The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. The discussion contains forward-looking statements that are based on the beliefs of management, as well as assumptions made by, and information currently available to, our management. Actual results could differ materially from those discussed in or implied by forward-looking statements as a result of various factors, including those discussed in Part II, Item 1A, "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021. Our historical results are not necessarily indicative of the results that may be expected in the future and our current quarterly results are not necessarily indicative of the results expected for the full year or any other period.
Xometry, Inc. ("Xometry", "Company", "our" or "we") was incorporated in the State of Delaware in May 2013. Xometry is a leading AI-enabled digital marketplace, transforming one of the largest industries in the world. We use our proprietary technology to create a marketplace that enables buyers to efficiently source manufactured parts and assemblies, and empower suppliers of manufacturing services to grow their businesses. Xometry's corporate headquarters is located in Derwood, Maryland.
Xometry uses proprietary technology to enable product designers, engineers, buyers, and supply chain professionals to instantly access the capacity of a global network of manufacturing facilities. The Company's platform makes it possible for buyers to quickly receive pricing, expected lead times, manufacturability feedback and place orders on the Company's platform. The network allows the Company to provide high volumes of unique parts, including custom components and aftermarket parts for its buyers.
Our mission is to accelerate innovation by providing real time, equitable access to global manufacturing capacity and demand. Our vision is to drive efficiency, sustainability and innovation for industries worldwide by lowering the barriers to entry to the manufacturing ecosystem.
We empower suppliers to grow their manufacturing businesses and improve machine uptime by providing access to an extensive, diverse base of buyers. We also offer suppliers supporting products and services to meet their unique needs. Our suite of supplier services includes access to competitively priced tools, materials and supplies from leading brands and financial service products to stabilize and enhance cash flow. In addition, we offer suppliers digital marketing and data solutions and SaaS based solutions to help suppliers optimize their productivity.
We define "buyers" as individuals who have placed an order to purchase on-demand parts or assemblies on our marketplace. Our buyers include engineers, product designers, procurement and supply chain personnel, inventors and business owners from businesses of a variety of sizes, ranging from self-funded start-ups to Fortune 100 companies. We define "accounts" as an individual entity, such as a sole proprietor with a single buyer or corporate entities with multiple buyers, having purchased at least one part on our marketplace. We define "suppliers" as individuals or businesses who have been approved by us to either manufacture a product on our platform for a buyer or have utilized our supplier services, including our financial services or the purchase of supplies.
The majority of our revenue is derived from the sale of part(s) and assemblies to our customers on our marketplace, which we refer to as marketplace revenue. The suppliers on our platform offer a diversified mix of manufacturing processes. These manufacturing processes include computer numerical control ("CNC") manufacturing, sheet metal forming, sheet cutting, 3D printing (including fused deposition modeling, direct metal laser sintering, PolyJet, stereolithography, selective laser sintering, binder jetting, carbon digital light synthesis and multi jet fusion), die casting, stamping, injection molding, urethane casting, as well as finishing services, rapid prototyping and high-volume production. We enable buyers to source these processes to meet complex and specific design and order needs across several industries, including Defense, Aerospace, Healthcare, Automotive, Consumer Goods, Industrial, Robotics, Government, and Education.
Our supplier services revenue primarily includes the sale of advertising and marketing services and to a lesser extent, supplies and financial service products that help our customers better manage cash flow at all stages of job production. Our financial services products, such as Xometry Pay, enable suppliers to stabilize and enhance their cash flows, supply discounts that allow suppliers to lower their operating costs, and resource management tools to optimize their businesses. In 2021, we acquired Thomas Publishing Company ("Thomas") and Fusiform, Inc. (d.b.a FactoryFour) ("FactoryFour"), expanding our basket of supplier services to include advertising and marketing services and to a lesser extent SaaS based solutions to help suppliers optimize their productivity. Our revenue from Thomas is primarily advertising revenue.
Our business benefits from a virtuous network liquidity effect, because adding buyers to our platform generates greater demand on our marketplace which in turn attracts more suppliers to the platform, allowing us to rapidly scale and increase the number of manufacturing processes offered on our platform. In order to continue to meet the needs of buyers and remain highly competitive, we expect to continue to add suppliers to our platform that have new and innovative manufacturing processes. Thus, our platform is unbounded by the in-house manufacturing capacity and processes of our current suppliers.
