Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 30, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-25131 | |
Entity Registrant Name | Avantax, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 91-1718107 | |
Entity Address, Address Line One | 3200 Olympus Blvd, Suite 100 | |
Entity Address, City or Town | Dallas | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 75019 | |
City Area Code | 972 | |
Local Phone Number | 870-6400 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Trading Symbol | AVTA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 36,811,784 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0001068875 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 106,435 | $ 263,928 |
Accounts receivable, net | 24,680 | 24,117 |
Commissions and advisory fees receivable | 22,177 | 20,679 |
Prepaid expenses and other current assets | 32,944 | 15,027 |
Total current assets | 186,236 | 323,751 |
Long-term assets: | ||
Property, equipment, and software, net | 49,932 | 53,041 |
Right-of-use assets, net | 18,126 | 19,361 |
Goodwill, net | 266,279 | 266,279 |
Acquired intangible assets, net | 256,867 | 266,002 |
Other long-term assets | 48,239 | 35,081 |
Total long-term assets | 639,443 | 639,764 |
Total assets | 825,679 | 963,515 |
Current liabilities: | ||
Accounts payable | 3,771 | 7,531 |
Commissions and advisory fees payable | 15,033 | 13,829 |
Accrued expenses and other current liabilities | 49,798 | 111,212 |
Current deferred revenue | 4,241 | 4,583 |
Current lease liabilities | 5,107 | 5,139 |
Current portion of long-term debt | 11,813 | 0 |
Total current liabilities | 89,763 | 142,294 |
Long-term liabilities: | ||
Long-term debt, net | 248,388 | 0 |
Long-term lease liabilities | 27,797 | 30,332 |
Deferred tax liabilities, net | 15,584 | 20,819 |
Long-term deferred revenue | 3,701 | 4,396 |
Other long-term liabilities | 36,759 | 22,476 |
Total long-term liabilities | 332,229 | 78,023 |
Total liabilities | 421,992 | 220,317 |
Commitments and contingencies (Note 9) | ||
Stockholders’ equity: | ||
Common stock, par value $0.0001 per share—900,000 shares authorized; 43,530 shares issued and 36,807 shares outstanding as of September 30, 2023; 51,260 shares issued and 48,079 shares outstanding as of December 31, 2022 | 4 | 5 |
Additional paid-in capital | 1,391,702 | 1,636,134 |
Accumulated deficit | (825,783) | (829,542) |
Accumulated other comprehensive loss | (13,043) | 0 |
Treasury stock, at cost—6,723 shares as of September 30, 2023 and 3,181 shares as of December 31, 2022 | (149,193) | (63,399) |
Total stockholders’ equity | 403,687 | 743,198 |
Total liabilities and stockholders’ equity | $ 825,679 | $ 963,515 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in USD per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 900,000,000 | 900,000,000 |
Common stock, shares issued (in shares) | 43,530,000 | 51,260,000 |
Common stock, shares outstanding (in shares) | 36,807,000 | 48,079,000 |
Treasury stock (in shares) | 6,723,000 | 3,181,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||||
Revenue | $ 192,343 | $ 165,032 | $ 557,251 | $ 494,104 |
Operating expenses: | ||||
Cost of revenue | 117,684 | 105,809 | 336,783 | 341,443 |
Engineering and technology | 2,352 | 2,617 | 7,264 | 6,733 |
Sales and marketing | 26,298 | 23,770 | 79,902 | 70,826 |
General and administrative | 33,011 | 23,792 | 91,747 | 69,388 |
Acquisition and integration | (100) | 416 | (17) | (4,710) |
Depreciation | 4,142 | 3,343 | 11,318 | 8,428 |
Amortization of acquired intangible assets | 6,404 | 6,342 | 18,973 | 19,435 |
Total operating expenses | 189,791 | 166,089 | 545,970 | 511,543 |
Operating income (loss) from continuing operations | 2,552 | (1,057) | 11,281 | (17,439) |
Interest expense and other, net | (5,115) | (158) | (8,919) | (423) |
Income (loss) from continuing operations before income taxes | (2,563) | (1,215) | 2,362 | (17,862) |
Income tax benefit (expense) | 1,068 | 1,536 | (524) | 22,582 |
Income (loss) from continuing operations | (1,495) | 321 | 1,838 | 4,720 |
Discontinued operations (Note 3) | ||||
Income (loss) from discontinued operations before gain on disposal and income taxes | 0 | (22,352) | 0 | 74,165 |
Pre-tax gain on disposal | 0 | 0 | 2,539 | 0 |
Income (loss) from discontinued operations before income taxes | 0 | (22,352) | 2,539 | 74,165 |
Income tax benefit (expense) | 0 | 190 | (618) | (26,681) |
Income (loss) from discontinued operations | 0 | (22,162) | 1,921 | 47,484 |
Net income (loss) | $ (1,495) | $ (21,841) | $ 3,759 | $ 52,204 |
Basic net income (loss) per share: | ||||
Continuing operations (in dollars per share) | $ (0.04) | $ 0.01 | $ 0.05 | $ 0.10 |
Discontinued operations (in dollars per share) | 0 | (0.47) | 0.04 | 0.99 |
Basic net income (loss) per share: (in dollars per share) | (0.04) | (0.46) | 0.09 | 1.09 |
Diluted net income (loss) per share: | ||||
Continuing operations (in dollars per share) | (0.04) | 0.01 | 0.04 | 0.10 |
Discontinued operations (in dollars per share) | 0 | (0.46) | 0.05 | 0.96 |
Diluted net income (loss) per share: (in dollars per share) | $ (0.04) | $ (0.45) | $ 0.09 | $ 1.06 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 36,921 | 47,847 | 39,971 | 47,981 |
Diluted (in shares) | 36,921 | 49,016 | 40,940 | 49,153 |
Comprehensive income (loss): | ||||
Net income (loss) | $ (1,495) | $ (21,841) | $ 3,759 | $ 52,204 |
Other comprehensive loss, net of tax | (982) | 0 | (13,043) | 0 |
Comprehensive income (loss) | $ (2,477) | $ (21,841) | $ (9,284) | $ 52,204 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common stock | Additional paid-in capital | Accumulated deficit | Accumulated other comprehensive loss | Treasury stock |
Beginning balance (in shares) at Dec. 31, 2021 | 50,137 | |||||
Beginning balance at Dec. 31, 2021 | $ 341,622 | $ 5 | $ 1,619,805 | $ (1,249,789) | $ 0 | $ (28,399) |
Beginning balance (in shares) at Dec. 31, 2021 | 1,306 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock issued pursuant to stock incentive and employee stock purchase plans (in shares) | 247 | |||||
Common stock issued pursuant to stock incentive and employee stock purchase plans | 96 | 96 | ||||
Stock repurchases (in shares) | 1,645 | |||||
Stock repurchases | (30,537) | $ (30,537) | ||||
Stock-based compensation | 4,641 | 4,641 | ||||
Tax payments from shares withheld for equity awards | (1,569) | (1,569) | ||||
Net income (loss) | 34,620 | 34,620 | ||||
Ending balance (in shares) at Mar. 31, 2022 | 50,384 | |||||
Ending balance at Mar. 31, 2022 | 348,873 | $ 5 | 1,622,973 | (1,215,169) | 0 | $ (58,936) |
Ending balance (in shares) at Mar. 31, 2022 | 2,951 | |||||
Beginning balance (in shares) at Dec. 31, 2021 | 50,137 | |||||
Beginning balance at Dec. 31, 2021 | 341,622 | $ 5 | 1,619,805 | (1,249,789) | 0 | $ (28,399) |
Beginning balance (in shares) at Dec. 31, 2021 | 1,306 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Other comprehensive loss, net of tax | 0 | |||||
Net income (loss) | 52,204 | |||||
Ending balance (in shares) at Sep. 30, 2022 | 50,955 | |||||
Ending balance at Sep. 30, 2022 | 371,590 | $ 5 | 1,632,569 | (1,197,585) | 0 | $ (63,399) |
Ending balance (in shares) at Sep. 30, 2022 | 3,181 | |||||
Beginning balance (in shares) at Mar. 31, 2022 | 50,384 | |||||
Beginning balance at Mar. 31, 2022 | 348,873 | $ 5 | 1,622,973 | (1,215,169) | 0 | $ (58,936) |
Beginning balance (in shares) at Mar. 31, 2022 | 2,951 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock issued pursuant to stock incentive and employee stock purchase plans (in shares) | 537 | |||||
Common stock issued pursuant to stock incentive and employee stock purchase plans | 2,402 | 2,402 | ||||
Stock repurchases (in shares) | 230 | |||||
Stock repurchases | (4,463) | $ (4,463) | ||||
Stock-based compensation | 3,683 | 3,683 | ||||
Tax payments from shares withheld for equity awards | (467) | (467) | ||||
Net income (loss) | 39,425 | 39,425 | ||||
Ending balance (in shares) at Jun. 30, 2022 | 50,921 | |||||
Ending balance at Jun. 30, 2022 | 389,453 | $ 5 | 1,628,591 | (1,175,744) | 0 | $ (63,399) |
Ending balance (in shares) at Jun. 30, 2022 | 3,181 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock issued pursuant to stock incentive and employee stock purchase plans (in shares) | 34 | |||||
Common stock issued pursuant to stock incentive and employee stock purchase plans | 307 | 307 | ||||
Stock-based compensation | 3,725 | 3,725 | ||||
Tax payments from shares withheld for equity awards | (54) | (54) | ||||
Other comprehensive loss, net of tax | 0 | |||||
Net income (loss) | (21,841) | (21,841) | ||||
Ending balance (in shares) at Sep. 30, 2022 | 50,955 | |||||
Ending balance at Sep. 30, 2022 | $ 371,590 | $ 5 | 1,632,569 | (1,197,585) | 0 | $ (63,399) |
Ending balance (in shares) at Sep. 30, 2022 | 3,181 | |||||
Beginning balance (in shares) at Dec. 31, 2022 | 51,260 | 51,260 | ||||
Beginning balance at Dec. 31, 2022 | $ 743,198 | $ 5 | 1,636,134 | (829,542) | 0 | $ (63,399) |
Beginning balance (in shares) at Dec. 31, 2022 | 3,181 | 3,181 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock issued pursuant to stock incentive and employee stock purchase plans (in shares) | 307 | |||||
Common stock issued pursuant to stock incentive and employee stock purchase plans | $ 1,135 | 1,135 | ||||
Stock repurchases (in shares) | 9,291 | |||||
Stock repurchases | (279,562) | $ (279,562) | ||||
Retirement of common stock (in shares) | (8,333) | (8,333) | ||||
Retirement of common stock | 0 | $ (1) | (254,538) | $ 254,539 | ||
Stock-based compensation | 4,714 | 4,714 | ||||
Tax payments from shares withheld for equity awards | (3,114) | (3,114) | ||||
Net income (loss) | 1,673 | 1,673 | ||||
Ending balance (in shares) at Mar. 31, 2023 | 43,234 | |||||
Ending balance at Mar. 31, 2023 | $ 468,044 | $ 4 | 1,384,331 | (827,869) | 0 | $ (88,422) |
Ending balance (in shares) at Mar. 31, 2023 | 4,139 | |||||
Beginning balance (in shares) at Dec. 31, 2022 | 51,260 | 51,260 | ||||
Beginning balance at Dec. 31, 2022 | $ 743,198 | $ 5 | 1,636,134 | (829,542) | 0 | $ (63,399) |
Beginning balance (in shares) at Dec. 31, 2022 | 3,181 | 3,181 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Other comprehensive loss, net of tax | $ (13,043) | |||||
Net income (loss) | $ 3,759 | |||||
Ending balance (in shares) at Sep. 30, 2023 | 43,530 | 43,530 | ||||
Ending balance at Sep. 30, 2023 | $ 403,687 | $ 4 | 1,391,702 | (825,783) | (13,043) | $ (149,193) |
Ending balance (in shares) at Sep. 30, 2023 | 6,723 | 6,723 | ||||
Beginning balance (in shares) at Mar. 31, 2023 | 43,234 | |||||
Beginning balance at Mar. 31, 2023 | $ 468,044 | $ 4 | 1,384,331 | (827,869) | 0 | $ (88,422) |
Beginning balance (in shares) at Mar. 31, 2023 | 4,139 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock issued pursuant to stock incentive and employee stock purchase plans (in shares) | 229 | |||||
Common stock issued pursuant to stock incentive and employee stock purchase plans | 1,506 | 1,506 | ||||
Stock repurchases (in shares) | 2,206 | |||||
Stock repurchases | (51,624) | $ (51,624) | ||||
Stock-based compensation | 2,910 | 2,910 | ||||
Tax payments from shares withheld for equity awards | (1,156) | (1,156) | ||||
Other comprehensive loss, net of tax | (12,061) | (12,061) | ||||
Net income (loss) | 3,581 | 3,581 | ||||
Ending balance (in shares) at Jun. 30, 2023 | 43,463 | |||||
Ending balance at Jun. 30, 2023 | 411,200 | $ 4 | 1,387,591 | (824,288) | (12,061) | $ (140,046) |
Ending balance (in shares) at Jun. 30, 2023 | 6,345 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock issued pursuant to stock incentive and employee stock purchase plans (in shares) | 67 | |||||
Common stock issued pursuant to stock incentive and employee stock purchase plans | 1,146 | 1,146 | ||||
Stock repurchases (in shares) | 378 | |||||
Stock repurchases | (9,147) | $ (9,147) | ||||
Stock-based compensation | 3,041 | 3,041 | ||||
Tax payments from shares withheld for equity awards | (76) | (76) | ||||
Other comprehensive loss, net of tax | (982) | (982) | ||||
Net income (loss) | $ (1,495) | (1,495) | ||||
Ending balance (in shares) at Sep. 30, 2023 | 43,530 | 43,530 | ||||
Ending balance at Sep. 30, 2023 | $ 403,687 | $ 4 | $ 1,391,702 | $ (825,783) | $ (13,043) | $ (149,193) |
