MOZILLA FOUNDATION AND SUBSIDIARIESDECEMBER 31, 2022 AND 2021
INDEPENDENT AUDITORS’ REPORT, AND
CONSOLIDATED FINANCIAL STATEMENTS

Mozilla Foundation and Subsidiaries
Independent Auditors’ Report, andConsolidated Financial Statements

Independent Auditors’ Report

1-2

Consolidated Financial Statements
Consolidated Statement of Financial Position

3

Consolidated Statement of Activities and Change in Net Assets

4Consolidated Statement of Functional Expenses

5

Consolidated Statement of Cash Flows6

Notes to the Consolidated Financial Statements

7 - 32

Independent Auditors’ Report
AUDIT COMMITTEEMOZILLA FOUNDATION AND SUBSIDIARIESSan Francisco, California
OpinionWe have audited the consolidated financial statements of MOZILLA FOUNDATION AND
SUBSIDIARIES (Mozilla), which comprise the consolidated statement of financial position as ofDecember 31, 2022 and 2021, and the related consolidated statements of activities and change in net
assets, functional expenses, and cash flows for the years then ended, and the related notes to the financial
statements (collectively, the financial statements).
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial
position of Mozilla as of December 31, 2022 and 2021, and the changes in net assets and their cash flows
for the years then ended in accordance with accounting principles generally accepted in the United Statesof America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica (GAAS). Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Financial Statements section of our report. We are required to be
independent of Mozilla and to meet our other ethical responsibilities, in accordance with the relevant
ethical requirements relating to our audits. We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements inaccordance with accounting principles generally accepted in the United States of America, and for thedesign, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the financial statements, management is required to evaluate whether there are conditions or
events, considered in the aggregate, that raise substantial doubt about Mozilla’s ability to continue as agoing concern for one year from the date of this report.

San Francisco ● San Jose ● San Mateo ● Petaluma

Auditors’ Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole arefree from material misstatement, whether due to fraud or error, and to issue an auditors’ report that
includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance andtherefore is not a guarantee that an audit conducted in accordance with GAAS will always detect amaterial misstatement when it exists. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentionalomissions, misrepresentations, or the override of internal control. Misstatements are considered material
if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with GAAS, we:xExercise professional judgment and maintain professional skepticism throughout the audit.

x

Identify and assess the risks of material misstatement of the financial statements, whether due tofraud or error, and design and perform audit procedures responsive to those risks. Suchprocedures include examining, on a test basis, evidence regarding the amounts and disclosures in
the financial statements.

x

Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of Mozilla’s internal control. Accordingly, no such opinion isexpressed.

x

Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of thefinancial statements.

x

Conclude whether, in our judgment, there are conditions or events, considered in the aggregate,that raise substantial doubt about Mozilla’s ability to continue as a going concern for a reasonable
period of time.

We are required to communicate with those charged with governance regarding, among other matters, theplanned scope and timing of the audit, significant audit findings, and certain internal control-related
matters that we identified during the audit.

San Jose, California
September 6, 2023
2

Mozilla Foundation and Subsidiaries
Consolidated Statement of Financial Position(In thousands)

December 31,

2022

2021

AssetsCash and cash equivalents
Receivables, net of allowance for doubtful accounts of$152 and $148, respectively
Prepaid expenses and other assets
Investments
Prepaid income taxes
Deferred taxes
Property and equipment, net
Goodwill, net
Intangible assets, net
Total assets$

513,780$

60,231
25,969631,124
4,196
69,2072,239
13,008
1,785

378,266
62,832
31,899651,079391
19,494
4,210
15,610681$

1,321,539$

1,164,462$

16,441
7,128
83,203
4,825
12,095$16,097
3,596
68,205
2,963
19,397

Liabilities and Net Assets
Liabilities:
Accounts payable
Accrued liabilities
Accrued compensation and benefits
Deferred revenue
Other liabilities
Total liabilities

123,692

110,258

Net Assets:
Without donor restrictions
With donor restrictions

1,189,196
8,651

1,046,307
7,897

Total net assets

1,197,847

1,054,204

Total liabilities and net assets$

1,321,539

See accompanying notes to the consolidated financial statements.
3$

1,164,462

Mozilla Foundation and Subsidiaries
Consolidated Statement of Activities and Change in Net Assets(In thousands)

Years Ended December 31,

2022

Net Assets Without Donor Restrictions:
Revenues and other support:
Royalties
Subscription and advertising revenue
Other revenue
Interest and dividend income
Net realized and unrealized loss on investments
Contributions
Other income (expense), net
Foreign currency exchange gain (loss), net
Net assets released from restrictions$

Total revenue and support

2021

510,389
75,716352
9,408(19,078)
9,391
5,468
(3,504)
5,374$

527,585
56,563451
5,719(1,445)
7,398(1,694)
688
5,419

593,516

600,684

220,966
34,863

199,189
27,05958,252
108,953

30,08781,750

2,186

1,876

425,220339,961

168,296

260,723

24,90349,020Change in Net Assets Without Donor Restrictions

143,393

211,703

Change in Net Assets With Donor Restrictions:Contributions
Net assets released from restriction

6,128(5,374)

5,325(5,419)Change in Net Assets With Donor Restrictions

754

(94)

144,147

211,609

1,054,204(504)

843,019(424)

Expenses:
Program:
Software development
Other program services
Management and general:
Branding and marketing
General and administrative
Fundraising:Fundraising and development
Total expenses
Change in Net Assets Without Donor Restrictions before
Provision for Income Taxes
Provision for income tax expense

Change in Net Assets
Net Assets - beginning of year
Distribution
Net Assets - end of year$

1,197,847

See accompanying notes to the consolidated financial statements.
4$

1,054,204

Mozilla Foundation and Subsidiaries
Consolidated Statement of Functional Expenses(In thousands)
Years Ended December 31, 2022 and 2021
2022
Management
and General

Program
Salaries and benefits
Information technology
Consultants
Advertising and promotion
Conferences, conventions, and meetings
Occupancy
Grants and donations
EventsLegal
Dues and subscriptions
TravelOffice expenses
Accounting and audit
Insurance
Depreciation and amortization
Other expenses$

Expenses before income tax
provision
Provision for income tax expense
Total expenses$

171,307
24,231
26,079
317
3,113
4,235
4,491
1,053
8
2,211
2,017
1,174
97
2,845
12,651$

110,767
3,272
12,53722,189
1,934
2,449
938
487
2,595
1,280
1,377
813
1,911
744
1,671
2,241

2021
Fundraising

$

Total

1,665
90
51
98
1
7
15
2
27
9
221

$

283,739
27,59338,66722,604
5,048
6,691
5,429
1,540
2,618
3,493
3,421
1,996
2,008
744
4,516
15,113

