0001628280-22-004539 | 10-K | XBRL Viewer

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Consolidated Statements of Stockholders' Equity (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2020 USD ($)
Stock issued, offering cost	$ 2,303
Common Stock
Stock issued, offering cost	$ 2,303

Commitments and Contingencies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Dec. 31, 2020	Jun. 30, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2018
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets	$ 17,076		$ 14,627	$ 17,076	$ 10,049
Total Operating lease liabilities	$ 18,210		15,902	18,210
Option granted to purchase leased system, period	12 months
Revenue for sales-type leases			0	700
Proceeds from purchase option			400
Lease receivable			300
Estimated product liability	$ 400		$ 700	$ 400
Former Executive VP and CFO
Lessee, Lease, Description [Line Items]
Arbitration settlement		$ 400
Arbitration settlement (in shares)		15,408
Accounting Standards Update 2016-02
Lessee, Lease, Description [Line Items]
Operating lease right-of-use assets					10,200
Total Operating lease liabilities					$ 10,100
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease terms of operating leases			1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease terms of operating leases			10 years
Remaining lease terms of finance leases			5 years

Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Retained Earnings (Accumulated Deficit)	Accumulated Other Comprehensive Income (loss)
Balance (in shares) at Dec. 31, 2018		13,968,852
Balance at Dec. 31, 2018	$ 46,386	$ 14	$ 70,451	$ (24,010)	$ (69)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee purchase plan (in shares)		82,810
Issuance of common stock for employee purchase plan	$ 1,281		1,281
Exercise of stock options (in shares)	160,798	160,798
Exercise of stock options	$ 1,613		1,613
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes (in shares)		103,126
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	(831)		(831)
Stock-based compensation expense	9,832		9,832
Net income (loss)	(12,348)			(12,348)
Net change in unrealized gain on available-for-sale investments	9				9
Balance (in shares) at Dec. 31, 2019		14,315,586
Balance at Dec. 31, 2019	45,942	$ 14	82,346	(36,358)	(60)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee purchase plan (in shares)		56,751
Issuance of common stock for employee purchase plan	$ 632		632
Exercise of stock options (in shares)	73,227	73,227
Exercise of stock options	$ 947		947
Issuance of common stock in connection with public offering, net of issuance costs of $2,303 (in shares)		2,742,750
Issuance of common stock in connection with public offering, net of issuance costs of $2,303	26,495	$ 3	26,492
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes (in shares)		490,918
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	(3,428)	$ 1	(3,429)
Stock-based compensation expense	10,109		10,109
Net income (loss)	(23,877)			(23,877)
Net change in unrealized gain on available-for-sale investments	$ 60				60
Balance (in shares) at Dec. 31, 2020	17,679,232	17,679,232
Balance at Dec. 31, 2020	$ 56,880	$ 18	117,097	(60,235)	0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock for employee purchase plan (in shares)		59,635
Issuance of common stock for employee purchase plan	$ 1,184		1,184
Exercise of stock options (in shares)	71,798	71,798
Exercise of stock options	$ 1,581		1,581
Purchase of capped call	(16,134)		(16,134)
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes (in shares)		184,679
Issuance of common stock in settlement of restricted and performance stock units, net of shares withheld for employee taxes	(2,176)		(2,176)
Stock-based compensation expense	13,172		13,172
Net income (loss)	2,062			2,062
Net change in unrealized gain on available-for-sale investments	$ 0
Balance (in shares) at Dec. 31, 2021	17,995,344	17,995,344
Balance at Dec. 31, 2021	$ 56,569	$ 18	$ 114,724	$ (58,173)	$ 0

Balance Sheet Detail (Tables)

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Inventories

Inventories, net of these adjustments, consist of the following (in thousands):


	December 31,
	2021		2020
Raw materials	$	24,035	$	14,874
Work in process	2,124		1,030
Finished goods	13,344		12,604
Total	$	39,503	$	28,508

Schedule of Property and Equipment, net

Depreciation expense recognized is on a straight-line basis over the estimated useful lives of the assets, generally as follows:


			Useful Lives
Leasehold improvements			Lesser of useful life or term of lease
Equipment leasing			4.5
Office equipment and furniture			3
Machinery and equipment			3

Property and equipment, net, consists of the following (in thousands):


	December 31,
	2021		2020
Leasehold improvements	$	826	$	1,051
Equipment leasing	107		186
Office equipment and furniture	1,527		3,407
Machinery and equipment	3,983		7,683
	6,443		12,327
Less: Accumulated depreciation	(3,424)		(10,028)
Property and equipment, net	$	3,019	$	2,299

Schedule of Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	December 31,
	2021		2020
Bonus and payroll-related accruals	$	21,649	$	12,197
Sales and marketing accruals	4,808		2,352
Accrued inventory in transit	4,265		2,476
Product warranty	3,947		4,124
Accrued sales tax	9,110		5,343
Other accrued liabilities	10,321		5,803
Total	$	54,100	$	32,295

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Restricted Stock Units Activity (Details) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Apr. 01, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Mar. 04, 2021	Dec. 31, 2018
Number of Shares
Granted (in shares)	209,981
Weighted-Average Grant- Date Fair Value
Stock price (in dollars per share)		$ 41.32	$ 24.11	$ 35.81	$ 26.02	$ 17.02
RSUs
Number of Shares
Outstanding (in shares)		779,757	1,104,802	474,291
Granted (in shares)		744,949	667,694	963,814
Vested (in shares)		(254,946)	(684,491)	(172,281)
Forfeited(in shares)		(236,856)	(308,248)	(161,022)
Outstanding (in shares)		1,032,904	779,757	1,104,802
Weighted-Average Grant- Date Fair Value
Outstanding (in dollars per share)		$ 23.96	$ 22.10	$ 38.44
Granted (in dollars per share)		40.16	20.66	18.68
Vested (in dollars per share)		22.94	17.82	33.66
Forfeited (in dollars per share)		27.33	23.24	37.91
Outstanding (in dollars per share)		$ 35.00	$ 23.96	$ 22.10
Vested, aggregate fair value		$ 8,287	$ 12,036	$ 6,169
Aggregate intrinsic value		42,680	18,800	37,442		$ 8,072
Grant date fair value of awards vested		$ 5,800	$ 12,200	$ 5,900
Stock price (in dollars per share)		$ 41.32	$ 24.11	$ 35.81		$ 17.02

Commitments and Contingencies - Financial Statement Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Assets
Operating lease right-of-use assets	$ 14,627	$ 17,076		$ 10,049
Finance lease	$ 392	$ 467
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	Property and equipment, net	Property and equipment, net
Total leased assets	$ 15,019	$ 17,543
Liabilities
Operating lease liabilities	2,419	2,260		2,430
Operating lease liabilities , non-current	13,483	15,950		$ 7,759
Total Operating lease liabilities	15,902	18,210
Finance lease liabilities, current	$ 554	$ 370
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Accrued liabilities	Accrued liabilities
Finance lease liabilities, non-current	$ 730	$ 241
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Other long-term liabilities	Other long-term liabilities
Present value of lease liabilities	$ 1,284	$ 611
Finance lease cost	484	431	$ 704
Finance lease cost	59	63	88
Operating lease cost	3,542	3,275	2,892
Operating cash flow	56	63	88
Financing cash flow	462	537	649
Operating cash flow	$ 3,092	$ 2,139	$ 2,820

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense (Tables)

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Share-based Payment Arrangement, Option, Activity

Activity under the 2004 Plan and 2019 Equity Incentive Plan is summarized as follows:


		Options Outstanding
	Shares Available For Grant	Number of Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in millions ) (1)
Balances as of December 31, 2018	1,141,305	507,705	$	20.52	3.52	$	2.00
Additional shares reserved(2)	700,000
Options exercised	—	(160,798)	$	10.03
Options cancelled (expired or forfeited)	51,208	(51,208)	$	24.61
Stock awards granted	(1,538,128)	—	—
Stock awards cancelled (expired or forfeited)	407,320	—	—
Balances as of December 31, 2019	761,705	295,699	$	25.52	3.19	$	3.04
Additional shares reserved(2)	600,000
Options granted	(71,088)	71,088	$	14.85
Options exercised	—	(73,227)	$	12.91
Options cancelled (expired or forfeited)	76,553	(76,553)	$	36.65
Stock awards granted	(804,949)	—	—
Stock awards cancelled (expired or forfeited)	522,949	—	—
Balances as of December 31, 2020	1,085,170	217,007	$	22.35	3.75	$	1.47
Additional shares reserved(2)	450,000
Options granted	(172,139)	172,139	$	30.71
Options exercised	—	(71,798)	$	22.02
Options cancelled (expired or forfeited)	30,173	(30,173)	$	37.14
Stock awards granted	(744,949)	—	—
Stock awards cancelled (expired or forfeited)	299,092	—	—
Balances as of December 31, 2021	947,347	287,175	$	25.89	4.92	$	4.46
Exercisable as of December 31, 2021		83,855	$	24.14	2.86	$	1.47
Vested and expected to vest as of December 31, 2021		287,175	$	25.89	4.92	$	4.46

(1)Based on the closing stock price of $41.32 of the Company’s stock on December 31, 2021, $24.11 on December 31, 2020, $35.81 on December 31, 2019 and $17.02 on December 31, 2018.

(2)Approved by the board of directors and stockholders in 2021, 2020 and 2019.

Share-based Payment Arrangement, Option, Exercise Price Range

The options outstanding and exercisable at December 31, 2021 were in the following exercise price ranges:


Exercise Prices			Number Outstanding	Contractual Life (in years)	Number Exercisable
$10.79	—	$14.04	25,480	1.97	25,480
	$14.10		60,000	3.59	16,000
	$15.32		2,396	0.56	2,396
	$18.55		1,000	2.07	1,000
	$18.93		11,088	8.83	3,234
	$25.70		6,000	2.59	6,000
	$29.28		93,844	6.32	—
	$32.87		57,622	6.12	—
	$39.30		25,000	2.83	25,000
	$47.40		4,745	2.96	4,745
$10.79	—	$47.40	287,175	4.92	83,855

Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity

Information with respect to RSUs and PSUs activity is as follows (in thousands):


	Number of Shares	Weighted-Average Grant- Date Fair Value		Aggregate Fair Value(1) (in thousands)			Aggregate Intrinsic Value(2) (in thousands)
Outstanding at December 31, 2018	474,291	$	38.44				$	8,072
Granted	963,814	$	18.68
Vested(3)	(172,281)	$	33.66	$	6,169	(4)
Forfeited	(161,022)	$	37.91
Outstanding at December 31, 2019	1,104,802	$	22.10				$	37,442
Granted	667,694	$	20.66
Vested(3)	(684,491)	$	17.82	$	12,036	(5)
Forfeited	(308,248)	$	23.24
Outstanding at December 31, 2020	779,757	$	23.96				$	18,800
Granted	744,949	$	40.16
Vested(3)	(254,946)	$	22.94	$	8,287	(6)
Forfeited	(236,856)	$	27.33
Outstanding at December 31, 2021	1,032,904	$	35.00				$	42,680

(1)Represents the value of the Company’s stock on the date that the restricted stock units and performance stock units vest.

(2)Based on the closing stock price of the Company’s stock of $41.32 on December 31, 2021, $24.11 on December 31, 2020, $35.81 on December 31, 2019, and $17.02 on December 31, 2018.

(3)The number of restricted stock units vested includes shares that the Company withheld on behalf of the employees to satisfy the statutory tax withholding requirements.

(4)On the grant date, the fair value for these vested awards was $5.9 million.

(5)On the grant date, the fair value for these vested awards was $12.2 million.

(6)On the grant date, the fair value for these vested awards was $5.8 million.

Share-based Payment Arrangement, Cost by Plan

Stock-based compensation expense for the years ended December 31, 2021, 2020 and 2019 was as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Stock options	$	782	$	370	$	622
RSUs	5,305		8,849		4,786
PSUs	6,591		666		3,948
ESPP	494		224		476
Total stock-based compensation expense	$	13,172	$	10,109	$	9,832

Share-based Payment Arrangement, Expensed and Capitalized, Amount

Total stock-based compensation expense recognized during the year ended December 31, 2021, 2020 and 2019 was recorded in the Consolidated Statement of Operations as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Cost of revenue	$	1,408	$	1,665	$	1,572
Sales and marketing	3,160		3,385		4,510
Research and development	2,784		1,669		1,536
General and administrative	5,820		3,390		2,214
Total stock-based compensation expense	$	13,172	$	10,109	$	9,832

Valuation Assumptions and Fair Value of Stock Options and ESPP Grants

The weighted average estimated fair values of the employee stock options and rights granted under the employee stock purchase plan and the weighted average assumptions used to calculate the grant date fair values, are as follows:


	Stock Options									Stock Purchase Plan (ESPP)
	2021			2020			2019			2021			2020			2019
Expected term (in years)(1)	3.97			4.84			3.65			0.50			0.50			0.50
Risk-free interest rate(2)	0.48		%	0.15		%	1.64		%	0.14		%	0.11		%	2.49		%
Volatility(3)	66		%	63		%	54		%	36		%	76		%	70		%
Dividend yield(4)	—		%	—		%	—		%	—		%	—		%	—		%
Weighted average estimated fair value at grant date	$	15.09		$	7.63		$	14.83		$	9.64		$	6.13		$	9.60

(1)The expected term represents the period during which the Company’s stock-based awards are expected to be outstanding. The estimated term is based on historical experience of similar awards, giving consideration to the contractual terms of the awards, vesting requirements and expectation of future employee behavior, including post-vesting terminations. The expected term of groups of employees that have similar historical exercise patterns has been considered separately for valuation purposes.

(2)The risk-free interest rate is based on U.S. Treasury debt securities with maturities close to the expected term of the option or ESPP participation right as of the date of grant.

(3)Estimated volatility is based on historical volatility. The Company estimates volatility based on the Company’s historical volatility of its stock price.

(4)The Company has not paid dividends since its inception.

Balance Sheet Detail - Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 24,035	$ 14,874
Work in process	2,124	1,030
Finished goods	13,344	12,604
Total	$ 39,503	$ 28,508

Segment Information and Revenue by Geography and Products - Summary of Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Disaggregation of Revenue [Line Items]
Total net revenue	$ 231,270	$ 147,683	$ 181,712
Total product revenue
Disaggregation of Revenue [Line Items]
Total net revenue	205,703	125,113	158,638
Systems
Disaggregation of Revenue [Line Items]
Total net revenue	139,633	90,765	140,478
Consumables
Disaggregation of Revenue [Line Items]
Total net revenue	16,401	9,287	9,648
Skincare
Disaggregation of Revenue [Line Items]
Total net revenue	49,669	25,061	8,512
Service
Disaggregation of Revenue [Line Items]
Total net revenue	25,567	22,570	23,074
United States
Disaggregation of Revenue [Line Items]
Total net revenue	96,629	61,238	106,372
Japan
Disaggregation of Revenue [Line Items]
Total net revenue	70,235	43,265	24,143
Asia, excluding Japan
Disaggregation of Revenue [Line Items]
Total net revenue	12,649	10,707	14,414
Europe
Disaggregation of Revenue [Line Items]
Total net revenue	19,444	11,185	11,937
Rest of the world, other than United States, Asia and Europe
Disaggregation of Revenue [Line Items]
Total net revenue	$ 32,313	$ 21,288	$ 24,846

Schedule II - Valuation and Qualifying Accounts - Summary of the Deferred Tax Assets Valuation Allowance and Allowance for Doubtful Accounts Receivable (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Deferred tax assets valuation allowance
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Year	$ 38,321	$ 32,350	$ 27,865
Additions	7,503	7,986	7,396
Deductions	5,337	2,015	2,911
Balance at End of Year	40,487	38,321	32,350
Allowance for credit losses, accounts receivable
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items]
Balance at Beginning of Year	1,598	1,354	1,257
Additions	271	2,144	1,361
Deductions	970	1,900	1,264
Balance at End of Year	$ 899	$ 1,598	$ 1,354

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Property and Equipment

Depreciation expense recognized is on a straight-line basis over the estimated useful lives of the assets, generally as follows:


			Useful Lives
Leasehold improvements			Lesser of useful life or term of lease
Equipment leasing			4.5
Office equipment and furniture			3
Machinery and equipment			3

Property and equipment, net, consists of the following (in thousands):


	December 31,
	2021		2020
Leasehold improvements	$	826	$	1,051
Equipment leasing	107		186
Office equipment and furniture	1,527		3,407
Machinery and equipment	3,983		7,683
	6,443		12,327
Less: Accumulated depreciation	(3,424)		(10,028)
Property and equipment, net	$	3,019	$	2,299

Cash, Cash Equivalents and Restricted Cash - Summary of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Cash and Cash Equivalents [Abstract]
Cash and cash equivalents	$ 164,164	$ 47,047
Restricted cash	700	0
Cash equivalents and restricted cash as reported within the Consolidated Statement of Cash Flows	$ 164,864	$ 47,047

Schedule II - Valuation and Qualifying Accounts (Tables)

12 Months Ended

Dec. 31, 2021

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Summary of Valuation Allowance


	Balance at Beginning of Year		Additions		Deductions		Balance at End of Year
Deferred tax assets valuation allowance
Year ended December 31, 2021	$	38,321	$	7,503	$	5,337	$	40,487
Year ended December 31, 2020	$	32,350	$	7,986	$	2,015	$	38,321
Year ended December 31, 2019	$	27,865	$	7,396	$	2,911	$	32,350


	Balance at Beginning of Year		Additions		Deductions		Balance at End of Year
Allowance for credit losses, accounts receivable
Year ended December 31, 2021	$	1,598	$	271	$	970	$	899
Year ended December 31, 2020	$	1,354	$	2,144	$	1,900	$	1,598
Year ended December 31, 2019	$	1,257	$	1,361	$	1,264	$	1,354

Cash, Cash Equivalents and Restricted Cash

12 Months Ended

Dec. 31, 2021

Cash and Cash Equivalents [Abstract]

Cash, Cash Equivalents and Restricted Cash

CASH, CASH EQUIVALENTS AND RESTRICTED CASH

The following tables summarize cash, cash equivalents and marketable securities (in thousands):


	December 31,
	2021		2020
Cash and cash equivalents	$	164,164	$	47,047
Non-current restricted cash	700		—
Cash equivalents and restricted cash as reported within the Consolidated Statement of Cash Flows	$	164,864	$	47,047

The Company had no marketable securities as of December 31, 2021 and December 31, 2020. The cash is restricted to support an outstanding letter of credit for $0.7 million provided to a supplier.