The on-going COVID-19 pandemic has globally resulted in loss of life, and business closures impacting our buyers and suppliers. Even after the COVID-19 pandemic subsides, it may have a continued and lasting impact on the global economy, including our business. Future shelter-in-place orders and similar regulations impact the ability of our buyers and suppliers to operate their businesses. Any limitations on or disruptions or closures of buyers' and suppliers' businesses could adversely affect our business.
The COVID-19 pandemic to date has not significantly adversely impacted the growth of our business. We believe the COVID-19 pandemic has validated our platform, highlighting the need for resilient supply chains, and reshaping the way buyers source their manufacturing needs.
In addition to the measures presented in our condensed consolidated financial statements included elsewhere in this filing, we use the following key operational and business metrics to help us evaluate our marketplace business, measure our performance, identify trends affecting our business, formulate business plans and develop forecasts, and make strategic decisions:
We define Active Buyers as the number of buyers who have made at least one purchase on our marketplace during the last twelve months. An increase or decrease in the number of Active Buyers is a key indicator of our ability to attract, retain and engage buyers on our platform.
Active Buyers has consistently grown over time. The number of Active Buyers on our platform reached 30,683 as of March 31, 2022, up 44% from 21,345 as of March 31, 2021. The key drivers of Active Buyer growth are continued account and buyer engagement and the success of our strategy to attract new buyers.
Percentage of Revenue from Existing Accounts
We define an existing account as an account where at least one buyer has made a purchase on our marketplace. We believe the efficiency and transparency of our business model leads to increasing account stickiness and spend over time. Buyers can utilize our marketplace for both one-off and recurring manufacturing opportunities. For example, a buyer may choose to utilize our marketplace's CNC manufacturing processes to manufacture a discrete component for a prototype, and then may choose to later use our marketplace to mass produce that same component. A buyer may also recommend our marketplace to other engineers within their organizations who are designing other products and who may use an entirely different set of manufacturing processes, deepening our reach and stickiness with an account.
For the quarter ended March 31, 2022, 94% of our revenue was generated from existing accounts. We believe the repeat purchase activity from existing accounts reflects the underlying strength of our business and provides us with substantial revenue visibility and predictability.
Accounts with Last Twelve-Month Spend of At Least $50,000
Accounts with Last Twelve-Month, or LTM, Spend of At Least $50,000 means an account that has spent at least $50,000 on our marketplace in the most recent twelve-month period. We view the acquisition of an account as a foundation for the addition of long-term buyers to our marketplace. Once an account joins our platform, we aim to expand the relationship and increase engagement and spending activities from that account over time. The number of accounts with LTM Spend of at least $50,000 on our platform reached 790 as of March 31, 2022, up 92% from 412 as of March 31, 2021.
We define Adjusted EBITDA as net income (loss), adjusted to exclude interest expense, interest and dividend income and other expenses, depreciation and amortization, stock-based compensation expense, charitable contributions, transactions costs, income from an unconsolidated joint venture and impairment charges. Adjusted EBITDA is a performance measure that we use to assess our operating performance and the operating leverage in our business. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA for a period by revenue for the same period.
For the three months ended March 31, 2022, Adjusted EBITDA loss increased to $(12.7) million, as compared to Adjusted EBITDA loss of $(8.8) million for the same quarter in 2021. For the quarter ended March 31, 2022, Adjusted EBITDA Margin decreased to (15)% of revenue, as compared to (20)% of revenue for the same quarter in 2021, driven primarily by higher operating expenses offset by increased revenues, as we continue to scale our business.
Addback (deduct) Interest expense, interest and dividend income and other expenses
We define Non-GAAP net loss, as net loss adjusted to exclude depreciation and amortization, stock-based compensation expense, amortization of in-place lease assets, amortization of debt discount and issuance costs, unrealized loss on marketable securities, revaluation of contingent consideration and transaction costs.
For the three months ended March 31, 2022, Non-GAAP net loss increased to $(12.6) million, as compared to Non-GAAP net loss of $(9.3) million for the same quarter in 2021. For the quarter ended March 31, 2022, Non-GAAP net loss decreased to (15)% of revenue, as compared to (21)% of revenue for the same quarter in 2021.