Ending balance (in shares) at Sep. 30, 2023 | 6,723 | 6,723 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating activities: | ||
Net income (loss) | $ 3,759 | $ 52,204 |
Less: Income from discontinued operations, net of income taxes | 1,921 | 47,484 |
Income from continuing operations | 1,838 | 4,720 |
Adjustments to reconcile income from continuing operations to net cash from operating activities: | ||
Depreciation and amortization of acquired intangible assets | 30,291 | 27,863 |
Stock-based compensation | 17,678 | 14,782 |
Change in the fair value of acquisition-related contingent consideration | 0 | (5,320) |
Reduction of right-of-use lease assets | 1,235 | 1,103 |
Deferred income taxes | (1,043) | (599) |
Amortization of debt discount and issuance costs | 871 | 0 |
Accretion of lease liabilities | 1,405 | 1,522 |
Other non-cash items | 4,610 | 4,218 |
Changes in operating assets and liabilities, net of acquisitions and disposals: | ||
Accounts receivable, net | (551) | (2,505) |
Commissions and advisory fees receivable | (1,498) | 4,587 |
Prepaid expenses and other current assets | (16,533) | (3,755) |
Other long-term assets | (17,276) | (14,829) |
Accounts payable | (3,760) | (5,047) |
Commissions and advisory fees payable | 1,204 | (4,137) |
Lease liabilities | (3,972) | (3,788) |
Deferred revenue | (1,037) | (1,447) |
Accrued expenses and other current and long-term liabilities | (77,023) | (7,459) |
Net cash provided (used) by operating activities from continuing operations | (63,561) | 9,909 |
Investing activities: | ||
Purchases of property, equipment, and software | (8,257) | (12,601) |
Asset acquisitions | (8,017) | (3,743) |
Net cash used by investing activities from continuing operations | (16,274) | (16,344) |
Financing activities: | ||
Proceeds from credit facilities, net of debt discount and issuance costs | 261,543 | 0 |
Payments on credit facilities | (3,375) | (35,906) |
Acquisition-related fixed and contingent consideration payments | (287) | (14,548) |
Stock repurchases | (337,192) | (35,000) |
Proceeds from issuance of stock through employee stock purchase plan | 1,584 | 2,324 |
Proceeds from stock option exercises | 2,203 | 481 |
Tax payments from shares withheld for equity awards | (4,346) | (2,090) |
Net cash used by financing activities from continuing operations | (79,870) | (84,739) |
Net cash used by continuing operations | (159,705) | (91,174) |
Net cash provided by operating activities from discontinued operations | 0 | 69,508 |
Net cash provided (used) by investing activities from discontinued operations | 2,212 | (4,552) |
Net cash provided by financing activities from discontinued operations | 0 | 0 |
Net cash provided by discontinued operations | 2,212 | 64,956 |
Net decrease in cash and cash equivalents | (157,493) | (26,218) |
Cash and cash equivalents, beginning of period | 263,928 | 100,629 |
Cash and cash equivalents, end of period | 106,435 | 74,411 |
Supplemental cash flow information: | ||
Cash paid for income taxes | 99,966 | 2,408 |
Cash paid for interest | $ 11,422 | $ 23,005 |
Description of the Business
Description of the Business | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of the Business | Note 1: Description of the Business Avantax, Inc. (the “ Company, ” “ Avantax, ” “ we, ” “ our, ” or “ us ” ) is a leading provider of integrated tax-intelligent wealth management services and software, assisting consumers, small business owners, tax professionals, financial professionals, and certified public accounting ( “CPA” ) firms. Our integrated tax-intelligent wealth management services consist of the operations of Avantax Wealth Management and Avantax Planning Partners. Avantax Wealth Management provides tax-intelligent wealth management solutions for financial professionals, tax professionals, CPA firms, and their clients. Avantax Wealth Management offers its services through its registered broker-dealer, which is a leading U.S. tax-focused independent broker-dealer, registered investment advisor ( “RIA” ), and insurance agency subsidiaries. Avantax Wealth Management works with a nationwide network of financial professionals that operate as independent contractors. Avantax Wealth Management provides these financial professionals with an integrated platform of technical, practice, compliance, operations, sales, and product support tools that enable them to offer tax-intelligent planning, investing, and wealth management services to their clients. Avantax Planning Partners is an in-house/employee-based RIA, insurance agency, and wealth management business that partners with CPA firms in order to provide their consumer and small business clients with holistic financial planning and advisory services, as well as retirement plan solutions through Avantax Retirement Plan Services. Merger Agreement On September 9, 2023, Avantax entered into an Agreement and Plan of Merger (the “Merger Agreement” ) with Aretec Group, Inc., a Delaware corporation that does business as Cetera Holdings ( “Parent” ), and C2023 Sub Corp., a Delaware corporation and a wholly-owned subsidiary of Parent ( “Acquisition Sub” ) whereby Parent will acquire all of the issued and outstanding equity of Avantax in an all-cash transaction valuing Avantax at approximately $1.2 billion, inclusive of Avantax’s net debt. On the terms and subject to the conditions of the Merger Agreement, holders of shares of Avantax common stock (other than Excluded Shares and Dissenting Shares (each, as defined in the Merger Agreement)) will receive $26.00 per share in cash, without interest and less any required tax withholdings. Upon the closing of the transactions contemplated by the Merger Agreement, Avantax will operate as a privately-held company. The closing remains subject to customary closing conditions, including approval by Avantax’s stockholders. Avantax expects the closing to occur by the end of November 2023. Divestiture of Tax Software Business On October 31, 2022, we entered into a Stock Purchase Agreement (the “Purchase Agreement” ) with TaxAct Holdings, Inc. (f/k/a Avantax Holdings, Inc.), a Delaware corporation and a direct subsidiary of Avantax, Franklin Cedar Bidco, LLC, a Delaware limited liability company (the “Buyer” ), and, solely for purposes of certain provisions thereof, DS Admiral Bidco, LLC, a Delaware limited liability company, pursuant to which we sold our former tax software business to Buyer for an aggregate purchase price of $720.0 million in cash, subject to customary purchase price adjustments set forth in the Purchase Agreement (the “ TaxAct Sale ” ). This transaction subsequently closed on December 19, 2022. In accordance with ASC 205 ( “ASC 205” ), Presentation of Financial Statements , we determined that the sale of our tax software business represented a strategic shift that will have a major effect on our operations and financial results. As a result of the TaxAct Sale, the historical results of our former tax software business, and any adjustments to amounts previously reported in discontinued operations in a prior period (if applicable) have been reclassified as a discontinued operation and are excluded from continuing operations for all periods presented within the condensed consolidated financial statements. Segments Our Chief Executive Officer is our chief operating decision maker and assesses performance and allocates resources on a consolidated basis. Given the similarities in economic characteristics between our operations and the common nature of the products, services, we currently operate in one reportable segment. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 2: Summary of Significant Accounting Policies Interim Financial Information The accompanying unaudited condensed consolidated financial statements have been prepared by us under the rules and regulations of the SEC for interim financial reporting. These condensed consolidated financial statements are unaudited and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the condensed consolidated financial position, results of operations, and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States ( “ GAAP” ) have been omitted in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of results for a full year. A summary of our significant accounting policies is included in Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022. Other than below, there have been no significant changes in our significant accounting policies since December 31, 2022. Derivative Financial Instruments We primarily enter into derivative financial instruments as part of our strategy to manage our exposure to changes in interest rates. Derivative instruments represent contracts between parties that result in one party delivering cash to the other party based on a notional amount and an underlying term (such as an interest rate or index) as specified in the contract. The amount of cash delivered from one party to the other is determined based on the interaction of the notional amount of the contract with the underlying term. We do not enter into derivative instruments for any purpose other than hedging interest rate risk, and none of our derivative instruments are used for trading purposes. We recognize derivatives as assets or liabilities on our consolidated balance sheets at their fair value in accordance with ASC 815, Derivatives and Hedging . The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Currently, we have only designated derivative instruments as cash flow hedges. We may also enter into derivative contracts that are intended to economically hedge interest rate risk, even though hedge accounting does not apply, or we elect not to apply hedge accounting. To qualify for hedge accounting, concurrent with the execution of a derivative contract, we formally document our risk management objective and strategy for undertaking the hedging transaction, how the hedging instrument is expected to hedge the designated risk related to the hedged item, and the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. For derivatives designated as cash flow hedging instruments, changes in fair value are initially recorded net of tax in accumulated other comprehensive income (loss) and subsequently reclassified into earnings when the hedged transaction affects earnings. Additionally, changes in the fair value of amounts excluded from the assessment of effectiveness are recorded net of tax in accumulated other comprehensive income (loss) and recognized in earnings using a straight-line amortization method over the term of instrument. Changes in fair value for derivative contracts that do not qualify for hedge accounting (or for those that we elect to not apply hedge accounting), are immediately recognized within earnings. Realized and unrealized gains and losses for derivatives are presented in the statements of comprehensive income (loss) based on the nature and use of the instrument. We prospectively discontinue hedge accounting if it is determined that the derivative is no longer effective in offsetting the designated risk of the hedged item, the derivative is terminated prior to maturity, or the occurrence of the forecasted transaction (for a cash flow hedge) is no longer probable. When hedge accounting for a cash flow hedge is discontinued, any subsequent changes in fair value of the derivative are recognized immediately in earnings. The cumulative unrealized gain or loss related to the discontinued hedge continues to be reported in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the same manner |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 3: Discontinued Operations On October 31, 2022, we entered into the Purchase Agreement with the Buyer to sell our former tax software business for an aggregate purchase price of $720.0 million in cash, subject to customary purchase price adjustments set forth in the Purchase Agreement. The TaxAct Sale subsequently closed on December 19, 2022. This divestiture was considered part of our strategic shift to become a pure-play wealth management company and was determined to meet discontinued operations accounting criteria under ASC 205. During the nine months ended September 30, 2023, we finalized our previously estimated closing date working capital balance, resulting in an incremental pre-tax gain of $2.5 million which is included within “Pre-tax gain on disposal” in the condensed consolidated statements of comprehensive income (loss). The following table presents summarized information regarding certain components of income (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Revenues $ — $ 6,664 $ — $ 242,028 Operating expenses — 19,425 — 142,579 Interest expense and other, net — (9,591) — (25,284) Income (loss) from discontinued operations before gain on disposal and income taxes — (22,352) — 74,165 Pre-tax gain on disposal — — 2,539 — Income (loss) from discontinued operations before income taxes — (22,352) 2,539 74,165 Income tax benefit (expense) — 190 (618) (26,681) Income (loss) from discontinued operations $ — $ (22,162) $ 1,921 $ 47,484 |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Note 4: Revenue Recognition Revenue primarily consists of advisory revenue, commission revenue, asset-based revenue, and transaction and fee revenue. Revenues by major category and the timing of revenue recognition was as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Recognized upon transaction: Commission $ 20,448 $ 17,868 $ 57,333 $ 56,373 Transaction and fee 1,054 1,307 3,066 3,813 Total revenue recognized upon transaction $ 21,502 $ 19,175 $ 60,399 $ 60,186 Recognized over time: Advisory $ 108,393 $ 95,070 $ 309,234 $ 306,394 Commission 22,903 23,920 69,329 75,905 Asset-based 33,444 21,147 100,524 33,774 Transaction and fee 6,101 5,720 17,765 17,845 Total revenue recognized over time $ 170,841 $ 145,857 $ 496,852 $ 433,918 Total revenue: Advisory $ 108,393 $ 95,070 $ 309,234 $ 306,394 Commission 43,351 41,788 126,662 132,278 Asset-based 33,444 21,147 100,524 33,774 Transaction and fee 7,155 7,027 20,831 21,658 Total revenue $ 192,343 $ 165,032 $ 557,251 $ 494,104 |
