On April 1, 2022, the Company acquired all of the outstanding shares of Area 1, a company that has developed cloud-native email security technology, for a total purchase consideration of $156.6 million. The total purchase consideration included (i) acquisition-date cash payments of $82.6 million, net of $2.5 million of cash acquired, (ii) $63.5 million in shares of the Company’s Class A common stock, (iii) a cash holdback of $9.3 million, which the Company retained for up to 12 months and was then payable to the previous owners of Area 1, subject to offset by the Company for any of the previous owners’ indemnification obligations in connection with the acquisition, and (iv) a separate cash holdback of $1.1 million. The cash holdback of $9.3 million and $1.1 million were subsequently paid to the previous owners of Area 1 as of the six months ended June 30, 2023. Concurrent with the closing of the acquisition, the Company made a cash payment of $4.1 million to repay Area 1’s debt, which was part of the acquisition-date cash payments included in the purchase consideration.

In connection with the acquisition, the Company entered into compensation arrangements for stock-based and cash awards with a value totaling $15.9 million. Of the total stock-based and cash awards, $1.4 million cash awards were recognized as compensation expense on the acquisition date. Refer to Note 10 to these condensed consolidated financial statements for further details on the share-based awards.

The transaction-related costs for the acquisition were not material and were included in general and administrative expenses during the three months and six months ended June 30, 2022. The fair values of assets acquired and liabilities assumed on the acquisition date are summarized as follows (in thousands):


Accounts receivable, net	$	1,634
Prepaids and other current assets	953
Acquired Intangible Assets	43,300
Goodwill	119,743
Total assets acquired	165,630
Accounts Payable	(254)
Accrued expense and other current liabilities	(595)
Deferred revenue	(5,736)
Deferred revenue, noncurrent	(1,213)
Other noncurrent liabilities	(1,267)
Total purchase price	$	156,565

The acquired assets and assumed liabilities were recorded at their estimated fair values, except for deferred revenue which was recorded under ASC 606 in accordance with the early adoption of ASU 2021-08 Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers effective January 1, 2022. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, none of which is expected to be deductible for tax purposes. Goodwill is primarily attributable to the assembled workforce as well as the anticipated synergies from the integration of Area 1’s technology with the Company's technology. An immaterial purchase accounting adjustment to revise purchase consideration and goodwill was made during the year ended December 31, 2022.

On January 14, 2022, the Company acquired all of the outstanding shares of Vectrix Security, Inc. (Vectrix), a company that has developed an online security technology that gives users the ability to scan and monitor SaaS applications for security issues, for a total purchase consideration of $7.6 million. The total purchase consideration included (i) acquisition-date cash payments of $4.3 million, net of $0.8 million of cash acquired, (ii) $2.0 million in shares of the Company’s Class A common stock, and (iii) a cash holdback of $1.3 million, which the Company is retaining for up to 18 months and will be payable to the previous owners of Vectrix, subject to offset by the Company for any of the previous owners’ indemnification obligations in connection with the acquisition. Concurrent with the closing of the acquisition, the Company made a cash payment of $2.0 million to cancel and settle Vectrix’s other existing equity-related agreements, which was part of the acquisition-date cash payments included in the purchase consideration.

In connection with the acquisition, the Company entered into compensation arrangements for stock-based and cash awards with a value totaling $8.0 million, of which $2.6 million was recognized as compensation expense on the acquisition date. Additional compensation expense during the three and six months ended June 30, 2023 and June 30, 2022 were not material. The remaining compensation amount is not material and will be recognized through the year ended December 31, 2026.

The transaction-related costs for the acquisition were not material and are included in general and administrative expenses in the condensed consolidated statement of operations for the three and six months ended June 30, 2022.

The acquired assets and assumed liabilities were recorded at their estimated fair values. The estimated useful life for the acquired developed technology is two years. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, none of which is expected to be deductible for tax purposes. Goodwill is primarily attributable to the assembled workforce as well as the anticipated synergies from the integration of Vectrix's technology with the Company's technology. An immaterial purchase accounting adjustment to revise purchase consideration and goodwill was made during the year ended December 31, 2022.

On October 15, 2021, the Company acquired all of the outstanding shares of Zaraz Inc. (Zaraz), a remote-first company, that has developed a server-side rendering technology, for a total purchase consideration of $7.2 million.

The total purchase consideration included (i) acquisition-date cash payments of $5.6 million, net of $0.8 million of cash acquired, and (ii) $1.6 million in shares of the Company’s Class A common stock. Concurrent with the closing of the acquisition, the Company made a cash payment of $1.1 million to cancel and settle Zaraz’s existing equity arrangements, which was part of the acquisition-date cash payments included in the purchase consideration.

In connection with the acquisition, the Company entered into compensation arrangements for stock-based and cash awards with a value totaling $6.5 million, of which $0.5 million was recorded as compensation expense during the year ended December 31, 2021. Additional compensation expense during the three and six months ended June 30, 2023 and June 30, 2022 were not material. The remaining compensation amount is not material and will be recognized through the year ended December 31, 2024.

The acquired assets and assumed liabilities were recorded at their estimated fair values. The estimated useful life for the acquired developed technology is two years. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, none of which is expected to be deductible for tax purposes. Goodwill is primarily attributable to the assembled workforce as well as the anticipated synergies from the integration of Zaraz's technology with the Company's technology. An immaterial purchase accounting adjustment to revise purchase consideration and goodwill was made during the year ended December 31, 2022.