Adjusted EBITDA and Non-GAAP net loss are non-GAAP financial measures that we use, in addition to our GAAP financial measures, to evaluate our business. We have included Adjusted EBITDA and Non-GAAP net loss in this filing because they are key measures used by our management to evaluate our operating performance. Accordingly, we believe that Adjusted EBITDA and Non-GAAP net loss provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. Our calculation of Adjusted EBITDA and Non-GAAP net loss may differ from similarly titled non-GAAP measures, if any, reported by our peer companies and therefore may not serve as an accurate basis of comparison among companies. Adjusted EBITDA and Non-GAAP net loss should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP.
Our marketplace revenue is primarily comprised of sales to customers through our platform. Buyers purchase specialized CNC manufacturing, sheet metal manufacturing, 3D printing, injection molding, urethane casting, finishing services. Customer purchases range from rapid prototyping of single parts to high-volume production on our marketplace. These products are primarily manufactured by our network of suppliers.
Supplier services revenue includes the sale of marketing and advertising services, and to a lesser extent SaaS based solutions and financial service products.
Marketplace cost of revenue primarily consists of the cost to us of the products that are manufactured or produced by us or our suppliers for delivery to buyers on our platform, internal and external production costs, shipping costs and certain internal depreciation. We expect cost of revenue to increase in absolute dollars to the extent our revenue increases and transaction volume increases. As we grow and add suppliers to our platform we are able to improve our pricing efficiency, we expect cost of revenue to decline as a percentage of revenue over time.
Cost of revenue for supplier services primarily consists of internal and external production costs and website hosting.
Gross profit, or revenue less cost of revenue, is primarily affected by the growth of our revenue. Our gross profit margin is primarily affected by liquidity of our suppliers network and the efficiency of our pricing and will be benefited by increasing the use of existing supplier services and the variety of supplier services offerings over time.
Our operating expenses consist of sales and marketing, operations and support, product development and general and administrative functions.
Sales and marketing expenses are expensed as incurred and include the costs of our digital marketing strategies, branding costs and other advertising costs, certain depreciation and amortization expense, and compensation expenses, including stock-based compensation, to our sales and marketing employees. We intend to continue to invest in our sales and marketing capabilities in the future to continue to increase our brand awareness, add new accounts and further penetrate existing accounts. We expect sales and marketing expense to increase in absolute dollars in the future as we grow our business, though in the near term sales and marketing expenses may fluctuate from period to period based on the timing of our investments in our sales and marketing functions as these investments may vary in scope and scale over future periods.
Operations and support expenses are the costs we incur in support of the buyers and suppliers on our platform which are provided by phone, email and chat for purposes of resolving buyer and suppliers related matters. These costs primarily consist of compensation expenses of the support staff, including stock-based compensation, certain depreciation and amortization expense and software costs used in delivering buyer and suppliers services. We expect operations and support expense to increase in absolute dollars in the future, though in the near term operations and support expenses may fluctuate from period-to-period based on total revenue levels and the timing of our investments in our operations and support functions as these investments may vary in scope and scale over future periods.
Product development costs which are not eligible for capitalization are expensed as incurred. This account also includes compensation expenses, including stock-based compensation expenses to our employees performing these functions and certain depreciation and amortization expense. We expect product development expense to increase in absolute dollars in the future, though in the near term product development expenses may fluctuate from period-to-period based on total revenue levels and the timing of our investments in our product development functions as these investments may vary in scope and scale over future periods.
General and administrative expenses primarily consist of professional service fees, public company costs, charitable contributions and certain depreciation and amortization expense. It also includes compensation expenses, including stock-based compensation expenses, for executive, finance, legal and other administrative personnel. We expect our general and administrative expenses to increase. We expect to incur additional general and administrative expenses as a result of operating as a public company, including as a result of increased legal, accounting, and directors' and officers' insurance expenses.
Interest expense consists of interest incurred on our outstanding borrowings under our outstanding convertible notes or other borrowings. See "Management's Discussion and Analysis of Financial Condition and Results of Operations-Liquidity and Capital Resources."
Interest and dividend income consists of interest on our cash and cash equivalents and dividend income from our investments.
Other expenses consist primarily of unrealized losses and other expenses.
Comparison of the Three Months Ended March 31, 2022 and 2021
The following table sets forth our unaudited statements of operations data expressed as a percentage of total revenue for the periods indicated:
The following table present our disaggregated revenue and costs of revenue. Revenue from our marketplace primarily reflects the sales of parts and assemblies on our platform. Revenue from supplier services primarily includes the sale of advertising and to a lesser extent supplies, financial service products and SaaS products.
