Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2023 | Oct. 23, 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 | 001-15169 | |
Entity Registrant Name | PERFICIENT, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 74-2853258 | |
Entity Address, Address Line One | 555 Maryville University Drive | |
Entity Address, Address Line Two | Suite 600 | |
Entity Address, City or Town | Saint Louis | |
Entity Address, State or Province | MO | |
Entity Address, Postal Zip Code | 63141 | |
City Area Code | 314 | |
Local Phone Number | 529-3600 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | PRFT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 34,771,617 | |
Entity Central Index Key | 0001085869 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 80,087 | $ 30,130 |
Accounts receivable, net | 185,140 | 202,298 |
Prepaid expenses | 6,840 | 6,432 |
Other current assets | 19,148 | 16,756 |
Total current assets | 291,215 | 255,616 |
Property and equipment, net | 13,918 | 17,970 |
Operating lease right-of-use assets | 23,588 | 27,088 |
Goodwill | 577,628 | 565,161 |
Intangible assets, net | 74,882 | 88,937 |
Other non-current assets | 47,266 | 41,116 |
Total assets | 1,028,497 | 995,888 |
Current liabilities: | ||
Accounts payable | 15,307 | 24,351 |
Other current liabilities | 54,992 | 104,780 |
Total current liabilities | 70,299 | 129,131 |
Long-term debt, net | 396,303 | 394,587 |
Operating lease liabilities | 18,052 | 18,528 |
Other non-current liabilities | 41,154 | 43,515 |
Total liabilities | 525,808 | 585,761 |
Stockholders’ equity: | ||
Preferred stock (par value $0.001 per share; 8,000,000 authorized; no shares issued or outstanding as of September 30, 2023 and December 31, 2022) | 0 | 0 |
Common stock (par value $0.001 per share; 100,000,000 authorized; 53,317,130 shares issued and 34,122,836 shares outstanding as of September 30, 2023; 53,082,010 shares issued and 34,071,750 shares outstanding as of December 31, 2022) | 53 | 53 |
Additional paid-in capital | 424,989 | 403,866 |
Accumulated other comprehensive loss | (8,705) | (17,519) |
Treasury stock, at cost (19,194,294 shares as of September 30, 2023; 19,010,260 shares as of December 31, 2022) | (367,669) | (354,536) |
Retained earnings | 454,021 | 378,263 |
Total stockholders’ equity | 502,689 | 410,127 |
Total liabilities and stockholders’ equity | $ 1,028,497 | $ 995,888 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 8,000,000 | 8,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 53,317,130 | 53,082,010 |
Common stock, shares outstanding | 34,122,836 | 34,071,750 |
Treasury stock, shares | 19,194,294 | 19,010,260 |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Revenues | ||||
Revenues | $ 223,238 | $ 227,614 | $ 685,751 | $ 672,463 |
Cost of revenues (cost of services, exclusive of depreciation and amortization, shown separately below) | ||||
Cost of revenues (cost of services, exclusive of depreciation and amortization, shown separately below) | 142,979 | 136,416 | 433,359 | 411,696 |
Selling, general and administrative | 42,109 | 44,273 | 130,206 | 127,384 |
Depreciation | 2,194 | 2,355 | 6,723 | 6,233 |
Amortization | 5,032 | 6,087 | 16,372 | 18,064 |
Acquisition costs | 456 | 2,148 | 464 | 2,508 |
Adjustment to fair value of contingent consideration | (1,748) | 3,115 | (6,475) | (351) |
Income from operations | 32,216 | 33,220 | 105,102 | 106,929 |
Net interest (income) expense | (7) | 616 | 794 | 2,308 |
Net other expense | 236 | 20 | 698 | 406 |
Income before income taxes | 31,987 | 32,584 | 103,610 | 104,215 |
Provision for income taxes | 9,391 | 9,569 | 27,852 | 26,282 |
Net income | $ 22,596 | $ 23,015 | $ 75,758 | $ 77,933 |
Basic net income per share (in dollars per share) | $ 0.66 | $ 0.68 | $ 2.23 | $ 2.30 |
Diluted net income per share (in dollars per share) | $ 0.63 | $ 0.64 | $ 2.11 | $ 2.17 |
Shares used in computing basic net income per share (in shares) | 33,989 | 33,861 | 33,964 | 33,873 |
Shares used in computing diluted net income per share (in shares) | 36,713 | 36,663 | 36,709 | 36,763 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 22,596 | $ 23,015 | $ 75,758 | $ 77,933 |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustment, net of tax | 1,437 | (5,356) | 8,814 | (8,374) |
Comprehensive income | $ 24,033 | $ 17,659 | $ 84,572 | $ 69,559 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Additional Paid-in Capital Cumulative effect, period of adoption, adjustment | Treasury Stock, Common | Accumulated Other Comprehensive Loss | Retained Earnings | Retained Earnings Cumulative effect, period of adoption, adjustment |
Balance at Dec. 31, 2021 | $ 53 | $ 423,235 | $ (324,412) | $ (5,843) | $ 271,732 | |||
Balance (in shares) at Dec. 31, 2021 | 33,881,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions | 0 | 17,399 | ||||||
Issuance of stock in conjunction with acquisition including stock attributed to future compensation | 3,142 | |||||||
Proceeds from the sales of stock through the Employee Stock Purchase Plan (in shares) | 8,000 | |||||||
Proceeds from the sales of stock through the Employee Stock Purchase Plan | 832 | |||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions (in shares) | 246,000 | |||||||
Purchases of treasury stock and buyback of shares for taxes (in shares) | (236,000) | |||||||
Foreign currency translation adjustment | $ (8,374) | (8,374) | ||||||
Purchases of treasury stock and buyback of shares for taxes | (22,059) | |||||||
Escrow Shares Reqcquired | 0 | |||||||
Net income | 77,933 | 77,933 | ||||||
Balance at Sep. 30, 2022 | $ 384,270 | $ 53 | 393,101 | $ (51,507) | (346,471) | (14,217) | 351,804 | $ 2,139 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of stock in conjunction with acquisition (in shares) | 49,000 | |||||||
Stock Issued During Period, Shares, Restricted Stock Award, Forfeited | 0 | |||||||
Balance (in shares) at Sep. 30, 2022 | 33,948,000 | |||||||
Balance at Jun. 30, 2022 | $ 53 | 383,987 | 0 | (337,237) | (8,861) | 328,789 | 0 | |
Balance (in shares) at Jun. 30, 2022 | 33,993,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions | 0 | 5,715 | ||||||
Issuance of stock in conjunction with acquisition including stock attributed to future compensation | 3,142 | |||||||
Proceeds from the sales of stock through the Employee Stock Purchase Plan (in shares) | 3,000 | |||||||
Proceeds from the sales of stock through the Employee Stock Purchase Plan | 257 | |||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions (in shares) | 14,000 | |||||||
Purchases of treasury stock and buyback of shares for taxes (in shares) | (111,000) | |||||||
Foreign currency translation adjustment | $ (5,356) | (5,356) | ||||||
Purchases of treasury stock and buyback of shares for taxes | (9,234) | |||||||
Escrow Shares Reqcquired | 0 | |||||||
Net income | 23,015 | 23,015 | ||||||
Balance at Sep. 30, 2022 | $ 384,270 | 53 | 393,101 | (51,507) | (346,471) | (14,217) | 351,804 | 2,139 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of stock in conjunction with acquisition (in shares) | 49,000 | |||||||
Stock Issued During Period, Shares, Escrow Shares | 0 | |||||||
Balance (in shares) at Sep. 30, 2022 | 33,948,000 | |||||||
Balance at Dec. 31, 2022 | $ 410,127 | 53 | 403,866 | (354,536) | (17,519) | 378,263 | ||
Balance (in shares) at Dec. 31, 2022 | 34,071,750 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions | 0 | 20,358 | ||||||
Issuance of stock in conjunction with acquisition including stock attributed to future compensation | 0 | |||||||
Proceeds from the sales of stock through the Employee Stock Purchase Plan (in shares) | 11,000 | |||||||
Proceeds from the sales of stock through the Employee Stock Purchase Plan | 765 | |||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions (in shares) | 229,000 | |||||||
Purchases of treasury stock and buyback of shares for taxes (in shares) | (184,000) | |||||||
Foreign currency translation adjustment | $ 8,814 | 8,814 | ||||||
Purchases of treasury stock and buyback of shares for taxes | (12,708) | |||||||
Escrow Shares Reqcquired | (425) | |||||||
Net income | 75,758 | 75,758 | ||||||
Balance at Sep. 30, 2023 | $ 502,689 | $ 53 | 424,989 | 0 | (367,669) | (8,705) | 454,021 | 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of stock in conjunction with acquisition (in shares) | 0 | |||||||
Stock Issued During Period, Shares, Restricted Stock Award, Forfeited | (5,000) | |||||||
Balance (in shares) at Sep. 30, 2023 | 34,122,836 | |||||||
Balance at Jun. 30, 2023 | $ 53 | 418,123 | 0 | (364,768) | (10,142) | 431,425 | 0 | |
Balance (in shares) at Jun. 30, 2023 | 34,145,000 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions | 0 | 6,619 | ||||||
Issuance of stock in conjunction with acquisition including stock attributed to future compensation | 0 | |||||||
Proceeds from the sales of stock through the Employee Stock Purchase Plan (in shares) | 3,000 | |||||||
Proceeds from the sales of stock through the Employee Stock Purchase Plan | 247 | |||||||
Stock compensation related to restricted stock vesting and retirement savings plan contributions (in shares) | 21,000 | |||||||
Purchases of treasury stock and buyback of shares for taxes (in shares) | (43,000) | |||||||
Foreign currency translation adjustment | $ 1,437 | 1,437 | ||||||
Purchases of treasury stock and buyback of shares for taxes | (2,640) | |||||||
Escrow Shares Reqcquired | (261) | |||||||
Net income | 22,596 | 22,596 | ||||||
Balance at Sep. 30, 2023 | $ 502,689 | $ 53 | $ 424,989 | $ 0 | $ (367,669) | $ (8,705) | $ 454,021 | $ 0 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of stock in conjunction with acquisition (in shares) | 0 | |||||||
Stock Issued During Period, Shares, Escrow Shares | (3,000) | |||||||
Balance (in shares) at Sep. 30, 2023 | 34,122,836 |
Unaudited Condensed Consolida_4
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Operating Activities | ||
Net income | $ 75,758 | $ 77,933 |
Adjustments to reconcile net income to net cash provided by operations: | ||
Depreciation | 6,723 | 6,233 |
Amortization | 16,372 | 18,064 |
Deferred income taxes | (4,896) | (7,353) |
Non-cash stock compensation and retirement savings plan contributions | 20,574 | 17,733 |
Amortization of debt issuance costs | 1,870 | 1,822 |
Adjustment to fair value of contingent consideration for purchase of businesses | (6,475) | (351) |
Changes in operating assets and liabilities, net of business acquisitions: | ||
Accounts receivable | 17,388 | (12,642) |
Other assets | (7,530) | (2,153) |
Accounts payable | (9,116) | (7,288) |
Other liabilities | (22,184) | (20,557) |
Net cash provided by operating activities | 88,484 | 71,441 |
Investing Activities | ||
Purchase of property and equipment | (4,209) | (7,019) |
Capitalization of internally developed software costs | (856) | (678) |
Purchase of businesses, net of cash acquired | 254 | (44,716) |
Net cash used in investing activities | (4,811) | (52,413) |
Financing Activities | ||
Payment for credit facility financing fees | (750) | 0 |
Proceeds from line of credit | 0 | 10,000 |
Payments on line of credit | 0 | (10,000) |
Payment of contingent consideration for purchase of business | (21,530) | 0 |
Proceeds from the sale of stock through the Employee Stock Purchase Plan | 765 | 832 |
Purchases of treasury stock | (7,601) | (13,052) |
Remittance of taxes withheld as part of a net share settlement of restricted stock vesting | (5,107) | (9,007) |
