an increase in usage and subscriptions from smaller customers, many of whom are small or medium sized businesses. We have also seen slower growth in certain operating expenses due to reduced business travel and the virtualization or cancellation of customer and employee 20
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events. While a reduction in operating expenses may have an immediate positive impact on our operating results, we do not yet have visibility into the full impact this will have on our business. Moreover, as vaccines become widely available and people begin to return to offices and other workplaces, any positive impacts of the COVID-19 pandemic on our business may slow or decline once the impact of the pandemic tapers. We cannot predict how long we will continue to experience the impact of the COVID-19 pandemic including any new variants, vaccine mandates, and further travel and office restrictions. Our operating results, cash flows, and financial condition have not been adversely affected to date. However, as certain of our customers or partners experience downturns or uncertainty in their own business operations or revenue resulting from the spread of COVID-19, our operating results, cash flows, and financial condition could be adversely affected. In addition, in response to the spread of COVID-19, we previously required substantially all of our employees to work remotely to minimize the risk of the virus to our employees and the communities in which we operate. Most of our employees continue to work remotely and we have slowly opened up our offices at minimal capacity, subject to local COVID-19 restrictions. We may take further actions as may be required by government authorities or that we determine are in the best interests of our employees, customers, and business partners. The global impact of the COVID-19 pandemic continues to rapidly evolve, and we will continue to monitor the situation and the effects on our business and operations closely. We do not yet know the full extent of potential impacts on our business or operations or on the global economy as a whole, particularly if the COVID-19 pandemic continues and persists for an extended period of time. Given the uncertainty, we cannot reasonably estimate the impact on our future operating results, cash flows, or financial condition. For additional information, see the section titled "Risk Factors."
Key Business Metrics
We monitor the following key metrics to help us evaluate our business, identify trends affecting our business, formulate business plans, and make strategic decisions.
Annualized Recurring Revenue
We believe that ARR is a key operating metric to measure our business because it
is driven by our ability to acquire new subscription customers and to maintain
and expand our relationship with existing subscription customers. ARR represents
the annualized revenue run rate of our subscription contracts at the end of a
reporting period, assuming contracts are renewed on their existing terms for
customers that are under subscription contracts with us. ARR is not a forecast
of future revenue, which can be impacted by contract start and end dates and
renewal rates.
As of April 30,
2022 2021
(in thousands)
Annualized recurring revenue (ARR)
ARR grew 110% year-over-year to$339.0 million as ofApril 30, 2022 , primarily due to high growth in the number of new customers purchasing our subscriptions and to additional purchases by existing customers.
Customers with ARR of
We believe that our ability to increase the number of customers with ARR of$100,000 or more is an indicator of our market penetration and strategic demand for our platform. We define a customer as an entity that has an active subscription for access to our platform. We count MSPs, MSSPs, MDRs, and OEMs, who may purchase our products on behalf of multiple companies, as a single customer. We do not count our reseller or distributor channel partners as customers. 21
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As of April 30,
2022 2021
Customers with ARR of $100,000 or more 591 277
Customers with ARR of $100,000 or more grew 113% year-over-year to 591 as of
April 30, 2022 , primarily due to new customers making purchases of greater than
$100,000 , and partly due to existing customers who made additional purchases.
Dollar-Based Net Retention Rate
We believe that our ability to retain and expand our revenue generated from our
existing customers is an indicator of the long-term value of our customer
relationships and our potential future business opportunities. Dollar-based net
retention rate measures the percentage change in our ARR derived from our
customer base at a point in time.
As of April 30,
2022 2021
Dollar-based net retention rate 131 % 124 %
Our dollar-based net retention rate was 131% as of
Components of Our Results of Operations
Revenue
We generate substantially all of our revenue from subscriptions to our Singularity Platform. Customers can extend the functionality of their subscription to our platform by subscribing to additional Singularity Modules. Subscriptions provide access to hosted software. The nature of our promise to the customer under the subscription is to provide protection for the duration of the contractual term and as such is considered as a series of distinct services. We invoice our customers upfront upon signing for the entire term of the contract, periodically, or in arrears. Most of our subscription contracts have a term of one to three years. Cost of Revenue Cost of revenue consists primarily of third-party cloud infrastructure expenses incurred in connection with the hosting and maintenance of our platform. Cost of revenue also consists of personnel-related costs associated with our customer support and services organization, including salaries, benefits, bonuses, and stock-based compensation, amortization of acquired intangible assets, amortization of capitalized internal-use software, software and subscription services used by our customer support and services team, and allocated overhead costs. Our third-party cloud infrastructure costs are driven primarily by the number of customers, the number of endpoints per customer, the number of modules, and the incremental costs for storing additional data collected for such cloud modules. We plan to continue to invest in our platform infrastructure and additional resources in our customer support and services organization as we grow our business. The level and timing of investment in these areas could affect our cost of revenue from period to period.