Revenue and cost of revenue of is presented in the following tables for the three months ended March 31, 2022 (in thousands, amounts for the three months ended March 31, 2021 were not considered material):
Total revenue increased $39.7 million, or 90%, from $43.9 million for the three months ended March 31, 2021 to $83.7 million for the three months ended March 31, 2022. This growth was primarily a result of an increase in marketplace revenue and an increase in supplier services revenue due to our acquisition of Thomas. Total revenue from marketplace and supplier services for the three months ended March 31, 2022 was $64.4 million and $19.3 million, respectively. The marketplace increase was primarily the result of a 44% increase in active buyers resulting from investments in sales and marketing, as well as existing buyers increasing their spend on the platform for the three months ended March 31, 2022, as compared to the prior year period. Supplier services revenue growth was driven primarily by our acquisition of Thomas in December 2021.
Total revenue from our U.S. and International operating segments for the three months ended March 31, 2022 and 2021, was $77.2 million and $41.3 million, respectively, for the U.S., and $6.5 million and $2.6 million, respectively, for International.
Total cost of revenue increased $16.6 million, or 49%, from $34.1 million for the three months ended March 31, 2021 to $50.7 million for the three months ended March 31, 2022. This increase was primarily the result of an increase in marketplace cost of revenue and increase in supplier service costs of revenue due to our acquisition of Thomas. Total cost of revenue from marketplace and supplier services for the three months ended March 31, 2022 was $46.7 million and $4.0 million, respectively.
Marketplace cost of revenue was driven by increased payments to suppliers on our platform due to the growth in our buyer base and increased activity by existing accounts on our marketplace. Our supplier services cost of revenue increased primarily as a result of our acquisition of Thomas in December 2021.
Gross profit increased $23.1 million, or 235%, from $9.8 million for the three months ended March 31, 2021 to $32.9 million for the three months ended March 31, 2022. The increase in gross profit was primarily due to the acquisition of Thomas, increases in revenue from marketplace and improved gross margin as compared to the prior year period.
Gross margin for marketplace was 27.4% for the three months ended March 31, 2022 which was a significant improvement over the prior year period in part due to our AI-driven platform. Pricing has become more efficient due to the increased number of orders, improving the data set and thus making our pricing decisions more accurate. Additionally, we continue to grow our active suppliers resulting in a lower cost of revenue. Gross margin for our supplier services was 79.3% for the three months ended March 31, 2022 primarily due to our acquisition of Thomas.
Sales and marketing expense increased $11.7 million, or 155%, from $7.6 million for the three months ended March 31, 2021 to $19.3 million for the three months ended March 31, 2022, primarily as a result our acquisition of Thomas in December 2021, increases in marketing and advertising spend and additional sales employees. As a percent of total revenue, sales and marketing expenses increased to 23.0% for the three months ended March 31, 2022 from 17.2% for the three months ended March 31, 2021.
For the three months ended March 31, 2022 and 2021, stock based compensation expense recorded in sales and marketing was $0.6 million and $53 thousand, respectively. Excluding stock based compensation, sales and marketing would be 22.3% and 17.1% of revenue for the three months ended March 31, 2022 and 2021, respectively.
Operations and support increased $8.0 million, or 185%, from $4.3 million for the three months ended March 31, 2021 to $12.4 million for the three months ended March 31, 2022, primarily as a result our acquisition of Thomas in December 2021, hiring of additional operations and support employees, and increased stock based compensation expense. As a percent of total revenue, operations and support expenses increased to 14.8% for the three months ended March 31, 2022 from 9.9% for the three months ended March 31, 2021.
For the three months ended March 31, 2022 and 2021, stock based compensation expense recorded in operations and support was $1.4 million and $0.1 million, respectively. Excluding stock based compensation, operations and support would be 13.1% and 9.6% of revenue for the three months ended March 31, 2022 and 2021, respectively.
Product development expense increased $3.6 million, or 99%, from $3.7 million for the three months ended March 31, 2021 to $7.3 million for the three months ended March 31, 2022, primarily as result of our acquisition Thomas in December 2021, hiring additional development employees, software and maintenance cost and increased stock based compensation expense. As a percent of total revenue, product development expenses increased to 8.7% for the three months ended March 31, 2022 from 8.3% for the three months ended March 30, 2021.