Net cash used in financing activities | (34,223) | (21,227) |
Effect of exchange rate on cash and cash equivalents | 507 | (1,366) |
Change in cash and cash equivalents | 49,957 | (3,565) |
Cash and cash equivalents at beginning of period | 30,130 | 24,410 |
Cash and cash equivalents at end of period | 80,087 | 20,845 |
Supplemental Disclosures: | ||
Cash paid for income taxes | 41,469 | 25,912 |
Cash paid for interest | 555 | 697 |
Stock issued for purchase of businesses (stock reacquired for escrow claim) | (425) | 2,556 |
Liability incurred for purchase of property and equipment | $ 190 | $ 3,765 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim unaudited condensed consolidated financial statements of Perficient, Inc. and its subsidiaries (collectively, the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and are presented in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) applicable to interim financial information. Accordingly, certain note disclosures have been condensed or omitted. In the opinion of management, the interim unaudited condensed consolidated financial statements reflect all adjustments (consisting of only normal recurring adjustments) necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the periods presented. These financial statements should be read in conjunction with the Company’s consolidated financial statements and notes thereto filed with the SEC in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. Certain prior period financial statement amounts have been reclassified to conform to current period presentation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and such differences could be material to the financial statements. There have been no changes to significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2022 that have had a material impact on the Company’s condensed consolidated financial statements and related notes . |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for the exception. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods. The ASU allows entities to use a modified or full retrospective transition method. Under the modified approach, entities will apply the guidance to all financial instruments that are outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained earnings. Under the full retrospective method, entities will apply the guidance to all outstanding financial instruments for each prior reporting period presented. The Company adopted this ASU on January 1, 2022 under the modified retrospective method of transition. Upon adoption, the Company recorded a $2.1 million cumulative-effect adjustment that increased the opening balance of retained earnings on the consolidated balance sheet, largely due to the reduction in non-cash interest expense associated with the historical separation of debt and equity components for the Company's convertible senior notes (the “Notes”) described in Note 11, Long-Term Debt . The Company also recorded an increase to long-term debt, net of $66.2 million, a net change in the deferred tax balance of $16.8 million, and a decrease to additional paid-in capital of $51.5 million due to no longer separating the embedded conversion feature of the Notes. Upon adoption, the Company's interest expense recognized has been reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. This adoption did not have a material impact on the consolidated statement of cash flows. Upon adoption, the Company prospectively utilized the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. |
Revenue
Revenue | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue The Company’s revenues consist of services and software and hardware sales. In accordance with Accounting Standards Codification (“ASC”) Topic 606 , Revenue from Contracts with Customers, revenues are recognized when control of services or goods are transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods. Services Revenues Services revenues are primarily comprised of professional services that include developing, implementing, automating and extending business processes, technology infrastructure, and software applications. The Company’s professional services span multiple industries, platforms and solutions; however, the Company has remained relatively diversified and does not believe that it has significant revenue concentration within any single industry, platform or solution. Professional services revenues are recognized over time as services are rendered. Most projects are performed on a time and materials basis, while a portion of revenues is derived from projects performed on a fixed fee or fixed fee percent complete basis. For time and material contracts, revenues are generally recognized and invoiced by multiplying the number of hours expended in the performance of the contract by the hourly rates. For fixed fee contracts, revenues are generally recognized and invoiced by multiplying the fixed rate per time period established in the contract by the number of time periods elapsed. For fixed fee percent complete contracts, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours, and the client is invoiced according to the agreed-upon schedule detailing the amount and timing of payments in the contract. Clients are typically billed monthly for services provided during that month but can be billed on a more or less frequent basis as determined by the contract. If the time is worked and approved at the end of a fiscal period and the invoice has not yet been sent to the client, the amount is recorded as revenue once the Company verifies all other revenue recognition criteria have been met, and the amount is classified as a receivable as the right to consideration is unconditional at that point. Amounts invoiced in excess of revenues recognized are contract liabilities, which are classified as deferred revenues in the Unaudited Condensed Consolidated Balance Sheet. The term between invoicing and payment due date is not significant. Contracts for professional services provide for a general right, to the client or the Company, to cancel or terminate the contract within a given period of time (generally 10 to 30 days’ notice is required). The client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract. Certain contracts may include volume discounts or holdbacks, which are accounted for as variable consideration, but are not typically significant. The Company estimates variable consideration based on historical experience and forecasted sales and includes the variable consideration in the transaction price. Other services revenues are comprised of hosting fees, partner referral fees, maintenance agreements, training and internally developed software-as-a-service (“SaaS”) sales. Revenues from hosting fees, maintenance agreements, training and internally developed SaaS sales are generally recognized over time using a time-based measure of progress as services are rendered. Partner referral fees are recorded at a point in time upon meeting specified requirements to earn the respective fee. On many professional service projects, the Company is also reimbursed for out-of-pocket expenses including travel and other project-related expenses. These reimbursements are included as a component of the transaction price of the respective professional services contract and are invoiced as the expenses are incurred. The Company structures its professional services arrangements to recover the cost of reimbursable expenses without a markup. Software and Hardware Revenues Software and hardware revenues are comprised of third-party software and hardware resales, in which the Company is considered the agent, and sales of internally developed software, in which the Company is considered the principal. Third-party software and hardware revenues are recognized and invoiced when the Company fulfills its obligation to arrange the sale, which occurs when the purchase order with the vendor is executed and the customer has access to the software or the hardware has been shipped to the customer. Internally developed software revenues are recognized and invoiced when control is transferred to the customer, which occurs when the software has been made available to the customer and the license term has commenced. Revenues from third-party software and hardware sales are recorded on a net basis, while revenues from internally developed software sales are recorded on a gross basis. There are no significant cancellation or termination-type provisions for the Company’s software and hardware sales, and the term between invoicing and payment due date is not significant. Revenues are presented net of taxes assessed by governmental authorities. Sales taxes are generally collected and subsequently remitted on all software and hardware sales and certain services transactions as appropriate. Arrangements with Multiple Performance Obligations Arrangements with clients may contain multiple promises such as delivery of software, hardware, professional services or post-contract support services. These promises are accounted for as separate performance obligations if they are distinct. For arrangements with clients that contain multiple performance obligations, the transaction price is allocated to the separate performance obligations based on estimated relative standalone selling price, which is estimated by the expected cost plus a margin approach, taking into consideration market conditions and competitive factors. Because contracts that contain multiple performance obligations are typically short term due to the contract cancellation provisions, the allocation of the transaction price to the separate performance obligations is not considered a significant estimate. Contract Costs In accordance with the terms of the Company’s sales commission plan, commissions are not earned until the related revenue is recognized. Therefore, sales commissions are expensed as they are earned. Certain sales incentives are accrued based on achievement of specified bookings goals. For these incentives, the Company applies the practical expedient that allows the Company to expense the incentives as incurred because the amortization period would have been one year or less. Deferred Revenue The Company’s deferred revenue balance as of September 30, 2023 and December 31, 2022 was $5.3 million and $12.7 million, respectively. Substantially all of the December 31, 2022 deferred revenue balance was recognized in revenue during the nine months ended September 30, 2023. Transaction Price Allocated to Remaining Performance Obligations Due to the ability of the client or the Company to cancel or terminate the contract within a given period of time (generally 10 to 30 days’ notice is required), the majority of the Company’s contracts have a term of less than one year. The Company does not disclose the value of unsatisfied performance obligations for contracts with an original maturity date of one year or less or time and materials contracts for which the Company has the right to invoice for services performed. Revenue related to unsatisfied performance obligations for remaining contracts as of September 30, 2023 was immaterial. Disaggregation of Revenue The following tables present revenue disaggregated by revenue source and pattern of revenue recognition (in millions): Three Months Ended September 30, 2023 2022 Over Time Point In Time Total