Asset Acquisitions
Asset Acquisitions | 9 Months Ended |
Sep. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Asset Acquisitions | Note 5: Asset Acquisitions During the nine months ended September 30, 2023, we completed acquisitions that met the criteria to be accounted for as asset acquisitions. Total initial purchase consideration, including acquisition costs and fixed deferred payments, was $5.2 million. This purchase consideration was allocated to client relationship intangibles. Client relationship intangibles are amortized on a straight-line basis over an amortization period of 15 years. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Note 6: Debt Our debt consisted of the following as of the periods indicated in the table below (in thousands): September 30, 2023 December 31, 2022 Delayed Draw Term Loan Facility Principal outstanding $ 266,625 $ — Unamortized debt issuance costs (5,208) — Unamortized debt discount (1,216) — Net carrying value $ 260,201 $ — In May 2017, we entered into a credit agreement (as the same has been amended, the “Credit Agreement” ) with a syndicate of lenders, which provided for a term loan facility and a revolving line of credit (including a letter of credit sub-facility) for working capital, capital expenditures, and general business purposes. Subject to the terms of the Credit Agreement, we repaid the remaining principal amount outstanding under the Credit Agreement in connection with the TaxAct Sale in the fourth quarter of 2022. On January 24, 2023 (the “Closing Date” ) , we entered into a restatement agreement (the “ Amended and Restated Credit Agreement” ), which amended and restated in its entirety our previous Credit Agreement. The Amended and Restated Credit Agreement provides for a new delayed draw term loan facility up to a maximum principal amount of $270.0 million (the “Delayed Draw Term Loan Facility” ) and a revolving credit facility with a commitment amount of $50.0 million (the “Revolving Credit Facility” ). We may borrow term loans under the Delayed Draw Term Loan Facility (the “Term Loans” ) until January 24, 2024. The stated maturity date of the Delayed Draw Term Loan Facility and the Revolving Credit Facility is January 24, 2028 (the “Maturity Date” ). The proceeds of any Term Loans may be used to fund shareholder distributions and for general corporate purposes. The proceeds of any loans under the Revolving Credit Facility may be used to finance working capital needs and for general corporate purposes. On February 24, 2023, we borrowed $170.0 million under the Delayed Draw Term Loan Facility. During the second quarter of 2023, we borrowed the remaining $100.0 million available under the Delayed Draw Term Loan Facility. We capitalized approximately $8.5 million of debt discount and issuance costs in connection with the Amended and Restated Credit Agreement. A portion of these costs were allocated to the Revolving Credit Facility and are included in other long-term assets on the Company’s condensed consolidated balance sheets. As of September 30, 2023, we had $266.6 million in principal amount outstanding under the Delayed Draw Term Loan Facility and no amounts outstanding under the Revolving Credit Facility. As of September 30, 2023, $50.0 million was available for future borrowings under the Revolving Credit Facility, subject to customary terms and conditions. Subject to certain conditions set forth in the Amended and Restated Credit Agreement, we may borrow, prepay, and reborrow under the Revolving Credit Facility and terminate or reduce the Lenders’ commitments at any time prior to the Maturity Date. We are required to make quarterly principal amortization payments on the Delayed Draw Term Loan Facility on the last business day of each fiscal quarter, beginning with the last business day of June 2023. These payments will amortize in equal quarterly installments based on the following aggregate annual amounts (expressed as a percentage of the principal amount of Term Loans borrowed): 2.5% during the first year ended December 31, 2023, 5% during years two and three, 7.5% during year four, and 10% during year five. Any remaining Term Loans outstanding are due on the Maturity Date. Commencing with the first year ending December 31, 2023, we may be required to make annual prepayments on the Term Loans in an amount equal to a percentage of Excess Cash Flow (as defined in the Amended and Restated Credit Agreement). The percentage of Excess Cash Flow ranges from 0% to 50% depending on our Consolidated First Lien Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement). We may voluntarily prepay the Term Loans in whole or in part without premium or penalty. Subject to customary reference rate availability provisions, the borrowings under the Amended and Restated Credit Agreement will bear interest at a rate per annum equal to (i) the Term SOFR Rate (as defined in the Amended and Restated Credit Agreement, and which includes a 0.10% credit spread adjustment) plus a margin ranging from 2.25% to 2.75% (which margin would be 2.75% as of the Closing Date), or (ii) a base rate based on the highest of the Wall Street Journal prime rate, the federal funds rate plus 0.50% and the Term SOFR (as defined in the Amended and Restated Credit Agreement, and which includes a 0.10% credit spread adjustment) rate plus 1.00%, in each case plus a margin ranging from 1.25% to 1.75% (which margin would be 1.75% as of the Closing Date). The margin is determined based on the Company’s Consolidated First Lien Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement). We are required to pay a quarterly commitment fee on the daily amount of the undrawn portion of the revolving commitments under the Revolving Credit Facility ranging from 0.35% to 0.45%. Interest is payable at the end of each interest period, typically quarterly. The obligations of the Company under the Amended and Restated Credit Agreement are secured by a first-priority security interest in substantially all of the existing and future personal property of the Company and certain of its subsidiaries. Pursuant to the Amended and Restated Credit Agreement, we shall not permit (i) the Consolidated Total Net Leverage Ratio (as defined in the Amended and Restated Credit Agreement) to exceed 4.00 to 1.00 between March 31, 2023 and June 30, 2024, or 3.75 to 1.00 between July 1, 2024 and the Maturity Date, (ii) the Consolidated Fixed Charge Coverage Ratio (as defined in the Amended and Restated Credit Agreement) to be less than 1.25 to 1.00 or (iii) Liquidity (as defined in the Amended and Restated Credit Agreement) on the last day of any fiscal quarter to be less than $50 million. The Company was in compliance with the debt covenants of the Amended and Restated Credit Agreement as of September 30, 2023. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Leases | Note 7: Leases Our leases are primarily related to office space and are classified as operating leases. Operating lease cost, net of sublease income, is recognized in “General and administrative” expense for those net costs related to leases used in our operations and within “Acquisition and integration” expense for those net costs related to an unoccupied lease assumed in a previous acquisition on the condensed consolidated statements of comprehensive income (loss). During the nine months ended September 30, 2023, we began subleasing portions of our corporate headquarters in Dallas, Texas. These subleases were classified as operating leases at inception, with sublease income recognized on a straight-line basis over the five-year and ten-year respective sublease terms. Operating lease cost, net of sublease income, and cash paid on operating lease liabilities for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Fixed lease cost $ 972 $ 965 $ 2,908 $ 2,885 Variable lease cost 415 258 1,163 1,023 Operating lease cost, before sublease income 1,387 1,223 4,071 3,908 Sublease income (684) (235) (1,642) (703) Total operating lease cost, net of sublease income $ 703 $ 988 $ 2,429 $ 3,205 Additional lease information: Cash paid on operating lease liabilities $ 1,336 $ 1,297 $ 3,955 $ 3,788 Lease liabilities obtained from new right-of-use assets $ — $ 262 $ — $ 390 Right-of-use assets and operating lease liabilities were recorded on the condensed consolidated balance sheets as follows (in thousands): September 30, 2023 December 31, 2022 Right-of-use assets, net $ 18,126 $ 19,361 Current lease liabilities $ 5,107 $ 5,139 Long-term lease liabilities 27,797 30,332 Total operating lease liabilities $ 32,904 $ 35,471 Weighted-average remaining lease term (in years) 8.9 9.4 Weighted-average discount rate 5.5 % 5.5 % The maturities of our operating lease liabilities as of September 30, 2023 were as follows (in thousands): Undiscounted cash flows: Remainder of 2023 $ 1,329 2024 5,174 2025 5,086 2026 4,256 2027 3,858 Thereafter 22,315 Total undiscounted cash flows 42,018 Imputed interest (9,114) Present value of cash flows $ 32,904 |