Management
and General

Program$

154,478
21,846
21,175
234
54
4,996
5,029
770
2,011
93
1,379
4,317
9,866

$

81,047
2,306
9,534
6,146
83
2,399
409
9
2,447
1,809
42
852
1,912
460
2,078
304

Fundraising
$

1,589
65
67
116
4
2
7
1
25
-

Total
$

237,114
24,21730,776
6,496
137
7,399
5,438
781
2,454
3,820
136
2,256
1,912
460
6,395
10,170255,829

167,2052,186

425,220226,248

111,837

1,876

339,961

15,9208,793

190

24,90333,141

15,852

27

49,020271,749$

175,998

$

2,376

$

450,123$

259,389

See accompanying notes to the consolidated financial statements.
5$

127,689

$

1,903

$

388,981Mozilla Foundation and Subsidiaries
Consolidated Statement of Cash Flows(In thousands)

Years Ended December 31,

2022

Cash Flows from Operating Activities:
Change in net assets
Adjustments to reconcile change in net assets
to net cash provided by operations:
Depreciation and amortization
Net realized and unrealized (gain) loss on investments
Foreign currency exchange (gain) loss, net
Unrecognized tax positions
Deferred income taxes
Loss on disposal of assets
Changes in assets and liabilities:
Receivables
Prepaid expenses and other assets
Prepaid income taxes
Accounts payable and accrued expenses
Accrued compensation and benefits
Deferred revenue
Other liabilities

$

2021

144,147$

211,609

4,516
30,0458(790)(49,713)
11

6,395
1,919
(691)
1,060
(2,002)
1,646

2,601
5,930
(3,805)
3,876
14,9981,862(6,512)(9,462)(3,367)
3,213(7,760)(3,228)
1,714(4,154)

147,174

196,892

Cash Flows from Investing Activities:
Purchases of property and equipment
Purchases of investments
Proceeds from maturities and sales of investments
Purchase of intangible assets(34)(201,168)
190,576
(732)

(296)
(648,167)
572,636-

Net cash used by investing activities(11,358)(75,827)

(504)

(424)

(504)

(424)

202

997

Net Change in Cash and Cash Equivalents

135,514

121,638

Cash and Cash Equivalents - beginning of year

378,266

256,628

Net cash provided by operating activities

Cash Flows from Financing Activities:
Distribution
Net cash used by financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents

Cash and Cash Equivalents - end of year$

513,780$

378,266

Supplemental Disclosure:
Cash paid for taxes, net of refunds
Right-of-use assets recognized in exchange for lease liabilities$$

74,555
6,442$$

54,3286,306

See accompanying notes to the consolidated financial statements.
6

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Note 1 -Nature of the Organization:
Established in July 2003, Mozilla Foundation (the Foundation) is a California not-for-profit
corporation that exists to improve and protect the internet as a public resource by working
with thousands of volunteers to 1) keep the internet a universal open platform and 2) promote
continued innovation on the internet. The Foundation supports the development of opensource, standards-compliant, free internet applications useable free of charge to hundreds ofmillions of users. It also a) develops foundational technologies that can be used to build thevalues of openness and interoperability into the internet; and b) fuels the movement for an
open internet through educational work that connects open internet leaders with each otherand mobilizes grassroot activities around the world. The Foundation is headquartered in San
Francisco, California and has operations in Canada, Germany, and the United Kingdom.
The Foundation has several wholly-owned for-profit subsidiaries that operate independently(together with the Foundation, collectively Mozilla) that serve its non-profit, public benefit
goals and the vast Mozilla community. Mozilla Corporation (the Corporation) provides
internet based open-source software and services (Mozilla Products) that are made available
to hundreds of millions of users worldwide to fulfill Mozilla’s mission to make the internet
open and accessible to all. The Corporation is headquartered in San Francisco, California andhas operations in Australia, Canada, China, New Zealand, Netherlands, Germany, France,
United Kingdom and other European countries. MZLA Technologies Corporation (MZLA)
promotes choice and innovation on the internet. MZLA is headquartered in San Francisco,California. Mozilla Ventures (Ventures) invests in startups pushing the internet – and the techindustry – in a better direction. MZL.AI (AI), is building a trustworthy open-source artificial
intelligence ecosystem.

Note 2 -Summary of Significant Accounting Policies:
a. Basis of Accounting and Principles of Consolidation
The accompanying consolidated financial statements of Mozilla have been prepared on
the accrual basis of accounting in accordance with accounting principles generally
accepted in the United States of America (U.S. GAAP). All significant intercompany
accounts and transactions have been eliminated. Certain accounts in the 2021 financial
statements have been reclassified for comparative purposes to conform with the 2022
presentation. These reclassifications had no effect on net assets or change in net assets.
b. Basis of Presentation
Net assets, revenues, expenses, gains and losses are classified based on the existence orabsence of donor-imposed restrictions.
Net Assets Without Donor Restrictions – Net assets that are not subject to time or donorimposed restrictions and may be expended for any purpose in achieving the primaryobjectives of the Foundation.
7

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Net Assets With Donor Restrictions – Net assets that are limited in use by Mozilla inaccordance with donor-imposed stipulations. These stipulations may expire with time or
may be satisfied and removed by the actions of Mozilla according to the terms of thecontribution. Net assets with donor restrictions also include net assets to be retained inperpetuity, of which Mozilla has none as of December 31, 2022 and 2021.
c. Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires
management to make estimates, judgments, and assumptions that affect the reported
amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dateof the financial statements and the reported amounts of revenues, support and expenses
reported during the reporting period. Mozilla bases its estimates on historical experienceand on other assumptions that its management believes are reasonable under thecircumstances. Actual results could differ from those estimates.
d. Foreign Currency
The functional currencies of Mozilla’s foreign subsidiaries are the respective local
currencies. Translation adjustments arising from the use of differing exchange rates fromperiod to period and foreign currency transaction gains and losses are included in foreign
currency exchange gain (loss) in the consolidated statement of activities and change innet assets. All assets and liabilities denominated in a foreign currency are translated into
U.S. dollars at the exchange rate on the balance sheet date. Revenue and expenses aretranslated at the average exchange rate during the period, and equity balances aretranslated using historical exchange rates.
e. Cash and Cash Equivalents
For purposes of the consolidated statement of cash flows, cash and cash equivalents
consist of cash on hand and highly liquid investments with original maturities of threemonths or less from the date of purchase. Cash equivalents generally consist ofinvestments in money market funds and commercial paper. The carrying value of cash
and cash equivalents approximate their fair value as of December 31, 2022 and 2021.
f.