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Narrative (Details)						1 Months Ended				12 Months Ended
	Apr. 21, 2020 USD ($) $ / shares shares	Apr. 01, 2020 shares	Jun. 14, 2019 shares	Jun. 11, 2019	Jan. 12, 2004 shares	Jul. 31, 2021 tranche shares	Aug. 31, 2020 shares	Jun. 30, 2020 shares	Jul. 31, 2019 shares	Dec. 31, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares	Dec. 31, 2019 USD ($) shares	Dec. 31, 2012 shares	Dec. 31, 1998 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, par value (in dollars per share) \| $ / shares										$ 0.001	$ 0.001
Authorized capital (in shares)										55,000,000
Common stock authorized (in shares)										50,000,000	50,000,000
Common stock issued (in shares)										17,995,344	17,679,232
Common stock outstanding (in shares)										17,995,344	17,679,232
Preferred stock authorized (in shares)										5,000,000
Preferred stock, par value (in dollars per share) \| $ / shares										$ 0.001
Preferred stock issued (in shares)										0
Preferred stock outstanding (in shares)										0
Gross proceeds from equity offering \| $										$ 0	$ 28,798,000	$ 0
Stock issued, offering cost \| $										0	2,303,000	0
Vesting period									4 years
Percentage of awards officers are required to hold for a minimum of one year				50.00%
Awards granted (in shares)		209,981
Number of vesting tranches \| tranche						4
Intrinsic value of options exercised \| $										$ 1,300,000	$ 400,000	$ 1,000,000
Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							5 years
Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period							2 years 6 months
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)										744,949	667,694	963,814
RSUs \| Share-based Payment Arrangement, Nonemployee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period										1 year
Awards granted (in shares)										41,301	35,735	42,236
RSUs \| Share-based Payment Arrangement, Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)										219,686	405,248	475,166
Restricted Stock Units, Annual Grant \| Share-based Payment Arrangement, Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period										4 years
Restricted Stock Units, New Hire \| Share-based Payment Arrangement, Employee \| Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage										25.00%
Restricted Stock Units, New Hire \| Share-based Payment Arrangement, Employee \| Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period										36 months
PSUs \| Share-based Payment Arrangement, Employee
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)						265,002			67,897	178,222	76,157	319,275
PSUs \| Share-based Payment Arrangement, Employee \| Share-based Payment Arrangement, Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)							60,000
Vesting percentage										50.00%
PSUs \| Share-based Payment Arrangement, Employee \| Share-based Payment Arrangement, Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted (in shares)							22,423
Vesting percentage										50.00%
1998 Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock reserved for issuance (in shares)														4,650,000
2004 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock reserved for issuance (in shares)					1,750,000
Share subtraction (in shares)													2.12
Vesting period			1 year
2019 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock reserved for issuance (in shares)			9,701,192
Share subtraction (in shares)			2.12
Additional stock available for grant (in shares)			700,000
Grant date fair value \| $										$ 60,000
The Amended and Restated 2019 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional stock available for grant (in shares)								600,000
2004 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Additional stock available for grant (in shares)					600,000
Offering period					6 months
Additional shares authorized, percentage					2.00%
Purchase price of stock, percent of market value										85.00%
ESPP stock issued (in shares)										59,635	56,751	82,810
Shares available for future issuance (in shares)										645,319
Underwritten Public Offering
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, par value (in dollars per share) \| $ / shares	$ 0.001
Issuance of common stock (in shares)	2,742,750
Common stock issued, price (in dollars per share) \| $ / shares	$ 10.50
Gross proceeds from equity offering \| $	$ 26,500,000
Stock issued, offering cost \| $	$ 2,300,000
Underwritten Public Offering \| Underwriter
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Issuance of common stock (in shares)	357,750

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 2,062	$ (23,877)	$ (12,348)
Available-for-sale investments
Net change in unrealized gain (loss) on available-for-sale investments	0	(3)	9
Less: Reclassification adjustment for net losses on investments recognized during the year	0	63	0
Total change in unrealized gain (loss) on available-for-sale investments	0	60	9
Other comprehensive income, net of tax	0	60	9
Comprehensive income (loss)	$ 2,062	$ (23,817)	$ (12,339)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

Debt (Tables)

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Convertible Debt

The following table presents the outstanding principal amount and carrying value of the convertible notes (in thousands):


	December 31, 2021
Outstanding principal amount	$	138,250
Unamortized debt issuance costs	(4,007)
Carrying Value	$	134,243

Income Taxes - Income Tax Provision (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Current:
Federal	$ 0	$ 0	$ 0
State	(87)	(53)	101
Foreign	1,512	747	(76)
Total Current	1,425	694	25
Deferred:
Federal	2	2	2
State	1	1	1
Foreign	(105)	(227)	57
Total Deferred	(102)	(224)	60
Tax provision	$ 1,323	$ 470	$ 85

Product Warranty (Tables)

12 Months Ended

Dec. 31, 2021

Product Warranties Disclosures [Abstract]

Schedule of Product Warranty Accrual

The following table provides the changes in the product standard warranty accrual for the years ended December 31, 2021 and 2020 (in thousands):


	December 31,
	2021		2020
Balance at beginning of year	$	4,124	$	6,400
Add: Accruals for warranties issued during the period	5,135		4,475
Less: Settlements made during the period	(5,312)		(6,751)
Balance at end of year	$	3,947	$	4,124

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Operations and Principles of Consolidation

Cutera, Inc. (“Cutera” or the “Company”) provides energy-based aesthetic systems for practitioners worldwide. The Company develops, manufactures, distributes, and markets energy-based product platforms for use by physicians and other qualified practitioners, enabling them to offer safe and effective aesthetic treatments to their customers. The Company currently markets the following system platforms: enlighten, excel, Secret PRO, Secret RF, truSculpt and xeo. Several of the Company’s systems offer multiple hand pieces and applications, providing customers the flexibility to upgrade their systems. The sales of (i) systems, system upgrades, and hand pieces (collectively “Systems” revenue); (ii) replacement hand pieces, Titan, truSculpt 3D,truSculpt iD and truSculpt flex cycle refills, as well as single use disposable tips applicable to Secret PRO, and Secret RF (“Consumables” revenue); (iii) the distribution of third party manufactured skincare products (“Skincare” revenue); and (iv) the leasing of equipment through a membership program; are collectively classified as “Products” revenue. In addition to Products revenue, the Company generates revenue from the sale of post-warranty service contracts, parts, detachable hand piece replacements (except for Titan, truSculpt 3D, truSculpt iD and truSculpt flex) and service labor for the repair and maintenance of products that are out of warranty, all of which are collectively classified as “Service” revenue.

The Company’s corporate headquarters and U.S. operations are located in Brisbane, California, where the Company conducts manufacturing, warehousing, research and development, regulatory, sales and marketing, service, and administrative activities. The Company also maintains regional distribution centers (“RDCs”) in selection locations across the U.S. These RDCs serve as forward warehousing for systems and service parts in various geographies. The Company markets sells and services the Company’s products through direct sales and service employees in North America (including Canada), Australia, Austria, Belgium, France, Germany, Hong Kong, Japan, the Netherlands, Spain, Switzerland, and the United Kingdom. Sales and services outside of these direct markets are made through a worldwide distributor network in over 42 countries. The consolidated financial statements include the accounts of the Company and its subsidiaries. All inter-company transactions and balances have been eliminated.

Basis of Presentation

The Consolidated Financial Statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“U.S. GAAP”). Certain prior period amounts have been reclassified to conform to the 2021 presentation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the amounts reported of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the accompanying notes, and the reported amounts of revenue and expenses during the reported periods. Actual results could differ materially from those estimates.

On an ongoing basis, management evaluates its estimates, including those related to warranty obligations, sales commissions, allowance for credit losses, sales allowances, valuation of inventories, fair value of goodwill, useful lives of property and equipment, impairment testing for long-lived-assets, assumptions regarding variables used in calculating the fair value of the Company's equity awards, expected achievement of performance based vesting criteria, management performance bonuses, the standalone selling price of the Company's products and services, the period of benefit used to capitalize and amortize contract acquisition costs, variable consideration, contingent liabilities, recoverability of deferred tax assets, assumptions used in operating and sales-type lease classification, implicit and incremental borrowing rates related to the Company’s leases, residual value of leased equipment, lease term and effective income tax rates. Management bases estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities.

Risks and Uncertainties

The Company's future results of operations involve a number of risks and uncertainties. Factors that could affect the Company's future operating results and cause actual results to vary materially from expectations include, but are not limited to, rapid technological change, continued acceptance of the Company's products, stability of global financial markets, cybersecurity breaches and other disruptions that could compromise the Company’s information or results, business disruptions that are

caused by natural disasters or pandemic events, management of international activities, competition from substitute products and larger companies, ability to obtain and maintain regulatory approvals, government regulations and oversight, patent and other types of litigation, ability to protect proprietary technology from counterfeit versions of the Company's products, the successful execution of new product launches, strategic relationships and dependence on key individuals.

In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. The COVID-19 outbreak, and lately the Delta and Omicron variants, has negatively affected the United States and global economies. The spread of the coronavirus, which caused a broad impact in 2020 globally, including restrictions on travel, shifting work force to work remotely and quarantine policies put into place by businesses and governments, had a material economic effect on the Company’s business during the year ended December 31, 2020. Notably, healthcare facilities in many countries effectively banned elective procedures. Many of the Company’s products are used in aesthetic elective procedures and as such, the bans on elective procedures substantially reduced the Company’s sales and marketing efforts in the early months of the pandemic and led the Company to implement cost control measures. Although the Company’s operation and results of operations have significantly improved as the economic outlook due to the COVID-19 pandemic improved in 2021, the COVID-19 outbreak continues to be fluid and the aftermath of the business and economic disruptions due to the COVID-19 is still uncertain, making it difficult to forecast the final impact it could have on the Company’s future operations, including disruptions in the Company's supply chain and contract manufacturing operations. The Company cannot presently predict the scope and severity of any impacts in future periods from the business shutdowns or disruptions due to the COVID-19 pandemic, but the impact on economic activity including the possibility of recession or financial market instability could have a material adverse effect on the Company’s business, revenue, operating results, cash flows and financial condition.

The Company continues to assess whether any impairment of its goodwill or its long-lived assets has occurred, and has determined that no charges were necessary during the years ended December 31, 2021, and 2020, other than an impairment loss of $0.2 million and $0.8 million on capitalized implementation costs of cloud-based CRM software, respectively. The Company’s assumptions about future conditions important to its assessment of potential impairment of its long-lived assets, and goodwill, including the impacts of the COVID-19 pandemic and other ongoing impacts to its business, are subject to uncertainty, and the Company will continue to monitor these conditions in future periods as new information becomes available.

Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted by the Company

Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326):"Measurement of Credit Losses on Financial Instruments", which replaces the incurred loss methodology with an expected credit loss methodology that is referred to as the current expected credit loss (CECL) methodology. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, with early adoption permitted. The amendments in this update are required to be applied using the modified retrospective method with an adjustment to accumulated deficit and are effective for the Company beginning with fiscal year 2020, including interim periods. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables, available for sale securities and held-to-maturity debt securities. An entity with available for sale securities and trade receivables will be required to use historical loss information, current conditions, and reasonable and supportable forecasts to determine expected lifetime credit losses. Pooling of assets with similar risk characteristics is also required. The Company adopted ASU 2016-13 on January 1, 2020 on a modified retrospective basis. Upon adoption, the standard did not have a material impact on the consolidated financial statements.

The Company identified trade receivables and available-for-sale debt securities as impacted by the new guidance. However, the Company determined that the historical losses related to these available-for-sale debt securities are not material as the Company invests in high grade short-term securities.

The Company establishes an allowance for credit losses on trade receivables based on the credit quality of clients, current economic conditions, the age of the accounts receivable balances, historical loss information, and current conditions and forecasted information, and write-off amounts against the allowance when they are deemed uncollectible.

In August 2018, the FASB issued ASU No. 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement”, to improve the fair value measurement reporting of financial instruments. The amendments in this update require, among other things, added disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The amendments in this update eliminate, among other things, disclosure of the reasons for and amounts of transfers between Level 1 and Level 2 for assets and liabilities that are measured at fair value on a recurring basis and an entity's valuation processes for Level 3 fair value measurements. The amendments in this update became effective for the Company beginning with fiscal year 2020. Retrospective application is required for all amendments in this update except the added disclosures, which should be applied prospectively. The adoption

of the amendments in this update did not have a material impact on the Company’s consolidated financial position and results of operations.

In December 2019, the FASB issued ASU No. 2019-12 “Income Taxes (Topic 740)-Simplifying the Accounting for Income Taxes,” to remove certain exceptions and improve consistency of application, including, among other things, requiring that an entity reflect the effect of an enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the enactment date. The Company adopted this guidance starting January 1, 2021. The adoption of this guidance did not have a material impact on the Company’s consolidated financial position and results of operations.

In August 2020, the FASB issued ASU No. 2020-6, Debt – Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815), to simplify the accounting for convertible debt instruments by removing the beneficial conversion and cash conversion separation models for convertible instruments. Under the amendment, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives or that do not result in substantial premiums accounted for as paid-in capital. The update also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the computation of diluted earnings per share. The Company early adopted the guidance on a prospective basis effective January 1, 2021. See section Computation of Net Income (Loss) per Share.

Recently Issued Accounting Pronouncements Not Yet Adopted by the Company

The Company reviewed all recently issued, but not yet effective, accounting pronouncements and does not expect the future adoption of any such pronouncements will have a material impact on the Company’s consolidated financial statements.

Revenue recognition

Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s performance obligations are satisfied either over time or at a point in time. Revenue from performance obligations that are transferred to customers over time accounted for approximately 11%, 15% and 13%, respectively, of the Company’s total revenue for the years ended December 31, 2021, 2020 and 2019.

The Company has certain system sale arrangements that contain multiple products and services. For these bundled sale arrangements, the Company accounts for individual products and services as separate performance obligations if they are distinct. The Company’s products and services are distinct if a customer can benefit from the product or service on its own or with other resources that are readily available to the customer, and if the Company’s promise to transfer the products or service to the customer is separately identifiable from other promises in the sale arrangements. The Company’s system sale arrangements can include all or a combination of the following performance obligations: the system and software license (considered as one performance obligation), system accessories (hand pieces), training, other accessories, extended service contracts, marketing services, and time and materials services.

For the Company’s system sale arrangements that include an extended service contract, the period of service commences at the expiration of the Company’s standard warranty offered at the time of the system sale. The Company considers the extended service contracts terms in the arrangements that are legally enforceable to be performance obligations. Other than extended service contracts and marketing services, which are satisfied over time, the Company generally satisfies all performance obligations at a point in time. Systems, system accessories (hand pieces), service contracts, training, and time and materials services are also sold on a stand-alone basis, and these performance obligations are satisfied at a point in time. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis.

Nature of Products and Services

Systems

Systems revenue is generated from the sale of systems and from the sale of upgrades to existing systems. A system consists of a console that incorporates a universal graphic user interface, a laser or other energy-based module, control system software and high voltage electronics, as well as one or more hand pieces. In certain applications, the laser or other energy-based module is contained in the hand piece, such as with the Company’s Pearl and Pearl Fractional applications, rather than within the console.

The Company offers customers the ability to select the system that best fits their practice at the time of purchase and then to cost-effectively add applications to their system as their practice grows. This provides customers the flexibility to upgrade their systems whenever they choose and provides the Company with a source of additional Systems revenue.

The system or upgrade and the right to use the embedded software represent a single performance obligation as the software license is integral to the functionality of the system or upgrade.

For systems sold directly to end-customers that are credit approved, revenue is recognized when the Company transfers control to the end-customer, which occurs when the product is shipped to the customer or when the customer receives the product, depending on the nature of the arrangement. When collectability is not established in advance of receipt of payment from the customer, revenue is recognized upon the later of the receipt of payment or the satisfaction of the performance obligation. For systems sold through credit approved distributors, revenue is recognized at the time of shipment to the distributor.

The Company typically receives payment for its system consoles and other accessories within 30 days of shipment. Certain international distributor arrangements allow for longer payment terms.

Skincare products

The Company sells third-party manufactured skincare products in Japan. The skincare products are purchased from a third-party manufacturer and sold to medical offices and licensed physicians. The Company warrants that the skincare products are free of significant defects in workmanship and materials for 90 days from shipment. The Company acts as the principal in this arrangement, as the Company determines the price to charge customers for the skincare products and controls the products before they are transferred to the customer. The Company recognizes revenue for skincare products at a point in time upon shipment.

Consumables and other accessories

The Company classifies its customers' purchases of replacement cycles for truSculpt iD and truSculpt flex, as well as replacement hand pieces, Titan and truSculpt 3D hand pieces, and single use disposable tips applicable to Secret PRO, and Secret RF, as Consumable revenue, which provides the Company with a source of recurring revenue from existing customers. The Secret RF products’ single use disposable tips must be replaced after every treatment. Sales of these consumable tips further enhance the Company’s recurring revenue. The Company’s systems offer multiple hand pieces and applications, which allow customers to upgrade their systems.

Equipment leasing

The Company leases equipment to customers through membership programs and receives a fixed monthly fee over the term of the arrangement. The Company classifies its lease income as product revenue. The Company recognizes lease income over the term of the lease if the lease is classified as an operating lease. For agreements that grant customers the right to purchase the leased system, the Company typically classifies the lease as a sales-type lease as the Company has determined it is reasonably certain that the customer will exercise the purchase option. On the commencement of sales-type leases, the Company recognizes revenue upfront in product revenue and the corresponding receivables recorded in Other current assets and prepaid expenses on the consolidated balance sheets (Notes 1 and 11). Revenue from equipment leases was not material in the years ended December 31, 2021 and 2020.

Extended service contract

The Company offers post-warranty services to its customers through extended service contracts that cover parts and labor for a term of one, two, or three years. Service contract revenue is recognized over time, using a time-based measure of progress, as customers benefit from the service throughout the service period. The Company also offers services on a time-and-materials basis for systems and detachable hand piece replacements. Revenue related to services performed on a time-and-materials basis is recognized when performed.

Training

Sales of systems to customers include training on the use of the system to be provided within 180 days of purchase. The Company considers training a separate performance obligation as customers can immediately benefit from the training together with the customer’s system. Training is also sold separately from systems. The Company recognizes revenue for training when the training is provided. Training is not required for customers to use the systems.

Significant Judgments

The determination of whether two or more contracts entered into at or near the same time with the same customer should be combined and accounted for as one contract may require the use of significant judgment. In making this determination, the Company considers whether the contracts are negotiated as a package with a single commercial objective, have price interdependencies, or promise goods or services that represent a single performance obligation.

While the Company’s purchase agreements do not provide customers with a contractual right of return, the Company maintains a sales allowance to account for potential returns or refunds as a reduction in transaction price at the time of sale.