For the three months ended March 31, 2022 and 2021, stock based compensation expense recorded in product development was $0.9 million and $0.1 million, respectively. Excluding stock based compensation, product development would be 7.6% and 8.2% of revenue for the three months ended March 31, 2022 and 2021, respectively.
General and administrative expense increased $8.6 million, or 199%, from $4.3 million for the three months ended March 31, 2021 to $13.0 million for the three months ended March 31, 2022. The primary driver of the increase was due to our acquisition of Thomas in December 2021. We also incurred public company costs for insurance, legal and accounting. As a percent of total revenue, general and administrative expenses increased to 15.5% for the for the three months ended March 31, 2022 from 9.9% for the three months ended March 31, 2021.
For the three months ended March 31, 2022 and 2021, stock based compensation expense recorded in general and administrative was $0.5 million and $0.3 million, respectively. Excluding stock based compensation, general and administrative would be 14.9% and 9.2% of revenue for the three months ended March 31, 2022 and 2021, respectively.
Interest expense increased by $0.4 million, or 133%, from $0.3 million for the three months ended March 31, 2021 to $0.8 million for the three months ended March 31, 2022, as a result of the interest on the 2027 convertible notes issued in February 2022.
Interest and dividend income increased to $96 thousand for the three months ended March 31, 2022, due to dividend income from our marketable securities.
Other expenses increased by $0.8 million, or 689%, from $0.1 million for the three months ended March 31, 2021 to $1.0 million for the three months ended March 31, 2022, as a result of a $0.9 million of unrealized loss on marketable securities.
Benefit for income taxes increased by $0.6 million due to an income tax benefit resulting from our acquisition of Thomas.
Total segment loss from our U.S. operating segment for the three months ended March 31, 2022 and 2021, was $16.3 million and $8.2 million, respectively. Total segment loss from our International operating segment for the three months ended March 31, 2022 and 2021, was $3.7 million and $2.3 million, respectively.
We have financed our operations primarily through sales of our equity securities and borrowings under our convertible notes. As of March 31, 2022, our cash and cash equivalents and marketable securities totaled $368.7 million, compared with $116.7 million as of December 31, 2021. We believe our existing cash and cash equivalents and marketable securities will be sufficient to support our working capital and capital expenditure requirements for at least the next twelve months. Our future capital requirements will depend on many factors, including our revenue growth rate, receivable and payable cycles, the timing and extent of investments in product development, sales and marketing, operations and support and general and administrative expenses.
Our capital expenditures consist primarily of internal-use software costs, manufacturing equipment, computers and peripheral equipment, furniture and fixtures and leasehold improvements and patents.
In February 2022, we entered into a purchase agreement with certain counterparties for the sale of an aggregate of $287.5 million principal amount of convertible senior notes due in 2027 (the "2027 Notes") in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"). The 2027 Notes consisted of a $250 million initial placement and an over-allotment option that provided the initial purchasers of the 2027 Notes with the option to purchase an additional $37.5 million aggregate principal amount of the 2027 Notes, which was fully exercised. The 2027 Notes were issued pursuant to an indenture dated February 4, 2022. The net proceeds from the issuance of the 2027 Notes were $278.2 million, net of debt issuance costs. The debt issuance costs are amortized to interest expense using the effective interest rate method.
The 2027 Notes are unsecured obligations which bear regular interest at 1% per annum and for which the principal balance will not accrete. The 2027 Notes will mature on February 1, 2027 unless repurchased, redeemed, or converted in accordance with their terms prior to such date.
The 2027 Notes are convertible into cash, shares of our Class A common stock, or a combination of cash and shares of our Class A common stock, at our election, at an initial conversion rate of 17.8213 shares of Class A common stock per $1,000 principal amount of 2027 Notes, which is equivalent to an initial conversion price of approximately $56.11 per share of our Class A common stock. The conversion rate is subject to customary adjustments for certain events as described in the indenture governing the 2027 Notes.
We may redeem for cash all or any portion of the 2027 Notes, at our option, on or after February 5, 2025 if the last reported sale price of our Class A common stock has been at least 130% of the conversion price then in effect for at least 20 trading days at a redemption price equal to 100% of the principal amount of the 2027 Notes to be redeemed, plus accrued and unpaid interest or additional interest, if any.