Revenues Over Time Point In Time Total Revenues Time and materials contracts $ 162.8 $ — $ 162.8 $ 176.3 $ — $ 176.3 Fixed fee percent complete contracts 14.5 — 14.5 11.3 — 11.3 Fixed fee contracts 40.4 — 40.4 35.0 — 35.0 Reimbursable expenses 3.2 — 3.2 2.1 — 2.1 Total professional services fees 220.9 — 220.9 224.7 — 224.7 Other services revenue* 1.5 0.3 1.8 1.9 0.4 2.3 Total services 222.4 0.3 222.7 226.6 0.4 227.0 Software and hardware — 0.5 0.5 — 0.6 0.6 Total revenues $ 222.4 $ 0.8 $ 223.2 $ 226.6 $ 1.0 $ 227.6 *Other services revenue primarily consists of hosting fees, maintenance, training, internally developed SaaS revenue and partner referral fees. Nine Months Ended September 30, 2023 2022 Over Time Point In Time Total Revenues Over Time Point In Time Total Revenues Time and materials contracts $ 508.9 $ — $ 508.9 $ 518.5 $ — $ 518.5 Fixed fee percent complete contracts 45.5 — 45.5 39.2 — 39.2 Fixed fee contracts 116.3 — 116.3 99.3 — 99.3 Reimbursable expenses 7.8 — 7.8 6.5 — 6.5 Total professional services fees 678.5 — 678.5 663.5 — 663.5 Other services revenue* 4.4 1.3 5.7 5.8 1.4 7.2 Total services 682.9 1.3 684.2 669.3 1.4 670.7 Software and hardware — 1.6 1.6 — 1.8 1.8 Total revenues $ 682.9 $ 2.9 $ 685.8 $ 669.3 $ 3.2 $ 672.5 *Other services revenue primarily consists of hosting fees, maintenance, training, internally developed SaaS revenue and partner referral fees. The following table presents revenue disaggregated by geographic area, as determined by the billing address of customers (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 214.4 $ 219.9 $ 661.0 $ 650.3 Other countries 8.8 7.7 24.8 22.2 Total revenues $ 223.2 $ 227.6 $ 685.8 $ 672.5 |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation is accounted for in accordance with ASC Topic 718, Compensation – Stock Compensation . Under this guidance, the Company recognizes share-based compensation ratably using the straight-line attribution method over the requisite service period, which is generally three years. The fair value of restricted stock awards is based on the value of the Company’s common stock on the date of the grant. The Company’s Third Amended and Restated 2012 Long Term Incentive Plan (as amended, the “Incentive Plan”) allows for the granting of various types of stock awards, not to exceed a total of 8.5 million shares, to eligible individuals. The Compensation Committee of the Board of Directors administers the Incentive Plan and determines the terms of all stock awards made under the Incentive Plan. The Incentive Plan was increased by 1.5 million shares on June 7, 2023 upon the approval of the Company’s stockholders at the 2023 annual meeting. As of September 30, 2023, there were 2.2 million shares of common stock available for issuance under the Incentive Plan. Stock-based compensation cost recognized for the three and nine months ended September 30, 2023 was $6.7 million and $20.9 million, respectively, which included $1.1 million and $3.5 million, respectively, of expense for retirement savings plan contributions. The associated current and future income tax benefit recognized was $2.0 million and $5.6 million for the three and nine months ended September 30, 2023, respectively. Stock-based compensation cost recognized for the three and nine months ended September 30, 2022 was $6.1 million and $18.1 million, respectively, which included $1.1 million and $3.3 million, respectively, of expense for retirement savings plan contributions. The associated current and future income tax benefit recognized was $1.8 million and $4.6 million for the three and nine months ended September 30, 2022, respectively. Restricted Stock Awards (“RSAs”) Restricted stock activity for the nine months ended September 30, 2023 was as follows (shares in thousands): RSAs (Shares) Weighted-Average Restricted stock awards outstanding at December 31, 2022 616 $ 72.02 Awards granted 240 73.50 Awards vested (179) 64.77 Awards forfeited (34) 72.46 Restricted stock awards outstanding at September 30, 2023 643 $ 74.57 As of September 30, 2023, there was $31.9 million of total unrecognized compensation cost related to non-vested RSAs with a weighted-average remaining life of two years. Performance Stock Awards (“PSAs”) The Company also grants PSAs under the Incentive Plan with terms determined at the discretion of the compensation committee of the Company’s board of directors. The actual number of PSAs that will be eligible to vest is based on the achievement of a relative total shareholder return (“TSR”) target as compared to the TSR realized by each of the companies comprising the Nasdaq Composite Index over a three-year period. The PSAs vest at the end of the TSR measurement period, and up to 100% of the target number of shares subject to each PSA are eligible to be earned. During the three months ended September 30, 2023, the Company awarded 10,842 PSAs with a fair market value of $80.90 per share. PSA related stock-based compensation cost recognized for both the three and nine months ended September 30, 2023 was immaterial. The Company estimated the grant date fair value of the PSAs using a Monte Carlo simulation model that included the following assumptions: Nine Months Ended September 30, 2023 Valuation assumptions: Expected dividend yield — Expected volatility 52.37 % Expected term (years) 3.44 Risk-free interest rate 4.45 % As of September 30, 2023, there was $0.8 million of total unrecognized compensation cost related to unvested PSAs, expected to be recognized over a period of three years. |
Net Income per Share
Net Income per Share | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Income per Share | Net Income per Share The following table presents the calculation of basic and diluted net income per share (in thousands, except per share information): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net income, basic $ 22,596 $ 23,015 $ 75,758 $ 77,933 Add back interest expense on convertible notes, net of tax 539 539 1,674 1,712 Net income, diluted $ 23,135 $ 23,554 $ 77,432 $ 79,645 Basic: Weighted-average shares of common stock outstanding 33,989 33,861 33,964 33,873 Shares used in computing basic net income per share 33,989 33,861 33,964 33,873 Effect of dilutive securities: Restricted stock and performance stock awards subject to vesting 154 255 147 298 Shares issuable for acquisition consideration (1) 140 13 168 66 Shares issuable for conversion of convertible senior notes 2,430 2,431 2,430 2,431 Shares issuable for exercise of warrants — 103 — 95 Shares used in computing diluted net income per share 36,713 36,663 36,709 36,763 Basic net income per share $ 0.66 $ 0.68 $ 2.23 $ 2.30 Diluted net income per share $ 0.63 $ 0.64 $ 2.11 $ 2.17 (1) For the three and nine months ended September 30, 2023, this represents the shares held in escrow pursuant to: (i) the Asset Purchase Agreement with Zeon Solutions Incorporated and certain related entities (collectively, “Zeon”); (ii) the Asset Purchase Agreement with Catalyst Networks, Inc. (“Brainjocks”); (iii) the Stock Purchase Agreement with the shareholders of Productora de Software S.A.S. (“PSL”); (iv) the Purchase Agreement with Talos LLC, Talos Digital LLC, Talos Digital SAS and TCOMM SAS (“Talos”); (v) the Stock Purchase Agreement with the shareholders of Izmul S.A. (“Overactive”); (vi) the Stock Purchase Agreement with the shareholders of Inflection Point Systems, Inc. (“Inflection Point”); and (vii) the Purchase Agreement with Ameex Technologies Corporation (“Ameex”), as part of the consideration. For the three and nine months ended September 30, 2022, this represents the shares held in escrow pursuant to: (i) the Asset Purchase Agreement with Zeon; (ii) the Asset Purchase Agreement with Brainjocks; (iii) the Stock Purchase Agreement with the shareholders of PSL; (iv) the Purchase Agreement with Talos; (v) the Stock Purchase Agreement with the shareholders of Overactive; and (vi) the Stock Purchase Agreement with the shareholders of Inflection Point, as part of the consideration. The number of anti-dilutive securities not included in the calculation of diluted net income per share were as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Restricted stock and performance stock awards subject to vesting 153 76 191 78 Warrants related to the issuance of convertible senior notes 2,431 1,980 2,431 1,980 Total anti-dilutive securities 2,584 2,056 2,622 2,058 See Note 11, Long-term Debt for further information on the convertible senior notes and warrants related to the issuance of convertible notes. The Company’s Board of Directors authorized the repurchase of up to $375.0 million of Company common stock through a stock repurchase program expiring December 31, 2024. The program could be suspended or discontinued at any time, based on market, economic, or business conditions. The timing and amount of repurchase transactions will be determined by management based on its evaluation of market conditions, share price, and other factors. Since the program’s inception on August 11, 2008, the Company has repurchased approximately $287.4 million (16.5 million shares) of outstanding common stock through September 30, 2023. |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2023 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Components | Balance Sheet Components September 30, 2023 (unaudited) December 31, 2022 Accounts receivable: (in millions) Billed accounts receivable, net $ 107.7 $ 134.5 Unbilled revenues, net 77.4 67.8 Total $ 185.1 $ 202.3 Other current assets: Miscellaneous receivables $ 4.4 $ 2.9 Contractual commitment asset 1.8 0.9 Federal/state income tax receivable 9.9 9.2 Other current assets 3.0 3.8 Total $ 19.1 $ 16.8 Property and equipment: Computer hardware (useful life of 3 years) $ 26.4 $ 26.3 Software (useful life of 1 to 7 years) 9.1 11.9 Furniture and fixtures (useful life of 5 years) 4.5 4.7 Leasehold improvements (useful life of 5 years) 7.7 7.7 Less: Accumulated depreciation (33.8) (32.6) Total $ 13.9 $ 18.0 Other non-current assets: Non-current unbilled revenue $ 1.9 $ 1.6 Company owned life insurance (“COLI ” ) asset 11.5 10.5 Long term deposits 1.8 1.9 Credit facility deferred finance fees, net 1.1 0.5 Other non-current assets 12.7 8.5 Deferred income taxes 18.3 18.1 Total $ 47.3 $ 41.1 Other current liabilities: Estimated fair value of contingent consideration liability (Note 9) $ 4.5 $ 32.7 Accrued variable compensation 11.4 21.1 Current operating lease liabilities 7.3 10.3 Payroll related costs 11.6 8.9 Deferred revenues 5.3 12.7 Other current liabilities 4.5 9.7 Accrued medical claims expense 3.4 2.9 Professional fees 1.6 2.2 Accrued IT expenses 5.4 4.3 Total $ 55.0 $ 104.8 September 30, 2023 (unaudited) December 31, 2022 Other non-current liabilities: (in millions) Deferred income taxes $ 7.5 $ 8.7 Reserve for uncertain tax positions 17.8 17.5 Deferred compensation liability 10.0 9.3 Other non-current liabilities 3.6 5.9 Non-current software accrual 2.3 2.1 Total $ 41.2 $ 43.5 |
Allowance for Credit Losses
Allowance for Credit Losses | 9 Months Ended |
Sep. 30, 2023 | |
Credit Loss [Abstract] | |