The Company determines standalone selling price ("SSP") for each performance obligation as follows:

•Systems: The SSPs for systems are based on directly observable sales in similar circumstances to similar customers.

•Extended service contracts: SSP is based on observable price when sold on a standalone basis to similar customers.

Loyalty Program

The Company launched a customer loyalty program during the third quarter of 2018 for qualified customers located in the U.S. and Canada. Under the loyalty program, customers accumulate points based on their purchasing levels which can be redeemed for such rewards as the right to attend the Company’s advanced training event for a product, or a ticket for the Company’s annual forum. A customer’s account must be in good standing to receive the benefits of the rewards program. Rewards are earned on a quarterly basis and must be used in the following quarter. All unused rewards are forfeited. The fair value of the reward earned by loyalty program members is included in accrued liabilities and recorded as a reduction. of net revenue at the time the reward is earned. As of December 31, 2021, and December 31, 2020, the accrual for the loyalty program included in accrued liabilities was $0.5 million, and $0.3 million, respectively.

Deferred Sales Commissions

Incremental costs of obtaining a contract, which consist primarily of commissions and related payroll taxes, are capitalized, and amortized on a straight-line basis over the expected period of benefit, except for costs that are recognized when product is sold. The Company uses the portfolio method to recognize the amortization expense related to these capitalized costs related to initial contracts and such expense is recognized over a period associated with the revenue of the related portfolio, which is generally two to three years.

Total capitalized costs for the year ended December 31, 2021 and December 31, 2020 were $4.2 million and $3.4 million, respectively, and are included in Other long-term assets in the Company’s consolidated balance sheet. Amortization expenses for these assets were $1.9 million, $2.6 million and $2.9 million, respectively, during the years ended December 31, 2021, 2020 and 2019 and were included in sales and marketing expense in the Company’s consolidated statement of operations.

Cash and Cash Equivalents

The Company invests its cash primarily in money market funds. All highly liquid investments with stated maturities of three months or less from date of purchase are classified as cash equivalents; all highly liquid investments with stated maturities of greater than three months are classified as marketable investments. The majority of the Company’s cash and investments are held in U.S. banks and the Company's foreign subsidiaries maintain a limited amount of cash in their local banks to cover short term operating expenses.

Fair Value of Financial Instruments

Fair value is an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels of inputs that may be used to measure fair value, in accordance with ASC 820, as follows:

•Level 1: inputs, which include quoted prices in active markets for identical assets or liabilities;

•Level 2: inputs, which include observable inputs other than Level 1 inputs, such as quoted prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability. For available-for-sale securities, the Company reviews trading activity and pricing as of the measurement date. When sufficient quoted pricing for identical securities is not available, the Company uses market pricing and other observable market inputs for similar securities obtained from various third-party data providers. These inputs either represent quoted prices for similar assets in active markets or have been derived from observable market data; and

•Level 3: inputs, which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability. Level 3 assets and liabilities include those whose fair value measurements are determined using pricing models, discounted cash flow methodologies, or similar valuation techniques, as well as significant management judgment or estimation.

In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.

Allowances for Sales Returns and Credit Losses

Allowance for Sales Returns and Credit Losses

The allowance for sales returns is based on the Company’s estimates of potential future product returns and other allowances related to current period product revenue. The Company analyzes historical returns, current economic trends and changes in customer demand and acceptance of the Company's products.

The allowance for credit losses on trade receivables is based on the credit quality of clients, current economic conditions, the age of the accounts receivable balances, historical loss information, and current conditions and forecasted information. The Company writes off amounts against the allowance when they are deemed uncollectible.

Concentration of Credit Risk and Other Risks and Uncertainties

The Company operates in markets that are highly competitive and rapidly changing. Significant technological changes, shifting customer needs, the emergence of competitive products or services with new capabilities and other factors could negatively impact the Company’s operating results.

The Company is also subject to risks related to changes in the value of the Company’s significant balance of financial instruments. Financial instruments that potentially subject the Company to concentrations of risk consist principally of cash, cash equivalents, and accounts receivable. The Company’s cash and cash equivalents are primarily invested in deposits and money market accounts with three major financial institutions in the U.S. In addition, the Company has operating cash balances in banks in each of the international locations in which it operates. Deposits in these banks may exceed the federally insured limits or any other insurance provided on such deposits, if any. Management believes that these financial institutions are financially sound and, accordingly, believes that minimal credit risk exists. To date, the Company has not experienced any losses on its deposits of cash and cash equivalents.

Accounts receivable are recorded net of an allowance for credit losses and are typically unsecured and are derived from revenue earned from worldwide customers. The Company controls credit risk through credit approvals, credit limits, and monitoring procedures. The Company performs credit evaluations of its customers and maintains an allowance for potential credit losses. As of December 31, 2021, and 2020, no customer represented more than 10% of the Company’s net accounts receivable. During the years ended December 31, 2021, 2020, and 2019, domestic revenue accounted for 42%, 41% and 58%, respectively, of total revenue, while international revenue accounted for 58%, 59% and 42%, respectively, of total revenue. No single customer represented more than 10% of total revenue for any of the years ended December 31, 2021, 2020 and 2019.

Supplier concentration

The Company relies on third parties for the supply of components of its products, as well as third-party logistics providers. In instances where these parties fail to perform their obligations, the Company may be unable to find alternative suppliers or satisfactorily deliver its products to its customers. The Company relies on one supplier for its Secret and Secret PRO products and one supplier for its skincare products.

Inventories

Inventories are stated at the lower of cost and net realizable value, cost being determined on a standard cost basis which approximates actual cost on a first-in, first-out basis. Net realizable value is the estimated selling prices in the ordinary course of the Company’s business, less reasonably predictable costs of completion, disposal, and transportation. The cost basis of the Company’s inventory is reduced for any products that are considered excessive or obsolete based upon assumptions about future demand and market conditions.

The Company includes demonstration units within inventories. Demonstration units are carried at cost and amortized over an estimated economic life of two years. Amortization expense related to demonstration units is recorded in products cost of revenue or in the respective operating expense line based on which function and purpose for which the demonstration units are being used. Proceeds from the sale of demonstration units are recorded as revenue and all costs incurred to refurbish the

systems prior to sale are charged to product cost of revenue. As of December 31, 2021 and 2020, demonstration inventories, net of accumulated depreciation, included in finished goods inventory was $3.7 million and $3.6 million, respectively.

Property and Equipment

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation expense recognized is on a straight-line basis over the estimated useful lives of the assets, generally as follows:


			Useful Lives
Leasehold improvements			Lesser of useful life or term of lease
Equipment leasing			4.5
Office equipment and furniture			3
Machinery and equipment			3

Upon sale or retirement of property and equipment, the costs and related accumulated depreciation and amortization are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses. Maintenance and repairs are charged to operations as incurred.

Depreciation expense related to property and equipment for 2021, 2020 and 2019, was $1.3 million, $1.4 million, and $1.5 million, respectively. Amortization expense for vehicles leased under capital leases is included in depreciation expense. Amortization expense related to equipment leasing accounted for as sales type is included in cost of revenue and was immaterial as of December 31, 2021 and 2020.

Capitalized Cloud Computing Set-up Cost

The Company capitalizes certain set-up costs for the Company’s cloud computing arrangements. The capitalized implementation costs are then amortized over the term of the cloud computing arrangement inclusive of expected contract renewals, which are generally three years to ten years. As of December 31, 2021, the Company had capitalized cloud computing set-up costs with a carrying amount of $0.4 million in Other current assets and prepaid expenses and $3.5 million in Other long-term assets. As of and during the year ended December 31, 2021 there was no accumulated amortization and amortization expense recorded. The Company periodically assesses the capitalized asset for impairment and, when required, will record an associated impairment loss. During the year ended December 31, 2021, the Company recognized in general and administrative expense an impairment loss of $0.2 million for capitalized cloud computing costs related to a cloud-based enterprise resource planning software.

Goodwill and Intangible Assets

Goodwill and intangible assets with indefinite useful lives are not amortized but are tested for impairment at least annually during the fourth quarter of the Company’s fiscal year, or if circumstances indicate their value may no longer be recoverable. Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities.

The Company continues to operate in one segment, which is considered to be the sole reporting unit and, therefore, goodwill was tested for impairment at the enterprise level. As of December 31, 2021, there has been no impairment of goodwill. All acquired intangible assets have been fully amortized as of December 31, 2021.

Warranty Obligations

The Company provides a 12-month warranty for direct sales to customers. For sales to distributors, the Company generally provides a 14-month warranty for parts only, with labor being provided to the end customer by the distributor.

After the original warranty period, maintenance and support are offered on an extended service contract basis or on a time and materials basis.

Leases

Effective January 1, 2019, the Company adopted ASC 842, which established a right-of-use ("ROU") model requiring lessees to record a right-of-use asset ("ROU asset") and lease obligations on the balance sheet for all leases with terms longer than 12 months. The Company determines if an arrangement is a lease at inception. Where an arrangement is a lease the Company determines if it is an operating lease or a finance lease. At lease commencement, the Company records a lease liability and corresponding ROU asset. Lease liabilities represent the present value of the Company’s future lease payments over the

expected lease term which includes options to extend or terminate the lease when it is reasonably certain those options will be exercised. The present value of the Company’s lease liability is determined using its incremental collateralized borrowing rate at lease inception. ROU assets represent its right to control the use of the leased asset during the lease and are recognized in an amount equal to the lease liability for leases with an initial term greater than 12 months. Over the lease term (operating leases only), the Company uses the effective interest rate method to account for the lease liability as lease payments are made and the ROU asset is amortized to consolidated statement of operations in a manner that results in straight-line expense recognition. The Company does not apply lease recognition requirements for short-term leases. Instead, the Company recognizes payments related to these arrangements in the consolidated statement of operations as lease costs on a straight-line basis over the lease term.

Accounting for Leases as a Lessor

The Company leases equipment to customers through membership programs and receives a fixed monthly fee over the term of the arrangement. The Company classifies its lease income as product revenue. The Company recognizes lease income over the term of the lease if the lease is classified as an operating lease. For agreements that grant customers the right to purchase the leased system, the Company typically classifies the lease as a sales-type lease as the Company has determined it is reasonably certain that the customer will exercise the purchase option. On the commencement of sales-type leases, the Company recognizes revenue upfront in product revenue and the corresponding receivables is classified in Other current assets and prepaid expenses on the condensed consolidated balance sheets.

See Note 11 to the consolidated financial statements for more information regarding leasing arrangements.

Cost of Revenue

Cost of revenue consists primarily of material, finished and semi-finished products purchased from third-party manufacturers, labor, stock-based compensation expenses, overhead involved in the Company's internal manufacturing processes, service contracts, technology license amortization and royalties, costs associated with equipment leasing, costs associated with product warranties and any inventory write-downs.

The Company's system sales include a control console, universal graphic user interface, control system software, high voltage electronics and a combination of applications (referred to as “hand pieces”). Hand pieces are programmed to have a limited number of uses to ensure the safety of the device to patients. The Company sells refurbished hand pieces, or "refills," of its Titan and truSculpt 3D products and provides for the cost of refurbishment of these hand pieces as part of cost of revenue. When customers purchase a replacement hand piece or are provided a replacement hand piece under a warranty or service contract, the Company ships the customer a previously refurbished unit. Upon the receipt of the expended hand piece from the customer, the Company capitalizes the expended hand piece as inventory at the estimated fair value. Cost of service revenue includes the costs incurred to refurbish hand pieces.

Research and Development Expenditures

Research and development costs are expensed as incurred and include costs related to research, design, development, testing of products, salaries, benefits and other headcount related costs, facilities, material, third party contractors, regulatory affairs, clinical and development costs.

Advertising Costs

Advertising costs are included as part of sales and marketing expense and are expensed as incurred. Advertising expenses for 2021, 2020 and 2019 were $2.1 million, $1.2 million and $2.8 million, respectively.

Stock-based Compensation

The Company accounts for share-based employee compensation plans using the fair value recognition and measurement provisions under U.S. GAAP. The Company’s share-based compensation cost is measured at the grant date, based on the fair value of the award, and is recognized as expense on a straight- line basis over the requisite service period.

Expected Term: The expected term represents the weighted-average period that the stock options are expected to be outstanding prior to being exercised. The Company determines expected term based on historical exercise patterns and its expectation of the time it will take for employees to exercise options still outstanding.

Expected Volatility: For the underlying stock price volatility of the Company’s stock, the Company estimates volatility solely based on the Company’s historical volatility of its stock price.

Forfeitures: The amount of stock-based compensation recognized during a period is based on the value of the portion of the awards that are ultimately expected to vest. Under ASC 718, the Company has made an accounting policy to estimate forfeitures at the time awards are granted and revises, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the stock option.

The fair value of stock options ("options") on the grant date using the closing price of the Company's common shares on the grant date is estimated using the Black-Scholes option-pricing model using the single-option approach. The Black-Scholes option pricing model requires the use of highly subjective and complex assumptions, including the option's expected term and the price volatility of the underlying stock, to determine the fair value of award. The Company recognizes the expense associated with options using a single award approach over the requisite service period. The Company accounts for all stock options awarded to non-employees at the fair value of the award issued on the day of the grant.

The fair value of restricted stock units (“RSUs”) granted are measured on the grant date. The quantity of the RSUs units granted is calculated by dividing a fixed award amount determined by the Board on the grant date by the average closing price of the Company’s common stock over the 50-day period ending on the day of the grant.

The fair value of Performance Stock Units (“PSUs”) that have operational measurement goals are measured on the grant date using the closing price of the Company’s common shares on the grant date. The quantity of the PSUs granted is calculated by dividing a fixed award amount determined by the Board on the grant date by the average closing price of the Company’s common stock over the 50-day period ending on the day of the grant.

See Note 6 - "Stockholders’ Equity, Stock Plans and Stock-Based Compensation Expense" for a detailed discussion of the Company’s stock plans and share-based compensation expense.

Income Taxes

The Company is subject to income taxes in the United States and several foreign jurisdictions. Significant judgment is required in determining the Company’s provision (benefit) for income taxes and income tax assets and liabilities, including evaluating uncertainties in the application of accounting principles and complex tax laws.

The Company records a provision (benefit) for income taxes for the anticipated tax consequences of the reported results of operations using the asset and liability method. Under this method, the Company recognizes deferred income tax assets and liabilities for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as for loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using the tax rates that are expected to apply to taxable income for the years in which those tax assets and liabilities are expected to be realized or settled. The Company recognizes the deferred income tax effects of a change in tax rates in the period of enactment. The Company records a valuation allowance to reduce the Company’s deferred tax assets to the net amount that the Company believes is more likely than not to be realized.

The Company recognizes tax benefits from uncertain tax positions if the Company believes that it is more likely than not that the tax position will be sustained upon examination by the taxing authorities based on the technical merits of the position. Although the Company believes it has adequately reserved for the Company’s uncertain tax positions (including net interest and penalties), the Company can provide no assurance that the final tax outcome of these matters will not be different. The Company makes adjustments to these reserves in accordance with income tax accounting guidance when facts and circumstances change, such as the closing of a tax audit. To the extent that the final tax outcome of these matters is different from the amounts recorded, such differences may impact the provision (benefit) for income taxes in the period in which such determination is made. The Company records interest and penalties related to the Company’s uncertain tax positions in the Company’s provision (benefit) for income taxes.

The Company’s effective tax rates have differed from the statutory rate primarily due to changes in the valuation allowance, foreign operations, research and development tax credits, state taxes, and certain benefits realized related to stock option activity. The Company’s current effective tax rate does not assume U.S. taxes on undistributed profits of foreign subsidiaries. These earnings could become subject to incremental foreign withholding or U.S. federal and state taxes, should they either be deemed or actually remitted to the U.S. The Company’s future effective tax rates could be adversely affected by earnings being lower in countries where the Company has lower statutory rates and being higher in countries where the Company has higher statutory rates, or by changes in tax laws, accounting principles, interpretations thereof, net operating loss carryback, research and development tax credits, and due to changes in the valuation allowance of its U.S. deferred tax assets. In addition, the

Company is subject to the examination of the Company’s income tax returns by the Internal Revenue Service and other tax authorities. The Company regularly assesses the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of the Company’s provision for income taxes.

Undistributed earnings of the Company’s foreign subsidiaries at December 31, 2021 are considered to be indefinitely reinvested and, accordingly, no provision for state income taxes has been provided thereon. Due to the Transition Tax and Global Intangible Low-Tax Income (“GILTI”) regimes as enacted by the 2017 Tax Act, those foreign earnings will not be subject to federal income taxes when actually distributed in the form of a dividend or otherwise. The Company, however, could still be subject to state income taxes and withholding taxes payable to various foreign countries. The amounts of taxes which the Company could be subject to are not material to the accompanying financial statements.

On March 27, 2020, the U.S. federal government enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”). The CARES Act changed several of the existing U.S. corporate income tax laws by, among other things, increasing the amount of deductible interest, allowing companies to carry back certain Net Operating Losses (“NOLs”) and increasing the amount of NOLs that corporations can use to offset income. The CARES Act did not have a material impact on the Company's income tax provision, deferred tax assets and liabilities, and related taxes payable. The Company is currently assessing the future implications of these provisions within the CARES Act on the Company's consolidated financial statements but does not expect the impact to be material.

Computation of Net Income (Loss) per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net income per share is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method and the if-converted method. Dilutive potential common shares include outstanding stock options, restricted stock units, performance stock units, employee stock purchase plan (ESPP) shares and conversion shares under the convertible notes. On January 1, 2021, the Company adopted the accounting standard update to simplify the accounting for convertible debt instruments. The Company now uses the if-converted method for its convertible notes in calculating the diluted net income (loss) per share, and includes the effect of potential share settlement for the convertible notes, if the effect is dilutive. The diluted net income per share is computed with the assumption that the Company will settle the convertible debt in shares, rather than cash.

Diluted earnings per share is the same as basic earnings per share for the periods in which the Company had a net loss because the inclusion of outstanding common stock equivalents would be anti-dilutive.

Comprehensive Income (Loss)

Comprehensive income (loss) includes all changes in stockholders’ equity except those resulting from investments or contributions by stockholders. For the periods presented, the accumulated other comprehensive income (loss) consisted solely of the unrealized gains or losses on the Company's available-for- sale investments, net of tax.

Foreign Currency

The financial statements of the Company’s foreign subsidiaries are translated in accordance with ASC 830, Foreign Currency Matters. The U.S. Dollar is the functional currency of the Company’s subsidiaries and the Company’s reporting currency. Monetary assets and liabilities are re-measured into U.S. Dollars at the applicable period end exchange rate. Sales and operating expenses are re-measured at average exchange rates in effect during each period. Gains or losses resulting from foreign currency transactions are included in net income (loss) are $1.8 million in the year ended December 31, 2021 and were insignificant for each of the two years ended December 31, 2020. The effect of exchange rate changes on cash and cash equivalents was insignificant for each of the three years ended December 31, 2021.