Operating Expenses
Our operating expenses consist of research and development, sales and marketing,
and general and administrative expenses. Personnel-related expenses are the most
significant component of operating expenses and consist of salaries, benefits,
bonuses, stock-based compensation, and sales commissions. Operating expenses
also include allocated facilities and IT overhead costs.
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Research and Development
Research and development expenses consist primarily of employee salaries, benefits, bonuses, and stock-based compensation. Research and development expenses also include consulting fees, software and subscription services, and third-party cloud infrastructure expenses incurred in developing our platform and modules. We expect research and development expenses to increase in absolute dollars as we continue to increase investments in our existing products and services. However, we anticipate research and development expenses to decrease as a percentage of our total revenue over time, although our research and development expenses may fluctuate as a percentage of our total revenue from period to period depending on the timing of these expenses. In addition, research and development expenses that qualify as internal-use software are capitalized, the amount of which may fluctuate significantly from period to period.
Sales and Marketing
Sales and marketing expenses consist primarily of employee salaries, commissions, benefits, bonuses, stock-based compensation, travel and entertainment related expenses, advertising, branding and marketing events, promotions, and software and subscription services. Sales and marketing expenses also include sales commissions paid to our sales force and referral fees paid to independent third parties that are incremental to obtain a subscription contract. Such costs are capitalized and amortized over an estimated period of benefit of four years, and any such expenses paid for the renewal of a subscription are capitalized and amortized over the contractual term of the renewal. We expect sales and marketing expenses to increase in absolute dollars as we continue to make significant investments in our sales and marketing organization to drive additional revenue, further penetrate the market, and expand our global customer base, but to decrease as a percentage of our revenue over time.
General and Administrative
General and administrative expenses consist primarily of salaries, benefits, bonuses, stock-based compensation, and other expenses for our executive, finance, legal, human resources, and facilities organizations. General and administrative expenses also include external legal, accounting, other consulting, and professional services fees, software and subscription services, and other corporate expenses. We expect to incur additional expenses as a result of operating as a public company, including costs to comply with the rules and regulations applicable to companies listed on a national securities exchange, costs related to compliance and reporting obligations, and increased expenses for insurance, investor relations, and professional services. We expect that our general and administrative expenses will increase in absolute dollars as our business grows but will decrease as a percentage of our revenue over time.
Interest Income, Interest Expense, and Other Income (Expense), Net
Interest income consists primarily of interest earned on our cash equivalents and short-term investments.
Interest expense consisted primarily of interest on borrowings associated with our loan and security agreement.
Other income (expense), net consists primarily of foreign currency transaction gains and losses.
Provision for Income Taxes Provision for income taxes consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business. In connection with our global consolidated losses, we maintain a full valuation allowance against ourU.S. andIsrael deferred tax assets because we have concluded that it is more likely than not that the deferred tax assets will not be realized. 23
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Results of Operations
The following table sets forth our results of operations for the periods
presented:
Three Months Ended April 30,
2022 2021
(in thousands)
Revenue $ 78,255 $ 37,395
Cost of revenue(1) 27,139 18,283
Gross profit 51,116 19,112
Operating expenses:
Research and development(1) 45,881 27,820
Sales and marketing(1) 60,641 36,180
General and administrative(1) 34,890 16,724
Total operating expenses 141,412 80,724
Loss from operations (90,296) (61,612)
Interest income 1,087 23
Interest expense (5) (303)
Other income (expense), net (291) (593)
Loss before provision for income taxes (89,505) (62,485)
Provision for income taxes 329 149
Net loss $ (89,834) $ (62,634)
__________________(1)Includes stock-based compensation expense as follows:
Three Months Ended April 30,
2022 2021
(in thousands)
Cost of revenue $ 1,848 $ 383
Research and development 10,463 7,139
Sales and marketing 7,096 2,047
General and administrative 12,223 3,868
Total stock-based compensation expense $ 31,630 $ 13,437
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The following table sets forth the components of our condensed consolidated
statements of operations as a percentage of revenue for each of the periods
presented:
Three Months Ended April 30,
2022 2021
(as a percentage of total revenue)
Revenue 100 % 100 %
Cost of revenue 35 49
Gross profit 65 51
Operating expenses:
Research and development 59 74
Sales and marketing 77
97
General and administrative 45 45 Total operating expenses 181 216 Loss from operations (115) (165) Interest income 1 - Interest expense - (1) Other income (expense), net -
(2)
Loss before provision for income taxes (114) (167) Provision for income taxes - - Net loss (115) % (167) %
Note: Certain figures may not sum due to rounding.
