accd-20241130

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________________________________

FORM 10-Q

______________________________________________________


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended November 30, 2024


o			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: 001-39348

ACCOLADE, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or Other Jurisdiction of Incorporation or Organization)		01-0969591 (I.R.S. Employer Identification No.)
	1201 Third Avenue, Suite 1700 Seattle, WA 98101 (Address of principal executive offices including zip code)

Registrant’s telephone number, including area code: (206) 926-8100

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


Title of each class	Trading symbol	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	ACCD	The Nasdaq Stock Market LLC (The Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	o

Non-accelerated filer	o	Smaller reporting company	o

		Emerging growth company	o

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. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of December 31, 2024, 81,585,508 shares of the registrant’s common stock were outstanding.

Table of Contents

ACCOLADE, INC.

INDEX


		PAGE NUMBER
	Special Note Regarding Forward Looking Information	2

PART I FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of November 30 , 2024 and February 29, 2024	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended Nov ember 30 , 2024 and 2023	4
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the three and nine months ended November 30 , 2024 and 2023	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended November 30 , 2024 and 2023	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	38

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	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "intend," "may," "plan," "potential," "predict," "project," "should," "target," "will," or "would" or the negative of these words or other similar terms or expressions. Forward-looking statements include information related to our financial performance and possible or assumed future results of operations and expenses, our outlook, business strategies and plans, business environment, market size, product capabilities, timing of new product releases, the impact of our focus areas and key initiatives, and potential future growth. Forward-looking statements include all statements that are not historical facts.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled "Risk Factors" and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

ACCOLADE, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (unaudited)

(In thousands, except share and per share data)


	November 30, 2024		February 29, 2024
Assets
Current assets:
Cash and cash equivalents	$	185,922	$	185,718
Marketable securities	39,557		51,315
Accounts receivable, net	25,764		21,800
Unbilled revenue	4,930		5,902
Current portion of deferred contract acquisition costs	4,209		4,369
Prepaid and other current assets	12,064		15,808
Total current assets	272,446		284,912
Property and equipment, net	18,567		19,140
Operating lease right-of-use assets	24,677		28,340
Goodwill	181,731		278,191
Intangible assets, net	139,314		165,407
Deferred contract acquisition costs	8,471		9,608
Other assets	2,245		2,553
Total assets	$	647,451	$	788,151
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	10,344	$	13,749
Accrued expenses and other current liabilities	10,538		10,736
Accrued compensation	33,446		23,392
Due to customers	3,649		18,552
Current portion of deferred revenue	38,260		34,770
Current portion of operating lease liabilities	7,341		6,651
Total current liabilities	103,578		107,850
Loans payable, net of unamortized issuance costs	209,403		208,482
Operating lease liabilities	21,148		26,077
Other noncurrent liabilities	256		156
Deferred revenue	66		121
Total liabilities	334,451		342,686
Commitments and Contingencies (note 10)
Stockholders’ equity
Common stock par value $0.0001; 500,000,000 shares authorized; 81,186,542 and 78,070,781 shares issued and outstanding at November 30, 2024 and February 29, 2024, respectively	8		8
Additional paid-in capital	1,539,857		1,499,603
Accumulated other comprehensive income (loss)	24		(47)
Accumulated deficit	(1,226,889)		(1,054,099)
Total stockholders’ equity	313,000		445,465
Total liabilities and stockholders’ equity	$	647,451	$	788,151

See accompanying notes to condensed consolidated financial statements.

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ACCOLADE, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

(In thousands, except share and per share data)


	Three months ended November 30,				Nine months ended November 30,
	2024		2023		2024		2023
Revenue	$	105,061	$	99,371	$	321,887	$	289,461
Cost of revenue, excluding depreciation and amortization	58,573		54,518		174,106		164,038
Operating expenses:
Product and technology	20,588		23,468		69,374		74,969
Sales and marketing	25,508		26,230		78,634		75,339
General and administrative	16,199		15,474		48,743		47,813
Depreciation and amortization	10,048		11,400		31,077		33,858
Goodwill impairment	96,460		—		96,460		—
Total operating expenses	168,803		76,572		324,288		231,979
Loss from operations	(122,315)		(31,719)		(176,507)		(106,556)
Interest income, net	1,452		1,705		4,836		4,340
Other income (expense)	(69)		9,281		(78)		10,424
Loss before income taxes	(120,932)		(20,733)		(171,749)		(91,792)
Income tax expense	(332)		(331)		(1,041)		(506)
Net loss	$	(121,264)	$	(21,064)	$	(172,790)	$	(92,298)

Net loss per share, basic and diluted

SEC Form 10-Q filed by Accolade Inc.