Segments

The Company operates in one segment and reports segment information in accordance with ASC 280, Segment Reporting. Management uses one measurement of profitability and does not segregate its business for internal reporting. As of December 31, 2021 and 2020, 99.0% and 98.0% of long-lived assets were in the United States, respectively. Revenue is attributed to a geographic region based on the location of the end customer. See Note 10 – "Segment Information and Revenue by Geography and Products" for details relating to revenue by geography.

Product Warranty - Summary of Warranties (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Movement in Standard Product Warranty Accrual [Roll Forward]
Balance at beginning of year	$ 4,124	$ 6,400
Add: Accruals for warranties issued during the period	5,135	4,475
Less: Settlements made during the period	(5,312)	(6,751)
Balance at end of year	$ 3,947	$ 4,124

Summary of Significant Accounting Policies - Property and Equipment (Details)	12 Months Ended
	Dec. 31, 2021
Equipment leasing
Property, Plant and Equipment [Line Items]
Estimated useful life	4 years 6 months
Office equipment and furniture
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years
Machinery and equipment
Property, Plant and Equipment [Line Items]
Estimated useful life	3 years

Commitments and Contingencies

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Leases

COMMITMENTS AND CONTINGENCIES

LEASES

The Company is a party to certain operating and finance leases for vehicles, office space and storage facilities. The Company’s material operating leases consist of office space, as well as storage facilities and finance leases consist of automobiles. The Company’s leases generally have remaining terms of one to 10 years, some of which include options to renew the leases for up to five years. The Company leases space for operations in the United States, Japan, Belgium, France, and Spain. In addition to the above facility leases, the Company also routinely leases automobiles for certain sales and field service employees under finance leases.

In February 2016, the FASB issued ASU 2016-2, "Leases," (also known as ASC Topic 842) which requires, among other items, lease accounting to recognize most leases as assets and liabilities on the balance sheet. Qualitative and quantitative disclosures are enhanced to better present the amount, timing and uncertainty of cash flows arising from leases.

The Company adopted ASU 2016-2, as of January 1, 2019, using the modified retrospective method, to all leases existing at the date of initial application. The comparative period information has not been restated and continues to be reported under the accounting standards in effect for the period presented. The new standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed the Company to carry forward the Company’s historical conclusions about lease identification, lease classification and initial direct costs. The Company also elected the practical expedient related to land easements, allowing the Company to carry forward the Company’s accounting treatment for land easements on existing agreements. The Company did not elect the practical expedient to use hindsight in determining the lease term.

The adoption of the new standard resulted in the recording of additional lease assets and lease liabilities of $10.2 million and $10.1 million, respectively, as of January 1, 2019, based on the present value of the remaining minimum rental payments under current leasing standards for existing operating leases. The difference between the additional lease assets and lease liabilities resulted from rent-free periods which were previously recorded as deferred rent. The Company’s accounting for finance leases remained substantially unchanged. The standard had no material impact on the Company’s consolidated net earnings, results of operations, comprehensive loss, statements of changes in equity, and cash flows.

Effect of Adoption of the New Lease Standard (ASC Topic 842) on Consolidated Financial Statements

The following table summarizes the effects of adopting Topic 842 on the Company’s consolidated balance sheet as of January 1, 2019 (in thousands):


	As reported under Topic 842		Adjustments		Balances under Prior GAAP
Operating lease right-of-use assets	$	10,049	$	(10,049)	$	—
Operating lease liabilities	(2,430)		2,430		—
Other long-term liabilities*	—		140		140
Operating lease liabilities, net of current portion	(7,759)		7,759		—

*Deferred rent included in other long-term liabilities

The Company determines if a contract contains a lease at inception. Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent the right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, the Company estimates the incremental secured borrowing rates corresponding to the maturities of the leases. The Company based the rate estimates on prevailing financial market conditions, credit analysis, and management judgment.

The Company recognizes expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce the Company’s right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term.

Below is supplemental balance sheet information related to leases (in thousands):


		Year Ended December 31,
		2021		2020
Assets	Classification
Right-of-use assets	Operating lease right-of-use assets	$	14,627	$	17,076
Finance lease	Property and equipment, net	392		467
Total leased assets		$	15,019	$	17,543


		Year Ended December 31,
		2021		2020
Liabilities	Classification
Operating lease liabilities
Operating lease liabilities, current	Operating lease liabilities	$	2,419	$	2,260
Operating lease liabilities , non-current	Operating lease liabilities, net of current portion	13,483		15,950
Total Operating lease liabilities		$	15,902	$	18,210


		Year Ended December 31,
	Classification	2021		2020
Finance lease liabilities
Finance lease liabilities, current	Accrued liabilities	$	554	$	370
Finance lease liabilities, non-current	Other long-term liabilities	730		241
Total Finance lease liabilities		$	1,284	$	611

Lease costs during the twelve months ended December 31, 2021 and December 31, 2020 (in thousands):


		Year Ended December 31,
		2021		2020		2019
Finance lease cost	Amortization expense	$	484	$	431	$	704
Finance lease cost	Interest for finance lease	$	59	$	63	$	88
Operating lease cost	Operating lease expense	$	3,542	$	3,275	$	2,892

Cash paid for amounts included in the measurement of lease liabilities during the twelve months ended December 31, 2021 and December 31, 2020 were as follows (in thousands):


		Year Ended December 31,
		2021		2020		2019
Operating cash flow	Finance lease	$	56	$	63	$	88
Financing cash flow	Finance lease	$	462	$	537	$	649
Operating cash flow	Operating lease	$	3,092	$	2,139	$	2,820

Maturities of lease liabilities

Maturities of operating lease liabilities were as follows as of December 31, 2021 (in thousands):


	Amount
2022	$	3,121
2023	3,160
2024	2,874
2025	2,875
2026	2,970
Thereafter	3,338
Total lease payments	18,338
Less: imputed interest	(2,436)
Present value of lease liabilities	$	15,902

Vehicle Leases

As of December 31, 2021, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance leases as follows (in thousands):


	Amount
2022	$	601
2023	347
2024	409
2025	22
Total lease payments	1,379
Less: imputed interest	(95)
Present value of lease liabilities	$	1,284

Weighted-average remaining lease term and discount rate, as of December 31, 2021, were as follows:


Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases	5.8
Finance leases	2.1
Weighted-average discount rate
Operating leases	4.8	%
Finance leases	6.7	%

Lessor Information related to the Company’s system leasing

During fiscal year ended December 31, 2020, the Company entered into leasing transactions, in which the Company is the lessor, offered through the Company's membership program. The Company's leases for equipment rentals were all accounted for as operating leases during the second and third quarters of 2020.

During the fourth quarter ended December 31, 2020, certain of the membership program agreements were amended, granting the customers the exclusive right and option to purchase the leased system from the Company, at any time during the period of twelve months from signing the amended agreement. For contracts signed under the amended membership agreement, the Company classified and accounted for the arrangements as sales-type leases as of December 31, 2020, as the Company determined it is reasonably certain that the customer will exercise the purchase option.

For the sales-type leases, the net investment of the Company’s lease receivable is measured at the commencement date and is included in the consolidated balance sheets as a component of Other current assets and prepaid expenses. As of December 31, 2020, the Company recorded $0.7 million of revenue for the sales-type leases in the consolidated statement of operations and the related lease receivable in other current assets of the consolidated balance sheet. There was no revenue recognized from the sales-type lease arrangement in fiscal year 2021. During fiscal year 2021 the company received a full payment of $0.4 million from customers who exercised the purchase option. As of December 31, 2021, the lease receivable balance included in Other current assets of the consolidated balance sheet was $0.3 million.

The revenue related to non-lease components, which comprise service contracts and consumables, are deferred and recognized either over time or at the point of delivery. The non-lease component revenue amount as of December 31, 2021 was immaterial.

Equipment lease revenue for operating lease agreements is recognized over the life of the lease. The following table summarizes the amount of operating lease income included in product revenue in the accompanying consolidated statements of operations (in thousands):


	Year Ended December 31, 2021		Year Ended December 31, 2020
Operating lease income from equipment rentals	$	149	$	367

Purchase Commitments

The Company maintains certain open inventory purchase commitments with its suppliers to ensure a smooth and continuous supply for key components. The Company’s liability in these purchase commitments is generally restricted to an agreed-upon period. These periods can vary among different suppliers. Although open purchase orders are considered enforceable and legally binding, the terms generally allow the Company the option to cancel, reschedule, and adjust their requirements based on the Company's business needs prior to the delivery of goods or performance of services.

Indemnifications

In the normal course of the Company’s business, the Company enters into agreements that contain a variety of representations, warranties, and indemnification obligations. For example, the Company has entered into indemnification agreements with each of its directors and executive officers and certain key employees. The Company’s exposure under its various indemnification obligations is unknown and not reasonably estimable as they involve future claims that may be made against the Company. As such, the Company has not accrued any amounts for such obligations.

Contingencies

The Company is named from time to time as a party to other legal proceedings, product liability, commercial disputes, employee disputes, and contractual lawsuits in the normal course of business. A liability and related charge are recorded to earnings in the Company’s consolidated financial statements for legal contingencies when the loss is considered probable and the amount can be reasonably estimated. The assessment is re-evaluated each accounting period and is based on all available information, including discussion with outside legal counsel. If a reasonable estimate of a known or probable loss cannot be made, but a range of probable losses can be estimated, the low-end of the range of losses is recognized if no amount within the range is a better estimate than any other. If a material loss is reasonably possible, but not probable and can be reasonably estimated, the estimated loss or range of loss is disclosed in the notes to the consolidated financial statements. The Company expenses legal fees as incurred.

In November 2019, the Company’s former Executive Vice President and CFO Sandra A. Gardiner announced her resignation from the Company. On November 7, 2019, Ms. Gardiner filed an arbitration demand against the Company in connection with the terms of her employment and resignation. The Company settled this matter with Ms. Gardiner during the second quarter of 2020 with a cash payment of $0.4 million and issuance of 15,408 shares of common stock.

As of December 31, 2021 and 2020, the Company had accrued $0.7 million and $0.4 million, respectively, related to various pending commercial and product liability lawsuits. The Company does not believe that a material loss in excess of accrued amounts is reasonably possible.

On January 31, 2020, Cutera filed a lawsuit against Lutronic Aesthetics in the United States District Court for the Eastern District of California. Lutronic employs numerous former Cutera employees. The complaint against Lutronic generally alleges claims for (1) misappropriation of trade secrets in violation of state and federal law; (2) violation of the Racketeer Influenced and Corrupt Organizations Act (RICO); (3) interference with contractual relations; (4) interference with prospective economic advantage; (5) unfair competition; and (6) aiding and abetting. On March 13, 2020, the court entered a temporary restraining order against Lutronic generally prohibiting it from using or disseminating Cutera confidential, proprietary, or trade secret information. The order also prohibits Lutronic, for 2 years, from using such information for the purpose of soliciting, or conducting business with, certain specified customers. At the parties’ request, the Court subsequently entered a preliminary injunction providing for the same restrictions in the restraining order. On February 9, 2022, Cutera filed a motion seeking leave from the court to file a second amended complaint. In addition to the above-referenced claims against Lutronic Aesthetics, the proposed amended complaint alleges additional claims against it, including (1) violation of the Lanham Act; (2) unlawful business practices; (3) false advertising; and (4) trademark infringement. The proposed amended complaint also seeks to add Lutronic Corporation (the Korean parent company of Lutronic Aesthetics) as an additional defendant, and also alleges against it the above-described claims for misappropriation of trade secrets, violation of RICO, interference with contractual relations and prospective economic advantage, unfair competition, and aiding and abetting. Discovery is ongoing. No trial date has been scheduled.

Income Taxes - Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
Balance at beginning of year	$ 1,864	$ 1,426	$ 1,563
Decreases related to prior year tax positions	(37)	(32)	(291)
Increases related to prior year tax positions	0	0	25
Increases related to current year tax positions	919	470	129
Balance at end of year	$ 2,746	$ 1,864	$ 1,426

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Significant Accounting Policies

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Operations and Principles of Consolidation

Basis of Presentation

Use of Estimates

Risks and Uncertainties

Recently Adopted Accounting Pronouncements

of the amendments in this update did not have a material impact on the Company’s consolidated financial position and results of operations.

Recently Issued Accounting Pronouncements Not Yet Adopted by the Company

Revenue recognition

Nature of Products and Services

Systems

The system or upgrade and the right to use the embedded software represent a single performance obligation as the software license is integral to the functionality of the system or upgrade.

The Company typically receives payment for its system consoles and other accessories within 30 days of shipment. Certain international distributor arrangements allow for longer payment terms.

Skincare products

Consumables and other accessories

Equipment leasing

Extended service contract

Training

Significant Judgments

The Company determines standalone selling price ("SSP") for each performance obligation as follows:

•Systems: The SSPs for systems are based on directly observable sales in similar circumstances to similar customers.

•Extended service contracts: SSP is based on observable price when sold on a standalone basis to similar customers.

Loyalty Program

Deferred Sales Commissions

Cash and Cash Equivalents

Fair Value of Financial Instruments

•Level 1: inputs, which include quoted prices in active markets for identical assets or liabilities;

Allowance for Sales Returns and Credit Losses

Concentration of Credit Risk and Other Risks and Uncertainties

Supplier concentration

Inventories

Property and Equipment


			Useful Lives
Leasehold improvements			Lesser of useful life or term of lease
Equipment leasing			4.5
Office equipment and furniture			3
Machinery and equipment			3

Capitalized Cloud Computing Set-up Cost

Goodwill and Intangible Assets

Warranty Obligations

After the original warranty period, maintenance and support are offered on an extended service contract basis or on a time and materials basis.

Leases

Accounting for Leases as a Lessor

The Company leases equipment to customers through membership programs and receives a fixed monthly fee over the term of the arrangement. The Company classifies its lease income as product revenue. The Company recognizes lease income over the term of the lease if the lease is classified as an operating lease. For agreements that grant customers the right to purchase the leased system, the Company typically classifies the lease as a sales-type lease as the Company has determined it is reasonably certain that the customer will exercise the purchase option. On the commencement of sales-type leases, the Company recognizes revenue upfront in product revenue and the corresponding receivables is classified in Other current assets and prepaid expenses on the condensed consolidated balance sheets.

See Note 11 to the consolidated financial statements for more information regarding leasing arrangements.

Cost of Revenue

Research and Development Expenditures

Advertising Costs

Stock-based Compensation

Expected Volatility: For the underlying stock price volatility of the Company’s stock, the Company estimates volatility solely based on the Company’s historical volatility of its stock price.

Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for the expected term of the stock option.

See Note 6 - "Stockholders’ Equity, Stock Plans and Stock-Based Compensation Expense" for a detailed discussion of the Company’s stock plans and share-based compensation expense.

Income Taxes

Computation of Net Income (Loss) per Share

Comprehensive Income (Loss)

Foreign Currency

Segments

Cash, Cash Equivalents and Restricted Cash (Tables)

12 Months Ended

Dec. 31, 2021

Cash and Cash Equivalents [Abstract]

Summary of Cash and Cash Equivalents

The following tables summarize cash, cash equivalents and marketable securities (in thousands):


	December 31,
	2021		2020
Cash and cash equivalents	$	164,164	$	47,047
Non-current restricted cash	700		—
Cash equivalents and restricted cash as reported within the Consolidated Statement of Cash Flows	$	164,864	$	47,047

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Valuation Assumptions and Fair Value of Stock Option and ESPP Grants (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Options
Expected term	3 years 11 months 19 days	4 years 10 months 2 days	3 years 7 months 24 days
Risk-free interest rate	0.48%	0.15%	1.64%
Volatility	66.00%	63.00%	54.00%
Dividend yield	0.00%	0.00%	0.00%
Weighted average estimated fair value at grant date (in dollars per share)	$ 15.09	$ 7.63	$ 14.83
Stock Purchase Plan
Expected term	6 months	6 months	6 months
Risk-free interest rate	0.14%	0.11%	2.49%
Volatility	36.00%	76.00%	70.00%
Dividend yield	0.00%	0.00%	0.00%
Weighted average estimated fair value at grant date (in dollars per share)	$ 9.64	$ 6.13	$ 9.60

Net Income (Loss) Per Share (Tables)

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Computation of Basic and Diluted Net Income (Loss)

The following table sets forth the computation of basic and diluted net loss and the weighted average number of shares used in computing basic and diluted net loss per share (in thousands, except per share data):


	Year Ended December 31,
	2021		2020		2019
Numerator:
Net income (loss)	$	2,062	$	(23,877)	$	(12,348)
Denominator:
Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic	17,891		16,691		14,096
Dilutive effect of incremental shares and share equivalents:
Options	68		—		—
RSUs	294		—		—
PSUs	104		—		—
ESPP	5		—		—
Weighted average shares of common stock outstanding used in computing net income (loss) per share, diluted	18,362		16,691		14,096
Net income (loss) per share:
Net income (loss) per share, basic	$	0.12	$	(1.43)	$	(0.88)
Net income (loss) per share, diluted	$	0.11	$	(1.43)	$	(0.88)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following numbers of shares outstanding, prior to the application of the treasury stock method and the if-converted method, were excluded from the computation of diluted net income (loss) per common share for the periods presented because including them would have had an anti-dilutive effect (in thousands):


	Year Ended December 31,
	2021	2020	2019
Capped call	4,167	—	—
Convertible debt	4,167	—	—
Options to purchase common stock	166	244	417
Restricted stock units	32	724	559
Employee stock purchase plan shares	—	87	111
Performance stock units	120	68	178
Total	8,652	1,123	1,265

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Options Outstanding and Exercisable Price Ranges (Details)	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price, lower range limit (in dollars per share) \| $ / shares	$ 10.79
Exercise price, upper range limit (in dollars per share) \| $ / shares	$ 47.40
Number outstanding (in shares)	287,175
Contractual life	4 years 11 months 1 day
Number exercisable (in shares)	83,855
Exercise Price Range 1
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price, lower range limit (in dollars per share) \| $ / shares	$ 10.79
Exercise price, upper range limit (in dollars per share) \| $ / shares	$ 14.04
Number outstanding (in shares)	25,480
Contractual life	1 year 11 months 19 days
Number exercisable (in shares)	25,480
Exercise Price Range 2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 14.10
Number outstanding (in shares)	60,000
Contractual life	3 years 7 months 2 days
Number exercisable (in shares)	16,000
Exercise Price Range 3
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 15.32
Number outstanding (in shares)	2,396
Contractual life	6 months 21 days
Number exercisable (in shares)	2,396
Exercise Price Range 4
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 18.55
Number outstanding (in shares)	1,000
Contractual life	2 years 25 days
Number exercisable (in shares)	1,000
Exercise Price Range 5
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 18.93
Number outstanding (in shares)	11,088
Contractual life	8 years 9 months 29 days
Number exercisable (in shares)	3,234
Exercise Price Range 6
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 25.70
Number outstanding (in shares)	6,000
Contractual life	2 years 7 months 2 days
Number exercisable (in shares)	6,000
Exercise Price Range 7
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 29.28
Number outstanding (in shares)	93,844
Contractual life	6 years 3 months 25 days
Number exercisable (in shares)	0
Exercise Price Range 8
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 32.87
Number outstanding (in shares)	57,622
Contractual life	6 years 1 month 13 days
Number exercisable (in shares)	0
Exercise Price Range 9
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 39.30
Number outstanding (in shares)	25,000
Contractual life	2 years 9 months 29 days
Number exercisable (in shares)	25,000
Exercise Price Range 10
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise price (in dollars per share) \| $ / shares	$ 47.40
Number outstanding (in shares)	4,745
Contractual life	2 years 11 months 15 days
Number exercisable (in shares)	4,745

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense

STOCKHOLDERS’ EQUITY, STOCK PLANS AND STOCK-BASED COMPENSATION EXPENSE

As of December 31, 2021, the Company had one class of issued common stock with a par value of $0.001. Authorized capital stock consists of 55,000,000 shares comprised of two classes: (i) 50,000,000 shares of Common Stock, of which 17,995,344 shares are issued and outstanding as of December 31, 2021, and (ii) 5,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”), of which no shares are issued and outstanding.