Leases | Note 7: Leases Our leases are primarily related to office space and are classified as operating leases. Operating lease cost, net of sublease income, is recognized in “General and administrative” expense for those net costs related to leases used in our operations and within “Acquisition and integration” expense for those net costs related to an unoccupied lease assumed in a previous acquisition on the condensed consolidated statements of comprehensive income (loss). During the nine months ended September 30, 2023, we began subleasing portions of our corporate headquarters in Dallas, Texas. These subleases were classified as operating leases at inception, with sublease income recognized on a straight-line basis over the five-year and ten-year respective sublease terms. Operating lease cost, net of sublease income, and cash paid on operating lease liabilities for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Fixed lease cost $ 972 $ 965 $ 2,908 $ 2,885 Variable lease cost 415 258 1,163 1,023 Operating lease cost, before sublease income 1,387 1,223 4,071 3,908 Sublease income (684) (235) (1,642) (703) Total operating lease cost, net of sublease income $ 703 $ 988 $ 2,429 $ 3,205 Additional lease information: Cash paid on operating lease liabilities $ 1,336 $ 1,297 $ 3,955 $ 3,788 Lease liabilities obtained from new right-of-use assets $ — $ 262 $ — $ 390 Right-of-use assets and operating lease liabilities were recorded on the condensed consolidated balance sheets as follows (in thousands): September 30, 2023 December 31, 2022 Right-of-use assets, net $ 18,126 $ 19,361 Current lease liabilities $ 5,107 $ 5,139 Long-term lease liabilities 27,797 30,332 Total operating lease liabilities $ 32,904 $ 35,471 Weighted-average remaining lease term (in years) 8.9 9.4 Weighted-average discount rate 5.5 % 5.5 % The maturities of our operating lease liabilities as of September 30, 2023 were as follows (in thousands): Undiscounted cash flows: Remainder of 2023 $ 1,329 2024 5,174 2025 5,086 2026 4,256 2027 3,858 Thereafter 22,315 Total undiscounted cash flows 42,018 Imputed interest (9,114) Present value of cash flows $ 32,904 |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | Note 8: Balance Sheet Components Prepaid expenses and other current assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 Prepaid expenses $ 9,679 $ 7,857 Prepaid income taxes 14,062 — Forgivable loans 6,910 5,951 Other current assets 2,293 1,219 Total prepaid expenses and other current assets $ 32,944 $ 15,027 Accrued expenses and other current liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Salaries and related benefit expenses $ 15,734 $ 17,481 Accrued legal costs 5,539 1,102 Accrued vendor and advertising costs 1,650 2,726 Accrued taxes 5,444 85,965 Accrued fixed and variable acquisition consideration 3,386 897 Accrued cash-settled stock-based compensation 8,629 2,121 Interest rate derivatives 7,581 — Other 1,835 920 Total accrued expenses and other current liabilities $ 49,798 $ 111,212 Other long-term liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Deferred compensation $ 13,555 $ 7,974 Accrued cash-settled stock-based compensation 5,594 7,556 Accrued tax positions 4,248 3,616 Interest rate derivatives 10,291 — Other 3,071 3,330 Other long-term liabilities $ 36,759 $ 22,476 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 9: Commitments and Contingencies TaxAct Indemnification Obligations In connection with the TaxAct Sale, we have certain indemnification obligations to the Buyer, TaxAct Holdings, Inc. and their respective affiliates and representatives with respect to certain losses actually incurred or suffered as a result of any claim, action, suit, or proceeding against such indemnitees arising out of or relating to the use by us or any of our affiliates in the tax software business of website tracking and analytics technologies prior to the closing of the TaxAct Sale. Such indemnification obligations terminate on December 19, 2027 and may not exceed $5.4 million ($1.0 million of which is allocable to the deductible under our insurance policies). We believe that applicable insurance policies will cover all or a substantial portion of any claims made by the Buyer under such indemnification obligations. The current carrying amount of the liability for these indemnification obligations is approximately $0.9 million as of September 30, 2023 and is included within “Other long-term liabilities” on the condensed consolidated balance sheets. Litigation From time to time, we are subject to various legal proceedings, regulatory matters or fines, or claims that arise in the ordinary course of business. We accrue a liability when management believes that it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Although we believe that resolving such claims, individually or in aggregate, will not have a material adverse impact on our financial statements, these matters are subject to inherent uncertainties. We are not currently a party to any such matters for which we have recognized a material liability on our condensed consolidated balance sheet as of September 30, 2023. We have entered into indemnification agreements in the ordinary course of business with our officers and directors. Pursuant to these agreements, we may be obligated to advance payment of legal fees and costs incurred by the defendants pursuant to our obligations under these indemnification agreements and applicable Delaware law. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 10: Fair Value Measurements Certain of our assets and liabilities are carried at fair value and are valued using inputs that are classified in one of the following three categories: • Level 1: Quoted market prices in active markets for identical assets or liabilities. • Level 2: Observable market-based inputs, other than Level 1, or unobservable inputs that are corroborated by market data. • Level 3: Unobservable inputs that are not corroborated by market data and reflect our own assumptions. Assets and Liabilities Measured on a Recurring Basis The fair value hierarchy of our financial assets and liabilities carried at estimated fair value and measured on a recurring basis were as follows (in thousands): Fair value measurements at the reporting date using September 30, 2023 Quoted prices in Significant other Significant Cash equivalents: money market and other funds $ 219 $ 219 $ — $ — Deferred compensation assets 14,012 14,012 — — Total assets at fair value $ 14,231 $ 14,231 $ — $ — Deferred compensation liabilities $ 14,012 $ 14,012 $ — $ — Interest rate derivatives 17,872 — 17,872 — Total liabilities at fair value $ 31,884 $ 14,012 $ 17,872 $ — Fair value measurements at the reporting date using December 31, 2022 Quoted prices in Significant other Significant Cash equivalents: money market and other funds $ 4,369 $ 4,369 $ — $ — Deferred compensation assets 7,974 7,974 — — Total assets at fair value $ 12,343 $ 12,343 $ — $ — Deferred compensation liabilities $ 7,974 $ 7,974 $ — $ — Total liabilities at fair value $ 7,974 $ 7,974 $ — $ — Cash equivalents are classified within Level 1 of the fair value hierarchy because we value them utilizing quoted prices in active markets. We offer non-qualified deferred compensation plans to our executive officers, board of directors, and certain independent financial professionals. Participants in these plans direct the investment of their accounts among the available investment options, which are generally the same as those available under our 401(k) plan. We have elected to fund these obligations through a rabbi trust which mirrors the investment elections made by participants. The assets in the rabbi trust are held for the purpose of satisfying our obligations to participants, however, remain subject to the claims of our creditors in the event we become insolvent. Our obligations and corresponding investments held under these non-qualified deferred compensation plans primarily consist of money market and mutual funds and are classified within Level 1 of the fair value hierarchy because we value them utilizing quoted prices in active markets. These investments, and the corresponding deferred compensation liabilities, are primarily included within “Other long-term assets” and “Other long-term liabilities,” respectively, on the condensed consolidated balance sheets. We utilize a third-party pricing service to estimate the fair value of our derivative financial instruments. Fair value is estimated using industry standard valuation models that primarily rely on observable market inputs, including daily simple secured overnight financing rates ( “SOFR” ) overnight index swap rate curves, SOFR swap rate curves, and volatility. Credit valuation adjustments are incorporated in the fair values to reflect nonperformance risk for both the Company and our counterparties. Although we have determined that the majority of the inputs used to value these derivative instruments fall within Level 2 of the fair value hierarchy, the credit valuation adjustments utilize Level 3 inputs, such as estimates of current credit spreads. We have determined that the impact of the credit valuation adjustments is not significant to the overall valuation of these derivatives. As a result, we have classified our derivative financial instruments in Level 2 of the fair value hierarchy. Fair Value of Financial Instruments We consider the carrying values of accounts receivable, commissions receivable, other receivables, prepaid expenses, other current assets, financial professional loans, accounts payable, commissions and advisory fees |
Derivative Financial Instrument
Derivative Financial Instruments | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | Note 11: Derivative Financial Instruments We primarily enter into derivative financial instruments as part of our strategy to manage our exposure to changes in interest rates. Our objective in using interest rate derivatives is to reduce variability in the future cash flows we earn from our cash sweep program by limiting our exposure to changes in our contractually specified rate, which is primarily tied to the federal funds rate. To accomplish this objective, we currently utilize interest rate collar and interest rate cap derivative instruments. Our interest rate collar derivatives involve the payment of variable-rate amounts if interest rates rise above the cap strike rate on the contracts and receipts of fixed-rate amounts if interest rates fall below the floor strike rate on the contracts. Our interest rate cap derivatives involve the payment of variable-rate amounts if interest rates rise above the cap strike rate on the contracts. Our interest rate collar derivatives are designated and qualify as cash flow hedges, as defined in ASC 815. Our interest rate cap derivatives do not qualify for cash flow hedge accounting and are considered economic hedges. As of September 30, 2023, the total notional value of our interest rate derivatives represented approximately 65% of the ending client cash balances in our cash sweep program. We are exposed to credit risk in the event of nonperformance of counterparties for our derivative financial instruments. We manage concentration of counterparty credit risk by limiting acceptable counterparties to major financial institutions with investment grade credit ratings, limiting the amount of credit exposure to individual counterparties and actively monitoring counterparty credit ratings. We also employ master netting arrangements which allow us to net settle positive and negative positions (assets and liabilities) arising from different transactions with the same counterparty. Although not completely eliminated, we do not consider the risk of counterparty default to be significant as a result of these protections. Further, none of our derivative financial instruments are subject to collateral or other security arrangements, nor do they contain provisions that are dependent on our credit ratings from any credit rating agency. We recognize derivative financial instruments in the condensed consolidated financial statements at fair value regardless of the purpose or intent for holding the instruments. The following table presents the gross fair value of our derivative financial instruments as of September 30, 2023 and December 31, 2022 (in thousands): Derivative Assets Derivative Liabilities September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Derivatives designated as hedging instruments under ASC 815: Interest rate collars (1) $ — $ — $ 17,235 $ — Total derivatives designated as hedging instruments under ASC 815 — — 17,235 — Derivatives not designated as hedging instruments under ASC 815: Interest rate caps (1) — — 637 — Total derivatives not designated as hedging instruments under ASC 815 — — 637 — Total derivatives $ — $ — $ 17,872 $ — ______________________ (1) As of September 30, 2023, approximately $7.6 million of the fair value of these derivative financial instruments was recorded within “Accrued expenses and other current liabilities,” with the remaining balance recorded within “Other long-term liabilities” on the condensed consolidated balance sheets. Cash Flow Hedges of Interest Rate Risk During the second quarter of 2023, we entered into two interest rate collar derivative contracts for a total notional value of $1.5 billion. Each contract is indexed to daily simple SOFR and is a combination of a purchased floor instrument with a strike rate of 2.5% and a sold cap instrument with a strike rate of 5.5%, both of which expire on May 31, 2026. The total cost for these interest rate collars was $15.3 million, which we elected to defer and will settle through monthly straight-line cash payments to the counterparties over the term of the instruments. This hedging