Receivables
Receivables consist primarily of amounts due from contracts with multiple search engine
and information providers, and grantors. Receivables are carried at original invoice
amount or accrued based on contractual agreements or grant agreements with each search
provider or grantor. An allowance for uncollectible receivables is appropriately
considered depending upon prior history and management’s assessment of collectability.
As of December 31, 2022 and 2021, Mozilla had an allowance of $0.2 million and $0.1
million, respectively.

8

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Mozilla has $3.7 million and $1.8 million in grants receivable as of December 31, 2022
and 2021, respectively.
g. Investments
Investments consist of marketable securities and non-marketable equity investments andare recorded at fair value.
Marketable securities consisting of marketable debt securities, mutual funds, government
issued securities, and hedge funds, are recorded at fair value. The fair value of marketabledebt and government issued securities is based upon models that maximize the use ofobservable inputs for similar assets. The fair value of mutual funds is based on theirquoted prices for identical assets in active or inactive markets. The fair value of hedge
funds has been estimated using the net asset value (NAV) per share or ownership interestof the investment. Changes in fair value are recognized on a current basis in the
consolidated statement of activities and change in net assets. Gains and losses oninvestments are determined on the specific identification method.
Non-marketable equity investments include direct and indirect investments into various
early stage, high growth technology companies. The fair value of the non-marketable
equity investments has been estimated using the NAV per share or ownership interest of
the investment. Changes in fair value, including any distributions, are recognized on acurrent basis in the consolidated statement of activities and change in net assets. If an
investment has no readily available information to determine the investment’s respective
fair value, under the measurement alternative, the carrying value is measured at cost, lessany impairment, plus or minus changes resulting from observable price changes inorderly transactions for identical or similar investments of the same issuer. Adjustments
are determined primarily based on a market approach as of the transaction date in the
consolidated statement of activities and change in net assets.
Non-marketable equity investments are included within “Investments” in the
consolidated statement of financial position and were $15.9 million and $8.3 million as ofDecember 31, 2022 and 2021, respectively.
h. Fair Value of Financial Instruments
The carrying value of financial instruments not otherwise disclosed herein, approximatesfair value due to the short-term nature of these financial instruments.
Mozilla carries certain assets and liabilities at fair value. Fair value is defined as the pricethat would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date. In addition, certain
investments are reported using the NAV per share method practical expedient whichallows NAV per share to represent fair value for reporting purposes when the criteria forusing this method are met.

9

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Mozilla classifies its financial assets and liabilities according to three levels andmaximizes the use of observable inputs and minimizes the use of unobservable inputs
when measuring fair value.
Level 1: Inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities that the entity has the ability to access at the measurement
date.
Level 2: Inputs are inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or indirectly.
Level 3: Inputs are unobservable inputs for the asset or liability that are notcorroborated by market data.
In determining the appropriate levels, Mozilla performed an analysis of the assets andliabilities. Any assets and liabilities for which the fair value measurement is based on
significant unobservable inputs are classified as Level 3.
i.

Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and amortization.
Depreciation is calculated over the estimated useful lives of the related assets, generally
one to seven years, using the straight-line method. Leasehold improvements areamortized over the useful life or the term of the lease, whichever is shorter.
Mozilla recognizes asset retirement obligations (AROs) in the period in which it has anexisting legal obligation associated with the retirement of a tangible long-lived asset, andthe amount of the liability can be reasonably estimated. The ARO is recognized at fairvalue when the liability is incurred with a corresponding increase in the carrying amountof the related long-lived asset. Mozilla depreciates the tangible asset over its estimateduseful life. The liability is adjusted in subsequent periods through accretion expense, ifany, which represents the increase in the present value of the liability due to the passageof time. Such depreciation and accretion expenses are included in depreciation expense.
Mozilla’s AROs are primarily the result of requirements under facility lease agreements
which generally have return to original condition clauses which would require Mozilla toremove or restore items such as demising walls and office buildouts, among other items.
The significant assumptions used in estimating the aggregate ARO are the timing ofremovals, the probability of a requirement to perform, estimated cost and associatedexpected inflation rates that are consistent with historical rates and credit-adjusted riskfree rates that approximate Mozilla’s incremental borrowing rate.

10

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statementsj.

Business Combinations
When Mozilla acquires a business, the purchase price is allocated to the net tangible andidentifiable assets acquired. Any residual purchase price is recorded as goodwill. The
allocation of the purchase price requires management to make estimates in determining
the fair value of assets acquired and liabilities assumed, especially with respect tointangible assets. These estimates can include but are not limited to: the cash flows thatan asset is expected to generate in the future, the approximate weighted-average cost ofcapital and the cost savings expected to be derived from acquiring the asset. Theseestimates are inherently uncertain and unpredictable. During the measurement period,
which may be up to one year from the acquisition date, adjustments to the fair value ofthese tangible and intangible assets acquired and liabilities assumed may be recordedwith the corresponding offset to goodwill. Upon the conclusion of the measurement
period or final determination of the fair value of assets acquired or liabilities assumed,whichever comes first, any subsequent adjustments are recorded to the consolidated
statement of activities and change in net assets.

k. Leases
Mozilla determines whether an arrangement is or includes a lease and categorizes leases
as either operating or finance leases at their commencement. Right-of-use (ROU) assets
are included within prepaid expenses and other assets and lease liabilities are included
within other liabilities on the consolidated statement of financial position. Mozilla does
not have any finance leases.
Operating lease ROU assets and operating lease liabilities are recognized based on thepresent value of the future minimum lease payments over the lease term at
commencement date. As Mozilla’s leases do not typically provide an implicit rate,
Mozilla uses a risk-free discount rate at the commencement date in determining thepresent value of future payments. The lease ROU asset also includes any lease payments
made minus any lease incentives received and initial direct costs incurred. Mozillaaccounts for lease and non-lease components, to the extent they are fixed, as a single
lease component. Additionally, the lease term may include options to extend or terminate
the lease when it is reasonably certain Mozilla will exercise that option. Lease expense
for minimum lease payments is recognized on a straight-line basis over the lease term.
Mozilla has subleased portions of its unoccupied leased office space. Similar to otherlong-lived assets discussed below, management tests ROU assets for impairment
whenever events or changes in circumstances indicate that the carrying amount of such
assets may not be recoverable. For leased assets, such circumstances would include thedecision to leave a leased facility prior to the end of the minimum lease term or subleases
for which estimated cash flows do not fully cover the costs of the associated lease.

11

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statementsl.