Comparison of the Three Months Ended
Revenue
Three Months Ended April 30, Change
2022 2021 $ %
(dollars in thousands)
Revenue $ 78,255 $ 37,395 $ 40,860 109 %
Revenue increased by $40.9 million primarily due to the expansion of our
customer base, which grew over 55% as compared to the same period last year. We
also experienced increased purchases from our existing customers as they expand
the number of endpoints, purchase additional modules from us, and upgrade
subscription tiers, as evidenced by our dollar-based net retention rate of 131%
as of April 30, 2022 .
Cost of Revenue, Gross Profit, and Gross Margin
Three Months Ended April 30, Change
2022 2021 $ %
(dollars in thousands)
Cost of revenue $ 27,139 $ 18,283 $ 8,856 48 %
Gross profit $ 51,116 $ 19,112 $ 32,004 167 %
Gross margin 65 % 51 %
Cost of revenue increased by $8.9 million primarily due to an increase of $5.0
million in allocated overhead costs and higher third-party cloud infrastructure
expenses of $3.3 million from increased data usage. Gross margin increased
to 65%, primarily due to revenue growth from existing and new customers
outpacing growth in cost of revenue.
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Research and Development
Three Months Ended April 30, Change
2022 2021 $ %
(dollars in thousands)
Research and development expenses
$ 18,061 65 % Research and development expenses increased by$18.1 million primarily due to an increase in personnel-related expenses of$8.2 million , including an increase of$3.3 million related to stock-based compensation expense as a result of increased headcount, and an increase of$7.3 million in third-party cloud infrastructure expenses incurred in developing our platform and modules. Sales and Marketing Three Months Ended April 30, Change 2022 2021 $ % (dollars in thousands) Sales and marketing expenses$ 60,641 $ 36,180 $ 24,461 68 % Sales and marketing expenses increased by$24.5 million primarily due to an increase in personnel-related expenses of$19.4 million , including an increase of$5.0 million in stock-based compensation expense as a result of increased headcount and an increase of$3.9 million in commission expense as a result of an increase in sales year over year. In addition, there was an increase in allocated overhead costs of$2.2 million , with the remaining increase primarily the result of increased travel as COVID-19 travel restrictions ease. Three Months Ended April 30, Change 2022 2021 $ % (dollars in thousands)
General and administrative expenses
109 %
General and administrative expenses increased by $18.2 million primarily due to
an increase in personnel-related expenses of $13.4 million , including an
increase of $8.4 million in stock-based compensation expense as a result of
increased headcount. In addition, there was an increase of $2.3 million due to
costs incurred related to due diligence and planning associated with our Attivo
acquisition which closed in May 2022 , with the remaining increase primarily the
result of additional operating costs as a public company and software
subscription services.
Interest Income, Interest Expense, and Other Income (Expense), Net
Three Months Ended April 30, Change
2022 2021 $ %
(dollars in thousands)
Interest income $ 1,087 $ 23 $ 1,064 4626 %
Interest expense $ (5) $ (303) $ 298 (98) %
Other income (expense), net $ (291) $ (593) $ 302 (51) %
Interest income increased $1.1 million as a result of interest earned on
investments, which we did not have in fiscal year 2022. Interest expense
decreased due to the repayment and termination of the revolving line of credit
in June 2021 . The decrease in other income (expense), net is primarily due to
net foreign currency exchange losses.
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Provision for Income Taxes
Three Months Ended April 30, Change
2022 2021 $ %
(dollars in thousands)
Provision for income taxes $ 329 $ 149 $ 180 121 %
The provision for income taxes increased primarily as a result of the increase in foreign taxes related to operations in international subsidiaries.