strategy enables us to limit the downside risk of significant reductions to interest rates over the term of the instruments in exchange for capping the amount of our future cash flows that may be received from our cash sweep program for the comparable notional amount hedged. We designated these derivative instruments as cash flow hedges and determined that they are highly effective at achieving offsetting changes in cash flows attributable to interest rate fluctuations associated with our cash sweep program. The changes in fair value of the effective portion of these derivative instruments are initially recorded net of tax in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. These accumulated gains or losses are reclassified into “Revenue” (where the hedged transaction is recorded) on the condensed consolidated statements of comprehensive income (loss) when the hedged transaction affects earnings. We have elected to exclude the change in fair value of these derivative instruments attributable to the passage of time from the assessment of hedge effectiveness. Changes in the fair value of amounts excluded from the assessment of effectiveness are recorded net of tax in accumulated other comprehensive income (loss) and recognized as a reduction to “Revenue” on the condensed consolidated statements of comprehensive income (loss) using a straight-line amortization method over the term of the instruments. The table below presents the amount of gains and losses related to these derivative financial instruments and their location in the condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 (in thousands): Gain (Loss) Gain (Loss) Three Months Ended September 30, 2023 September 30, 2022 Location of Gain (Loss) Recognized in Income September 30, 2023 September 30, 2022 Interest rate collars, net of tax $ (1,957) $ — Revenue $ (975) $ — Nine Months Ended Interest rate collars, net of tax $ (14,350) $ — Revenue $ (1,307) $ — As of September 30, 2023, we estimate that $4.9 million of the deferred amounts recorded in accumulated other comprehensive income (loss) for our cash flow hedges will be reclassified into earnings within the next twelve months. Gains and losses on our cash flow hedges are net of income tax benefit of $0.3 million and $4.2 million for the three and nine months ended September 30, 2023, respectively. Cash flows from these derivative instruments are included within operating activities in the condensed consolidated statements of cash flows, as our accounting policy is to present cash flows from hedging instruments in the same category as the item being hedged. Economic Hedges of Interest Rate Risk We also utilize interest rate cap derivatives to manage our economic exposure to interest rate movements which do not meet the hedge accounting requirements of ASC 815. During the second quarter of 2023, we sold two interest rate cap derivative contracts for a total notional value of $240.0 million. Each contract is indexed to daily simple SOFR, has a strike rate of 5.5%, and expires on May 31, 2026. These interest rate caps were sold for a total premium of $1.2 million, which were deferred and will be settled by the counterparties through monthly straight-line cash payments over the term of the instruments. This hedging strategy enables us to offset a portion of the total cost of our interest rate collar derivatives by capping the amount of our future cash flows that may be received from our cash sweep program for the comparable notional amount hedged. These derivative instruments are not designated for hedge accounting treatment, therefore, realized and unrealized gains or losses on the instruments are immediately recognized within “Interest expense and other, net” on the condensed consolidated statements of comprehensive income (loss). Cash flows from these derivative instruments are included within operating activities in the condensed consolidated statements of cash flows. The table below presents the amount of gains and losses related to these derivative financial instruments and their location in the condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 (in thousands): Gain (Loss) Three Months Ended Location of Gain (Loss) September 30, 2023 September 30, 2022 Interest rate caps Interest expense and other, net $ 336 $ — Nine Months Ended Interest rate caps Interest expense and other, net $ (506) $ — Accumulated Other Comprehensive Income (Loss) The table below presents a roll forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three and nine months ended September 30, 2023 (in thousands): Interest Rate Collars Deferred Taxes Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2022 $ — $ — $ — Balance as of March 31, 2023 — — — Changes in fair value (16,377) 3,984 (12,393) Reclassification to earnings 439 (107) 332 Balance as of June 30, 2023 (15,938) 3,877 (12,061) Changes in fair value (2,585) 628 (1,957) Reclassification to earnings 1,288 (313) 975 Balance as of September 30, 2023 $ (17,235) $ 4,192 $ (13,043) |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Note 12: Stockholders' Equity Capital Return Program On January 27, 2023, we commenced a modified “Dutch Auction” tender offer (the “Tender Offer” ) to purchase shares of our common stock for an aggregate purchase price of up to $250.0 million at a price per share not less than $27.00 and not greater than $31.00. The Tender Offer was in addition to, and separate from, the $200.0 million stock repurchase authorization discussed below. Upon the conclusion of the Tender Offer, we repurchased and subsequently retired approximately 8.3 million shares of our common stock at the purchase price of $30.00 per share, for aggregate cash consideration of $250.0 million. We incurred approximately $4.5 million for fees and expenses associated with the Tender Offer, including approximately $2.4 million for estimated excise taxes owed under the Inflation Reduction Act of 2022, which were recorded within stockholders’ equity. Repurchased common stock that is subsequently retired is deducted from common stock for par value and from additional paid-in capital for the excess over par value. Direct costs incurred to repurchase common stock are included in the total cost of the shares. Stock Repurchase Authorization On December 19, 2022, we announced that our board of directors authorized the Company to repurchase up to $200.0 million of our common stock. This repurchase authorization does not obligate us to repurchase any specific number of shares, may be suspended or discontinued at any time, and does not have a specified expiration date. For the three months ended September 30, 2023, we repurchased approximately 0.4 million shares of our common stock under the stock repurchase authorization for aggregate purchase consideration of approximately $9.1 million. For the nine months ended September 30, 2023, we repurchased approximately 3.5 million shares of our common stock under the stock repurchase authorization for aggregate purchase consideration of approximately $85.0 million. The remaining authorized amount under the stock repurchase authorization as of September 30, 2023, was approximately $115.0 million. For the three months ended September 30, 2022, we did not repurchase any shares of our common stock under our previous stock repurchase plan. For the nine months ended September 30, 2022, we repurchased approximately 1.9 million shares of our common stock under our previous stock repurchase plan for aggregate purchase consideration of approximately $35.0 million. |
Interest Expense and Other, Net
Interest Expense and Other, Net | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
Interest Expense and Other, Net | Note 13: Interest Expense and Other, Net “Interest expense and other, net” on the condensed consolidated statements of comprehensive income (loss) consisted of the following (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Interest expense $ 5,556 $ 52 $ 11,748 $ 133 Amortization of debt issuance costs 363 — 737 — Amortization of debt discount 68 — 134 — Total interest expense 5,987 52 12,619 133 Interest income and other 106 106 (918) 290 Transition services agreement income (642) — (3,288) — Derivative losses (gains) - interest rate caps (336) — 506 — Interest expense and other, net $ 5,115 $ 158 $ 8,919 $ 423 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 14: Income Taxes Our provision for income taxes in interim periods is based on our estimated annual effective tax rate. We record cumulative adjustments in the quarter in which a change in the estimated annual effective rate is determined. The estimated annual effective tax rate does not include the effects of discrete events that may occur during the year. The effect of these events, if any, is recorded in the quarter in which the event occurs. We recorded income tax benefit of $1.1 million and income tax expense of $0.5 million for the three and nine months ended September 30, 2023, respectively. Our effective income tax rate for the three and nine months ended September 30, 2023 differed from the 21% statutory rate primarily due to non-deductible compensation and the effect of state taxes. |
Net Income Per Share
Net Income Per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | Note 15: Net Income Per Share “Basic net income (loss) per share” is calculated using the weighted average number of common shares outstanding during the applicable period. “Diluted net income (loss) per share” is calculated using the weighted average number of common shares outstanding plus the number of dilutive potential common shares outstanding during the applicable period. Dilutive potential common shares consist of the incremental common shares issuable upon the exercise of outstanding stock options and the vesting of outstanding RSUs using the treasury stock method. Cash-settled restricted stock units are not settled in common shares and are therefore excluded from dilutive potential common shares. Dilutive potential common shares are excluded from the calculation of diluted net income (loss) per share if their effect is antidilutive, including when we report a loss from continuing operations. Performance-based RSUs are considered contingently issuable shares and are excluded from the diluted weighted average common shares outstanding computation if the related performance-based criteria are not expected to be achieved as of the end of the reporting period. The calculation of basic and diluted net income (loss) per share is as follows (in thousands, except per share amounts): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Numerator: Income (loss) from continuing operations $ (1,495) $ 321 $ 1,838 $ 4,720 Income (loss) from discontinued operations — (22,162) 1,921 47,484 Net income (loss) $ (1,495) $ (21,841) $ 3,759 $ 52,204 Denominator: Basic weighted average common shares outstanding 36,921 47,847 39,971 47,981 Dilutive potential common shares (1) — 1,169 969 1,172 Diluted weighted average common shares outstanding 36,921 49,016 40,940 49,153 Basic net income (loss) per share: Continuing operations $ (0.04) $ 0.01 $ 0.05 $ 0.10 Discontinued operations — (0.47) 0.04 0.99 Basic net income (loss) per share $ (0.04) $ (0.46) $ 0.09 $ 1.09 Diluted net income (loss) per share: Continuing operations $ (0.04) $ 0.01 $ 0.04 $ 0.10 Discontinued operations — (0.46) 0.05 0.96 Diluted net income (loss) per share $ (0.04) $ (0.45) $ 0.09 $ 1.06 Shares excluded (1) 2,647 893 387 921 ________________________ (1) Potential common shares were excluded from the calculation of diluted net income per share for these periods because their effect would have been anti-dilutive. For the three months ended September 30, 2023, all potential common shares were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive due to the net loss recognized for the period. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Pay vs Performance Disclosure | ||||||||
Net income (loss) | $ (1,495) | $ 3,581 | $ 1,673 | $ (21,841) | $ 39,425 | $ 34,620 | $ 3,759 | $ 52,204 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Segments | Given the similarities in economic characteristics between our operations and the common nature of the products, services, we currently operate in one reportable segment |