Goodwill and Intangible Assets
Goodwill represents the excess of the cost of net assets acquired over the fair value ofidentifiable net assets at the date of acquisition. Intangible assets consist of acquired userbase, trade names and trademarks, and developed technology.
Mozilla follows the private company alternative accounting for goodwill. Goodwill isamortized over a 10-year estimated useful life and impairment is assessed at the reporting
unit level. Mozilla performs an impairment test at the end of each reporting period inwhich there is a triggering event by comparing the fair value of the reporting unit to its
carrying value. There were no impairments to goodwill or intangible assets for the years
ended December 31, 2022 and 2021.

m. Long-Lived Assets
Mozilla evaluates its long-lived assets for impairment whenever events or changes incircumstances indicate that the carrying amount of such assets may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of an asset to future undiscounted net cash flows expected to be generated by theasset. If such assets are considered to be impaired, the impairment to be recognized ismeasured by the amount by which the carrying amount of the assets exceeds the fairvalue of the assets. Assets to be disposed of are reported at the lower of the carrying
amount or fair value less costs to sell. Mozilla recognized impairment losses of $0.0
million and $0.7 million for the years ended December 31, 2022 and 2021, respectively,
related to the subleases of a portion of its San Francisco office space. Impairment losses
are included within other income, net in the consolidated statement of activities andchange in net assets.
n. Recognition of Revenue
Mozilla accounts for revenue from contracts with customers by applying therequirements of Topic 606, which includes the following steps:
x Identification of the contract, or contracts, with a customer - A contract with acustomer exists when (i) Mozilla enters into an enforceable contract with a customerthat defines each party’s rights regarding the services to be transferred and identifies
the payment terms related to these services, (ii) the contract has commercial
substance, and (iii) Mozilla determines that collection of substantially all
consideration for services that are transferred are probable based on the customer’s
intent and ability to pay the promised consideration when it is due.

12

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

x

Identification of the performance obligations in the contract - Performanceobligations promised in a contract are identified based on the services that will betransferred to the customer that are both capable of being distinct, whereby thecustomer can benefit from the services either on their own or together with otherresources that are readily available from third parties or from Mozilla, and are
distinct within the context of the contract, whereby the transfer of the services isseparately identifiable from the other promises in the contract.

x Determination of the transaction price - The transaction price is determined based on
the consideration to which Mozilla will be entitled in exchange for transferring
services to the customer. Such amounts are typically stated in the customer contract
and to the extent that Mozilla identifies variable consideration, Mozilla estimates thevariable consideration at the onset of the arrangement as long as it is probable that asignificant reversal in the amount of cumulative revenue recognized will not occur
when the uncertainty associated with the variable consideration is subsequently
resolved.
x Allocation of the transaction price to the performance obligations in the contract - If
the contract contains a single performance obligation, the entire transaction price isallocated to the single performance obligation. Mozilla noted that contracts will only
contain a single performance obligation and therefore no standalone selling pricedetermination is necessary.
x Recognition of revenue when, or as, performance obligations are satisfied - For eachperformance obligation identified, Mozilla determines at contract inception whether
it satisfies the performance obligation over time or at a point in time. For
performance obligations that are satisfied at a point in time Mozilla recognizes
revenue at the time that control is transferred, and for performance obligations
satisfied over time Mozilla recognizes revenue as services are provided typically overthe contract term.
Revenue consists of the following:xRoyalties - Mozilla provides the Firefox web browser, which is a free and opensource web browser initially developed by Mozilla Foundation and the Corporation.
Mozilla incorporates search engines of its customers as a default status or an optional
status available in the Firefox web browser. Mozilla generally receives royalties at a
certain percentage of revenues earned by its customers through their search engines
incorporated in the Firefox web browser.

x

Subscription revenues - Mozilla’s subscription revenues primarily consist of revenue
from subscriptions to a service known as Pocket Premium and VPN.

13

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

x Pocket Premium - Pocket is a mobile and web application that enables users tosave, manage and consume articles, videos, and other content from the internet.
Pocket offers free and paid subscriptions (Pocket Premium) versions of its
products. Customers who subscribe to Pocket Premium unlock access toadditional Pocket features. Included in a Pocket Premium subscription arefeatures like full text search on saved articles, removal of advertising from
Pocket properties, the ability to create unlimited highlights and the ability tocreate a permanent library of everything a user has saved. Pocket Premium
subscription is available on a month-to-month or annual basis.
x VPN - In February 2020, Mozilla launched a new service called Mozilla VPN,
which offers a virtual private network (VPN) to allow users to create a secure
private internet connection for added security and to maintain privacy online. The
VPN creates a “tunnel” between the customer’s device and the internet at large,
concealing the IP address and obscures the customer’s location. It also encrypts
the internet traffic so others on the same local network cannot decipher or modify
it. The VPN subscription is available on a month-to-month, semi-annual or
annual basis.
x

Advertising revenues - Mozilla also offers advertising services in three formats. The
first is the New Tab / Tiles advertising service, which places links to sponsoredcontent when a new tab is opened in the Firefox web browser. The second format isthrough Pocket’s email product, Pocket Hits. Pocket Hits may include paid
advertisements, which are placed in email newsletters that get delivered to global
Pocket users. Lastly, Mozilla also sells web advertisement spots on content that
Mozilla licenses and syndicates from publisher partners across the web.

x

Deferred Revenue - Mozilla records contract liabilities to deferred revenue whenamounts are invoiced or received in advance of performance. Deferred revenue
consists of contract billings in excess of amounts recognized as revenue in a customer
contract. Deferred revenue is separately disclosed on Mozilla’s consolidated
statement of financial position.

Payment terms and conditions vary by contract type. Financial information for the searchengine and information providers with whom Mozilla contracts is generally publicly
available and as such Mozilla assesses credit risk prior to entering into contracts with newcustomers and does not enter into contracts if collection is not probable. For subscription
and advertising, contracts are typically only cancellable with a short notice period, andtherefore the consideration to which Mozilla is entitled for which Mozilla must assess
probability of collection is not significant. In instances where the timing of revenue
recognition differs from the timing of invoicing, Mozilla has determined the contracts do
not contain a significant financing component.

14

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statementso. Contributions
Contributions are recorded at fair value when the donor makes an unconditional promise
to give. Contributions collected by third parties are recorded as revenue when received by
the third party. When donor restrictions expire, that is, when a stipulated time restriction
ends or a purpose restriction is fulfilled, net assets with donor restrictions are reclassified
to net assets without donor restriction and reported in the consolidated statement ofactivities and change in net assets as net assets released from restrictions.
Conditional promises, that is, those with a measurable performance or other barrier, and aright of return, are not recognized until the conditions on which they depend aresubstantially met. Mozilla received $15.5 million and $12.7 million in contributions
during the years ended December 31, 2022 and 2021, respectively, and has $1.6 million
and $3.4 million in conditional promises as of December 31, 2022 and 2021,
respectively, that are not recorded in these financial statements.
p. Software Development Costs
Mozilla primarily develops open-source web-based solutions which are available free ofcharge to users. In addition, due to the open-source nature of the development, there is
generally no passage of time between achievement of technological feasibility and theavailability for general release. Therefore, Mozilla expenses the cost of softwaredevelopment as incurred.
q. Advertising Costs
Mozilla expenses advertising costs as incurred. Amounts paid in advance of services
provided are recorded as a prepaid expense. Advertising expense for the years ended
December 31, 2022 and 2021 amounted to $18.0 million and $4.3 million, respectively,
and is included in advertising and promotion on the statement of functional expenses.
r.

