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United States securities and exchange commission logo
January 6, 2021
Alicia Dietzen
General Counsel
KnowBe4, Inc.
33 N. Garden Avenue
Clearwater, FL 33755
Re: KnowBe4, Inc.
Draft Registration
Statement on Form S-1
Submitted December
10, 2020
CIK No. 0001664998
Dear Ms. Dietzen:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by providing the requested
information and either submitting
an amended draft registration statement or publicly filing your
registration statement on
EDGAR. If you do not believe our comments apply to your facts and
circumstances or do not
believe an amendment is appropriate, please tell us why in your
response.
After reviewing the information you provide in response to these
comments and your
amended draft registration statement or filed registration statement, we
may have additional
comments.
Draft Registration Statement on Form S-1 Confidentially Submitted on
December 10, 2020
Implications of Being an Emerging Growth Company, page 8
1. Please revise to
clarify your election under Section 107(b) of the JOBS Act. If you have
elected to opt out of
the extended transition period for complying with new or revised
accounting standards
pursuant to Section 107(b), please include a statement that the
election is irrevocable
and check the appropriate box on the cover page. Alternatively, if
you have elected to
avail yourself of the extended transition period, please clearly indicate
as such. Also, provide
a risk factor explaining that this election allows you to delay the
adoption of new or
revised accounting standards that have different effective dates for
public and private
companies until those standards apply to private companies and as a
result your financial
statements may not be comparable to companies that comply with
Alicia Dietzen
FirstName
KnowBe4, LastNameAlicia Dietzen
Inc.
Comapany
January NameKnowBe4, Inc.
6, 2021
January
Page 2 6, 2021 Page 2
FirstName LastName
public company effective dates.
Summary Historical Consolidated Financial Data
Non-GAAP Financial Measures, page 14
2. We note your non-GAAP measure, free cash flow margin. Please revise to
present the
most directly comparable GAAP measure with equal or greater
prominence. Further,
disclose why management believes the presentation of this non-GAAP
measure provides
useful information to investors and, to the extent material, a
statement disclosing the
additional purposes, if any, for which management uses such measure.
Refer to Item
10(e)(1)(i) of Regulation S-K.
Risk Factors
We have identified a material weakness in our financial reporting, page 41
3. We note you have identified a material weakness in your internal
control over financial
reporting. Please revise to describe how you intend to remediate such
weakness. In this
regard, include a discussion of what actions management has already
taken and what
remains to be completed in your remediation plan. Also, if the
material weakness has not
been fully remediated, revise to disclose how long you estimate it
will take to complete
your plan and disclose any associated material costs that you have
incurred or expect to
incur.
Management s Discussion and Analysis of Financial Condition and Results of
Operations
Key Factors Affecting Our Performance, page 57
4. Please revise to define how you calculate dollar-based net retention
rate and include such
amount for each period presented to provide context to this measure.
Refer to SEC
Release No. 33-10751.
Key Business Drivers, page 59
5. You disclose your key business metrics are the number of customers and
annual
recurring revenue. Tell us whether you considered renewal or retention
rates as key
metrics in managing your business. In this regard, you state that
overall revenue growth
depends, in part, on maintaining and expanding the rates at which
customers purchase and
renew subscriptions to your platform and products. Alternatively, tell
us what measures
you use to manage customer renewal and retention and include such
measures for each
period presented. Refer to Section III of Release No. 33-8350.
6. Please discuss the underlying business drivers that contributed to a
decrease in the year-
over-year growth in the number of customers and annual recurring
revenue from 2018 to
2019. To the extent material, describe any known trends or
uncertainties that have had, or
you expect may reasonably have, a material impact on your operations
and if you believe
that these trends are indicative of future performance. Refer to Item
303(a)(3) and
(a)(3)(iii) of Regulation S-K.
Alicia Dietzen
FirstName
KnowBe4, LastNameAlicia Dietzen
Inc.
Comapany
January NameKnowBe4, Inc.
6, 2021
January
Page 3 6, 2021 Page 3
FirstName LastName
Comparison for the Years Ended December 31, 2018 and 2019, page 63
7. You attribute 39.6% of the year-over-year growth in revenue to new
business activity,
including new customers. However, it is unclear if such amount also
includes new
business activity from existing customers. Please revise and clarify
your discussion to
quantify the amount of revenue growth attributable to new customers
versus existing
customers. Refer to Section III.D of SEC Release No. 33-6835.
Executive Compensation, page 97
8. Please provide the executive compensation information for fiscal year
ended December
31, 2019. See Item 402 of Regulation S-K.
Shares Eligible for Future Sale, page 119
9. Please disclose the exceptions to the lock-up agreements.
Financial Statements
Note 2. Summary of Significant Accounting Policies
Deferred Commissions, page F-10
10. You state that the non-commensurate portion of commissions paid upon
the initial
acquisition of a contract are amortized over an estimated period of
benefit of six years
while the commensurate portion of commissions are amortized over the
average contract
period. Please explain further to us what the commensurate and
non-commensurate
portion of commissions paid on the initial acquisition of a contract
relate to and revise
your disclosures if necessary to clarify.
Revenue Recognition, page F-12
11. Please describe further the nature of your initial subscription
revenue (i.e., downloadable
content) and tell us how you considered the guidance in Rule 5-03(b)
of Regulation S-X to
separately disclose revenue from products and services on the face of
your statement of
operations.
12. Please expand your disclosures to further explain how you determine
the stand-alone
selling price for the content available for download. Refer to ASC
606-10-50-20.
Note 11 Stock-Based Compensation, page F-25
13. Please revise to disclose the total compensation cost related to
non-vested awards not yet
recognized and the weighted average period over which it is expected
to be recognized, as
of the most recent balance sheet date included in the filing. Refer to
ASC 718-10-50-2i.
14. Please provide us with a breakdown of all stock-based compensation
awards granted in
fiscal 2020 including the fair value of the underlying stock used to
value such awards. To
the extent there was any significant fluctuations in the fair values,
please describe for us
Alicia Dietzen
KnowBe4, Inc.
January 6, 2021
Page 4
the factors that contributed to such fluctuations, including any
intervening events within
the company or changes in your valuation assumptions or methodology.
Also, disclose
any share-based issuances subsequent to the most recent balance sheet
date and the
expected financial statement impact, if material. Refer to ASC
855-10-50-2.
General
15. Please supplementally provide us with copies of all written
communications, as defined in
Securities Act Rule 405, that you, or anyone authorized to do so on your
behalf, present to
potential investors in reliance on Securities Act Section 5(d), whether
or not they retain
copies of the communications.
You may contact Melissa Kindelan, Staff Accountant, at (202) 551-3564
or Kathleen
Collins, Accounting Branch Chief, at (202) 551-3499 if you have questions
regarding comments
on the financial statements and related matters. Please contact Alexandra
Barone, Staff
Attorney, at (202) 551-8816 or Jan Woo, Legal Branch Chief, at (202) 551-3453
with any other
questions.
Sincerely,
FirstName LastNameAlicia Dietzen
Division of
Corporation Finance
Comapany NameKnowBe4, Inc.
Office of
Technology
January 6, 2021 Page 4
cc: Tony Jeffries, Wilson Sonsini Goodrich & Rosati
FirstName LastName