Commitment and Contingencies

12 Months Ended

Dec. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Guarantees and Indemnification

In the ordinary course of business to facilitate sales of its services, the Company has entered into agreements with, among others, suppliers, and partners that include guarantees or indemnity provisions. The Company also enters into indemnification agreements with its officers and directors, and the Company’s certificate of incorporation and bylaws include similar indemnification obligations to its officers and directors. To date, there have been no claims under any indemnification provisions, therefore no such amounts have been accrued as of December 31, 2021 and December 31, 2020.

Litigation and Loss Contingencies

Litigation

From time to time, the Company may be a party to litigation and subject to claims incident to the ordinary course of business, including intellectual property claims, labor and employment claims, threatened claims, breach of contract claims, and other matters. The Company accrues estimates for resolution of legal and other contingencies when losses are probable and estimable. Although the results of litigation and claims are inherently unpredictable, the Company believes that there was not at least a reasonable possibility that it had incurred a material loss with respect to such potential loss contingencies, as of December 31, 2021 and December 31, 2020.

Indirect taxes

The Company is subject to indirect taxation in various states and foreign jurisdictions in which it conducts business. The Company continually evaluates those jurisdictions in which indirect tax obligations exist to determine whether a loss is probable, as defined under GAAP, and the amount can be estimated. Determination of whether a loss is probable, and an estimate can be made, is a complex undertaking and takes into account the judgment of management, third-party research, and the potential outcome of negotiation and interpretations by regulators and courts, among other information. Such assessments include consideration of management’s evaluation of domestic and international tax laws and regulations, and the extent to which they may apply to our business and industry. Our assessment of probability includes consideration of recent inquiries, potential self-disclosure, and applicability of tax rules driven by the growth in our business. As a result of this assessment, management has accrued an estimated liability of approximately $3.8 million as of December 31, 2021, reflecting the amount that the Company believes is probable and estimable. The estimated liability is recorded within accrued expenses and other current liabilities on the Company's consolidated balance sheet. Although the Company believes its indirect tax estimates and associated liabilities are reasonable, the final determination of indirect tax audits or settlements could be materially different than the amounts recorded, and such differences could be material.

Reserve for Transaction Losses

The table below summarizes the Company’s reserve for transaction losses for the years ended December 31, 2021, 2020, and 2019:


	Years Ended December 31,
(in thousands)	2021		2020		2019
Beginning balance	$	3,250	$	798	$	497
Provisions for transaction losses	29,596		19,663		7,859
Losses incurred, net of recoveries	(29,712)		(17,211)		(7,558)
Ending balance	$	3,134	$	3,250	$	798