Income Taxes
The Foundation qualifies as a public benefit charitable organization exempt from income
taxes on income related to its charitable purpose under Section 501(c)(3) of the Internal
Revenue Code and applicable sections of the California Revenue and Taxation Code andis not classified as a private foundation. The Foundation provides for tax, if any, on
unrelated business income.

15

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

The Corporation, MZLA, Ventures and AI are all C corporations. Income taxes areaccounted for using an asset and liability approach, which requires the recognition ofdeferred tax liabilities and assets for the expected future tax consequences of temporary
differences between the financial statement and tax basis of assets and liabilities at theapplicable enacted tax rates. Differences relate primarily to state taxes, property andequipment, prepaid and accrued expenses and net operating losses and credits. Valuation
allowances are established, when necessary, to reduce deferred tax assets to amounts thatare more likely than not to be realized.
In accordance with the accounting standard on accounting for uncertainty in income
taxes, no portion of an uncertain tax position will be recognized if the position has lessthan a 50% likelihood of being sustained upon audit by the relevant taxing authority.
Also, interest expense, if any, is recognized on the full amount of deferred benefits for
uncertain tax positions.
s.

Functional Expenses
The costs of providing various programs and activities have been summarized on afunctional basis in the consolidated statement of activities and change in net assets.
Expenses such as salaries and benefits, facilities, certain staff travel, certain officesupplies and computer and technology, taxes, depreciation and amortization, and otherindirect costs are allocated among program, management and general, and fundraisingbased on time estimates determined by Mozilla’s management. All other costs areallocated directly to the functions they benefit.

t.

Concentrations of Risk and Significant Customers
Mozilla’s financial instruments that are exposed to concentration of credit risk consist
primarily of cash and cash equivalents, investments, and receivables.
Approximately 81% and 83% of Mozilla’s revenues from customers with contracts were
derived from one customer for the years ended December 31, 2022 and 2021,
respectively. Receivables from that one customer represented 64% and 69% of the
December 31, 2022 and 2021 outstanding receivables, respectively.
Mozilla has defined its financial instruments which are potentially subject to credit risk as
cash and cash equivalents and investments. As of December 31, 2022 and 2021,
essentially all of the cash is in excess of the federally insured limits. In addition, cash
equivalents and investments in general are exposed to various risks, such as interest rate,credit and overall market volatility. To address these risks, Mozilla maintains aninvestment policy that sets out performance criteria, investment, and asset allocation
guidelines, and actively manages the investments to these policies.

16

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statementsu. Accounting Pronouncements
Recently Adopted Accounting Pronouncements:
In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and other –Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation
Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, whichamended guidance for costs of implementing a cloud computing service arrangement andaligns the requirements for capitalizing implementation costs incurred in a hostingarrangement that is a service contract with the requirements for capitalizing
implementation costs incurred to develop or obtain internal-use software. This new
standard also requires customers to expense the capitalized implementation costs of ahosting arrangement that is a service contract over the term of the hosting arrangement.
The guidance is effective for fiscal years beginning after December 15, 2020. Mozilla
adopted this standard for the fiscal year beginning January 1, 2021. The adoption of thisstandard did not have a material impact on Mozilla’s financial statements.
In March 2021, the FASB issued ASU No. 2021-03, Intangibles - Goodwill and Other(Topic 350) Accounting Alternative for Evaluating Triggering Events, provide privatecompanies and not-for-profit entities with an accounting alternative to elect not tomonitor for goodwill impairment triggering events during the reporting period and,instead, to evaluate the facts and circumstances as of the end of the reporting period todetermine whether it is more likely than not that goodwill is impaired. The amendmentsin this Update may be elected on a prospective basis for fiscal years beginning after
December 15, 2019. Early adoption is permitted for both interim and annual financial
statements that have not yet been issued or made available for issuance as of March 30,
2021. Mozilla adopted this standard for the fiscal year beginning January 1, 2021. The
adoption of this standard did not have a material impact on Mozilla’s financial
statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740):
Simplifying the Accounting for Income Taxes (ASU 2019-12) which modifies ASC 740 tosimplify the accounting for income taxes. The amendments in ASU 2019-12 are effective
for private businesses for fiscal years beginning after December 15, 2021. Mozilla
adopted this accounting standard effective January 1, 2022. There was no impact on
Mozilla’s tax provision as a result of adopting this standard.
Recent Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses(Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13).
ASU 2016-13 amends guidance related to impairment of financial instruments byreplacing the incurred loss impairment methodology with an expected credit loss model
for which a company recognizes an allowance based on the estimate of expected credit
loss. The standard is effective for Mozilla beginning January 1, 2023. Mozilla is currently
evaluating the impact of adopting this new guidance on its financial statements.
17

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):
Accounting for Contract Assets and Contract Liabilities from Contracts with Customers,
which requires contract assets and contract liabilities acquired in a business combination
to be recognized and measured by the acquirer on the acquisition date in accordance with
Topic 606 as if the acquirer had originated the contracts. ASU 2021-08 is effective forfiscal years and interim reporting periods within those fiscal years beginning after
December 15, 2023. Mozilla is currently evaluating the effect, if any, the adoption of thisguidance will have on its financial statements.
Note 3 -Cash Equivalents, Investments and Fair Value Measurements:
The tables below present cash equivalents and investments measured at fair value on arecurring basis by level within the valuation hierarchy as of December 31 (in thousands):
2022
Cash equivalents:
Money market funds
Commercial paper$

Total cash equivalents

Total

Level 1

Level 2

393,356
18,766$ 393,356-

412,122393,356

18,766-941$

18,766

Level 3$-Marketable securities:
Mutual funds
Domestic
ETF: Minerals
Municipal bonds
U.S. governmental and agency
securities
Foreign sovereign securities
Asset-backed securities
Corporate debt securities