Interim Financial Information | The accompanying unaudited condensed consolidated financial statements have been prepared by us under the rules and regulations of the SEC for interim financial reporting. These condensed consolidated financial statements are unaudited and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments and accruals, necessary for a fair presentation of the condensed consolidated financial position, results of operations, and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in conformity with accounting principles generally accepted in the United States ( “ GAAP” ) have been omitted in accordance with the rules and regulations of the SEC. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and accompanying notes in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022. Interim results are not necessarily indicative of results for a full year. A summary of our significant accounting policies is included in Note 2 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2022. Other than below, there have been no significant changes in our significant accounting policies since December 31, 2022. |
Derivative Financial Instruments | We primarily enter into derivative financial instruments as part of our strategy to manage our exposure to changes in interest rates. Derivative instruments represent contracts between parties that result in one party delivering cash to the other party based on a notional amount and an underlying term (such as an interest rate or index) as specified in the contract. The amount of cash delivered from one party to the other is determined based on the interaction of the notional amount of the contract with the underlying term. We do not enter into derivative instruments for any purpose other than hedging interest rate risk, and none of our derivative instruments are used for trading purposes. We recognize derivatives as assets or liabilities on our consolidated balance sheets at their fair value in accordance with ASC 815, Derivatives and Hedging . The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship, and further, on the type of hedging relationship. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Currently, we have only designated derivative instruments as cash flow hedges. We may also enter into derivative contracts that are intended to economically hedge interest rate risk, even though hedge accounting does not apply, or we elect not to apply hedge accounting. To qualify for hedge accounting, concurrent with the execution of a derivative contract, we formally document our risk management objective and strategy for undertaking the hedging transaction, how the hedging instrument is expected to hedge the designated risk related to the hedged item, and the method that will be used to retrospectively and prospectively assess the hedging instrument’s effectiveness. A derivative designated as a hedging instrument must be assessed as being highly effective in offsetting the designated risk of the hedged item. Hedge effectiveness is formally assessed at inception and at least quarterly throughout the life of the designated hedging relationship. For derivatives designated as cash flow hedging instruments, changes in fair value are initially recorded net of tax in accumulated other comprehensive income (loss) and subsequently reclassified into earnings when the hedged transaction affects earnings. Additionally, changes in the fair value of amounts excluded from the assessment of effectiveness are recorded net of tax in accumulated other comprehensive income (loss) and recognized in earnings using a straight-line amortization method over the term of instrument. Changes in fair value for derivative contracts that do not qualify for hedge accounting (or for those that we elect to not apply hedge accounting), are immediately recognized within earnings. Realized and unrealized gains and losses for derivatives are presented in the statements of comprehensive income (loss) based on the nature and use of the instrument. We prospectively discontinue hedge accounting if it is determined that the derivative is no longer effective in offsetting the designated risk of the hedged item, the derivative is terminated prior to maturity, or the occurrence of the forecasted transaction (for a cash flow hedge) is no longer probable. When hedge accounting for a cash flow hedge is discontinued, any subsequent changes in fair value of the derivative are recognized immediately in earnings. The cumulative unrealized gain or loss related to the discontinued hedge continues to be reported in accumulated other comprehensive income (loss) and is subsequently reclassified into earnings in the same manner |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Financial Information | The following table presents summarized information regarding certain components of income (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Revenues $ — $ 6,664 $ — $ 242,028 Operating expenses — 19,425 — 142,579 Interest expense and other, net — (9,591) — (25,284) Income (loss) from discontinued operations before gain on disposal and income taxes — (22,352) — 74,165 Pre-tax gain on disposal — — 2,539 — Income (loss) from discontinued operations before income taxes — (22,352) 2,539 74,165 Income tax benefit (expense) — 190 (618) (26,681) Income (loss) from discontinued operations $ — $ (22,162) $ 1,921 $ 47,484 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue by Major Customers by Reporting Segments | Revenues by major category and the timing of revenue recognition was as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Recognized upon transaction: Commission $ 20,448 $ 17,868 $ 57,333 $ 56,373 Transaction and fee 1,054 1,307 3,066 3,813 Total revenue recognized upon transaction $ 21,502 $ 19,175 $ 60,399 $ 60,186 Recognized over time: Advisory $ 108,393 $ 95,070 $ 309,234 $ 306,394 Commission 22,903 23,920 69,329 75,905 Asset-based 33,444 21,147 100,524 33,774 Transaction and fee 6,101 5,720 17,765 17,845 Total revenue recognized over time $ 170,841 $ 145,857 $ 496,852 $ 433,918 Total revenue: Advisory $ 108,393 $ 95,070 $ 309,234 $ 306,394 Commission 43,351 41,788 126,662 132,278 Asset-based 33,444 21,147 100,524 33,774 Transaction and fee 7,155 7,027 20,831 21,658 Total revenue $ 192,343 $ 165,032 $ 557,251 $ 494,104 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Company's Debt | Our debt consisted of the following as of the periods indicated in the table below (in thousands): September 30, 2023 December 31, 2022 Delayed Draw Term Loan Facility Principal outstanding $ 266,625 $ — Unamortized debt issuance costs (5,208) — Unamortized debt discount (1,216) — Net carrying value $ 260,201 $ — |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Leases [Abstract] | |
Schedule of Operating Lease Expense | Operating lease cost, net of sublease income, and cash paid on operating lease liabilities for the three and nine months ended September 30, 2023 and 2022 were as follows (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Fixed lease cost $ 972 $ 965 $ 2,908 $ 2,885 Variable lease cost 415 258 1,163 1,023 Operating lease cost, before sublease income 1,387 1,223 4,071 3,908 Sublease income (684) (235) (1,642) (703) Total operating lease cost, net of sublease income $ 703 $ 988 $ 2,429 $ 3,205 Additional lease information: Cash paid on operating lease liabilities $ 1,336 $ 1,297 $ 3,955 $ 3,788 Lease liabilities obtained from new right-of-use assets $ — $ 262 $ — $ 390 |
Schedule of Supplemental Balance Sheet Information Related to Leases | Right-of-use assets and operating lease liabilities were recorded on the condensed consolidated balance sheets as follows (in thousands): September 30, 2023 December 31, 2022 Right-of-use assets, net $ 18,126 $ 19,361 Current lease liabilities $ 5,107 $ 5,139 Long-term lease liabilities 27,797 30,332 Total operating lease liabilities $ 32,904 $ 35,471 Weighted-average remaining lease term (in years) 8.9 9.4 Weighted-average discount rate 5.5 % 5.5 % |
Schedule of Maturities of Operating Lease Liabilities | The maturities of our operating lease liabilities as of September 30, 2023 were as follows (in thousands): Undiscounted cash flows: Remainder of 2023 $ 1,329 2024 5,174 2025 5,086 2026 4,256 2027 3,858 Thereafter 22,315 Total undiscounted cash flows 42,018 Imputed interest (9,114) Present value of cash flows $ 32,904 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Prepaid Expenses and Other Current Assets | Prepaid expenses and other current assets consisted of the following (in thousands): September 30, 2023 December 31, 2022 Prepaid expenses $ 9,679 $ 7,857 Prepaid income taxes 14,062 — Forgivable loans 6,910 5,951 Other current assets 2,293 1,219 Total prepaid expenses and other current assets $ 32,944 $ 15,027 |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Salaries and related benefit expenses $ 15,734 $ 17,481 Accrued legal costs 5,539 1,102 Accrued vendor and advertising costs 1,650 2,726 Accrued taxes 5,444 85,965 Accrued fixed and variable acquisition consideration 3,386 897 Accrued cash-settled stock-based compensation 8,629 2,121 Interest rate derivatives 7,581 — Other 1,835 920 Total accrued expenses and other current liabilities $ 49,798 $ 111,212 |
Schedule of Other Liabilities | Other long-term liabilities consisted of the following (in thousands): September 30, 2023 December 31, 2022 Deferred compensation $ 13,555 $ 7,974 Accrued cash-settled stock-based compensation 5,594 7,556 Accrued tax positions 4,248 3,616 Interest rate derivatives 10,291 — Other 3,071 3,330 Other long-term liabilities $ 36,759 $ 22,476 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value Hierarchy of Financial Assets Carried at Fair Value and Measured on Recurring Basis | The fair value hierarchy of our financial assets and liabilities carried at estimated fair value and measured on a recurring basis were as follows (in thousands): Fair value measurements at the reporting date using September 30, 2023 Quoted prices in Significant other Significant Cash equivalents: money market and other funds $ 219 $ 219 $ — $ — Deferred compensation assets 14,012 14,012 — — Total assets at fair value $ 14,231 $ 14,231 $ — $ — Deferred compensation liabilities $ 14,012 $ 14,012 $ — $ — Interest rate derivatives 17,872 — 17,872 — Total liabilities at fair value $ 31,884 $ 14,012 $ 17,872 $ — Fair value measurements at the reporting date using December 31, 2022 Quoted prices in Significant other Significant Cash equivalents: money market and other funds $ 4,369 $ 4,369 $ — $ — Deferred compensation assets 7,974 7,974 — — Total assets at fair value $ 12,343 $ 12,343 $ — $ — Deferred compensation liabilities $ 7,974 $ 7,974 $ — $ — Total liabilities at fair value $ 7,974 $ 7,974 $ — $ — |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Gross Fair Value of Our Derivative Financial Instruments | The following table presents the gross fair value of our derivative financial instruments as of September 30, 2023 and December 31, 2022 (in thousands): Derivative Assets Derivative Liabilities September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 Derivatives designated as hedging instruments under ASC 815: Interest rate collars (1) $ — $ — $ 17,235 $ — Total derivatives designated as hedging instruments under ASC 815 — — 17,235 — Derivatives not designated as hedging instruments under ASC 815: Interest rate caps (1) — — 637 — Total derivatives not designated as hedging instruments under ASC 815 — — 637 — Total derivatives $ — $ — $ 17,872 $ — ______________________ |
Schedule of Gains and Losses Related to Derivative Financial Instruments and their Location | The table below presents the amount of gains and losses related to these derivative financial instruments and their location in the condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 (in thousands): Gain (Loss) Gain (Loss) Three Months Ended September 30, 2023 September 30, 2022 Location of Gain (Loss) Recognized in Income September 30, 2023 September 30, 2022 Interest rate collars, net of tax $ (1,957) $ — Revenue $ (975) $ — Nine Months Ended Interest rate collars, net of tax $ (14,350) $ — Revenue $ (1,307) $ — The table below presents the amount of gains and losses related to these derivative financial instruments and their location in the condensed consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2023 and 2022 (in thousands): Gain (Loss) Three Months Ended Location of Gain (Loss) September 30, 2023 September 30, 2022 Interest rate caps Interest expense and other, net $ 336 $ — Nine Months Ended Interest rate caps Interest expense and other, net $ (506) $ — |