Issuances of Common Stock

On April 21, 2020, the Company issued and sold an aggregate of 2,742,750 shares of the Company’s common stock, par value $0.001 per share at a price to the public of $10.50 per share. The shares include the full exercise of the underwriter’s option to purchase an additional 357,750 shares of common stock. The Company received net proceeds from the offering of approximately $26.5 million, after deducting underwriting discounts, commissions and offering expenses of $2.3 million.

As of December 31, 2021, the Company had the following stock-based employee compensation plans:

2004 Equity Incentive Plan

In 1998, the Company adopted the 1998 Stock Plan, or 1998 Plan, under which 4,650,000 shares of the Company’s common stock were reserved for issuance to employees, directors and consultants.

On January 12, 2004, the Board of Directors (“the Board”) adopted the 2004 Equity Incentive Plan. A total of 1,750,000 shares of common stock were originally reserved for issuance pursuant to the 2004 Equity Incentive Plan. In addition, the shares reserved for issuance under the 2004 Equity Incentive Plan included shares reserved but un-issued under the 1998 Plan and shares returned to the 1998 Plan as the result of termination of options or the repurchase of shares. In 2012 the stockholders approved a “fungible share” provision whereby each full-value award issued under the 2004 Equity Incentive Plan results in a requirement to subtract 2.12 shares from the shares reserved under the Plan.

2019 Equity Incentive Plan

At the Company’s Annual Meeting of Stockholders on June 14, 2019, the Company’s stockholders approved the 2019 Equity Incentive Plan, which is an amendment and restatement of the 2004 Equity Incentive Plan. The 2004 Equity Incentive Plan was amended to: (i) increase the number of shares available for future grant by 700,000 (in addition to the 9,701,192 shares provided under the 2004 Equity Incentive Plan; (ii) extend the term of the 2004 Equity Incentive Plan to the date of the Annual Meeting of the Company’s stockholders in 2029; (iii) amend the 2004 Equity Incentive Plan to eliminate the requirement for awards granted on or after June 14, 2019 that any shares subject to awards with an exercise price less than fair market value on the date of such grant will be counted against the Plan as 2.12 shares for each full value share awarded in accordance with the 2004 Equity Incentive Plan; (iv) amend the 2004 Equity Incentive Plan to remove the requirement that any shares subject to awards with an exercise price less than fair market value on the date of such grant will be counted against the Plan as 2.12 shares for each full value share awarded; (v) amend the 2004 Equity Incentive Plan to remove certain provisions relating to the “performance based compensation” exception under Section 162(m) of the Internal Revenue Code of 1986, as amended; (vi) include a minimum one-year vesting period with respect to awards granted under the 2004 Equity Incentive Plan.

On June 11, 2019, the Board also approved, amended and restated the Company’s Stock Ownership Guidelines adopted on July 28, 2017 in their entirety, to require all officers (as defined by Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) to hold at least 50% of any shares received pursuant to stock options, stock appreciation rights, vested restricted stock awards (“RSAs”), restricted stock units (“RSUs”), or performance stock units (“PSUs”) (net of taxes) for a minimum of one year following vesting and delivery.

On June 11, 2019, the Board also adopted a clawback policy to permit recovery of certain compensation paid to Named Executive Officers (as defined in Item 402 of Regulation S-K) of the Company if the Compensation Committee of the Board determines that a Named Executive Officer (i) has violated law, the Company’s Code of Business Conduct and Ethics, or any significant ethics or compliance policies, and (ii) such conduct results in material financial or reputational harm, or results in a need for a restatement of the Company’s consolidated financial statements. The Amended and Restated Plan provides for the grant of incentive stock options, non-statutory stock options, RSAs, RSUs, stock appreciation rights, PSUs, and other stock or cash awards.

In June 2020, stockholders approved an amendment and restatement of the 2019 Equity Incentive Plan (the “Prior Plan”) as the Amended and Restated 2019 Equity Incentive Plan (the “Restated Plan”) and approved an additional 600,000 shares, available for future grants. The Restated Plan provides for the grant of incentive stock options, non-statutory stock options, RSAs, RSUs, stock appreciation rights, PSUs, and other stock or cash awards.

The Company’s non-employee directors are granted $60,000 of RSUs annually on the date of the Company’s Annual Meeting of stockholders. These RSUs cliff-vest on the one-year anniversary of the grant date. In the years ended December 31, 2021, 2020 and 2019, the Company issued 41,301, 35,735 and 42,236 RSUs, respectively, to its non-employee directors.

In the years ended December 31, 2021, 2020 and 2019, the Company’s Board of Directors granted 219,686, 405,248 and 475,166 RSUs, respectively, to its executive officers, directors and certain members of the Company’s management related to annual grants and new hire grants. The annual grant RSUs vest quarterly on each of the first four anniversaries of the vest date and the new hire RSUs vest one quarter on the first anniversary and monthly thereafter for 36 months. The Company measured the fair market values of the underlying stock on the dates of grant and recognizes the stock-based compensation expense over the vesting period. On the vesting date, the Company issues common stock, net of stock withheld to settle the recipient’s minimum statutory tax liability. In addition to the 2020 annual RSU grants, on April 1, 2020, the Company issued RSUs to settle bonuses owed to management under the 2019 Management Bonus Program. In the past, the Company has paid these bonuses with cash. However, due to the economic conditions resulting from COVID-19, fully vested shares were issued in lieu of cash. The Company issued 209,981 shares related to this bonus payment to management and recognized $2.6 million in stock-based compensation expense. The Company also recorded an equivalent reduction in bonus expense as a result of the settlement of the bonus in shares.

In the years ended December 31, 2021, 2020 and 2019 the Company’s Board of Directors granted its executive officers and certain senior management employees 178,222, 76,157, and 319,275 PSUs, respectively, related to its annual grants. The 2019 and 2020 grants vested on the first anniversary subject to the achievement of pre-established performance goals. The 2021 grant quantity vested one half on the first anniversary subject to the achievement of pre-established performance goals and the remaining half vested on the second anniversary subject to the recipient’s continued service. In addition to the 2021 annual PSU grants, in July 2021, the Company granted 265,002 PSUs to certain employees. This grant consists of four separate vesting tranches that will vest from April 2023 through June 2024 upon the achievement of operational milestones associated with each tranche and continued service.

In July 2019, the Board awarded its new CEO, David H. Mowry, 67,897 PSUs, which are scheduled to vest over four years from 2019 through 2022. These PSUs are subject to certain performance-based criteria related to achieving financial metrics in the Board approved annual budgets.

In August 2020, the Board awarded its new CFO, Rohan Seth, 60,000 stock options, which vests over five years, and 22,423 PSUs, which vests over 2.5 years and is subject to performance-based criteria relating to the achievement of certain department and financial goals.

On January 12, 2004, the Board of Directors adopted the 2004 Employee Stock Purchase Plan. Under the 2004 Employee Stock Purchase Plan, or 2004 ESPP, eligible employees are permitted to purchase common stock at a discount through payroll deductions. The 2004 ESPP offering and purchase periods are for six months. The 2004 ESPP has an evergreen provision based on which shares of common stock eligible for purchase are increased on the first day of each fiscal year by an amount equal to the lesser of:

•600,000 shares;

•2.0% of the outstanding shares of common stock on such date; or

•an amount as determined by the Board of Directors.

The price of the common stock purchased is the lower of 85% of the fair market value of the common stock at the beginning or end of the six-month offering period. In the years ended December 31, 2021, 2020, and 2019, under the 2004 ESPP, the Company issued 59,635, 56,751, and 82,810 shares, respectively. At December 31, 2021, 645,319 shares remained available for future issuance.

Option and Award Activity

Activity under the 2004 Plan and 2019 Equity Incentive Plan is summarized as follows:


		Options Outstanding
	Shares Available For Grant	Number of Shares	Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in millions ) (1)
Balances as of December 31, 2018	1,141,305	507,705	$	20.52	3.52	$	2.00
Additional shares reserved(2)	700,000
Options exercised	—	(160,798)	$	10.03
Options cancelled (expired or forfeited)	51,208	(51,208)	$	24.61
Stock awards granted	(1,538,128)	—	—
Stock awards cancelled (expired or forfeited)	407,320	—	—
Balances as of December 31, 2019	761,705	295,699	$	25.52	3.19	$	3.04
Additional shares reserved(2)	600,000
Options granted	(71,088)	71,088	$	14.85
Options exercised	—	(73,227)	$	12.91
Options cancelled (expired or forfeited)	76,553	(76,553)	$	36.65
Stock awards granted	(804,949)	—	—
Stock awards cancelled (expired or forfeited)	522,949	—	—
Balances as of December 31, 2020	1,085,170	217,007	$	22.35	3.75	$	1.47
Additional shares reserved(2)	450,000
Options granted	(172,139)	172,139	$	30.71
Options exercised	—	(71,798)	$	22.02
Options cancelled (expired or forfeited)	30,173	(30,173)	$	37.14
Stock awards granted	(744,949)	—	—
Stock awards cancelled (expired or forfeited)	299,092	—	—
Balances as of December 31, 2021	947,347	287,175	$	25.89	4.92	$	4.46
Exercisable as of December 31, 2021		83,855	$	24.14	2.86	$	1.47
Vested and expected to vest as of December 31, 2021		287,175	$	25.89	4.92	$	4.46

(1)Based on the closing stock price of $41.32 of the Company’s stock on December 31, 2021, $24.11 on December 31, 2020, $35.81 on December 31, 2019 and $17.02 on December 31, 2018.

(2)Approved by the board of directors and stockholders in 2021, 2020 and 2019.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value and is the aggregate difference between the Company’s closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of in-the-money options. The aggregate intrinsic amount changes based on the fair market value of the Company’s common stock. Total intrinsic value of options exercised in 2021, 2020 and 2019 was $1.3 million, $0.4 million, and $1.0 million, respectively. The options outstanding and exercisable at December 31, 2021 were in the following exercise price ranges:


Exercise Prices			Number Outstanding	Contractual Life (in years)	Number Exercisable
$10.79	—	$14.04	25,480	1.97	25,480
	$14.10		60,000	3.59	16,000
	$15.32		2,396	0.56	2,396
	$18.55		1,000	2.07	1,000
	$18.93		11,088	8.83	3,234
	$25.70		6,000	2.59	6,000
	$29.28		93,844	6.32	—
	$32.87		57,622	6.12	—
	$39.30		25,000	2.83	25,000
	$47.40		4,745	2.96	4,745
$10.79	—	$47.40	287,175	4.92	83,855

Stock Awards (RSU and PSU) Activity Table

Information with respect to RSUs and PSUs activity is as follows (in thousands):


	Number of Shares	Weighted-Average Grant- Date Fair Value		Aggregate Fair Value(1) (in thousands)			Aggregate Intrinsic Value(2) (in thousands)
Outstanding at December 31, 2018	474,291	$	38.44				$	8,072
Granted	963,814	$	18.68
Vested(3)	(172,281)	$	33.66	$	6,169	(4)
Forfeited	(161,022)	$	37.91
Outstanding at December 31, 2019	1,104,802	$	22.10				$	37,442
Granted	667,694	$	20.66
Vested(3)	(684,491)	$	17.82	$	12,036	(5)
Forfeited	(308,248)	$	23.24
Outstanding at December 31, 2020	779,757	$	23.96				$	18,800
Granted	744,949	$	40.16
Vested(3)	(254,946)	$	22.94	$	8,287	(6)
Forfeited	(236,856)	$	27.33
Outstanding at December 31, 2021	1,032,904	$	35.00				$	42,680

(1)Represents the value of the Company’s stock on the date that the restricted stock units and performance stock units vest.

(2)Based on the closing stock price of the Company’s stock of $41.32 on December 31, 2021, $24.11 on December 31, 2020, $35.81 on December 31, 2019, and $17.02 on December 31, 2018.

(3)The number of restricted stock units vested includes shares that the Company withheld on behalf of the employees to satisfy the statutory tax withholding requirements.

(4)On the grant date, the fair value for these vested awards was $5.9 million.

(5)On the grant date, the fair value for these vested awards was $12.2 million.

(6)On the grant date, the fair value for these vested awards was $5.8 million.

Stock-Based Compensation

Stock-based compensation expense for the years ended December 31, 2021, 2020 and 2019 was as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Stock options	$	782	$	370	$	622
RSUs	5,305		8,849		4,786
PSUs	6,591		666		3,948
ESPP	494		224		476
Total stock-based compensation expense	$	13,172	$	10,109	$	9,832

Total stock-based compensation expense recognized during the year ended December 31, 2021, 2020 and 2019 was recorded in the Consolidated Statement of Operations as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Cost of revenue	$	1,408	$	1,665	$	1,572
Sales and marketing	3,160		3,385		4,510
Research and development	2,784		1,669		1,536
General and administrative	5,820		3,390		2,214
Total stock-based compensation expense	$	13,172	$	10,109	$	9,832

Valuation Assumptions and Fair Value of Stock Options and ESPP Grants

The Company uses the Black-Scholes option pricing model to estimate the fair value of options granted under its equity incentive plans and rights to acquire stock granted under its employee stock purchase plan. The weighted average estimated fair values of the employee stock options and rights granted under the employee stock purchase plan and the weighted average assumptions used to calculate the grant date fair values, are as follows:


	Stock Options									Stock Purchase Plan (ESPP)
	2021			2020			2019			2021			2020			2019
Expected term (in years)(1)	3.97			4.84			3.65			0.50			0.50			0.50
Risk-free interest rate(2)	0.48		%	0.15		%	1.64		%	0.14		%	0.11		%	2.49		%
Volatility(3)	66		%	63		%	54		%	36		%	76		%	70		%
Dividend yield(4)	—		%	—		%	—		%	—		%	—		%	—		%
Weighted average estimated fair value at grant date	$	15.09		$	7.63		$	14.83		$	9.64		$	6.13		$	9.60

(2)The risk-free interest rate is based on U.S. Treasury debt securities with maturities close to the expected term of the option or ESPP participation right as of the date of grant.

(3)Estimated volatility is based on historical volatility. The Company estimates volatility based on the Company’s historical volatility of its stock price.

(4)The Company has not paid dividends since its inception.

Defined Contribution Plan	12 Months Ended
Defined Contribution Plan	Dec. 31, 2021
Retirement Benefits [Abstract]
Defined Contribution Plan	DEFINED CONTRIBUTION PLAN In the U.S., the Company has an employee savings plan (“401(k) Plan”) that qualifies as a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Eligible employees may make voluntary contributions to the 401(k) Plan up to 100% of their annual compensation, subject to statutory annual limitations. In 2021, 2020 and 2019, the Company made discretionary contributions under the 401(k) Plan of $0.3 million, $0.2 million and $0.4 million, respectively. For the Company’s Japanese subsidiary, a discretionary employee retirement plan has been established. In addition, for some of the Company’s other foreign subsidiaries, the Company deposits funds with insurance companies, third-party trustees, or into government-managed accounts consistent with the requirements of local laws. The Company has fully funded or accrued for its obligations as of December 31, 2021, and the related expense for each of the three years then ended was not significant.

- Definition

The entire disclosure for retirement benefits.

+ References

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-Name Accounting Standards Codification
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+ Details

Deferred Revenue (Tables)

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Summary of Deferred Service Contract Revenue

The following table provides changes in the deferred contract revenue balance for the years ended December 31, 2021 and 2020 (in thousands):


	December 31,
	2021		2020
Balance at beginning of year	$	11,237	$	14,222
Add: Payments received	17,139		14,131
Less: Revenue recognized from current period sales	(7,006)		(6,337)
Less: Revenue recognized from beginning balance	(10,545)		(10,779)
Balance at end of year	$	10,825	$	11,237

Product Warranty

12 Months Ended

Dec. 31, 2021

Product Warranties Disclosures [Abstract]

Product Warranty

PRODUCT WARRANTY

The Company has a direct field service organization in North America (including Canada). Internationally, the Company provides direct service support in Australia, Austria, Belgium, France, Germany, Hong Kong, Japan, the Netherlands, and Switzerland, as well as through third-party service providers in Spain and the United Kingdom. In several other countries, where the Company does not have a direct presence, the Company provides service through a network of distributors and third-party service providers.

After the original warranty period, maintenance and support are offered on an extended service contract basis or on a time and materials basis. The Company provides the estimated cost to repair or replace products under standard warranty at the time of sale. Costs in connection with extended service contracts are recognized at the time when costs are incurred. The following table provides the changes in the product standard warranty accrual for the years ended December 31, 2021 and 2020 (in thousands):


	December 31,
	2021		2020
Balance at beginning of year	$	4,124	$	6,400
Add: Accruals for warranties issued during the period	5,135		4,475
Less: Settlements made during the period	(5,312)		(6,751)
Balance at end of year	$	3,947	$	4,124

Deferred Revenue

12 Months Ended

Dec. 31, 2021

Revenue from Contract with Customer [Abstract]

Deferred Revenue

DEFERRED REVENUE

The Company records deferred revenue when revenue is to be recognized subsequent to invoicing. For extended service contracts, the Company generally invoices customers at the beginning of the extended service contract term. The Company’s extended service contracts typically have one to three-year terms. Deferred revenue also includes payments for training. Approximately 86% of the Company’s deferred revenue balance of $10.8 million as of December 31, 2021, will be recognized over the next 12 months.