17,945606
13,08017,004606-

13,080-147,189
16,928412,112
4,741-

147,189
16,928412,112
4,741-

Total marketable securities

612,601

17,610594,991-

Investments measured at net
asset value as a practical expedient

18,523---

Total investments$

Total assets measured at fair value$ 1,043,246

18

631,124$

17,610$ 594,991$-$ 410,966$ 613,757$-

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

2021
Cash equivalents:
Money market funds

Total
$

Total cash equivalents

25,077

Level 1$

25,077

Level 2$-

Level 3$-25,07725,077--

Marketable securities:
Mutual funds
Domestic
ETF: Minerals
Municipal bonds
U.S. governmental and agency
securities
Foreign sovereign securities
Asset-backed securities
Corporate debt securities

22,881610
2,998

20,801
610
-

2,080
2,998

-

147,200
17,352
11,667437,672-

147,200
17,352
11,667437,672-

Total marketable securities

640,380

21,411

618,969-

Investments measured at net
asset value as a practical expedient

10,699---Total investments$ 651,079$

21,411$ 618,969$-

Total assets measured at fair value$ 676,156$

46,488$ 618,969$-

An investment’s categorization within the valuation hierarchy is based on the lowest level of
input that is significant to the fair value measurement. There has been no change in themethodology used for the years ended December 31, 2022 and 2021.
The method described above may produce a fair value calculation that may not be indicativeof net realizable value or reflective of future fair values. Furthermore, while Mozilla believes
its valuation methods are appropriate and consistent with other market participants, the use ofdifferent methodologies or assumptions to determine fair value of certain financial
instruments could result in a different fair value measurement at the reporting date.

19

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

The following table provides information for investments using NAV to represent fair value
as of December 31 (in thousands):
2022
# of
Funds

2021

Valuation

# of
Funds

Valuation

Redemption
Frequency

NoticePeriodMonthly
None
None
None

90 Days
N/A
N/A
N/A

Global macro fund (a) 1Feeder fund (b)1Specific investments (c) 20
Venture funds (d)
4

$

2,202
406
9,580
6,335

1
1
15
3

$ 1,827
583
5,945
2,344

Total

$

18,52320$ 10,699

26

There were $1.3 million and $2.6 million in unfunded commitments as of December 31, 2022
and December 31, 2021, respectively.
(a)This fund invests in its affiliated Master Fund LP, whose investment strategy iscomprised of global investment strategies and a number of long and short strategies
that may have directional risk.

(b)This fund invests in its affiliated Master Fund LP, whose objective is to invest on aleveraged basis, in whole or in part, in collateralized and unsecured commercial loans
and debt securities of corporations, partnerships, companies or other securities.

(c)

These are direct investments in various open source and security / privacy pre-seedfunding round / early-stage companies, which are accounted for on a historical costbasis, less any impairments, as there is not readily available public information todetermine fair value.

(d)These venture funds make investments in various early-stage technology companies.
Mozilla is a limited partner with no significant influence on the funds’ investment
strategies.

20

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Note 4 -Property and Equipment:
Property and equipment were as follows as of December 31 (in thousands):
2022
Computer equipment
Furniture and office equipment
Leasehold improvements
Software$Gross property and equipment
Less accumulated depreciation

4,524
2,680
16,071
54

2021$

23,329(21,090)

Net property and equipment

$

2,239

Useful Life
(Years)

5,003
3,058
19,064
59

2-3
3-7
3-5
1-3

27,184(22,974)$

4,210

Depreciation and amortization expense, excluding amortization of goodwill and intangibles,amounted to $1.8 million and $3.5 million for the years ended December 31, 2022 and 2021,
respectively.
Mozilla has recorded an asset retirement obligation liability of $1.5 million and $1.7 million
as of December 31, 2022 and 2021, respectively. Mozilla recognized $0.2 million and $0.3
million in depreciation expense associated with the asset retirement obligation for the years
ended December 31, 2022 and 2021, respectively.
Note 5 -Goodwill:
Goodwill is amortized over an estimated useful life of 10 years. Amortization expense foreach of the years ended December 31, 2022 and 2021 was $2.6 million. Goodwill was asfollows as of December 31 (in thousands):
Estimated
Useful Life
2022
2021
(Years)Goodwill
Less accumulated amortization$ 26,017(13,009)$ 26,017(10,407)

Total goodwill, net$ 13,008$ 15,610

21

10

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Note 6 -Intangible Assets:
Intangible assets are amortized over their estimated useful lives on a straight-line basis. No
residual value is estimated for the intangible assets.
In November 2022, Mozilla acquired substantially all of the assets of Active Replica to build
on Mozilla’s existing virtual reality offering. Earlier in the year, Mozilla had previously
invested in Active Replica via a “SAFE” (simple agreement for future equity) and maintained
its investment on a historical cost / NAV basis. As a result of the transaction, a portion of theoriginal investment was returned and was taken into consideration in the calculation of theacquired intangible asset.
In November 2022, Mozilla entered into an agreement to acquire substantially all of theassets of Pulse to expand on Mozilla’s machine learning efforts.
Transaction costs, such as legal, are included in the calculation of the assets acquired
amounts.
As Mozilla acquired both inputs and a process to create outputs, these transactions would
normally be classified as business combinations. However, Mozilla elected to treat thesetransactions as asset acquisitions due to the immaterial differences in accounting treatment
and the transaction amounts are immaterial to Mozilla’s balance sheet. Mozilla elected toamortize the acquired intangibles over three years given the rapid technology development
and obsolescence cycle.
Both transactions also included compensation to the employees of each company as anincentive to join Mozilla upon closing of the transactions. These amounts are excluded fromthe assets acquired amount as the compensation is contingent on tenure and employment at
Mozilla subsequent to the transactions.
The components of intangible assets were as follows as of December 31 (in thousands):

2022
User baseTrade names and trademark
Developed technology
Domain rights

$

1,500
1,200
2,232
801

2021
$

1,500
1,200
1,000
801

Gross intangible assets

5,733

4,501

Less accumulated amortization(3,948)(3,820)Total intangible assets, net

$

22

1,785

$

681

Estimated
Useful Life
(Years)2
5
3
15

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Amortization expense for the years ended December 31, 2022 and 2021 was $0.1 million and$0.3 million, respectively. Estimated remaining amortization expense relating to intangible
assets for each calendar year is as follows (in thousands):
Year Ending December 31,
2023
2024
2025
2026
2027
Thereafter
Total

Note 7 -

$

464
464
430
53
53
321

$

1,785

Net Assets With Donor Restrictions:
Net assets with donor restrictions consisted of the following as of December 31 (inthousands):
2022
2021
Leadership Development: Responsible
Computer Science Challenge
Leadership Development: Mozilla Open Web
Fellowships
Leadership Development: Mozilla Tech andSociety Fellowships
Leadership Development: Coil Open Internet
Leadership Development: Data Futures Lab
Leadership Development: MozFest 2023
Movement Building: Africa Innovation Mradi
Movement Building: Common Voice
Movement Building: Policy Change
Other