Holders of the 2027 Notes may convert all or a portion of their 2027 Notes at their option prior to November 1, 2026, in multiples of $1,000 principal amounts, only under the following circumstances:
if the last reported sale price of our Class A common stock for at least 20 trading days (whether or not consecutive) during the period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price of the 2027 Notes on each such trading day;
during the five business day period after any ten consecutive trading day period in which the trading price per $1,000 principal amount of the 2027 Notes for each day of that ten consecutive trading day period was less than 98% of the product of the last reported sale price of our Class A common stock and the applicable conversion rate of the 2027;
on a notice of redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, in which case we may be required to increase the conversion rate for the 2027 Notes so surrendered for conversion in connection with such redemption notice; or
on the occurrence of specified corporate events.
On or after November 1, 2026, the 2027 Notes are convertible at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.
Holders of the 2027 Notes who convert the 2027 Notes in connection with a make-whole fundamental change, as defined in the indenture governing the 2027 Notes, or in connection with a redemption are entitled to an increase in the conversion rate. Additionally, in the event of a fundamental change, holders of the 2027 Notes may require us to repurchase all or a portion of the 2027 Notes at a price equal to 100% of the principal amount of 2027 Notes, plus any accrued and unpaid special interest, if any.
We accounted for the issuance of the 2027 Notes as a single liability measured at its amortized cost, as no other embedded features require bifurcation and recognition as derivatives.
As of March 31, 2022, the 2027 Notes have a carrying value of $278.5 million with an effective annual interest rate of 1.6%.
For the three months ended March 31, 2022, net cash used in operating activities was $24.3 million, primarily due to a net loss of $(20.0) million adjusted for non-cash charges of $8.1 million and a net decrease in our operating assets and liabilities of $(12.4) million. The non-cash adjustments primarily relate to stock-based compensation of $3.5 million, depreciation and amortization of $1.8 million, $0.9 unrealized loss on marketable securities, and $1.8 million of reduction to our right of use lease assets. The net decrease in operating assets and liabilities is primarily driven by an increase in accounts receivable of $6.1 million, a $1.4 million increase in deferred sales commissions, a decrease in accounts payable of $2.8 million and accrued expenses of $2.8 million, primarily due to growth of our business and the timing of payments related to the acquisition of Thomas and the renewal of annual software licenses that are amortized over the life of the contract. These decreases are partially offset by an increase in contract liabilities of $2.1 million.
For the three months ended March 31, 2021, net cash used in operating activities was $9.9 million, primarily due to a net loss of $(10.5) million adjusted for non-cash charges of $1.6 million and a net decrease in our operating assets and liabilities of $(1.0) million. The non-cash adjustments primarily relate to stock-based compensation of $0.5 million and depreciation and amortization of $0.7 million. The net decrease in operating assets and liabilities is primarily driven by an increase in accounts receivable of $5.5 million and prepaid expenses of $0.9 million. These increases are partially offset by increases in accounts payable of $1.9 million, accrued expenses of $1.6 million and $1.6 million of contract liabilities, primarily due to the growth of our business.
Cash used by investing activities was $282.5 million during the three months ended March 31, 2022, primarily due to the purchase of marketable securities of $280.1 million and $2.5 million for purchases of property and equipment (which includes internal-use software development costs).
Cash used by investing activities was $1.2 million during the three months ended March 31, 2021, primarily due to investments in property and equipment (which includes software development costs).
Cash provided by financing activities was $279.5 million during the three months ended March 31, 2022, reflecting $287.5 million of proceeds from the issuance of the 2027 convertible senior notes. These inflows were offset by $9.3 million of convertible note costs incurred in connection with these notes.
Cash provided by financing activities was $0.8 million during the three months ended March 31, 2021, reflecting $0.8 million of proceeds from the exercise of stock options.
Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected. For additional information about our critical accounting policies and estimates, see the disclosure included in our
Annual Report on Form 10-K as well as Note 2 - Basis of Presentation and Summary of Significant Accounting Policies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.
For a description of our recently adopted accounting pronouncements and recently issued accounting standards not yet adopted, see Note 2 - Basis of Presentation and Summary of Significant Accounting Policies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q.
We qualify as an "emerging growth company" pursuant to the provisions of the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we are an "emerging growth company," we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies," including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding advisory "say-on-pay" votes on executive compensation, and stockholder advisory votes on golden parachute compensation.
The JOBS Act also permits an emerging growth company like us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to "opt-in" to this extended transition period for complying with new or revised accounting standards and, therefore, we will not be subject to the same new or revised accounting standards as other public companies that comply with such new or revised accounting standards on a non-delayed basis.
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