Allowance for Credit Losses | Allowance for Credit Losses In accordance with ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , the Company evaluates its allowance based on expected losses rather than incurred losses, which is known as the current expected credit loss model. The allowance is determined using the loss rate approach and is measured on a collective (pool) basis when similar risk characteristics exist. Where financial instruments do not share risk characteristics, they are evaluated on an individual basis. The allowance is based on relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Activity in the allowance for credit losses is summarized as follows (in millions): Nine Months Ended September 30, 2023 2022 Opening balance at January 1 $ 5.8 $ 2.9 Charges to expense, net of recoveries (0.4) 3.2 Other (1) (2.0) (0.4) Balance at September 30 $ 3.4 $ 5.7 (1) Other is primarily related to uncollected balances written off, business acquisitions, and currency translation adjustments. |
Business Combinations
Business Combinations | 9 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations 2022 Acquisitions On October 11, 2022, the Company acquired all of the outstanding capital stock of Ameex. Ameex is a digital experience consultancy headquartered in Schaumburg, Illinois, with offshore operations located in Chennai, India. The acquisition of Ameex strengthened the Company’s global delivery capabilities, enhanced agile software design, and further expanded our operations in India. Ameex added more than 400 professionals and strategic client relationships across several industries. The Company’s total allocable purchase price consideration was $36.1 million, net of cash acquired. The Company incurred approximately $1.7 million in transaction costs, which were expensed when incurred. The goodwill is non-deductible for tax purposes. On September 7, 2022, the Company acquired all of the outstanding capital stock of Inflection Point. Inflection Point is a software consulting and product development firm with nearshore operations based in Monterrey, Mexico, and headquarters in Columbia, Maryland. The acquisition of Inflection Point strengthened the Company’s nearshore delivery capacity, enhanced our digital capabilities, and further expanded our operations across Latin America. Inflection Point added more than 200 professionals and strategic client relationships with customers across several industries. The Company’s total allocable purchase price consideration was $54.0 million, net of cash acquired. The Company incurred approximately $1.6 million in transaction costs, which were expensed when incurred. The goodwill is non-deductible for tax purposes. The acquisition date fair value of the consideration transferred for the 2022 acquisitions consisted of the following (in millions): Ameex Inflection Point Cash, net of cash acquired $ 26.1 $ 44.6 Company common stock issued at closing 4.2 3.0 Contingent consideration (1) 4.3 (2) 6.6 (3) Net working capital adjustment due to the seller(s) 1.5 (0.2) Total allocable purchase price consideration $ 36.1 $ 54.0 (1) Represents the initial fair value estimate of additional revenue and earnings-based contingent consideration, which may be realized by the sellers 12 months after the closing date of the acquisition. (2) The maximum cash payout that may be realized by the sellers in the Ameex acquisition is $5.7 million. As of September 30, 2023, the fair value of the contingent consideration was $4.0 million. The Company recorded a pre-tax adjustment to reduce the liability in “Adjustment to fair value of contingent consideration” on the Unaudited Condensed Consolidated Statements of Operations of $0.4 million during both the three and nine months ended September 30, 2023. (3) The maximum cash payout that may be realized by the sellers in the Inflection Point acquisition is $13.0 million. As of September 30, 2023, the fair value of the contingent consideration was $0.5 million. The Company recorded a pre-tax adjustment to reduce the liability in “Adjustment to fair value of contingent consideration” on the Unaudited Condensed Consolidated Statements of Operations of $1.3 million and $6.2 million during the three and nine months ended September 30, 2023, respectively. The Company has estimated the preliminary allocation of the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): Ameex Inflection Point Acquired tangible assets $ 6.8 $ 3.3 Identified intangible assets 13.2 20.1 Liabilities assumed (5.6) (10.5) Goodwill 21.7 41.1 Total allocable purchase price consideration $ 36.1 $ 54.0 The following table presents details as of September 30, 2023 of the intangible assets acquired during the year ended December 31, 2022 (dollars in millions). Weighted Average Useful Life Estimated Useful Life Aggregate Acquisitions Customer relationships 10 years 10 years $ 29.9 Customer backlog 1 year 1 year 2.8 Non-compete agreements 5 years 5 years 0.3 Trade name 1 year 1 year 0.3 Total acquired intangible assets $ 33.3 As the Company completed its evaluation of the acquired assets and assumed liabilities of Inflection Point, the Company recorded certain adjustments during the measurement period based on facts and circumstances that existed as of acquisition date. The measurement period adjustments for Inflection Point were not material. The above purchase price accounting estimates for Ameex are pending finalization of certain acquired tangible and intangible assets, contingent consideration valuation, and a net working capital settlement that is subject to final adjustment as the Company evaluates information during the measurement period. As the Company continues its evaluation of the acquired assets and assumed liabilities of Ameex, the Company recorded certain adjustments during the measurement period based on facts and circumstances that existed as of acquisition date. The measurement period adjustments for Ameex were not material. Pro-forma Results of Operations Pro-forma results of operations have not been presented for Inflection Point or Ameex because the effect of these acquisitions on the Company's condensed consolidated financial statements were not material individually or in the aggregate. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess purchase price over the fair value of net assets acquired, or net liabilities assumed, in a business combination. In accordance with ASC Topic 350, Intangibles – Goodwill and Other , the Company performs an annual impairment review in the fourth quarter and more frequently if events or changes in circumstances indicate that goodwill might be impaired. There was no indication that goodwill became impaired for the three and nine months ended September 30, 2023. Other intangible assets include customer relationships, non-compete arrangements, trade names, customer backlog, and developed software, which are being amortized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives range from less than one year to ten years. Amortization of customer relationships, non-compete arrangements, trade names, customer backlog, and developed software is considered an operating expense and is included in “Amortization” in the accompanying Unaudited Condensed Consolidated Statements of Operations. The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a lack of recoverability or revised useful life. There was no indication that other intangible assets became impaired for the three and nine months ended September 30, 2023. Goodwill The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 are as follows (in millions): Balance at December 31, 2022 $ 565.2 Measurement period adjustments for acquisitions 3.0 Effect of foreign currency translation adjustments 9.4 Balance at September 30, 2023 $ 577.6 Intangible Assets with Definite Lives The following table presents a summary of the Company’s intangible assets that are subject to amortization (in millions): September 30, 2023 (unaudited) December 31, 2022 Gross Accumulated Net Gross Accumulated Net Customer relationships $ 119.0 $ (46.9) $ 72.1 $ 151.9 $ (68.4) $ 83.5 Non-compete agreements 1.1 (0.5) 0.6 1.7 (1.0) 0.7 Customer backlog 0.9 (0.9) — 2.7 (0.7) 2.0 Trade name 0.7 (0.7) — 0.9 (0.7) 0.2 Developed software 8.4 (6.2) 2.2 7.8 (5.3) 2.5 Total $ 130.1 $ (55.2) $ 74.9 $ 165.0 $ (76.1) $ 88.9 The estimated useful lives of identifiable intangible assets are as follows: Customer relationships 5 - 10 years Non-compete agreements 4 - 5 years Customer backlog 1 year Trade name 1 year Developed software 1 - 7 years Estimated annual amortization expense for the next five years ended December 31 and thereafter is as follows (in millions): 2023 remaining $ 4.2 2024 $ 15.4 2025 $ 12.0 2026 $ 9.6 2027 $ 7.3 Thereafter $ 26.4 |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt Revolving Credit Facility On March 29, 2023, the Company amended and restated its existing credit agreement by entering into a Second Amended and Restated Credit Agreement (the “2023 Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent and the other lenders parties thereto. The 2023 Credit Agreement provides for revolving credit borrowings up to a maximum principal amount of $300.0 million, subject to a commitment increase of $75.0 million. All outstanding amounts owed under the 2023 Credit Agreement become due and payable no later than the final maturity date of March 29, 2028. As of September 30, 2023, there was no outstanding balance under the 2023 Credit Agreement. The Company incurred $0.8 million of additional deferred finance fees during the nine months ended September 30, 2023. The 2023 Credit Agreement also allows for the issuance of letters of credit in the aggregate amount of up to $10.0 million at any one time; outstanding letters of credit reduce the credit available for revolving credit borrowings. As of September 30, 2023, there were no outstanding letters of credit. Substantially all of the Company’s assets are pledged to secure the credit facility. Borrowings under the 2023 Credit Agreement bear interest at the Company’s option of the prime rate (8.50% on September 30, 2023) plus a margin ranging from 0.00% to 1.00% or one month Secured Overnight Financing Rate (“SOFR”) (5.31% on September 30, 2023) plus a margin ranging from 1.00% to 2.00%. The Company incurs an annual commitment fee of 0.15% to 0.20% on the unused portion of the line of credit. The additional margin amount and annual commitment fee are dependent on the level of outstanding borrowings. As of September 30, 2023, the Company had $300.0 million of unused borrowing capacity. The Company is required to comply with various financial covenants under the 2023 Credit Agreement. At September 30, 2023, the Company was in compliance with all covenants under the 2023 Credit Agreement. Convertible Senior Notes due 2026 On November 9, 2021, the Company i ssued $380.0 million aggregate principal amount of 0.125% Convertible Senior Notes Due 2026 (the “2026 Notes”) in a private placement to qualified institutional buyers pursuant to an exemption from registration provided by Section 4(a)(2) and Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2026 Notes bear interest at a rate of 0.125% per year. Interest is payable in cash on May 15 and November 15 of each year, with the first payment made on May 15, 2022. The 2026 Notes mature on November 15, 2026 unless earlier converted, redeemed or repurchased in accordance with their terms prior to such date. The initial conversion rate is 5.2100 shares of the Company’s common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $191.94 per share of common stock. After consideration of the 2026 Notes Hedges and 2026 Notes Warrants (as defined and described