The following table provides changes in the deferred contract revenue balance for the years ended December 31, 2021 and 2020 (in thousands):


	December 31,
	2021		2020
Balance at beginning of year	$	11,237	$	14,222
Add: Payments received	17,139		14,131
Less: Revenue recognized from current period sales	(7,006)		(6,337)
Less: Revenue recognized from beginning balance	(10,545)		(10,779)
Balance at end of year	$	10,825	$	11,237

Costs for extended service contracts were $8.3 million, $8.2 million and $9.3 million, respectively, for the years ended December 31, 2021, 2020 and 2019.

Debt - Narrative (Details)			1 Months Ended		12 Months Ended
Debt - Narrative (Details)	Jul. 09, 2020 USD ($)	Apr. 22, 2020 USD ($)	Jun. 30, 2021 USD ($)	Mar. 31, 2021 USD ($) day $ / shares $ / item	Dec. 31, 2021 USD ($) $ / shares	Dec. 31, 2020 USD ($) $ / shares	Dec. 31, 2019 USD ($) $ / shares	Mar. 04, 2021 $ / shares	Dec. 31, 2018 $ / shares
Debt Instrument [Line Items]
Unamortized debt issuance costs					$ 4,007,000
Cap price (in USD per share) \| $ / item				45.5350
Premium over stock price (percent)				75.00%
Stock price (in dollars per share) \| $ / shares					$ 41.32	$ 24.11	$ 35.81	$ 26.02	$ 17.02
Capped-call transaction term, consecutive trading days \| day				40
Purchase of capped call				$ 16,100,000	$ 16,134,000	$ 0	$ 0
Payment of issuance costs of convertible notes					4,717,000	0	0
Amortization of debt issuance costs					710,000	0	0
Interest on convertible notes					2,514,000	0	0
Gain on extinguishment of PPP loan					7,185,000	$ 0	$ 0
Convertible Senior Notes Due 2026
Debt Instrument [Line Items]
Convertible debt, conversion ratio				0.0301427
Convertible Senior Notes Due 2026 \| Common Stock
Debt Instrument [Line Items]
Conversion price (in dollars per share) \| $ / shares				$ 33.18
Convertible Senior Notes Due 2026 \| Convertible Debt
Debt Instrument [Line Items]
Debt instrument, aggregate principal amount				$ 138,300,000
Debt instrument, interest rate				2.25%
Proceeds from convertible notes, net of unamortized debt issuance costs				$ 133,600,000
Unamortized debt issuance costs					4,007,000
Redemption price, percentage				100.00%
Required outstanding amount not subject to redemption				$ 50,000,000
Debt fair value					201,000,000
Payment of issuance costs of convertible notes					4,700,000
Amortization of debt issuance costs					$ 700,000
Effective interest rate during period					2.97%
Interest on convertible notes					$ 3,200,000
Convertible Senior Notes Due 2026 \| Convertible Debt \| Debt Instrument, Redemption, Period One
Debt Instrument [Line Items]
Redemption price, percentage				100.00%
Incremental repurchase amount				$ 1,000
Convertible Senior Notes Due 2026, Second Conversion Trigger \| Convertible Debt
Debt Instrument [Line Items]
Conversion threshold trading days \| day				5
Threshold consecutive trading days \| day				5
Conversion threshold percentage of stock price trigger				98.00%
Convertible Senior Notes Due 2026, First Conversion Trigger \| Convertible Debt
Debt Instrument [Line Items]
Conversion threshold trading days \| day				20
Threshold consecutive trading days \| day				30
Conversion threshold percentage of stock price trigger				130.00%
Paycheck Protection Program CARES Act
Debt Instrument [Line Items]
Debt instrument, interest rate		1.00%
Loan proceeds		$ 7,200,000
Gain on extinguishment of PPP loan			$ 7,200,000
Loan and Security Agreement \| Revolving Credit Facility \| Silicon Valley Bank
Debt Instrument [Line Items]
Debt instrument, interest rate	5.00%
Debt instrument term	4 years
Maximum borrowing capacity	$ 30,000,000
Qualifying accounts receivable	80.00%
Commitment fee amount	$ 300,000
Anniversary fee amount	300,000
Quarterly minimum revenue	$ 90,000,000
Loan and Security Agreement \| Revolving Credit Facility \| Silicon Valley Bank \| Prime Rate
Debt Instrument [Line Items]
Basis spread on variable rate	1.75%

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 164,164	$ 47,047
Accounts receivable, net of allowance for credit losses of $899 and $1,598, respectively	31,449	21,962
Inventories	39,503	28,508
Other current assets and prepaid expenses	14,545	8,779
Total current assets	249,661	106,296
Property and equipment, net	3,019	2,299
Deferred tax assets	778	643
Operating lease right-of-use assets	14,627	17,076
Goodwill	1,339	1,339
Other long-term assets	10,169	5,080
Restricted cash	700	0
Total assets	280,293	132,733
Current liabilities:
Accounts payable	7,891	6,684
Accrued liabilities	54,100	32,295
Operating lease liabilities	2,419	2,260
PPP loan payable	0	3,630
Deferred revenue	9,490	9,489
Total current liabilities	73,900	54,358
Deferred revenue, net of current portion	1,335	1,748
Operating lease liabilities, net of current portion	13,483	15,950
PPP loan payable, net of current portion	0	3,555
Convertible notes, net of unamortized debt issuance costs of $4,007	134,243	0
Other long-term liabilities	763	242
Total liabilities	223,724	75,853
Commitments and contingencies (Note 11).
Stockholders’ equity:
Common stock, $0.001 par value: Authorized: 50,000,000 shares; Issued and outstanding: 17,995,344 and 17,679,232 shares at December 31, 2021 and 2020, respectively	18	18
Additional paid-in capital	114,724	117,097
Accumulated deficit	(58,173)	(60,235)
Total stockholders’ equity	56,569	56,880
Total liabilities and stockholders’ equity	$ 280,293	$ 132,733

Debt - Outstanding Debt and Carrying Value (Details) $ in Thousands	Dec. 31, 2021 USD ($)
Debt Instrument [Line Items]
Unamortized debt issuance costs	$ (4,007)
Convertible Senior Notes Due 2026 \| Convertible Debt
Debt Instrument [Line Items]
Outstanding principal amount	138,250
Unamortized debt issuance costs	(4,007)
Carrying Value	$ 134,243

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Stock-based Compensation Expense by Department (Details) - USD ($) $ in Thousands		12 Months Ended
	Apr. 01, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 2,600	$ 13,172	$ 10,109	$ 9,832
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense		1,408	1,665	1,572
Sales and marketing
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense		3,160	3,385	4,510
Research and development
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense		2,784	1,669	1,536
General and administrative
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense		$ 5,820	$ 3,390	$ 2,214

Income Taxes - Income (Loss) Before Provision for Income Taxes (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Abstract]
U.S.	$ (356)	$ (25,793)	$ (13,037)
Foreign	3,741	2,386	774
Income (loss) before income taxes	$ 3,385	$ (23,407)	$ (12,263)

- Definition

Amount of income (loss) from continuing operations, including income (loss) from equity method investments, before deduction of income tax expense (benefit), and income (loss) attributable to noncontrolling interest.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

Net Income (Loss) Per Share - Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Numerator:
Net income (loss)	$ 2,062	$ (23,877)	$ (12,348)
Denominator:
Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic (in shares)	17,891	16,691	14,096
Dilutive effect of incremental shares and share equivalents:
Weighted average shares of common stock outstanding used in computing net loss per share, diluted (in shares)	18,362	16,691	14,096
Net income (loss) per share:
Net income (loss) per share, basic (USD per share)	$ 0.12	$ (1.43)	$ (0.88)
Net income (loss) per share, diluted (USD per share)	$ 0.11	$ (1.43)	$ (0.88)
Options
Dilutive effect of incremental shares and share equivalents:
Dilutive effect of share-based payment arrangements (in shares)	68	0	0
RSUs
Dilutive effect of incremental shares and share equivalents:
Dilutive effect of share-based payment arrangements (in shares)	294	0	0
PSUs
Dilutive effect of incremental shares and share equivalents:
Dilutive effect of share-based payment arrangements (in shares)	104	0	0
ESPP
Dilutive effect of incremental shares and share equivalents:
Dilutive effect of share-based payment arrangements (in shares)	5	0	0

Segment Information and Revenue by Geography and Products - Narrative (Details)	12 Months Ended
	Dec. 31, 2021 segment
Segment Reporting [Abstract]
Number of operating segments	1

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Statement of Financial Position [Abstract]
Allowance for credit loss, current	$ 899	$ 1,598
Unamortized debt issuance costs	$ 4,007
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock authorized (in shares)	50,000,000	50,000,000
Common stock issued (in shares)	17,995,344	17,679,232
Common stock outstanding (in shares)	17,995,344	17,679,232

Commitments and Contingencies - Lease Information (Details)	Dec. 31, 2021
Leases [Abstract]
Operating leases	5 years 9 months 18 days
Finance leases	2 years 1 month 6 days
Operating leases	4.80%
Finance leases	6.70%

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Net revenue:
Total net revenue	$ 231,270	$ 147,683	$ 181,712
Cost of revenue:
Total cost of revenue	98,165	71,911	83,549
Gross profit	133,105	75,772	98,163
Operating expenses:
Sales and marketing	76,762	52,766	71,109
Research and development	21,568	14,322	15,085
General and administrative	32,945	31,512	24,033
Total operating expenses	131,275	98,600	110,227
Income (loss) from operations	1,830	(22,828)	(12,064)
Interest and other income (expense), net:
Amortization of debt issuance costs	(710)	0	0
Interest on convertible notes	(2,514)	0	0
Gain on extinguishment of PPP loan	7,185	0	0
Other expense, net	(2,406)	(579)	(199)
Total interest and other income (expense), net	1,555	(579)	(199)
Income (loss) before income taxes	3,385	(23,407)	(12,263)
Income tax provision	1,323	470	85
Net income (loss)	$ 2,062	$ (23,877)	$ (12,348)
Earnings Per Share [Abstract]
Basic (USD per share)	$ 0.12	$ (1.43)	$ (0.88)
Diluted (USD per share)	$ 0.11	$ (1.43)	$ (0.88)
Denominator:
Basic (in shares)	17,891	16,691	14,096
Diluted (in shares)	18,362	16,691	14,096
Products
Net revenue:
Total net revenue	$ 205,703	$ 125,113	$ 158,638
Cost of revenue:
Total cost of revenue	83,048	58,325	64,693
Service
Net revenue:
Total net revenue	25,567	22,570	23,074
Cost of revenue:
Total cost of revenue	$ 15,117	$ 13,586	$ 18,856

Segment Information and Revenue by Geography and Products

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segment Information and Revenue by Geography and Products

SEGMENT INFORMATION AND REVENUE BY GEOGRAPHY AND PRODUCTSSegment reporting is based on the “management approach,” following the method that management organizes the company’s reportable segments for which separate financial information is made available to, and evaluated regularly by, the chief operating decision maker in allocating resources and in assessing performance. The Company’s chief operating decision makers ("CODM") are its Chief Executive Officer ("CEO") and Chief Financial Officer (“CFO”), who make decisions on allocating resources and in assessing performance. The CEO and CFO review the Company's consolidated results as one operating segment. In making operating decisions, the CODM primarily considers consolidated financial information, accompanied by disaggregated information about revenues by geography and product. All of the Company’s principal operations and decision-making functions are located in the U.S. Substantially all of the Company's long-lived assets are located in the U.S.

The following table presents a summary of revenue by geography for the year ended December 31, 2021, 2020 and 2019 (in thousands):


	Year Ended December 31,
	2021		2020		2019
Revenue mix by geography:
United States	$	96,629	$	61,238	$	106,372
Japan	70,235		43,265		24,143
Asia, excluding Japan	12,649		10,707		14,414
Europe	19,444		11,185		11,937
Rest of the world, other than United States, Asia and Europe	32,313		21,288		24,846
Total consolidated revenue	$	231,270	$	147,683	$	181,712
Revenue mix by product category:
Systems	$	139,633	$	90,765	$	140,478
Consumables	16,401		9,287		9,648
Skincare	49,669		25,061		8,512
Total product revenue	205,703		125,113		158,638
Service	25,567		22,570		23,074
Total consolidated revenue	$	231,270	$	147,683	$	181,712

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Balance Sheet Detail - Accrued Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Bonus and payroll-related accruals	$ 21,649	$ 12,197
Sales and marketing accruals	4,808	2,352
Accrued inventory in transit	4,265	2,476
Product warranty	3,947	4,124
Accrued sales tax	9,110	5,343
Other accrued liabilities	10,321	5,803
Total	$ 54,100	$ 32,295

Debt

12 Months Ended

Dec. 31, 2021

Debt Disclosure [Abstract]

Debt

DEBT

Convertible notes, net of unamortized debt issuance costs

In March 2021, the Company issued $138.3 million aggregate principal amount of convertible senior notes ("convertible notes") due on March 15, 2026 in a private placement offering. The convertible notes bear interest at a rate of 2.25% per year payable semiannually in arrears on March 15 and September 15 of each year, beginning on September 15, 2021. Upon conversion, the convertible notes will be convertible into cash, shares of the Company’s common stock or a combination thereof, at the Company’s election. The convertible notes are presented as convertible notes, net of unamortized debt issuance costs, on the consolidated balance sheet. Proceeds from the offering were $133.6 million, net of issuance costs, including initial purchasers fees.

Initially, each $1,000 principal amount of Notes was convertible into 30.1427 shares of the Company’s common stock at a conversion price of $33.18 per share. The conversion rate for the convertible notes is subject to adjustment for certain events as set forth in the Indenture governing the convertible notes. The convertible notes will mature on March 15, 2026, unless earlier converted, redeemed, or repurchased in accordance with the terms of the convertible notes. No sinking fund is provided for the Notes. As of December 31, 2021, the net carrying amount of the Company’s convertible notes was $134.2 million and the unamortized debt issuance costs were $4.0 million.

Holders may convert their Notes at their option prior to the close of business on the business day immediately preceding December 15, 2025, in multiples of $1,000 principal amount, only under the following circumstances:

•During any fiscal quarter commencing after the fiscal quarter ended on June 30, 2021 (and only during such fiscal quarter), if the last reported sale price of the common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on and including, the last trading day of the immediately preceding fiscal quarter, is greater than or equal to 130% of the conversion price for the convertible notes on each applicable trading day;

•During the five-business day period after any five consecutive trading day period (the “measurement period”) in which the “trading price” per $1,000 principal amount of convertible notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company's common stock and the conversion rate on each such trading day;

•The Company calls such convertible notes for redemption, at any time prior to the close of business on the second scheduled trading day immediately preceding the redemption date; or

•Upon the occurrence of specified corporate events.

On or after December 15, 2025, and until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes, in multiples of $1,000 principal amount, at the option of the holder regardless of the foregoing circumstances.

The circumstances described in the first bullet of the paragraph above were met during the second and third quarters of 2021 as the Company's stock traded at a price in excess of the conversion price for the required number of days during each of those quarters. These circumstances were not met during the fourth quarter of 2021. As a result, holders of the Notes had the right to convert their Notes beginning July 1, 2021 and ending on December 31, 2021. As of December 31, 2021, the Notes are not convertible and this condition will remain until March 31, 2022. The Notes may become convertible in future periods. Upon any conversion requests of the convertible notes, the Company would be required to pay or deliver, as the case may be, cash, shares of its common stock, or a combination of cash and shares of its common stock, at the Company’s election with respect to such conversion requests. To the extent there are any conversion requests in the year ending December 31, 2022, the Company intends to settle such conversion requests in shares of common stock. Therefore, as of December 31, 2021, the convertible notes have been included as Long-term debt on the consolidated balance sheet.

The Company may not redeem the convertible notes prior to March 20, 2024. On or after March 20, 2024, the Company may redeem for cash all or any portion of the Notes, at the Company’s option, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. If the Company elects to redeem fewer than all of the outstanding Notes, at least $50.0 million aggregate principal amount of Notes must be outstanding and not subject to redemption as of the relevant redemption notice date.

If a fundamental change occurs, note holders have the option to require the Company to repurchase any portion or all of their convertible notes in $1,000 principal increments for cash. The price for such repurchase is calculated as 100% of the principal amounts of Notes, plus accrued and unpaid interest to the day immediately preceding the Fundamental Change repurchase date. Additionally, holders of the Notes who convert in connection with a fundamental change are, under certain circumstances, entitled to an increase in conversion rate.

The convertible notes are general senior unsecured obligations that rank senior to any of the Company’s indebtedness that is explicitly subordinated to the Notes. The Notes have equal rank in right of payment with all existing and future unsecured indebtedness that is not subordinated to the Notes. The Notes will be junior to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness. The Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company.

The estimated fair value of the convertible notes was approximately $201.0 million as of December 31, 2021. The fair value is based on observable market prices for this debt, which is traded in active markets and therefore is classified as a Level 2 fair value measurement, as defined in Note 1.

The following table presents the outstanding principal amount and carrying value of the convertible notes (in thousands):


	December 31, 2021
Outstanding principal amount	$	138,250
Unamortized debt issuance costs	(4,007)
Carrying Value	$	134,243

In connection with issuance of the convertible notes, the Company entered into capped call transactions with certain option counterparties. The capped call transactions are generally intended to reduce the potential dilution of the Company's common stock upon any conversion or settlement of the Notes or to offset any cash payment the Company is required to make in excess of the principal amount upon conversion of the Notes, as the case may be, with such reduction or offset subject to a cap based on the cap price. If the market price per share of the Company’s common stock exceeds the cap price of the capped calls transaction, then the Company’s stock would experience some dilution and/or the capped call would not fully offset the potential cash payments, in each case to the extent the then-market price per share of its common stock exceeds the cap price. Under the capped call transactions, the Company purchased from the option counterparties capped call options that in the aggregate relate to the total number of shares of the Company's common stock underlying the convertible notes, with a strike price equal to the conversion price of the convertible notes and with an initial cap price equal to $45.5350, which represents a 75% premium over the last reported sale price of the Company's common stock of $26.02 per share on March 4, 2021, with certain adjustments to the settlement terms that reflect standard anti-dilution provisions. The capped call transactions expire over 40 consecutive scheduled trading days ended on March 12, 2026. The capped calls were purchased for $16.1 million. The Company evaluated the capped call transaction under authoritative accounting guidance and determined that it should be accounted for as a separate transaction and classified as a net reduction to Additional paid-in capital within stockholders’ equity with no recurring fair value measurement recorded.