$

$

23

2,960

$

2,881

1,750

877

23
175
1,660
314
94
1,518
80
77

902
385
200
2,424
151
77

8,651

$

7,897

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Net assets were released from donor restrictions by incurring expenses satisfying the purposeof the restriction, by the passage of time, or by the occurrence of other specific events asfollows during the years ended December 31 (in thousands):
2022
Leadership Development: Responsible Computer
Science Challenge
Leadership Development: Mozilla Science
Fellowships
Leadership Development: Mozilla Open Web
Fellowships
Leadership Development: Mozilla Tech and Society
Fellowships
Leadership Development: Mozilla MITI/OIE
Fellowships
Leadership Development: Coil Open Internet
Leadership Development: Data Futures Lab
Movement Building: Africa Innovation Mradi
Movement Building: Policy Change
Movement Building: Common Voice
Thunderbird
Other

$

$
Note 8 -

621

2021
$

1,323

-

39

877

373

879

835

210
590
105
70
1,920
102

6
365
780
268
151
501
730
48

5,374

$

5,419

Income Taxes:
The following is a geographical breakdown of consolidated income before income taxes by
tax jurisdiction for the year ended December 31 (in thousands):
2022

2021

United States
Foreign$

187,982(19,171)$

252,955
7,674

Income before provision for income taxes$

168,811$

260,629

24

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Mozilla’s provision for (benefit from) income taxes for the years ended December 31
consisted of the following (in thousands):
2022
FederalCurrent provision
Foundation
Corporation
MZLA
Deferred benefit
Corporation
Total

$

611
59,187
868

State
$

(41,224)$

19,442Foreign

245
8,281
3

$

(3,484)
$

5,045

758
-

Total
$

(342)
$

416

856
68,226871(45,050)$

24,9032021
FederalCurrent provision
Foundation
Corporation
MZLA
Deferred benefit
Corporation
Total

$

142
42,344
179

State
$

(891)
$

41,77459
6,403-

Foreign
$

(55)
$

6,407

852
-

Total
$

(13)
$

839

201
49,599
179
(959)

$

49,020The provision for income taxes differs from taxes calculated at the federal statutory rate
primarily due to the activity related to Mozilla’s unrecognized tax positions, nondeductible
expenses, research and development credits, foreign operations, and state income taxes net offederal tax benefit.

25

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

The tax effects of temporary differences and related deferred tax assets and liabilities were as
follows as of December 31 (in thousands):
2022
Deferred tax assets:
Foreign operating loss
Net operating loss
Credits
Accrued expenses and other reserves
Asset retirement obligations
Right-of-use liability
Property and equipment
State tax deduction
R&D capitalization
Unrealized loss
Other

$

Total gross deferred tax assets

1,093
8,997
16,862
296
1,447
692
1,861
42,156
5,128
2,091

2021
$

5
1,347
9,528
11,610
249
2,140
624
1,206
2,650
465
1,849

80,62331,673

Less valuation allowance(8,969)(9,528)Net deferred tax assets

71,654

22,145(1,017)(1,362)(68)(704)(1,875)(72)(2,447)(2,651)

Deferred tax liabilities:
Prepaid expense
Right-of-use asset
Foreign deferred tax liabilities
Total gross deferred tax liabilities
Net deferred tax assets$

69,207$

19,494As of December 31, 2022, Mozilla had approximately $2.5 million of federal and $8.0
million of state net operating loss carryforwards available to offset future taxable income. If
not utilized, the federal and state operating loss carryforwards will begin to expire in 2033 forfederal and 2026 for state.
As of December 31, 2022, Mozilla has federal and state research and development credit
carryforwards of $0.05 million and $14.5 million, respectively, available to offset future tax
liabilities. If not utilized, the carryforwards will begin to expire in 2034 for federal and will
not expire for state.

26

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Financial Interpretation (FIN) 48, now codified as ASC 740-10, provides that a tax benefit
from an uncertain tax position may be recognized when it is more likely than not that theposition will be sustained upon examination, including resolution of any related appeals or
litigation processes, based on the technical merits. Income tax positions must meet a morelikely-than-not recognition threshold at the effective date to be recognized. FIN 48 also
provides guidance on measurement, derecognition, classification, interest and penalties,
accounting in interim periods, and disclosure.
Mozilla’s unrecognized tax benefits, which are all with the Corporation, were as follows as ofDecember 31 (in thousands):
2022
2021
Unrecognized tax benefits$

12,111$

12,458

Mozilla also accrued potential penalties and interest of $0.3 million and $0.2 million related
to these unrecognized tax benefits during the years ended December 31, 2022 and 2021,
respectively, and in total, has recorded a liability for potential penalties and interest of $0.8
million and $0.9 million, as of December 31, 2022 and 2021, respectively. Mozillarecognizes interest and penalties related to unrecognized tax benefits within the income tax
expense line in the accompanying consolidated statement of activities and change in net
assets. Accrued interest and penalties are included within the accrued liabilities line in the
consolidated statement of financial position. Mozilla does not expect its unrecognized tax
benefits to change significantly over the next 12 months.
As of December 31, 2022, the unrecognized tax benefit was $12.1 million, of which $5.8
million, if recognized, would affect the effective tax rate.
Mozilla files U.S., state, and foreign income tax returns in jurisdictions with varying statutesof limitations. In U.S. jurisdictions, the 2017 through 2022 tax years generally remain subject
to examination by their respective authorities. In state jurisdictions, the 2017 through 2022
tax years generally remain subject to examination by their respective authorities. In foreign
jurisdictions, the 2011 through 2022 tax years generally remain subject to examination by
their respective tax authorities.
Note 9 -Employee Benefit Plans:
The Foundation and the Corporation sponsor defined contribution plans covering
substantially all employees in the United States and Canada. The Foundation and the
Corporation contribute an amount equal to 3% of the employee’s qualified salary plus anadditional discretionary 4% of their qualified salary. Contributions to the plans totaled $8.9
million and $6.9 million for the years ended December 31, 2022 and 2021, respectively.
For certain other foreign locations, Mozilla contributes employee benefits due in accordancewith local labor regulations. Contributions totaled $2.4 million and $2.3 million for the years
ended December 31, 2022 and 2021, respectively.
27