below), the conversion rate is effectively hedged to a price of $295.29 per shar e of common stock. The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the indenture governing the 2026 Notes (the “2026 Indenture”). The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate(s). If a “make-whole fundamental change” (as defined in the 2026 Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time. The Company’s intent is to settle the principal amount of the 2026 Notes in cash upon conversion. Convertible Senior Notes due 2025 On August 14, 2020, the Company issued $230.0 million aggregate principal amount of 1.250% Convertible Senior Notes Due 2025 (the “2025 Notes”) in a private placement to qualified institutional purchasers pursuant to an exemption from registration provided by Section 4(a)(2) and Rule 144A under the Securities Act. The 2025 Notes bear interest at a rate of 1.250% per year. Interest is payable in cash on February 1 and August 1 of each year. The 2025 Notes mature on August 1, 2025 unless earlier converted, redeemed or repurchased in accordance with their terms prior to such date. The initial conversion rate is 19.3538 shares of the Company’s common stock per $1,000 principal amount of 2025 Notes, which is equivalent to an initial conversion price of approximately $51.67 per share of common stock. After consideration of the 2025 Notes Hedges and 2025 Notes Warrants (as defined and described below) , the conversion rate is effectively hedged to a price of $81.05 per share of common stock. The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the indenture governing the 2025 Notes (the “2025 Indenture”). The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate(s). If a “make-whole fundamental change” (as defined in the 2025 Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time. The Company’s intent is to settle the principal amount of the 2025 Notes in cash upon conversion. Other Terms of the Notes The 2025 Notes and 2026 Notes may be converted at the holder’s option prior to the close of business on the business day immediately preceding August 1, 2025 for the 2025 Notes and November 15, 2026 for the 2026 Notes, but only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 for the 2025 Notes and December 31, 2021 for the 2026 Notes, if the last reported sale price per share of the Company’s common stock exceeds 130% of the applicable conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; • during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the applicable conversion rate on such trading day; • upon the occurrence of certain corporate events or distributions on the Company’s common stock described in the 2025 Indenture and 2026 Indenture; and • at any time from, and including, February 3, 2025 for 2025 Notes and May 15, 2026 for 2026 Notes, until the close of business on the second scheduled trading day immediately before the maturity date for the 2025 Notes and 2026 Notes. The Company may not redeem the 2025 Notes and 2026 Notes at its option before maturity. If a “fundamental change” (as defined in the 2025 Indenture and 2026 Indenture) occurs, then, except as described in the 2025 Indenture and 2026 Indenture, noteholders may require the Company to repurchase their 2025 Notes and 2026 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes and 2026 Notes to be repurchased, plus accrued and unpaid interest, if any. As of September 30, 2023, none of the conditions permitting holders to convert their 2025 Notes and 2026 Notes had been satisfied and no shares of the Company’s common stock had been issued in connection with any conversions of the 2025 Notes and 2026 Notes during the nine months ended September 30, 2023. Based on the closing price of the Company's common stock of $57.86 per share on September 30, 2023, the conversion value of the 2026 Notes was less than the principal amount of the 2026 Notes outstanding on a per note basis, and the conversion value of the 2025 Notes was greater than the principal amount of the 2025 Notes outstanding on a per note basis. The 2025 Notes and 2026 Notes consisted of the following (in millions): September 30, 2023 (unaudited) Long-term debt: 2026 Notes 2025 Notes Principal $ 380.0 $ 23.3 Less: Unamortized debt issuance costs (6.7) (0.3) Net carrying amount $ 373.3 $ 23.0 December 31, 2022 Long-term debt: 2026 Notes 2025 Notes Principal $ 380.0 $ 23.3 Less: Unamortized debt issuance costs (8.3) (0.4) Net carrying amount $ 371.7 $ 22.9 Interest expense for the three and nine months ended September 30, 2023 and 2022 related to the 2026 Notes and 2025 Notes consisted of the following (in millions): 2026 Notes Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Coupon interest $ 0.1 $ 0.1 $ 0.4 $ 0.4 Amortization of debt issuance costs 0.6 0.6 1.6 1.6 Total interest expense recognized $ 0.7 $ 0.7 $ 2.0 $ 2.0 2025 Notes Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Coupon interest $ 0.1 $ 0.1 $ 0.2 $ 0.2 Amortization of debt issuance costs — — 0.1 0.1 Total interest expense recognized $ 0.1 $ 0.1 $ 0.3 $ 0.3 Convertible Notes Hedges In connection with the issuance of the 2026 Notes and 2025 Notes, the Company entered into privately negotiated convertible note hedge transactions (the “2026 Notes Hedges” and the “2025 Notes Hedges”), and together, the “Notes Hedges”) with certain of the initial purchasers or their respective affiliates and/or other financial institutions (the “Opt ion Counterparties”). As of September 30, 2023, the 2026 Notes Hedges provide the Company with the option to acquire, on a net settlement basis, approximately 2.0 million shares of common stock at a strike price of $191.94, w hich is equal to the number of shares of common stock that notionally underlie the 2026 Notes and correspond to the conversion price of the 2026 Notes. As of September 30, 2023 , the 2025 Notes Hedges provided the Company with the option to acquire, on a net settlement basis, approximately 0.5 million shares of common stock at a strike price of $51.67, which is equal to the number of shares of common stock that notionally underlie the 2025 Notes and correspond to the conversion price of the 2025 Notes. If the Company elects cash settlement and exercises the Notes Hedges, the aggregate amount of cash received from the Option Counterparties will cover the aggregate amount of cash that the Company would be required to pay to the holders of the Notes, less the principal amount thereof. The Notes Hedges do not meet the criteria for separate accounting as a derivative as they are indexed to the Company’s stock and are accounted for as freestanding financial instruments. Convertible Notes Warrants In connection with the issuance of the 2026 Notes and 2025 Notes, the Company also sold net-share-settled warrants (the “2026 Notes Warrants”, and the “2025 Notes Warrants,” respectively, and together, the “Notes Warrants”) in privately negotiated transactions with the Option Counterparties. The strike price of the 2026 Notes Warrants and 2025 Notes Warrants was appr oximately $295.29 and $81.05 per share, respectively, and is subject to certain adjustments under the terms of their respective Notes Warrants. As a result of the 2026 Notes Warrants and 2025 Notes Warrants and related transactions, the Company is required to recognize incremental dilution of earnings per share to the extent the average share pr ice for any fiscal quarter is over $295.29 for the 2026 Notes Warrants and $81.05 for the 2025 Notes Warrants. The 2026 Notes Warrants and the 2025 Notes Warrants expire over a period of 80 trading days commencing on February 15, 2027 and over a period of 100 trading days commencing on November 1, 2025, respectively, and may be settled in net shares of common stock or net cash at the Company’s election. As of |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company's effective tax rate was 29.4% and 26.9% for the three and nine months ended September 30, 2023, respectively. The effective tax rate for the three months ended September 30, 2023 was higher than the U.S. statutory rate of 21.0% primarily due to state taxes, Section 162(m) compensation limitations, foreign operations and the prior year true-up of research credits, partially offset by a change in the Company’s permanent reinvestment assertion in one jurisdiction and acquisition adjustments. The effective rate for the nine months ended September 30, 2023 was higher than the U.S. statutory rate of 21.0% primarily due to state taxes, Section 162(m) compensation limitations and foreign operations, partially offset by tax benefits for acquisition adjustments. The Company’s effective tax rate was 29.4% and 25.2% for the three and nine months ended September 30, 2022, respectively. The effective tax rates for the three and nine months ended September 30, 2022 were higher than the U.S. statutory rate of 21.0% primarily due to state taxes, Section 162(m) compensation limitations and foreign operations, partially offset by tax benefits for share based compensation deductions and research credits. |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives In the normal course of business, the Company uses derivative financial instruments to manage foreign currency exchange rate risk. Currency exposure is monitored and managed by the Company as part of its risk management program which seeks to reduce the potentially adverse effects that market volatility could have on operating results. The Company’s derivative financial instruments consist of non-deliverable and deliverable foreign currency forward contracts. Derivative financial instruments are neither held nor issued by the Company for trading purposes. Derivatives Not Designated as Hedging Instruments Both the gain or loss on the derivatives not designated as hedging instruments and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were a net gain of $0.2 million and net gain of $1.8 million during the three and nine months ended September 30, 2023, respectively. Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were a net loss of $1.0 million and net loss of $0.9 million during the three and nine months ended September 30, 2022, respectively. Gains and losses on these contracts are recorded in net other expense (income) and net interest expense in the Unaudited Condensed Consolidated Statements of Operations and are offset by losses and gains on the related hedged items. The notional amounts of the Company’s derivative instruments outstanding were as follows (in millions): September 30, 2023 (unaudited) December 31, 2022 Derivatives not designated as hedges Foreign exchange contracts $ 28.7 $ 31.0 Total derivatives not designated as hedges $ 28.7 $ 31.0 |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels: • Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. • Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The carrying value of cash and cash equivalents, accounts receivable, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. All highly liquid investments with maturities at date of purchase of three months or less are considered to be cash equivalents. Based on their short-term nature, the carrying value of cash equivalents approximate their fair value. As of September 30, 2023 and December 31, 2022, $39.0 million and $8.4 million, respectively, of the Company’s cash and cash equivalents balance related to money-market fund investments. These short-term money-market funds are considered Level 1 investments. The Company has a deferred compensation plan, which is funded through COLI policies. The COLI asset is carried at fair value derived from quoted market prices of investments within the COLI policies, which are considered Level 2 inputs. The fair value of the COLI asset was $11.5 million and $10.5 million as of September 30, 2023 and December 31, 2022, respectively. The Company estimates the fair value of each foreign exchange forward contract by using the present value of expected cash flows. The estimate takes into account the difference between the current market forward price and contracted forward price for each foreign exchange contract and applies the difference in the rates to each outstanding contract. Valuations for all derivatives fall within Level 2 of the GAAP valuation hierarchy. The fair values of the Company’s derivative instruments outstanding as of September 30, 2023 and December 31, 2022 were immaterial. The Company has contingent consideration liabilities related to acquisitions which are measured on a recurring basis and recorded at fair value, determined using the discounted cash flow method. The inputs used to calculate the fair value of the contingent consideration liabilities are considered to be Level 3 inputs due to the lack of relevant market activity and significant management judgment. An increase in future cash flows may result in a higher estimated fair value while a decrease in future cash flows may result in a lower estimated fair value of the contingent consideration liabilities. Remeasurements to fair value are recorded in adjustment to fair value of contingent consideration in the Unaudited Condensed Consolidated Statements of Operations. Refer to Note 7, Balance Sheet Components, for the estimated fair value of the contingent consideration liabilities as of September 30, 2023 and December 31, 2022. The fair value of the Notes is measured using quoted price inputs. The Notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates could significantly increase or decrease. The Notes are carried at their principal amount less unamortized issuance costs, and are not carried at fair value at each period end. The approximate fair value of the 2026 Notes as of September 30, 2023 and December 31, 2022 was $305.9 million and $295.5 million, respectively. The approximate fair value of the 2025 Notes as of September 30, 2023 and December 31, 2022 was $29.0 million and $33.8 million, respectively. The fair values were estimated on the basis of inputs that are observable in the market and are considered Level 2 fair value measurements. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Leases | Leases The Company leases office space under various operating lease agreements, which have remaining lease terms of less than one year to seven years. Operating leases are included in operating lease right-of-use assets, other current liabilities, and operating lease liabilities on the consolidated balance sheet. Operating lease expense for the three and nine months ended September 30, 2023 was $3.1 million and $9.7 million, respectively, and $3.2 million and $9.6 million for the three and nine months ended September 30, 2022. Supplemental balance sheet information related to leases was as follows (in millions): September 30, 2023 (unaudited) December 31, 2022 Other current liabilities $ 7.3 $ 10.3 Operating lease liabilities 18.1 18.5 Total $ 25.4 $ 28.8 Future minimum lease payments as of September 30, 2023 were as follows (in millions): September 30, 2023 (unaudited) 2023 remaining $ 1.2 2024 8.9 2025 6.3 2026 3.9 2027 3.6 Thereafter 3.5 Total future lease payments 27.4 Less implied interest (2.0) Total $ 25.4 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesFrom time to time the Company is involved in legal proceedings, claims and litigation related to employee claims, contractual disputes and taxes in the ordinary course of business. Although the Company cannot predict the outcome of such matters, currently the Company has no reason to believe the disposition of any current matter could reasonably be expected to have a material adverse impact on the Company’s financial position, results of operations or the ability to carry on any of its business activities. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Event On October 20, 2023, the Company entered into a Stock Purchase Agreement (the “SMEDIX Agreement”), by and among the Company, SMEDIX Inc. (“SMEDIX”), the sole shareholder of SMEDIX (the “Shareholder”), and certain other parties thereto. Pursuant to and subject to customary closing conditions contained in the SMEDIX Agreement, the Company will acquire all of the outstanding capital stock of SMEDIX. The SMEDIX Agreement includes customary representations, warranties, covenants and termination rights by the parties. Subject to its closing, this transaction will be accounted for as a business combination under the acquisition method of accounting. The Company will record the assets acquired and liabilities assumed at their fair values as of the acquisition date. The valuation efforts and related acquisition accounting will be completed following the closing of the transaction. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Use of Estimates | The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates, and such differences could be material to the financial statements. There have been no changes to significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2022 that have had a material impact on the Company’s condensed consolidated financial statements and related notes . |
Recent Accounting Pronouncements | In August 2020, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”), which simplifies the accounting for convertible instruments. The guidance removes certain accounting models that separate the embedded conversion features from the host contract for convertible instruments, requiring bifurcation only if the convertible debt feature qualifies as a derivative or for convertible debt issued at a substantial premium. The ASU removes certain settlement conditions required for equity contracts to qualify for the derivative scope exception, permitting more contracts to qualify for the exception. In addition, the guidance eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method. The ASU is effective for annual reporting periods beginning after December 15, 2021, including interim reporting periods within those annual periods. The ASU allows entities to use a modified or full retrospective transition method. Under the modified approach, entities will apply the guidance to all financial instruments that are outstanding as of the beginning of the year of adoption with the cumulative effect recognized as an adjustment to the opening balance of retained earnings. Under the full retrospective method, entities will apply the guidance to all outstanding financial instruments for each prior reporting period presented. The Company adopted this ASU on January 1, 2022 under the modified retrospective method of transition. Upon adoption, the Company recorded a $2.1 million cumulative-effect adjustment that increased the opening balance of retained earnings on the consolidated balance sheet, largely due to the reduction in non-cash interest expense associated with the historical separation of debt and equity components for the Company's convertible senior notes (the “Notes”) described in Note 11, Long-Term Debt . The Company also recorded an increase to long-term debt, net of $66.2 million, a net change in the deferred tax balance of $16.8 million, and a decrease to additional paid-in capital of $51.5 million due to no longer separating the embedded conversion feature of the Notes. Upon adoption, the Company's interest expense recognized has been reduced as a result of accounting for the convertible debt instrument as a single liability measured at its amortized cost. This adoption did not have a material impact on the consolidated statement of cash flows. Upon adoption, the Company prospectively utilized the if-converted method to calculate the impact of convertible instruments on diluted earnings per share. |
Revenue from Contract with Customer | The Company’s revenues consist of services and software and hardware sales. In accordance with Accounting Standards Codification (“ASC”) Topic 606 , Revenue from Contracts with Customers, revenues are recognized when control of services or goods are transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services or goods. Services Revenues Services revenues are primarily comprised of professional services that include developing, implementing, automating and extending business processes, technology infrastructure, and software applications. The Company’s professional services span multiple industries, platforms and solutions; however, the Company has remained relatively diversified and does not believe that it has significant revenue concentration within any single industry, platform or solution. Professional services revenues are recognized over time as services are rendered. Most projects are performed on a time and materials basis, while a portion of revenues is derived from projects performed on a fixed fee or fixed fee percent complete basis. For time and material contracts, revenues are generally recognized and invoiced by multiplying the number of hours expended in the performance of the contract by the hourly rates. For fixed fee contracts, revenues are generally recognized and invoiced by multiplying the fixed rate per time period established in the contract by the number of time periods elapsed. For fixed fee percent complete contracts, revenues are generally recognized using an input method based on the ratio of hours expended to total estimated hours, and the client is invoiced according to the agreed-upon schedule detailing the amount and timing of payments in the contract. Clients are typically billed monthly for services provided during that month but can be billed on a more or less frequent basis as determined by the contract. If the time is worked and approved at the end of a fiscal period and the invoice has not yet been sent to the client, the amount is recorded as revenue once the Company verifies all other revenue recognition criteria have been met, and the amount is classified as a receivable as the right to consideration is unconditional at that point. Amounts invoiced in excess of revenues recognized are contract liabilities, which are classified as deferred revenues in the Unaudited Condensed Consolidated Balance Sheet. The term between invoicing and payment due date is not significant. Contracts for professional services provide for a general right, to the client or the Company, to cancel or terminate the contract within a given period of time (generally 10 to 30 days’ notice is required). The client is responsible for any time and expenses incurred up to the date of cancellation or termination of the contract. Certain contracts may include volume discounts or holdbacks, which are accounted for as variable consideration, but are not typically significant. The Company estimates variable consideration based on historical experience and forecasted sales and includes the variable consideration in the transaction price. Other services revenues are comprised of hosting fees, partner referral fees, maintenance