Liquidity and Capital Resources
InJuly 2021 , upon completion of our IPO and the concurrent private placement, we received net proceeds of$1.4 billion , after deducting underwriters' discounts and commissions and estimated offering expenses of$81.6 million . We did not pay any underwriting discounts or commissions with respect to shares that were sold in the private placement. We have financed operations primarily through proceeds received from sales of equity securities, payments received from our customers, and borrowings under a now-terminated loan and security agreement, and we have generated operating losses, as reflected in our accumulated deficit of$711.5 million and$621.7 million as ofApril 30, 2022 andJanuary 31, 2022 , respectively. We expect these and other operating losses to continue for the foreseeable future. We also expect to incur significant research and development, sales and marketing, and general and administrative expenses over the next several years in connection with the continued development and expansion of our business. As ofApril 30, 2022 andJanuary 31, 2022 , our principal source of liquidity was cash, cash equivalents, and short-term investments of$1.6 billion and$1.7 billion , respectively. In the short term, we believe that our existing cash, cash equivalents, and short-term investments will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months. In the long term, our future capital requirements will depend on many factors, including our revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support research and development efforts, the price at which we are able to purchase third-party cloud infrastructure, expenses associated with our international expansion, the introduction of platform enhancements, and the continuing market adoption of our platform. We have, and in the future, we may enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operating results, and financial condition. The following table shows a summary of our cash flows for the periods presented: Three Months Ended April 30, 2022 2021 (in thousands) Net cash used in operating activities$ (49,351) $ (30,798) Net cash used in investing activities$ (858,525) $ (5,242) Net cash provided by financing activities $ 4,904$ 1,917 Operating Activities Our largest source of operating cash is payments received from our customers. Our primary uses of cash from operating activities are for personnel-related expenses, sales and marketing expenses, third-party cloud infrastructure expenses, and overhead expenses. We have generated negative cash flows from operating activities and have supplemented working capital through net proceeds from the sale of equity securities. 27
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Cash used in operating activities primarily consists of our net loss adjusted for certain non-cash items, including stock-based compensation expense, depreciation and amortization, amortization of deferred contract acquisition costs, and changes in operating assets and liabilities during each period. Cash used in operating activities during the three months endedApril 30, 2022 was$49.4 million , primarily consisting of our net loss of$89.8 million , and$2.2 million used in net changes to our operating assets and liabilities, partially offset by non-cash items of$42.7 million . The main drivers of the changes in operating assets and liabilities were a$21.5 million decrease in accrued payroll and benefits, a$9.3 million increase in deferred contract acquisition costs, a$5.2 million increase in prepaid expenses and other assets primarily due to annual insurance renewal and prepaid sponsorship costs. These amounts were partially offset by a$14.8 million decrease in accounts receivable due to timing of cash received from customers, a$13.6 million increase in deferred revenue resulting primarily from increased subscription contracts, a$5.1 million increase in accounts payable due to timing of invoices received from vendors. Cash used in operating activities during the three months endedApril 30, 2021 was$30.8 million , primarily consisting of our net loss of$62.6 million , adjusted for non-cash items of$19.6 million and net cash inflows of$12.3 million provided by changes in our operating assets and liabilities. The main drivers of the changes in operating assets and liabilities were a$9.7 million increase in deferred revenue resulting primarily from increased subscription contracts, and a$6.3 million decrease in accounts receivable due to payment from customers. These amounts were partially offset by a$5.5 million increase in deferred contract acquisition costs.
Investing Activities
Cash used in investing activities during the three months endedApril 30, 2022 was$858.5 million , consisting of$853.0 million of investment purchases,$2.8 million of purchases of property and equipment to support additional office facilities, and$2.6 million of capitalized internal-use software costs. Cash used in investing activities during the three months endedApril 30, 2021 was$5.2 million , consisting of$3.4 million of net cash paid for the acquisition of Scalyr,$1.0 million of capitalized internal-use software costs and$0.8 million of purchases of property and equipment to support additional office facilities. Financing Activities Cash provided by financing activities during the three months endedApril 30, 2022 was$4.9 million , consisting of$5.1 million of proceeds from the exercise of employee stock options, partially offset by$0.2 million of payments of deferred offering costs. Cash provided by financing activities during the three months endedApril 30, 2021 was$1.9 million , consisting of$3.7 million of proceeds from the exercise of employee stock options, partially offset by a$1.8 million repayment of our term loan.
Contractual Obligations and Commitments
There were no material changes outside of the ordinary course of business in our
contractual obligations and commitments from those disclosed in our Annual
Report on Form 10-K filed with the
Off-Balance Sheet Arrangements
We did not have during the periods presented, and we do not currently have, any off-balance sheet financing arrangements or any relationships with unconsolidated entities or financial partnerships, such as structured finance or special purpose entities, that were established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements are prepared in accordance withUnited States generally accepted accounting policies, or GAAP. The preparation of condensed consolidated financial statements requires us 28
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to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, and we evaluate our estimates and assumptions on an ongoing basis. Actual results could differ significantly from the estimates made by management. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, operating results, and cash flows will be affected.
There have been no material changes to our critical accounting policies and
estimates as compared to those described in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" set forth in our
Annual Report on Form 10-K for the fiscal year ended
Recently Issued Accounting Pronouncements
See Note 2, Summary of Significant Accounting Policies, in the notes to our condensed consolidated financial statements included in Part I, Item I of this Quarterly Report on Form 10-Q for more information regarding recently issued accounting pronouncements.
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