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Note 10 -Commitments and Contingencies:
Included in cash and cash equivalents as of December 31, 2022 and 2021 is approximately$1.0 million of collateral pledged for lease agreements.
LeasesMozilla leases its various office spaces under operating leases, which require it to pay baserent, real estate taxes, insurance, general repairs and maintenance. Mozilla’s leases arelocated in San Francisco, CA, Portland, OR (expired in November 2022), Canada, Germany
and France and have various expiration dates through 2026. Some leases have options torenew and certain leases are guaranteed by letters of credit. Lease expense for the years ended
December 31, 2022 and 2021 totaled $6.3 million and $7.3 million, respectively.
Lease ROU assets and liabilities are recognized at the lease commencement date based on thepresent value of the remaining minimum lease payments over the lease term, with certain
adjustments as described in Note 2. As Mozilla’s leases do not provide an implicit rate, and inaccordance with the private company exemptions available under ASC 842, Mozilla uses arisk-free interest rate based on the information available at commencement date indetermining the present value of lease payments.
As of December 31, 2022 and 2021, Mozilla had ROU assets of $5.9 million and $11.5
million, respectively, and lease liabilities related to its operating leases of $6.3 million and$12.8 million, respectively. ROU assets are included in prepaid expenses and other assets
and lease liabilities are included within other liabilities on the consolidated statement offinancial position. During the fiscal years ended December 31, 2022 and 2021, Mozilla paid
$6.4 million and $6.3 million, respectively, in cash related to its operating leases. As of
December 31, 2022 and 2021, the weighted-average remaining lease term was 2.0 years and2.6 years, respectively, and the weighted-average discount rate related to Mozilla’s operatingleases was 2.57% and 2.98%, respectively.
Future minimum lease commitments are as follows and include all base rent and operating
expenses (in thousands):
Year Ending December 31,
2023
2024
2025
2026

$

Total scheduled payments
Less discount to present value

4,089
1,293
690
345
6,417
(115)

Present value of lease liability

$

28

6,302

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Operating lease amounts above do not include sublease income. Mozilla has entered into
various sublease agreements with third parties for portions of its unused office spaces.
Sublease income was $1.7 million and $0.2 for the years ended December 31 2022 and 2021,
respectively. Under these agreements, Mozilla expects to receive sublease income of
approximately $1.1 million in the next year.
Long-Term Service Arrangements
Mozilla entered into service agreements with initial minimum commitments for cloud hosting
services. In addition to the initial term, Mozilla has the option to extend the terms of theservice agreements.
Future minimum purchase obligations under these long-term arrangements are as follows (inthousands):
Year Ending December 31,
2023
2024
2025
2026
Total contractual obligations$

15,525
16,596
17,528
10,194$

59,843

Legal Matters
From time to time, Mozilla may be party or subject to various legal proceedings and claims,
either asserted or unasserted, which arise in the ordinary course of business. Some of theseproceedings involve claims that are subject to substantial uncertainties and unascertainabledamages. Mozilla makes a provision for a liability when it is both probable that a liability has
been incurred and the amount of the loss can be reasonably estimated. Mozilla has
determined that no provision for liability nor disclosure is required related to any claim
against Mozilla because: (a) there is not a reasonable possibility that a loss exceeding
amounts already recognized (if any) may be incurred with respect to such claim; (b) areasonably possible loss or range of loss cannot be estimated; or (c) such estimate isimmaterial.

29

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Note 11 -Related Party Transactions:
The Corporation and MZLA pay license fees per trademark license agreements with theFoundation. The Corporation pays the Foundation a royalty payment based on the
Corporation’s annual royalties revenue. The Corporation incurred $19.1 million and $19.9
million in license fees to the Foundation for the years ended December 31, 2022 and 2021,
respectively.
The trademark license agreement between MZLA and the Foundation stipulates that MZLA
will pay the Foundation a royalty payment based upon the revenue generated from certain
products. MZLA paid $0.195 million and $0.084 million in license fees to the Foundation forthe years ended December 31, 2022 and 2021, respectively.
The Corporation provides basic administrative services, IT support and legal services to theFoundation under a service agreement between the Corporation and the Foundation.
The Foundation and Corporation also provide basic administrative services, IT support andlegal services to MZLA, Ventures and AI under separate service agreements between theFoundation and MZLA, Ventures and AI and the Corporation and MZLA.
A China subsidiary of Mozilla Corporation made a distribution to its minority shareholder in
the amount of $0.5 million and $0.4 million for the years ended December 31, 2022 and
2021, respectively. The amount is reported as a distribution on Mozilla’s consolidated
financial statements, but Mozilla Foundation itself did not make any distributions.
As noted in Note 2a, all significant intercompany transactions have been eliminated in the
preparation of these financial statements.

30

Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Note 12 -Availability of Financial Assets and Liquidity:
Mozilla’s financial assets available for general expenditures within one year are as follows asof December 31 (in thousands):
2022
Financial assets at year end:
Cash and cash equivalents
Receivables
Investments$

Total financial assets
Less amounts not available to be used within one year:
Investments with liquidity restrictions
Other assets
Net assets with donor restrictions
Add net assets with purpose restrictions to be met
in less than a year
Total amounts not available to be used within one year
Financial assets available to meet general expenditures
over the next twelve months

513,780
60,231
631,1242021$

378,266
62,832651,079

1,205,135

1,092,177(16,321)(1,000)(8,651)(8,872)(1,000)(7,897)

7,221

5,725

(18,751)(12,044)$ 1,186,384$ 1,080,133

Mozilla has certain donor-restricted assets limited to use which are available for general
expenditure within one year in the normal course of operations. Accordingly, these assets
have been included in the quantitative information above for financial assets to meet general
expenditures within one year. Donor-restricted assets that are not available for general
expenditure within the next year, are more fully described in Note 7.
As part of Mozilla’s liquidity management plan, cash in excess of daily requirements isinvested in a managed portfolio of fixed income and equity securities.

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Mozilla Foundation and Subsidiaries
Notes to the Consolidated Financial Statements

Note 13 -Subsequent Events:
Mozilla evaluated subsequent events from December 31, 2022 through September 6, 2023,
the date these financial statements were available to be issued. In April 2023, Mozillaacquired Fakespot, Inc., which provides consumers a service to identify fake reviews on ecommerce sites using machine learning technology. Mozilla obtained 100% of Fakespot’s
outstanding stock for an amount equating to less than 5% of total assets of Mozilla on thedate of the acquisition. In May 2023, Mozilla filed legal claims against Beijing Mozilla
Firefox Information Technology, Ltd. (Mozilla Online) with the long-term intent to wind
down its operations in China. The contract recently expired between Mozilla Corporation andMozilla Online. Although both parties attempted to negotiate a renewal in good faith, anagreement has not been reached. In June 2023, the Corporation issued a $35 million
distribution to the Foundation, which it in turn used to further invest in Ventures and AI.
There were no other material subsequent events that required recognition or additional
disclosure in these financial statements.

32