agreements, training and internally developed software-as-a-service (“SaaS”) sales. Revenues from hosting fees, maintenance agreements, training and internally developed SaaS sales are generally recognized over time using a time-based measure of progress as services are rendered. Partner referral fees are recorded at a point in time upon meeting specified requirements to earn the respective fee. On many professional service projects, the Company is also reimbursed for out-of-pocket expenses including travel and other project-related expenses. These reimbursements are included as a component of the transaction price of the respective professional services contract and are invoiced as the expenses are incurred. The Company structures its professional services arrangements to recover the cost of reimbursable expenses without a markup. Software and Hardware Revenues Software and hardware revenues are comprised of third-party software and hardware resales, in which the Company is considered the agent, and sales of internally developed software, in which the Company is considered the principal. Third-party software and hardware revenues are recognized and invoiced when the Company fulfills its obligation to arrange the sale, which occurs when the purchase order with the vendor is executed and the customer has access to the software or the hardware has been shipped to the customer. Internally developed software revenues are recognized and invoiced when control is transferred to the customer, which occurs when the software has been made available to the customer and the license term has commenced. Revenues from third-party software and hardware sales are recorded on a net basis, while revenues from internally developed software sales are recorded on a gross basis. There are no significant cancellation or termination-type provisions for the Company’s software and hardware sales, and the term between invoicing and payment due date is not significant. Revenues are presented net of taxes assessed by governmental authorities. Sales taxes are generally collected and subsequently remitted on all software and hardware sales and certain services transactions as appropriate. Arrangements with Multiple Performance Obligations Arrangements with clients may contain multiple promises such as delivery of software, hardware, professional services or post-contract support services. These promises are accounted for as separate performance obligations if they are distinct. For arrangements with clients that contain multiple performance obligations, the transaction price is allocated to the separate performance obligations based on estimated relative standalone selling price, which is estimated by the expected cost plus a margin approach, taking into consideration market conditions and competitive factors. Because contracts that contain multiple performance obligations are typically short term due to the contract cancellation provisions, the allocation of the transaction price to the separate performance obligations is not considered a significant estimate. Contract Costs In accordance with the terms of the Company’s sales commission plan, commissions are not earned until the related revenue is recognized. Therefore, sales commissions are expensed as they are earned. Certain sales incentives are accrued based on achievement of specified bookings goals. For these incentives, the Company applies the practical expedient that allows the Company to expense the incentives as incurred because the amortization period would have been one year or less. |
Stock-Based Compensation | Stock-based compensation is accounted for in accordance with ASC Topic 718, Compensation – Stock Compensation . Under this guidance, the Company recognizes share-based compensation ratably using the straight-line attribution method over the requisite service period, which is generally three years. The fair value of restricted stock awards is based on the value of the Company’s common stock on the date of the grant. |
Allowance for Credit Losses | In accordance with ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments |
Goodwill and Intangible Assets | Goodwill represents the excess purchase price over the fair value of net assets acquired, or net liabilities assumed, in a business combination. In accordance with ASC Topic 350, Intangibles – Goodwill and Other , the Company performs an annual impairment review in the fourth quarter and more frequently if events or changes in circumstances indicate that goodwill might be impaired. There was no indication that goodwill became impaired for the three and nine months ended September 30, 2023. Other intangible assets include customer relationships, non-compete arrangements, trade names, customer backlog, and developed software, which are being amortized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives range from less than one year to ten years. Amortization of customer relationships, non-compete arrangements, trade names, customer backlog, and developed software is considered an operating expense and is included in “Amortization” in the accompanying Unaudited Condensed Consolidated Statements of Operations. The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in a lack of recoverability or revised useful life. There was no indication that other intangible assets became impaired for the three and nine months ended September 30, 2023. |
Long-term Debt | Long-term Debt Revolving Credit Facility On March 29, 2023, the Company amended and restated its existing credit agreement by entering into a Second Amended and Restated Credit Agreement (the “2023 Credit Agreement”) with Wells Fargo Bank, National Association, as administrative agent and the other lenders parties thereto. The 2023 Credit Agreement provides for revolving credit borrowings up to a maximum principal amount of $300.0 million, subject to a commitment increase of $75.0 million. All outstanding amounts owed under the 2023 Credit Agreement become due and payable no later than the final maturity date of March 29, 2028. As of September 30, 2023, there was no outstanding balance under the 2023 Credit Agreement. The Company incurred $0.8 million of additional deferred finance fees during the nine months ended September 30, 2023. The 2023 Credit Agreement also allows for the issuance of letters of credit in the aggregate amount of up to $10.0 million at any one time; outstanding letters of credit reduce the credit available for revolving credit borrowings. As of September 30, 2023, there were no outstanding letters of credit. Substantially all of the Company’s assets are pledged to secure the credit facility. Borrowings under the 2023 Credit Agreement bear interest at the Company’s option of the prime rate (8.50% on September 30, 2023) plus a margin ranging from 0.00% to 1.00% or one month Secured Overnight Financing Rate (“SOFR”) (5.31% on September 30, 2023) plus a margin ranging from 1.00% to 2.00%. The Company incurs an annual commitment fee of 0.15% to 0.20% on the unused portion of the line of credit. The additional margin amount and annual commitment fee are dependent on the level of outstanding borrowings. As of September 30, 2023, the Company had $300.0 million of unused borrowing capacity. The Company is required to comply with various financial covenants under the 2023 Credit Agreement. At September 30, 2023, the Company was in compliance with all covenants under the 2023 Credit Agreement. Convertible Senior Notes due 2026 On November 9, 2021, the Company i ssued $380.0 million aggregate principal amount of 0.125% Convertible Senior Notes Due 2026 (the “2026 Notes”) in a private placement to qualified institutional buyers pursuant to an exemption from registration provided by Section 4(a)(2) and Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The 2026 Notes bear interest at a rate of 0.125% per year. Interest is payable in cash on May 15 and November 15 of each year, with the first payment made on May 15, 2022. The 2026 Notes mature on November 15, 2026 unless earlier converted, redeemed or repurchased in accordance with their terms prior to such date. The initial conversion rate is 5.2100 shares of the Company’s common stock per $1,000 principal amount of 2026 Notes, which is equivalent to an initial conversion price of approximately $191.94 per share of common stock. After consideration of the 2026 Notes Hedges and 2026 Notes Warrants (as defined and described below), the conversion rate is effectively hedged to a price of $295.29 per shar e of common stock. The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the indenture governing the 2026 Notes (the “2026 Indenture”). The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate(s). If a “make-whole fundamental change” (as defined in the 2026 Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time. The Company’s intent is to settle the principal amount of the 2026 Notes in cash upon conversion. Convertible Senior Notes due 2025 On August 14, 2020, the Company issued $230.0 million aggregate principal amount of 1.250% Convertible Senior Notes Due 2025 (the “2025 Notes”) in a private placement to qualified institutional purchasers pursuant to an exemption from registration provided by Section 4(a)(2) and Rule 144A under the Securities Act. The 2025 Notes bear interest at a rate of 1.250% per year. Interest is payable in cash on February 1 and August 1 of each year. The 2025 Notes mature on August 1, 2025 unless earlier converted, redeemed or repurchased in accordance with their terms prior to such date. The initial conversion rate is 19.3538 shares of the Company’s common stock per $1,000 principal amount of 2025 Notes, which is equivalent to an initial conversion price of approximately $51.67 per share of common stock. After consideration of the 2025 Notes Hedges and 2025 Notes Warrants (as defined and described below) , the conversion rate is effectively hedged to a price of $81.05 per share of common stock. The conversion rate, and thus the conversion price, may be adjusted under certain circumstances as described in the indenture governing the 2025 Notes (the “2025 Indenture”). The Company may settle conversions by paying or delivering, as applicable, cash, shares of its common stock or a combination of cash and shares of its common stock, at the Company’s election, based on the applicable conversion rate(s). If a “make-whole fundamental change” (as defined in the 2025 Indenture) occurs, then the Company will in certain circumstances increase the conversion rate for a specified period of time. The Company’s intent is to settle the principal amount of the 2025 Notes in cash upon conversion. Other Terms of the Notes The 2025 Notes and 2026 Notes may be converted at the holder’s option prior to the close of business on the business day immediately preceding August 1, 2025 for the 2025 Notes and November 15, 2026 for the 2026 Notes, but only under the following circumstances: • during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 for the 2025 Notes and December 31, 2021 for the 2026 Notes, if the last reported sale price per share of the Company’s common stock exceeds 130% of the applicable conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; • during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price per share of the Company’s common stock on such trading day and the applicable conversion rate on such trading day; • upon