The Company early adopted ASU 2020-6, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40). In accordance with Subtopic 470-20 and 815-40, as revised by ASU 2020-6, the Company records the convertible notes in long-term debt with no separation between the Notes and the conversion option. Each reporting period, the Company will determine whether any criteria is met for the note holders to have the option to redeem the Notes early, which could result in a change in the classification of the Notes to current liabilities.

Debt Issuance Cost

The issuance costs related to the convertible notes are presented in the consolidated balance sheet as a direct deduction from the carrying amount of the convertible notes. During the year ended December 31, 2021, the Company incurred direct costs associated with the issuance of convertible notes of $4.7 million.

The issuance costs are amortized using an effective interest method basis over the term of the convertible notes and accordingly the Company recorded approximately $0.7 million of amortization of debt issuance costs during the year ended December 31, 2021.

The effective interest rate on the convertible notes is 2.97%. Interest expense for the year ended December 31, 2021, including the amortization of debt issuance cost, totaled approximately $3.2 million.

Loan and Security Agreement

On July 9, 2020, the Company entered into a Loan and Security Agreement with Silicon Valley Bank for a four-year secured revolving loan facility (“SVB Revolving Line of Credit”) in an aggregate principal amount of up to $30.0 million. The SVB Revolving Line of Credit matures on July 9, 2024.

In order to draw on the full amount of the SVB Revolving Line of Credit, the Company must satisfy certain liquidity ratios. If the Company is unable to meet these liquidity ratios, then availability under the revolving line is calculated as 80% of the Company’s qualifying accounts receivable. The proceeds of the revolving loans may be used for general corporate purposes. The Company’s obligations under the Loan and Security Agreement with Silicon Valley Bank are secured by substantially all of the assets of the Company. Interest on principal amount outstanding under the revolving line shall accrue at a floating per annum rate equal to the greater of either 1.75% above the Prime Rate or five percent (5.0%). The Company paid a non-refundable revolving line commitment fee of $0.3 million, on the effective date of the Loan and Security Agreement with Silicon Valley Bank of July 9, 2020, and the Company is required to pay an anniversary fee of $0.3 million on each twelve-month anniversary of the effective date of the Loan and Security Agreement.

The Loan and Security Agreement with Silicon Valley Bank contains customary affirmative covenants, such as financial statement reporting requirements and delivery of borrowing base certificates, as well as customary covenants that restrict the Company’s ability to, among other things, incur additional indebtedness, sell certain assets, guarantee obligations of third parties, declare dividends, or make certain distributions, and undergo a merger or consolidation or certain other transactions. The Loan and Security Agreement also contains certain financial covenants, including maintaining a quarterly minimum revenue of $90.0 million, determined in accordance with GAAP on a trailing twelve-month basis, but which is only applicable if the Company has an outstanding balance under the loan facility.

On March 4, 2021, the Loan and Security Agreement dated July 9, 2020 was amended to (i) permit the Company to issue the Convertible notes and perform its obligations in connection therewith, and (ii) permit the Capped Call transactions.

On or about May 28, 2021, the Loan and Security Agreement was amended. The amendment removed the quarterly minimum revenue requirement but kept in place the other financial covenants.

As of December 31, 2021, the Company had not drawn on the SVB Revolving Line of Credit and the Company is in compliance with all financial covenants of the SVB Revolving Line of Credit.

The Paycheck Protection Program (PPP) Loan

On April 22, 2020, the Company received loan proceeds of $7.2 million pursuant to the Paycheck Protection Program (the “PPP”) under the CARES Act. The loan, which was in the form of a promissory note dated April 21, 2020, between the Company and Silicon Valley Bank as the lender, originally matured on April 21, 2022 and bore interest at a fixed rate of 1.00% per annum, payable monthly commencing September 2021. There was no prepayment penalty. Under the terms of the PPP, all or a portion of the principal may be forgiven if the loan proceeds were used for qualifying expenses as described in the CARES Act, such as payroll costs, benefits, rent, and utilities.

The PPP loan and related accrued interest were forgiven in June 2021 under the provisions of the CARES Act, and a $7.2 million Gain on extinguishment of PPP loan was recorded in the consolidated statement of operations.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
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+ Details

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2021

Leases [Abstract]

Accounting Standards Update and Change in Accounting Principle

The following table summarizes the effects of adopting Topic 842 on the Company’s consolidated balance sheet as of January 1, 2019 (in thousands):


	As reported under Topic 842		Adjustments		Balances under Prior GAAP
Operating lease right-of-use assets	$	10,049	$	(10,049)	$	—
Operating lease liabilities	(2,430)		2,430		—
Other long-term liabilities*	—		140		140
Operating lease liabilities, net of current portion	(7,759)		7,759		—

*Deferred rent included in other long-term liabilities

Leases, Financial Statement Information

Below is supplemental balance sheet information related to leases (in thousands):


		Year Ended December 31,
		2021		2020
Assets	Classification
Right-of-use assets	Operating lease right-of-use assets	$	14,627	$	17,076
Finance lease	Property and equipment, net	392		467
Total leased assets		$	15,019	$	17,543


		Year Ended December 31,
		2021		2020
Liabilities	Classification
Operating lease liabilities
Operating lease liabilities, current	Operating lease liabilities	$	2,419	$	2,260
Operating lease liabilities , non-current	Operating lease liabilities, net of current portion	13,483		15,950
Total Operating lease liabilities		$	15,902	$	18,210


		Year Ended December 31,
	Classification	2021		2020
Finance lease liabilities
Finance lease liabilities, current	Accrued liabilities	$	554	$	370
Finance lease liabilities, non-current	Other long-term liabilities	730		241
Total Finance lease liabilities		$	1,284	$	611

ease costs during the twelve months ended December 31, 2021 and December 31, 2020 (in thousands):


		Year Ended December 31,
		2021		2020		2019
Finance lease cost	Amortization expense	$	484	$	431	$	704
Finance lease cost	Interest for finance lease	$	59	$	63	$	88
Operating lease cost	Operating lease expense	$	3,542	$	3,275	$	2,892

Cash paid for amounts included in the measurement of lease liabilities during the twelve months ended December 31, 2021 and December 31, 2020 were as follows (in thousands):


		Year Ended December 31,
		2021		2020		2019
Operating cash flow	Finance lease	$	56	$	63	$	88
Financing cash flow	Finance lease	$	462	$	537	$	649
Operating cash flow	Operating lease	$	3,092	$	2,139	$	2,820

Lessee, Operating Lease, Liability, Maturity

Maturities of operating lease liabilities were as follows as of December 31, 2021 (in thousands):


	Amount
2022	$	3,121
2023	3,160
2024	2,874
2025	2,875
2026	2,970
Thereafter	3,338
Total lease payments	18,338
Less: imputed interest	(2,436)
Present value of lease liabilities	$	15,902

Finance Lease, Liability, Fiscal Year Maturity

As of December 31, 2021, the Company was committed to minimum lease payments for vehicles leased under long-term non-cancelable finance leases as follows (in thousands):


	Amount
2022	$	601
2023	347
2024	409
2025	22
Total lease payments	1,379
Less: imputed interest	(95)
Present value of lease liabilities	$	1,284

Lease, Cost

Weighted-average remaining lease term and discount rate, as of December 31, 2021, were as follows:


Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases	5.8
Finance leases	2.1
Weighted-average discount rate
Operating leases	4.8	%
Finance leases	6.7	%

Operating Lease, Lease Income

The following table summarizes the amount of operating lease income included in product revenue in the accompanying consolidated statements of operations (in thousands):


	Year Ended December 31, 2021		Year Ended December 31, 2020
Operating lease income from equipment rentals	$	149	$	367

Cash, Cash Equivalents and Restricted Cash - Narrative (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Cash and Cash Equivalents [Abstract]
Marketable securities	$ 0	$ 0

Commitments and Contingencies - Maturities of Finance Leases Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
2022	$ 601
2023	347
2024	409
2025	22
Total lease payments	1,379
Less: imputed interest	(95)
Present value of lease liabilities	$ 1,284	$ 611

Balance Sheet Detail - Narrative (Details) - USD ($)	12 Months Ended
Balance Sheet Detail - Narrative (Details) - USD ($)	Dec. 31, 2021	Dec. 31, 2020
Valuation adjustment for excess and obsolete inventory	$ 4,900,000	$ 3,900,000
Finance lease	392,000	467,000
Goodwill	1,339,000	1,339,000
Goodwill impairment	0	0
Goodwill additions during the year	0	0
Vehicles
Finance lease	2,600,000	1,800,000
Leased vehicles, accumulated depreciation	1,500,000	1,400,000
Construction in Progress
Construction in progress to be depreciated	$ 800,000	$ 400,000

Commitments and Contingencies - Operating Lease Income (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Operating lease income from equipment rentals	$ 149	$ 367

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Stock Option Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019	Dec. 31, 2018
Shares Available For Grant
Balance (in shares)	1,085,170	761,705	1,141,305
Additional shares reserved (in shares)	450,000	600,000	700,000
Options granted (in shares)	(172,139)	(71,088)
Options cancelled (expired or forfeited) (in shares)	30,173	76,553	51,208
Stock awards granted (in shares)	(744,949)	(804,949)	(1,538,128)
Stock awards canceled (expired or forfeited) (in shares)	299,092	522,949	407,320
Balance (in shares)	947,347	1,085,170	761,705	1,141,305
Number of Shares
Balance (in shares)	217,007	295,699	507,705
Options exercised (in shares)	(71,798)	(73,227)	(160,798)
Options granted (in shares)	172,139	71,088
Options cancelled (expired or forfeited) (in shares)	(30,173)	(76,553)	(51,208)
Balance (in shares)	287,175	217,007	295,699	507,705
Exercisable (in shares)	83,855
Vested and expected to vest (in shares)	287,175
Weighted- Average Exercise Price
Balance (in dollars per share)	$ 22.35	$ 25.52	$ 20.52
Options granted (in dollars per share)	30.71	14.85
Options exercised (in dollars per share)	22.02	12.91	10.03
Options cancelled (expired or forfeited) (in dollars per share)	37.14	36.65	24.61
Balance (in dollars per share)	25.89	$ 22.35	$ 25.52	$ 20.52
Exercisable (in dollars per share)	24.14
Vested and expected to vest (in dollars per share)	$ 25.89
Weighted-Average Remaining Contractual Life
Balance	4 years 11 months 1 day	3 years 9 months	3 years 2 months 8 days	3 years 6 months 7 days
Exercisable	2 years 10 months 9 days
Vested and expected to vest	4 years 11 months 1 day
Aggregate Intrinsic Value
Balance	$ 4,460	$ 1,470	$ 3,040	$ 2,000
Exercisable	1,470
Vested and expected to vest	$ 4,460

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	SUBSEQUENT EVENTSThe Company has evaluated subsequent events through the date the financial statements were issued, and determined that there have been no events that have occurred that would require adjustments to our disclosures in the consolidated financial statements.

Income Taxes - Deferred Tax Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Income Tax Disclosure [Abstract]
Net operating loss carryforwards	$ 18,274	$ 18,270
Stock-based compensation	3,160	869
Other accruals and reserves	2,863	3,670
Credits	13,634	12,653
Accrued warranty	939	976
Depreciation and amortization	2,226	2,191
Other	977	979
Operating lease liability	3,784	4,311
Deferred tax asset before valuation allowance	45,857	43,919
Valuation allowance	(40,485)	(38,321)
Deferred tax asset after valuation allowance	5,372	5,598
Deferred contract acquisition costs	(990)	(803)
Goodwill	(124)	(110)
Right of use asset	(3,480)	(4,042)
Net deferred tax asset	$ 778	$ 643

Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2021

SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

SCHEDULE II CUTERA, INC.

VALUATION AND QUALIFYING ACCOUNTS

(in thousands)

For the Years Ended December 31, 2021, 2020 and 2019


	Balance at Beginning of Year		Additions		Deductions		Balance at End of Year
Deferred tax assets valuation allowance
Year ended December 31, 2021	$	38,321	$	7,503	$	5,337	$	40,487
Year ended December 31, 2020	$	32,350	$	7,986	$	2,015	$	38,321
Year ended December 31, 2019	$	27,865	$	7,396	$	2,911	$	32,350


	Balance at Beginning of Year		Additions		Deductions		Balance at End of Year
Allowance for credit losses, accounts receivable
Year ended December 31, 2021	$	1,598	$	271	$	970	$	899
Year ended December 31, 2020	$	1,354	$	2,144	$	1,900	$	1,598
Year ended December 31, 2019	$	1,257	$	1,361	$	1,264	$	1,354

Deferred Revenue - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Costs for extended service contracts	$ 8.3	$ 8.2	$ 9.3
Service
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Extended service contract, option one, term	1 year
Extended service contract, option two, term	2 years
Service \| Minimum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Extended service contract, option one, term	1 year
Service \| Maximum
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Extended service contract, option two, term	3 years
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-01-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Deferred revenue balance, percentage	86.00%
Deferred revenue balance, amount	$ 10.8
Deferred revenue balance, recognition period	12 months

Income Taxes

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Income Taxes

INCOME TAXES

The Company files income tax returns in the U.S. federal and various state and local jurisdictions and foreign jurisdictions. The Company’s income (loss) before provision for income taxes consisted of the following (in thousands):


	Year Ended December 31,
	2021		2020		2019
U.S.	$	(356)	$	(25,793)	$	(13,037)
Foreign	3,741		2,386		774
Income (loss) before income taxes	$	3,385	$	(23,407)	$	(12,263)

The components of the provision for income taxes are as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Current:
Federal	$	—	$	—	$	—
State	(87)		(53)		101
Foreign	1,512		747		(76)
Total Current	1,425		694		25
Deferred:
Federal	2		2		2
State	1		1		1
Foreign	(105)		(227)		57
Total Deferred	(102)		(224)		60
Tax provision	$	1,323	$	470	$	85

The Company’s net deferred tax assets consist of the following (in thousands):


	December 31,
	2021		2020
Net operating loss carryforwards	$	18,274	$	18,270
Stock-based compensation	3,160		869
Other accruals and reserves	2,863		3,670
Credits	13,634		12,653
Accrued warranty	939		976
Depreciation and amortization	2,226		2,191
Other	977		979
Operating lease liability	3,784		4,311
Deferred tax asset before valuation allowance	45,857		43,919
Valuation allowance	(40,485)		(38,321)
Deferred tax asset after valuation allowance	5,372		5,598
Deferred contract acquisition costs	(990)		(803)
Goodwill	(124)		(110)
Right of use asset	(3,480)		(4,042)
Net deferred tax asset (liability)	$	778	$	643

The differences between the U.S. federal statutory income tax rates to the Company’s effective tax rate are as follows:


	Year Ended December 31,
	2021		2020		2019
U.S. federal statutory income tax rate	21.00	%	21.00	%	21.00	%
State tax rate	(2.55)		2.77		2.82
Meals and entertainment	9.28		(0.65)		(2.83)
Permanent differences	1.11		(2.87)		(2.58)
Stock-based compensation	(13.08)		(1.07)		3.78
Extinguishment of PPP loan	(44.59)		—		—
Excess compensation	7.88		—		—
Foreign rate differential	17.03		(1.05)		(0.34)
Other	(0.08)		0.15		(0.33)
General business credit	(17.95)		2.74		8.14
Valuation allowance	72.82		(25.51)		(38.60)
Change in prior year reserves	—		0.40		2.53
Deferred true-up	(11.76)		2.08		5.71
Effective tax rate	39.11	%	(2.01)	%	(0.70)	%

As of December 31, 2021, the Company recorded a valuation allowance of $40.5 million for the portion of the deferred tax asset that it does not expect to be realized. The valuation allowance on the Company’s net deferred taxes increased by $2.2 million and $6.0 million during the years ended December 31, 2021 and 2020, respectively. The changes in valuation allowance are primarily due to additional U.S. deferred tax assets and liabilities incurred in the respective year. The Company has $0.8 million of net deferred tax assets in foreign jurisdictions, which management believes are more-likely-than-not to be realized given the expectation of future earnings in these jurisdictions. The Company continues to monitor the realizability of the U.S. deferred tax assets taking into account multiple factors, including the results of operations and magnitude of excess tax deductions for stock-based compensation. The Company intends to continue maintaining a full valuation allowance on its U.S. deferred tax assets until there is sufficient evidence to support the reversal of all or some portion of these allowances. Release of all, or a portion, of the valuation allowance would result in the recognition of certain deferred tax assets and a decrease to income tax expense for the period the release is recorded.

At December 31, 2021, the Company had approximately $75.9 million and $39.3 million of federal and state net operating loss carryforwards, respectively, available to offset future taxable income. The federal and state net operating loss carryforwards, if not utilized will generally begin to expire in 2029 through 2039. Approximately $35.4 million of total federal net operating loss carryforwards were generated post December 31, 2017 and have no expiration. At December 31, 2021, the Company had research and development tax credits available to offset federal and California tax liabilities in the amount of $6.9 million and $8.5 million, respectively. Federal credits will begin to expire in 2024 and California state tax credits have no expiration.

Federal and state laws can impose substantial restrictions on the utilization of net operating loss and tax credit carryforwards in the event of an “ownership change,” as defined in Section 382 of the Internal Revenue Code. The Company has determined that no significant limitation would be placed on the utilization of the Company’s net operating loss and tax credit carryforwards due to prior ownership changes.

No deferred tax liabilities have been recorded relating to the earnings of the Company’s foreign subsidiaries since all such earnings are intended to be indefinitely reinvested. The amount of the unrecognized deferred tax liability associated with these earnings is immaterial.

Uncertain Tax Positions

The Company establishes reserves for uncertain tax positions based on the largest amount that is more-likely-than-not to be sustained. An uncertain income tax position will not be recognized if it has less than a 50% likelihood of being sustained. The Company performs a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement.

Although the Company believes it has adequately reserved for its uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. The Company adjusts these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest and penalties.

The Company files U.S., state, and foreign income tax returns in jurisdictions with varying statutes of limitations. Tax years after 2006 remain subject to examination by U.S. federal and California state tax authorities due to the Company’s net operating loss and credit carryforwards. For significant foreign jurisdictions, tax years after 2016 remain subject to examination by their respective tax authorities.