Schedule of Accumulated Other Comprehensive Income (Loss) | The table below presents a roll forward of the amounts included in accumulated other comprehensive income (loss), net of taxes, for the three and nine months ended September 30, 2023 (in thousands): Interest Rate Collars Deferred Taxes Accumulated Other Comprehensive Income (Loss) Balance as of December 31, 2022 $ — $ — $ — Balance as of March 31, 2023 — — — Changes in fair value (16,377) 3,984 (12,393) Reclassification to earnings 439 (107) 332 Balance as of June 30, 2023 (15,938) 3,877 (12,061) Changes in fair value (2,585) 628 (1,957) Reclassification to earnings 1,288 (313) 975 Balance as of September 30, 2023 $ (17,235) $ 4,192 $ (13,043) |
Interest Expense and Other, N_2
Interest Expense and Other, Net (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Other Income and Expenses [Abstract] | |
Schedule of Other Loss, Net | “Interest expense and other, net” on the condensed consolidated statements of comprehensive income (loss) consisted of the following (in thousands): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Interest expense $ 5,556 $ 52 $ 11,748 $ 133 Amortization of debt issuance costs 363 — 737 — Amortization of debt discount 68 — 134 — Total interest expense 5,987 52 12,619 133 Interest income and other 106 106 (918) 290 Transition services agreement income (642) — (3,288) — Derivative losses (gains) - interest rate caps (336) — 506 — Interest expense and other, net $ 5,115 $ 158 $ 8,919 $ 423 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Dilutive Effect for Awards with Exercise Price Less Than Average Stock Price | The calculation of basic and diluted net income (loss) per share is as follows (in thousands, except per share amounts): Three Months Ended Nine Months Ended 2023 2022 2023 2022 Numerator: Income (loss) from continuing operations $ (1,495) $ 321 $ 1,838 $ 4,720 Income (loss) from discontinued operations — (22,162) 1,921 47,484 Net income (loss) $ (1,495) $ (21,841) $ 3,759 $ 52,204 Denominator: Basic weighted average common shares outstanding 36,921 47,847 39,971 47,981 Dilutive potential common shares (1) — 1,169 969 1,172 Diluted weighted average common shares outstanding 36,921 49,016 40,940 49,153 Basic net income (loss) per share: Continuing operations $ (0.04) $ 0.01 $ 0.05 $ 0.10 Discontinued operations — (0.47) 0.04 0.99 Basic net income (loss) per share $ (0.04) $ (0.46) $ 0.09 $ 1.09 Diluted net income (loss) per share: Continuing operations $ (0.04) $ 0.01 $ 0.04 $ 0.10 Discontinued operations — (0.46) 0.05 0.96 Diluted net income (loss) per share $ (0.04) $ (0.45) $ 0.09 $ 1.06 Shares excluded (1) 2,647 893 387 921 ________________________ (1) Potential common shares were excluded from the calculation of diluted net income per share for these periods because their effect would have been anti-dilutive. For the three months ended September 30, 2023, all potential common shares were excluded from the calculation of diluted net loss per share as their effect would have been anti-dilutive due to the net loss recognized for the period. |
Description of the Business (De
Description of the Business (Details) $ / shares in Units, $ in Millions | 1 Months Ended | 9 Months Ended | |
Oct. 31, 2022 USD ($) | Nov. 30, 2023 USD ($) $ / shares | Sep. 30, 2023 segment | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Number of reportable segments | segment | 1 | ||
Discontinued Operations, Disposed of by Sale | Former Tax Software Business | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Cash received from sale of business | $ 720 | ||
Avantax, Inc | Cetera Holdings | Forecast | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Consideration transferred | $ 1,200 | ||
Share price (in USD per share) | $ / shares | $ 26 |
Discontinued Operations - Addit
Discontinued Operations - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Oct. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Pre-tax gain on disposal | $ 0 | $ 0 | $ 2,539 | $ 0 | |
Discontinued Operations, Disposed of by Sale | Former Tax Software Business | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash received from sale of business | $ 720,000 | ||||
Pre-tax gain on disposal | $ 0 | $ 0 | $ 2,539 | $ 0 |
Discontinued Operations- Income
Discontinued Operations- Income Statement (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Pre-tax gain on disposal | $ 0 | $ 0 | $ 2,539 | $ 0 |
Income (loss) from discontinued operations before income taxes | 0 | (22,352) | 2,539 | 74,165 |
Income tax benefit (expense) | 0 | 190 | (618) | (26,681) |
Income (loss) from discontinued operations | 0 | (22,162) | 1,921 | 47,484 |
Discontinued Operations, Disposed of by Sale | Former Tax Software Business | ||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | 0 | 6,664 | 0 | 242,028 |
Operating expenses | 0 | 19,425 | 0 | 142,579 |
Interest expense and other, net | 0 | (9,591) | 0 | (25,284) |
Income (loss) from discontinued operations before gain on disposal and income taxes | 0 | (22,352) | 0 | 74,165 |
Pre-tax gain on disposal | 0 | 0 | 2,539 | 0 |
Income (loss) from discontinued operations before income taxes | 0 | (22,352) | 2,539 | 74,165 |
Income tax benefit (expense) | 0 | 190 | (618) | (26,681) |
Income (loss) from discontinued operations | $ 0 | $ (22,162) | $ 1,921 | $ 47,484 |
Revenue Recognition (Details)
Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 192,343 | $ 165,032 | $ 557,251 | $ 494,104 |
Recognized upon transaction: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 21,502 | 19,175 | 60,399 | 60,186 |
Recognized over time: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 170,841 | 145,857 | 496,852 | 433,918 |
Commission | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 43,351 | 41,788 | 126,662 | 132,278 |
Commission | Recognized upon transaction: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 20,448 | 17,868 | 57,333 | 56,373 |
Commission | Recognized over time: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 22,903 | 23,920 | 69,329 | 75,905 |
Transaction and fee | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 7,155 | 7,027 | 20,831 | 21,658 |
Transaction and fee | Recognized upon transaction: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 1,054 | 1,307 | 3,066 | 3,813 |
Transaction and fee | Recognized over time: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 6,101 | 5,720 | 17,765 | 17,845 |
Advisory | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 108,393 | 95,070 | 309,234 | 306,394 |
Advisory | Recognized over time: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 108,393 | 95,070 | 309,234 | 306,394 |
Asset-based | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 33,444 | 21,147 | 100,524 | 33,774 |
Asset-based | Recognized over time: | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 33,444 | $ 21,147 | $ 100,524 | $ 33,774 |
Asset Acquisitions (Details)
Asset Acquisitions (Details) $ in Millions | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Asset acquisition, consideration transferred | $ 5.2 |
Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Maximum future contingent payments | $ 25.6 |
Customer Relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life | 15 years |
Debt - Schedule of Company's De
Debt - Schedule of Company's Debt (Details) - Delayed Draw Term Loan Facility - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | ||
Principal outstanding | $ 266,625 | $ 0 |
Unamortized debt issuance costs | (5,208) | 0 |
Unamortized debt discount | (1,216) | 0 |
Net carrying value | $ 260,201 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Feb. 24, 2023 | Jan. 24, 2023 | Jun. 30, 2023 | Sep. 30, 2023 | |
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Debt outstanding | $ 266,600,000 | |||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Debt outstanding | 0 | |||
Amended and Restate Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Payments of debt issuance costs | $ 8,500,000 | |||
Amount available for future borrowings | $ 50,000,000 | |||
Credit spread adjustment (as a percent) | 0.10% | |||
Liquidity requirement | $ 50,000,000 | |||
Amended and Restate Credit Facility | April 1, 2021 Through December 31, 2021 | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, leverage ratio | 4 | |||
Amended and Restate Credit Facility | January 1, 2022 Through September 30, 2022 | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, leverage ratio | 3.75 | |||
Amended and Restate Credit Facility | October 1, 2022 Through December 31, 2022 | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, leverage ratio | 1.25 | |||
Amended and Restate Credit Facility | Minimum | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, commitment fee percentage | 0.35% | |||
Amended and Restate Credit Facility | Maximum | ||||
Debt Instrument [Line Items] | ||||
Line of credit facility, commitment fee percentage | 0.45% | |||
Amended and Restate Credit Facility | SOFR | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate | 2.75% | |||
Amended and Restate Credit Facility | SOFR | Minimum | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate | 2.25% | |||
Amended and Restate Credit Facility | SOFR | Maximum | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate | 2.75% | |||
Amended and Restate Credit Facility | Federal Funds Rate | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate | 0.50% | |||
Amended and Restate Credit Facility | Base Rate | ||||
Debt Instrument [Line Items] | ||||
Credit spread adjustment (as a percent) | 0.10% | |||
Variable interest rate | 1% | |||
Amended and Restate Credit Facility | Base Rate | Minimum | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate | 1.25% | |||
Amended and Restate Credit Facility | Base Rate | Maximum | ||||
Debt Instrument [Line Items] | ||||
Variable interest rate | 1.75% | |||
Amended and Restate Credit Facility | Term Loan | ||||
Debt Instrument [Line Items] | ||||
Credit facility | $ 270,000,000 | |||
Proceeds from credit facilities, net of debt discount and issuance costs | $ 170,000,000 | $ 100,000,000 | ||
Quarterly amortization, year one (as a percent) | 2.50% | |||
Quarterly amortization, years two and three (as a percent) | 5% | |||
Quarterly amortization, year four (as a percent) | 7.50% | |||
Quarterly amortization, year five (as a percent) | 10% | |||
Amended and Restate Credit Facility | Term Loan | Minimum | ||||
Debt Instrument [Line Items] | ||||
Percentage of excess cash flow | 0% | |||
Amended and Restate Credit Facility | Term Loan | Maximum | ||||
Debt Instrument [Line Items] | ||||
Percentage of excess cash flow | 50% | |||
Amended and Restate Credit Facility | Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Credit facility | $ 50,000,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 9 Months Ended |
Sep. 30, 2023 | |
Corporate Headquarters 5 Year Sublease | |
Lessee, Lease, Description [Line Items] | |
Sublease term | 5 years |
Corporate Headquarters 10 Year Sublease | |
Lessee, Lease, Description [Line Items] | |
Sublease term | 10 years |
Leases - Operating Lease Expens
Leases - Operating Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Leases [Abstract] | ||||
Fixed lease cost | $ 972 | $ 965 | $ 2,908 | $ 2,885 |
Variable lease cost | 415 | 258 | 1,163 | 1,023 |
Operating lease cost, before sublease income | 1,387 | 1,223 | 4,071 | 3,908 |
Sublease income | (684) | (235) | (1,642) | (703) |
Total operating lease cost, net of sublease income | 703 | 988 | 2,429 | 3,205 |
Additional lease information: | ||||
Cash paid on operating lease liabilities | 1,336 | 1,297 | 3,955 | 3,788 |
Lease liabilities obtained from new right-of-use assets | $ 0 | $ 262 | $ 0 | $ 390 |
Leases - Supplement Balance She
Leases - Supplement Balance Sheet Information Related to Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Right-of-use assets, net | $ 18,126 | $ 19,361 |
Current lease liabilities | 5,107 | 5,139 |