The following table summarizes the activity related to the Company’s gross unrecognized tax benefits, excluding related interest and penalties, in December 31, 2019 to December 31, 2021 (in thousands):


	Year Ended December 31,
	2021		2020		2019
Balance at beginning of year	$	1,864	$	1,426	$	1,563
Decreases related to prior year tax positions	(37)		(32)		(291)
Increases related to prior year tax positions	—		—		25
Increases related to current year tax positions	919		470		129
Balance at end of year	$	2,746	$	1,864	$	1,426

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Balance Sheet Detail - Property and Equipment, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Property, plant, and equipment and finance lease right-of-use asset, before accumulated depreciation and amortization	$ 6,443	$ 12,327
Less: Accumulated depreciation	(3,424)	(10,028)
Property and equipment, net	3,019	2,299
Leasehold improvements
Property, plant and equipment, gross	826	1,051
Equipment leasing
Property, plant and equipment, gross	107	186
Office equipment and furniture
Property, plant and equipment, gross	1,527	3,407
Machinery and equipment
Property, plant and equipment, gross	$ 3,983	$ 7,683

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax

The Company’s income (loss) before provision for income taxes consisted of the following (in thousands):


	Year Ended December 31,
	2021		2020		2019
U.S.	$	(356)	$	(25,793)	$	(13,037)
Foreign	3,741		2,386		774
Income (loss) before income taxes	$	3,385	$	(23,407)	$	(12,263)

Schedule of Components of Income Tax Expense (Benefit)

The components of the provision for income taxes are as follows (in thousands):


	Year Ended December 31,
	2021		2020		2019
Current:
Federal	$	—	$	—	$	—
State	(87)		(53)		101
Foreign	1,512		747		(76)
Total Current	1,425		694		25
Deferred:
Federal	2		2		2
State	1		1		1
Foreign	(105)		(227)		57
Total Deferred	(102)		(224)		60
Tax provision	$	1,323	$	470	$	85

Schedule of Deferred Tax Assets and Liabilities

The Company’s net deferred tax assets consist of the following (in thousands):


	December 31,
	2021		2020
Net operating loss carryforwards	$	18,274	$	18,270
Stock-based compensation	3,160		869
Other accruals and reserves	2,863		3,670
Credits	13,634		12,653
Accrued warranty	939		976
Depreciation and amortization	2,226		2,191
Other	977		979
Operating lease liability	3,784		4,311
Deferred tax asset before valuation allowance	45,857		43,919
Valuation allowance	(40,485)		(38,321)
Deferred tax asset after valuation allowance	5,372		5,598
Deferred contract acquisition costs	(990)		(803)
Goodwill	(124)		(110)
Right of use asset	(3,480)		(4,042)
Net deferred tax asset (liability)	$	778	$	643

Schedule of Effective Income Tax Rate Reconciliation

The differences between the U.S. federal statutory income tax rates to the Company’s effective tax rate are as follows:


	Year Ended December 31,
	2021		2020		2019
U.S. federal statutory income tax rate	21.00	%	21.00	%	21.00	%
State tax rate	(2.55)		2.77		2.82
Meals and entertainment	9.28		(0.65)		(2.83)
Permanent differences	1.11		(2.87)		(2.58)
Stock-based compensation	(13.08)		(1.07)		3.78
Extinguishment of PPP loan	(44.59)		—		—
Excess compensation	7.88		—		—
Foreign rate differential	17.03		(1.05)		(0.34)
Other	(0.08)		0.15		(0.33)
General business credit	(17.95)		2.74		8.14
Valuation allowance	72.82		(25.51)		(38.60)
Change in prior year reserves	—		0.40		2.53
Deferred true-up	(11.76)		2.08		5.71
Effective tax rate	39.11	%	(2.01)	%	(0.70)	%

Schedule of Unrecognized Tax Benefits Roll Forward


	Year Ended December 31,
	2021		2020		2019
Balance at beginning of year	$	1,864	$	1,426	$	1,563
Decreases related to prior year tax positions	(37)		(32)		(291)
Increases related to prior year tax positions	—		—		25
Increases related to current year tax positions	919		470		129
Balance at end of year	$	2,746	$	1,864	$	1,426

Net Income (Loss) Per Share - Antidilutive Securities Excluded From Computation of Earnings Per Share (Details) - shares shares in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	8,652	1,123	1,265
Capped call
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	4,167	0	0
Convertible debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	4,167	0	0
Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	166	244	417
RSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	32	724	559
ESPP
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	0	87	111
PSUs
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Total	120	68	178

Summary of Significant Accounting Policies - Narrative (Details)	12 Months Ended
	Dec. 31, 2021 USD ($) country supplier segment reporting_unit	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Number of countries in which entity operates \| country	42
Training on use of system term (in days)	180 days
Accrual for loyalty program	$ 10,825,000	$ 11,237,000	$ 14,222,000
Total capitalized costs	$ 4,200,000	3,400,000
Estimated economic life of demonstration units	2 years
Demonstration inventories included in finished goods	$ 3,700,000	3,600,000
Depreciation expense	1,300,000	1,400,000	1,500,000
Capitalized computing accumulated amortization	0
Capitalized computing amortization expense	0
Capitalized computing impairment loss	$ 182,000	805,000	0
Number of operating segments \| segment	1
Number of reporting units \| reporting_unit	1
Goodwill impairment	$ 0
Warranty term, direct sales	12
Warranty term, distributor sales	14 months
Advertising expense	$ 2,100,000	1,200,000	$ 2,800,000
Foreign currency transaction gains	$ 1,800,000	$ 0
Restricted Stock Units and Performance Share Units
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Shares granted calculation, grant period (in days)	50
Other current assets and prepaid expenses
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Capitalized computing set-up costs	$ 400,000
Other long-term assets
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Capitalized computing set-up costs	$ 3,500,000
Minimum
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Capitalized costs, amortization period	2 years
Maximum
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Capitalized costs, amortization period	3 years
Capitalized Cloud Computing Set-up Cost \| Minimum
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Cloud computing arrangement expected contract renewals	3 years
Capitalized Cloud Computing Set-up Cost \| Maximum
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Cloud computing arrangement expected contract renewals	10 years
United States
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Percentage of assets in the United States	99.00%	98.00%
Customer Concentration Risk \| Revenue Benchmark \| United States
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Concentration risk percentage	42.00%	41.00%	58.00%
Customer Concentration Risk \| Revenue Benchmark \| Non-US
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Concentration risk percentage	58.00%	59.00%	42.00%
Sales and marketing
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Amortization of capitalized contract costs	$ 1,900,000	$ 2,600,000	$ 2,900,000
Loyalty
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Accrual for loyalty program	$ 500,000	$ 300,000
Service
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Extended service contract, option one, term	1 year
Extended service contract, option two, term	2 years
Extended service contract, option three, term	3 years
Service \| Minimum
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Extended service contract, option one, term	1 year
Service \| Maximum
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Extended service contract, option two, term	3 years
Secret and Secret Pro
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Number of major suppliers \| supplier	1
Skincare
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Number of major suppliers \| supplier	1
Transferred over Time
Organization, Consolidation And Presentation Of Financial Statements [Line Items]
Percent of total revenues	11.00%	15.00%	13.00%

Defined Contribution Plan - Narrative (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Retirement Benefits [Abstract]
Maximum 401(k) employee contribution percentage	100.00%
Employer 401(k) discretionary contribution	$ 0.3	$ 0.2	$ 0.4

Balance Sheet Detail

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Detail

BALANCE SHEET DETAIL

Inventories

Valuation adjustments for excess and obsolete inventory, reflected as a reduction of inventory at December 31, 2021 and 2020, were $4.9 million and $3.9 million, respectively. Inventories, net of these adjustments, consist of the following (in thousands):


	December 31,
	2021		2020
Raw materials	$	24,035	$	14,874
Work in process	2,124		1,030
Finished goods	13,344		12,604
Total	$	39,503	$	28,508

Property and Equipment, net

Property and equipment, net, consists of the following (in thousands):


	December 31,
	2021		2020
Leasehold improvements	$	826	$	1,051
Equipment leasing	107		186
Office equipment and furniture	1,527		3,407
Machinery and equipment	3,983		7,683
	6,443		12,327
Less: Accumulated depreciation	(3,424)		(10,028)
Property and equipment, net	$	3,019	$	2,299

Included in machinery and equipment are financed vehicles used by the Company’s sales employees. As of December 31, 2021 and 2020, the gross capitalized value of the leased vehicles was $2.6 million and $1.8 million, respectively, and the related accumulated depreciation was $1.5 million and $1.4 million at December 31, 2021 and 2020, respectively. Included in Property and equipment as of December 31, 2021 and 2020 is construction in progress of $0.8 million and $0.4 million, respectively, which is yet to be depreciated.

Goodwill

Goodwill is related to the acquisition of Iridex’s aesthetic business unit, and customer relationships in the Benelux countries acquired from a former distributor in 2013. Goodwill was $1.3 million as of December 31, 2021 and 2020. There were no impairments or additions to goodwill during the years ended December 31, 2021 or 2020.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


	December 31,
	2021		2020
Bonus and payroll-related accruals	$	21,649	$	12,197
Sales and marketing accruals	4,808		2,352
Accrued inventory in transit	4,265		2,476
Product warranty	3,947		4,124
Accrued sales tax	9,110		5,343
Other accrued liabilities	10,321		5,803
Total	$	54,100	$	32,295

Commitments and Contingencies - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
2022	$ 3,121
2023	3,160
2024	2,874
2025	2,875
2026	2,970
Thereafter	3,338
Total lease payments	18,338
Less: imputed interest	(2,436)
Total Operating lease liabilities	$ 15,902	$ 18,210

Segment Information and Revenue by Geography and Products (Tables)

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Schedule of Revenue by Geography

The following table presents a summary of revenue by geography for the year ended December 31, 2021, 2020 and 2019 (in thousands):


	Year Ended December 31,
	2021		2020		2019
Revenue mix by geography:
United States	$	96,629	$	61,238	$	106,372
Japan	70,235		43,265		24,143
Asia, excluding Japan	12,649		10,707		14,414
Europe	19,444		11,185		11,937
Rest of the world, other than United States, Asia and Europe	32,313		21,288		24,846
Total consolidated revenue	$	231,270	$	147,683	$	181,712
Revenue mix by product category:
Systems	$	139,633	$	90,765	$	140,478
Consumables	16,401		9,287		9,648
Skincare	49,669		25,061		8,512
Total product revenue	205,703		125,113		158,638
Service	25,567		22,570		23,074
Total consolidated revenue	$	231,270	$	147,683	$	181,712

Deferred Revenue - Summary of Deferred Service Contract Revenue (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020
Change in Contract with Customer, Liability [Roll Forward]
Balance at beginning of year	$ 11,237	$ 14,222
Add: Payments received	17,139	14,131
Less: Revenue recognized from current period sales	(7,006)	(6,337)
Less: Revenue recognized from beginning balance	(10,545)	(10,779)
Balance at end of year	$ 10,825	$ 11,237

Stockholders' Equity, Stock Plans and Stock-based Compensation Expense - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands		12 Months Ended
	Apr. 01, 2020	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense	$ 2,600	$ 13,172	$ 10,109	$ 9,832
Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense		782	370	622
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense		5,305	8,849	4,786
PSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense		6,591	666	3,948
ESPP
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Total stock-based compensation expense		$ 494	$ 224	$ 476

Income Taxes - Reconciliation of Effective Tax Rate (Details)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Tax Disclosure [Abstract]
U.S. federal statutory income tax rate	21.00%	21.00%	21.00%
State tax rate	(2.55%)	2.77%	2.82%
Meals and entertainment	9.28%	(0.65%)	(2.83%)
Permanent differences	1.11%	(2.87%)	(2.58%)
Stock-based compensation	(13.08%)	(1.07%)	3.78%
Extinguishment of PPP loan	(44.59%)	0.00%	0.00%
Excess compensation	7.88%	0.00%	0.00%
Foreign rate differential	17.03%	(1.05%)	(0.34%)
Other	(0.08%)	0.15%	(0.33%)
General business credit	(17.95%)	2.74%	8.14%
Valuation allowance	72.82%	(25.51%)	(38.60%)
Change in prior year reserves	0.00%	0.40%	2.53%
Deferred true-up	(11.76%)	2.08%	5.71%
Effective tax rate	39.11%	(2.01%)	(0.70%)

Net Income (Loss) Per Share - Narrative (Details)	12 Months Ended
Net Income (Loss) Per Share - Narrative (Details)	Dec. 31, 2021 segment
Convertible Senior Notes Due 2026 \| Convertible Debt
Debt convertible to common shares (in shares)	4,167,232

Income Taxes - Narrative (Details) - USD ($) $ in Thousands	12 Months Ended
Income Taxes - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Valuation allowance	$ 40,485	$ 38,321
Change in valuation allowance	2,200	6,000
Net deferred tax asset	778	$ 643
Operating loss carryforwards without expiration	$ 35,400
Restricted Stock Units and Performance Share Units
Shares granted calculation, grant period (in days)	50
Foreign Tax Authority
Net deferred tax asset	$ 800
Domestic Tax Authority
Net operating loss carryforward	75,900
Domestic Tax Authority \| Internal Revenue Service (IRS) \| Research Tax Credit Carryforward
Tax credit carryforward	6,900
State and Local Jurisdiction
Net operating loss carryforward	39,300
State and Local Jurisdiction \| California Franchise Tax Board \| Research Tax Credit Carryforward
Tax credit carryforward	$ 8,500

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net income (loss)	$ 2,062	$ (23,877)	$ (12,348)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Stock-based compensation	13,172	10,109	9,832
Depreciation and amortization	1,344	1,394	1,548
Amortization of contract acquisition costs	1,857	2,593	2,915
Amortization of debt issuance costs	710	0	0
Impairment of capitalized cloud computing costs	182	805	0
Change in deferred tax assets	(135)	(220)	34
Provision for credit losses	87	2,144	590
Gain on extinguishment of PPP loan	(7,185)	0	0
Change in right-of-use asset	2,292	2,522	2,502
Other	1	513	(83)
Changes in assets and liabilities:
Accounts receivable	(9,574)	(2,550)	(2,509)
Inventories	(10,936)	5,413	(5,907)
Other current assets and prepaid expenses	(5,766)	(3,164)	(1,762)
Other long-term assets	(7,128)	(2,067)	(3,355)
Accounts payable	1,207	(6,034)	1,406
Accrued liabilities	21,608	161	5,997
Other long-term liabilities	0	0	(140)
Operating lease liabilities	(2,151)	(1,598)	(2,292)
Deferred revenue	(412)	(2,985)	1,656
Income tax liability	0	(93)	(301)
Net cash provided by (used in) operating activities	1,235	(16,934)	(2,217)
Cash flows from investing activities:
Acquisition of property and equipment	(1,015)	(1,279)	(991)
Disposal of property and equipment	71	30	45
Proceeds from sales of marketable investments	0	5,648	0
Proceeds from maturities of marketable investments	0	28,050	14,700
Purchase of marketable investments	0	(26,060)	(12,687)
Net cash provided by (used in) investing activities	(944)	6,389	1,067
Cash flows from financing activities:
Proceeds from exercise of stock options and employee stock purchase plan	2,765	1,579	2,894
Purchase of capped call	(16,134)	0	0
Proceeds from PPP loan	0	7,167	0
Proceeds from issuance of convertible notes	138,250	0	0
Payment of issuance costs of convertible notes	(4,717)	0	0
Gross proceeds from equity offering	0	28,798	0
Issuance costs on the public offering	0	(2,303)	0
Taxes paid related to net share settlement of equity awards	(2,176)	(3,428)	(831)
Payments on capital lease obligation	(462)	(537)	(649)
Net cash provided by financing activities	117,526	31,276	1,414
Net increase in cash, cash equivalents, and restricted cash	117,817	20,731	264
Cash, cash equivalents, and restricted cash at beginning of year	47,047	26,316	26,052
Cash, cash equivalents, and restricted cash at end of year	164,864	47,047	26,316
Supplemental disclosure of cash flow information:
Cash paid for interest	1,663	63	81
Cash paid (refunded) for income taxes, net of (refunds) payments	891	(1)	59
Supplemental non-cash investing and financing activities:
Assets acquired under finance lease	828	43	738
Assets acquired under operating lease	123	11,735	0
Gain on extinguishment of PPP loan	$ 7,185	$ 0	$ 0

Commitments and Contingencies - Effect of Adoption of the New Standard (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets	$ 14,627	$ 17,076	$ 10,049
Operating lease liabilities	(2,419)	(2,260)	(2,430)
Other long-term liabilities	763	242	140
Operating lease liabilities, net of current portion	$ (13,483)	$ (15,950)	(7,759)
Cumulative Effect, Period of Adoption, Adjustment
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Operating lease right-of-use assets			(10,049)
Operating lease liabilities			2,430
Other long-term liabilities			140
Operating lease liabilities, net of current portion			$ 7,759

Net Income (Loss) Per Share

12 Months Ended

Dec. 31, 2021

Earnings Per Share [Abstract]

Net Income (Loss) Per Share

NET INCOME (LOSS) PER SHARE

As of December 31, 2021, the Company’s convertible notes were potentially convertible into 4,167,232 shares of common stock. The Company used the if-converted method to calculate the potential dilutive effect of the conversion spread on diluted net income per share for the year ended December 31, 2021.

The denominator for diluted net income (loss) per share does not include any effect from the capped call transactions the Company entered into concurrently with the issuance of the convertible notes, as this effect would be anti-dilutive. In the event of conversion of a convertible note, shares delivered to the Company under the capped call will offset the dilutive effect of the shares that the Company would issue under the convertible notes.

For the years ended December 31, 2020 and 2019, basic loss per common share and diluted loss per common share are the same in each respective period, as the inclusion of any potentially issuable shares would be anti-dilutive.


	Year Ended December 31,
	2021		2020		2019
Numerator:
Net income (loss)	$	2,062	$	(23,877)	$	(12,348)
Denominator:
Weighted average shares of common stock outstanding used in computing net income (loss) per share, basic	17,891		16,691		14,096
Dilutive effect of incremental shares and share equivalents:
Options	68		—		—
RSUs	294		—		—
PSUs	104		—		—
ESPP	5		—		—
Weighted average shares of common stock outstanding used in computing net income (loss) per share, diluted	18,362		16,691		14,096
Net income (loss) per share:
Net income (loss) per share, basic	$	0.12	$	(1.43)	$	(0.88)
Net income (loss) per share, diluted	$	0.11	$	(1.43)	$	(0.88)


	Year Ended December 31,
	2021	2020	2019
Capped call	4,167	—	—
Convertible debt	4,167	—	—
Options to purchase common stock	166	244	417
Restricted stock units	32	724	559
Employee stock purchase plan shares	—	87	111
Performance stock units	120	68	178
Total	8,652	1,123	1,265