Long-term lease liabilities | 27,797 | 30,332 |
Total operating lease liabilities | $ 32,904 | $ 35,471 |
Weighted-average remaining lease term (in years) | 8 years 10 months 24 days | 9 years 4 months 24 days |
Weighted-average discount rate | 5.50% | 5.50% |
Leases - Maturities of Operatin
Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Remainder of 2023 | $ 1,329 | |
2024 | 5,174 | |
2025 | 5,086 | |
2026 | 4,256 | |
2027 | 3,858 | |
Thereafter | 22,315 | |
Total undiscounted cash flows | 42,018 | |
Imputed interest | (9,114) | |
Present value of cash flows | $ 32,904 | $ 35,471 |
Balance Sheet Components - Prep
Balance Sheet Components - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Prepaid expenses | $ 9,679 | $ 7,857 |
Prepaid income taxes | 14,062 | 0 |
Forgivable loans | 6,910 | 5,951 |
Other current assets | 2,293 | 1,219 |
Total prepaid expenses and other current assets | $ 32,944 | $ 15,027 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Salaries and related benefit expenses | $ 15,734 | $ 17,481 |
Accrued legal costs | 5,539 | 1,102 |
Accrued vendor and advertising costs | 1,650 | 2,726 |
Accrued taxes | 5,444 | 85,965 |
Accrued fixed and variable acquisition consideration | 3,386 | 897 |
Accrued cash-settled stock-based compensation | 8,629 | 2,121 |
Interest rate derivatives | 7,581 | 0 |
Other | 1,835 | 920 |
Total accrued expenses and other current liabilities | $ 49,798 | $ 111,212 |
Balance Sheet Components - Ac_2
Balance Sheet Components - Accrued Other Long Term Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Deferred compensation | $ 13,555 | $ 7,974 |
Accrued cash-settled stock-based compensation | 5,594 | 7,556 |
Accrued tax positions | 4,248 | 3,616 |
Interest rate derivatives | 10,291 | 0 |
Other | 3,071 | 3,330 |
Other long-term liabilities | $ 36,759 | $ 22,476 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Indemnification Agreement $ in Millions | Sep. 30, 2023 USD ($) |
Business Acquisition [Line Items] | |
Maximum obligation | $ 5.4 |
Deductible amount | 1 |
Loss contingency accrual | $ 0.9 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule of Fair Value Hierarchy of Financial Assets Carried at Fair Value and Measured on Recurring Basis (Details) - Fair Value Measurements, Recurring - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
ASSETS | ||
Deferred compensation assets | $ 14,012 | $ 7,974 |
Total assets at fair value | 14,231 | 12,343 |
Liabilities | ||
Deferred compensation liabilities | 14,012 | 7,974 |
Interest rate derivatives | 17,872 | |
Total liabilities at fair value | 31,884 | 7,974 |
Money market and other funds | ||
ASSETS | ||
Cash equivalents: money market and other funds | 219 | 4,369 |
Quoted prices in active markets using identical assets (Level 1) | ||
ASSETS | ||
Deferred compensation assets | 14,012 | 7,974 |
Total assets at fair value | 14,231 | 12,343 |
Liabilities | ||
Deferred compensation liabilities | 14,012 | 7,974 |
Interest rate derivatives | 0 | |
Total liabilities at fair value | 14,012 | 7,974 |
Quoted prices in active markets using identical assets (Level 1) | Money market and other funds | ||
ASSETS | ||
Cash equivalents: money market and other funds | 219 | 4,369 |
Significant other observable inputs (Level 2) | ||
ASSETS | ||
Deferred compensation assets | 0 | 0 |
Total assets at fair value | 0 | 0 |
Liabilities | ||
Deferred compensation liabilities | 0 | 0 |
Interest rate derivatives | 17,872 | |
Total liabilities at fair value | 17,872 | 0 |
Significant other observable inputs (Level 2) | Money market and other funds | ||
ASSETS | ||
Cash equivalents: money market and other funds | 0 | 0 |
Significant unobservable inputs (Level 3) | ||
ASSETS | ||
Deferred compensation assets | 0 | 0 |
Total assets at fair value | 0 | 0 |
Liabilities | ||
Deferred compensation liabilities | 0 | 0 |
Interest rate derivatives | 0 | |
Total liabilities at fair value | 0 | 0 |
Significant unobservable inputs (Level 3) | Money market and other funds | ||
ASSETS | ||
Cash equivalents: money market and other funds | $ 0 | $ 0 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Delayed Draw Term Loan Facility | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Principal outstanding | $ 266,625 | $ 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Narrative (Details) $ in Millions | 3 Months Ended | 9 Months Ended | 38 Months Ended | |
Sep. 30, 2023 USD ($) | Jun. 30, 2023 USD ($) derivativeContract derivativeContractSold | Sep. 30, 2023 USD ($) | May 31, 2026 USD ($) | |
Derivative [Line Items] | ||||
Notional value representing cash balance percentage | 65% | 65% | ||
Cash flow hedges reclassified into earnings within next twelve months | $ 4.9 | $ 4.9 | ||
Income tax benefit | $ 0.3 | $ 4.2 | ||
Interest Rate Collars | Cash Flow Hedges of Interest Rate Risk | ||||
Derivative [Line Items] | ||||
Number of derivative contracts | derivativeContract | 2 | |||
Notional value | $ 1,500 | |||
Floor instrument strike rate | 2.50% | 2.50% | ||
Interest Rate Collars | Cash Flow Hedges of Interest Rate Risk | Forecast | ||||
Derivative [Line Items] | ||||
Total interest rate cost | $ 15.3 | |||
Interest rate caps | Economic Hedges of Interest Rate Risk | ||||
Derivative [Line Items] | ||||
Notional value | $ 240 | |||
Number of derivative contracts sold | derivativeContractSold | 2 | |||
Derivative strike rate | 5.50% | 5.50% | ||
Interest rate caps sold | $ 1.2 | |||
Interest rate caps | Cash Flow Hedges of Interest Rate Risk | ||||
Derivative [Line Items] | ||||
Cap instrument strike rate | 5.50% | 5.50% |
Derivative Financial Instrume_4
Derivative Financial Instruments - Schedule of Gross Fair Value of Our Derivative Financial Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 0 | $ 0 |
Derivative Liabilities | 17,872 | 0 |
Accrued Expenses and Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | 7,600 | |
Derivatives designated as hedging instruments under ASC 815 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 0 | 0 |
Derivative Liabilities | 17,235 | 0 |
Derivatives not designated as hedging instruments under ASC 815 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 0 | 0 |
Derivative Liabilities | 637 | 0 |
Interest Rate Collars | Derivatives designated as hedging instruments under ASC 815 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 0 | 0 |
Derivative Liabilities | 17,235 | 0 |
Interest rate caps | Derivatives not designated as hedging instruments under ASC 815 | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 0 | 0 |
Derivative Liabilities | $ 637 | $ 0 |
Derivative Financial Instrume_5
Derivative Financial Instruments - Schedule of Gains and Losses Related to Derivative Financial Instruments and their Location (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Interest Rate Collars | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain (Loss) Recognized in OCI | $ (1,957) | $ 0 | $ (14,350) | $ 0 |
Interest Rate Collars | Revenue | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain (Loss) Recognized in Income | (975) | 0 | (1,307) | 0 |
Interest rate caps | Interest expense and other, net | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Gain (Loss) Recognized in Income | $ 336 | $ 0 | $ (506) | $ 0 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Schedule of Rollforward of the Amounts Included in Accumulated Other Comprehensive Loss, Net of Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Dec. 31, 2022 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Dec. 31, 2021 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Equity attributable to parent | $ 403,687 | $ 411,200 | $ 743,198 | $ 371,590 | $ 389,453 | $ 348,873 | $ 341,622 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Beginning balance | 411,200 | 468,044 | |||||
Changes in fair value | (1,957) | (12,393) | |||||
Reclassification to earnings | 975 | 332 | |||||
Ending balance | 403,687 | 411,200 | |||||
Accumulated Other Comprehensive Income (Loss) | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Equity attributable to parent | (13,043) | (12,061) | 0 | $ 0 | $ 0 | $ 0 | $ 0 |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Beginning balance | (12,061) | 0 | |||||
Ending balance | (13,043) | (12,061) | |||||
Interest Rate Collars | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Equity attributable to parent | (17,235) | (15,938) | 0 | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Beginning balance | (15,938) | 0 | |||||
Changes in fair value | (2,585) | (16,377) | |||||
Reclassification to earnings | 1,288 | 439 | |||||
Ending balance | (17,235) | (15,938) | |||||
Deferred Taxes | |||||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | |||||||
Equity attributable to parent | 4,192 | 3,877 | $ 0 | ||||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||||||
Beginning balance | 3,877 | 0 | |||||
Changes in fair value | 628 | 3,984 | |||||
Reclassification to earnings | (313) | (107) | |||||
Ending balance | $ 4,192 | $ 3,877 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||||||
Jan. 27, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 19, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Treasury stock | $ 250,000,000 | $ 9,147,000 | $ 51,624,000 | $ 279,562,000 | $ 4,463,000 | $ 30,537,000 | ||||
Stock repurchased and retired during period (in shares) | 8,300,000 | |||||||||
Common stock purchase price (in dollars per share) | $ 30 | |||||||||
Stock repurchased fees and expenses | $ 4,500,000 | |||||||||
Stock repurchased excise taxes | $ 2,400,000 | |||||||||
Stock Repurchase Authorization Program | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Treasury stock | $ 9,100,000 | $ 85,000,000 | $ 35,000,000 | |||||||
Stock repurchase authorization | $ 200,000,000 | |||||||||
Stock repurchases (in shares) | 400,000 | 0 | 3,500,000 | 1,900,000 | ||||||
Stock repurchase program, remaining authorized repurchase amount | $ 115,000,000 | $ 115,000,000 | ||||||||
Minimum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share price (USD per share) | $ 27 | |||||||||
Maximum | ||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||
Share price (USD per share) | $ 31 |
Interest Expense and Other, N_3
Interest Expense and Other, Net (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Other Income and Expenses [Abstract] | ||||
Interest expense | $ 5,556 | $ 52 | $ 11,748 | $ 133 |
Amortization of debt issuance costs | 363 | 0 | 737 | 0 |
Amortization of debt discount | 68 | 0 | 134 | 0 |
Total interest expense | 5,987 | 52 | 12,619 | 133 |
Interest income and other | 106 | 106 | (918) | 290 |
Transition services agreement income | (642) | 0 | (3,288) | 0 |
Derivative losses (gains) - interest rate caps | (336) | |||
Derivative losses (gains) - interest rate caps | 0 | 506 | 0 | |
Interest expense and other, net | $ 5,115 | $ 158 | $ 8,919 | $ 423 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) | $ (1,068) | $ (1,536) | $ 524 | $ (22,582) |
Net Income Per Share (Details)
Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Numerator: | ||||||||
Income (loss) from continuing operations | $ (1,495) | $ 321 | $ 1,838 | $ 4,720 | ||||
Income (loss) from discontinued operations | 0 | (22,162) | 1,921 | 47,484 | ||||
Net income (loss) | $ (1,495) | $ 3,581 | $ 1,673 | $ (21,841) | $ 39,425 | $ 34,620 | $ 3,759 | $ 52,204 |
Denominator: | ||||||||
Basic weighted average common shares outstanding (in shares) | 36,921 | 47,847 | 39,971 | 47,981 | ||||
Dilutive potential common shares (in shares) | 0 | 1,169 | 969 | 1,172 | ||||
Diluted weighted average common shares outstanding (in shares) | 36,921 | 49,016 | 40,940 | 49,153 | ||||
Basic net income (loss) per share: | ||||||||
Continuing operations (in dollars per share) | $ (0.04) | $ 0.01 | $ 0.05 | $ 0.10 | ||||
Discontinued operations (in dollars per share) | 0 | (0.47) | 0.04 | 0.99 | ||||
Basic net income (loss) per share (in dollars per share) | (0.04) | (0.46) | 0.09 | 1.09 | ||||
Diluted net income (loss) per share: | ||||||||
Continuing operations (in dollars per share) | (0.04) | 0.01 | 0.04 | 0.10 | ||||
Discontinued operations (in dollars per share) | 0 | (0.46) | 0.05 | 0.96 | ||||
Diluted net income (loss) per share (in dollars per share) | $ (0.04) | $ (0.45) | $ 0.09 | $ 1.06 | ||||
Shares excluded (in shares) | 2,647 | 893 | 387 | 921 |