the occurrence of certain corporate events or distributions on the Company’s common stock described in the 2025 Indenture and 2026 Indenture; and • at any time from, and including, February 3, 2025 for 2025 Notes and May 15, 2026 for 2026 Notes, until the close of business on the second scheduled trading day immediately before the maturity date for the 2025 Notes and 2026 Notes. The Company may not redeem the 2025 Notes and 2026 Notes at its option before maturity. If a “fundamental change” (as defined in the 2025 Indenture and 2026 Indenture) occurs, then, except as described in the 2025 Indenture and 2026 Indenture, noteholders may require the Company to repurchase their 2025 Notes and 2026 Notes at a cash repurchase price equal to the principal amount of the 2025 Notes and 2026 Notes to be repurchased, plus accrued and unpaid interest, if any. As of September 30, 2023, none of the conditions permitting holders to convert their 2025 Notes and 2026 Notes had been satisfied and no shares of the Company’s common stock had been issued in connection with any conversions of the 2025 Notes and 2026 Notes during the nine months ended September 30, 2023. Based on the closing price of the Company's common stock of $57.86 per share on September 30, 2023, the conversion value of the 2026 Notes was less than the principal amount of the 2026 Notes outstanding on a per note basis, and the conversion value of the 2025 Notes was greater than the principal amount of the 2025 Notes outstanding on a per note basis. The 2025 Notes and 2026 Notes consisted of the following (in millions): September 30, 2023 (unaudited) Long-term debt: 2026 Notes 2025 Notes Principal $ 380.0 $ 23.3 Less: Unamortized debt issuance costs (6.7) (0.3) Net carrying amount $ 373.3 $ 23.0 December 31, 2022 Long-term debt: 2026 Notes 2025 Notes Principal $ 380.0 $ 23.3 Less: Unamortized debt issuance costs (8.3) (0.4) Net carrying amount $ 371.7 $ 22.9 Interest expense for the three and nine months ended September 30, 2023 and 2022 related to the 2026 Notes and 2025 Notes consisted of the following (in millions): 2026 Notes Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Coupon interest $ 0.1 $ 0.1 $ 0.4 $ 0.4 Amortization of debt issuance costs 0.6 0.6 1.6 1.6 Total interest expense recognized $ 0.7 $ 0.7 $ 2.0 $ 2.0 2025 Notes Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Coupon interest $ 0.1 $ 0.1 $ 0.2 $ 0.2 Amortization of debt issuance costs — — 0.1 0.1 Total interest expense recognized $ 0.1 $ 0.1 $ 0.3 $ 0.3 Convertible Notes Hedges In connection with the issuance of the 2026 Notes and 2025 Notes, the Company entered into privately negotiated convertible note hedge transactions (the “2026 Notes Hedges” and the “2025 Notes Hedges”), and together, the “Notes Hedges”) with certain of the initial purchasers or their respective affiliates and/or other financial institutions (the “Opt ion Counterparties”). As of September 30, 2023, the 2026 Notes Hedges provide the Company with the option to acquire, on a net settlement basis, approximately 2.0 million shares of common stock at a strike price of $191.94, w hich is equal to the number of shares of common stock that notionally underlie the 2026 Notes and correspond to the conversion price of the 2026 Notes. As of September 30, 2023 , the 2025 Notes Hedges provided the Company with the option to acquire, on a net settlement basis, approximately 0.5 million shares of common stock at a strike price of $51.67, which is equal to the number of shares of common stock that notionally underlie the 2025 Notes and correspond to the conversion price of the 2025 Notes. If the Company elects cash settlement and exercises the Notes Hedges, the aggregate amount of cash received from the Option Counterparties will cover the aggregate amount of cash that the Company would be required to pay to the holders of the Notes, less the principal amount thereof. The Notes Hedges do not meet the criteria for separate accounting as a derivative as they are indexed to the Company’s stock and are accounted for as freestanding financial instruments. Convertible Notes Warrants In connection with the issuance of the 2026 Notes and 2025 Notes, the Company also sold net-share-settled warrants (the “2026 Notes Warrants”, and the “2025 Notes Warrants,” respectively, and together, the “Notes Warrants”) in privately negotiated transactions with the Option Counterparties. The strike price of the 2026 Notes Warrants and 2025 Notes Warrants was appr oximately $295.29 and $81.05 per share, respectively, and is subject to certain adjustments under the terms of their respective Notes Warrants. As a result of the 2026 Notes Warrants and 2025 Notes Warrants and related transactions, the Company is required to recognize incremental dilution of earnings per share to the extent the average share pr ice for any fiscal quarter is over $295.29 for the 2026 Notes Warrants and $81.05 for the 2025 Notes Warrants. The 2026 Notes Warrants and the 2025 Notes Warrants expire over a period of 80 trading days commencing on February 15, 2027 and over a period of 100 trading days commencing on November 1, 2025, respectively, and may be settled in net shares of common stock or net cash at the Company’s election. As of |
Derivatives | In the normal course of business, the Company uses derivative financial instruments to manage foreign currency exchange rate risk. Currency exposure is monitored and managed by the Company as part of its risk management program which seeks to reduce the potentially adverse effects that market volatility could have on operating results. The Company’s derivative financial instruments consist of non-deliverable and deliverable foreign currency forward contracts. Derivative financial instruments are neither held nor issued by the Company for trading purposes. Derivatives Not Designated as Hedging Instruments Both the gain or loss on the derivatives not designated as hedging instruments and the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in current earnings. Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were a net gain of $0.2 million and net gain of $1.8 million during the three and nine months ended September 30, 2023, respectively. Realized gains or losses and changes in the estimated fair value of foreign currency forward contracts that have not been designated as hedges were a net loss of $1.0 million and net loss of $0.9 million during the three and nine months ended September 30, 2022, respectively. Gains and losses on these contracts are recorded in net other expense (income) and net interest expense in the Unaudited Condensed Consolidated Statements of Operations and are offset by losses and gains on the related hedged items. |
Fair Value Measurement | The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels: • Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities. • Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. • Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The carrying value of cash and cash equivalents, accounts receivable, accounts payable, current liabilities and the revolving line of credit approximate fair value because of the short maturity of these instruments. All highly liquid investments with maturities at date of purchase of three months or less are considered to be cash equivalents. Based on their short-term nature, the carrying value of cash equivalents approximate their fair value. As of September 30, 2023 and December 31, 2022, $39.0 million and $8.4 million, respectively, of the Company’s cash and cash equivalents balance related to money-market fund investments. These short-term money-market funds are considered Level 1 investments. The Company has a deferred compensation plan, which is funded through COLI policies. The COLI asset is carried at fair value derived from quoted market prices of investments within the COLI policies, which are considered Level 2 inputs. The fair value of the COLI asset was $11.5 million and $10.5 million as of September 30, 2023 and December 31, 2022, respectively. The Company estimates the fair value of each foreign exchange forward contract by using the present value of expected cash flows. The estimate takes into account the difference between the current market forward price and contracted forward price for each foreign exchange contract and applies the difference in the rates to each outstanding contract. Valuations for all derivatives fall within Level 2 of the GAAP valuation hierarchy. The fair values of the Company’s derivative instruments outstanding as of September 30, 2023 and December 31, 2022 were immaterial. The Company has contingent consideration liabilities related to acquisitions which are measured on a recurring basis and recorded at fair value, determined using the discounted cash flow method. The inputs used to calculate the fair value of the contingent consideration liabilities are considered to be Level 3 inputs due to the lack of relevant market activity and significant management judgment. An increase in future cash flows may result in a higher estimated fair value while a decrease in future cash flows may result in a lower estimated fair value of the contingent consideration liabilities. Remeasurements to fair value are recorded in adjustment to fair value of contingent consideration in the Unaudited Condensed Consolidated Statements of Operations. Refer to Note 7, Balance Sheet Components, for the estimated fair value of the contingent consideration liabilities as of September 30, 2023 and December 31, 2022. The fair value of the Notes is measured using quoted price inputs. The Notes are not actively traded, and thus the price inputs represent a Level 2 measurement. As the quoted price inputs are highly variable from day to day, the fair value estimates could significantly increase or decrease. The Notes are carried at their principal amount less unamortized issuance costs, and are not carried at fair value at each period end. The approximate fair value of the 2026 Notes as of September 30, 2023 and December 31, 2022 was $305.9 million and $295.5 million, respectively. The approximate fair value of the 2025 Notes as of September 30, 2023 and December 31, 2022 was $29.0 million and $33.8 million, respectively. The fair values were estimated on the basis of inputs that are observable in the market and are considered Level 2 fair value measurements. |
Commitments and Contingencies | From time to time the Company is involved in legal proceedings, claims and litigation related to employee claims, contractual disputes and taxes in the ordinary course of business. Although the Company cannot predict the outcome of such matters, currently the Company has no reason to believe the disposition of any current matter could reasonably be expected to have a material adverse impact on the Company’s financial position, results of operations or the ability to carry on any of its business activities. |
Revenue (Tables)
Revenue (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of revenue | The following tables present revenue disaggregated by revenue source and pattern of revenue recognition (in millions): Three Months Ended September 30, 2023 2022 Over Time Point In Time Total Revenues Over Time Point In Time Total Revenues Time and materials contracts $ 162.8 $ — $ 162.8 $ 176.3 $ — $ 176.3 Fixed fee percent complete contracts 14.5 — 14.5 11.3 — 11.3 Fixed fee contracts 40.4 — 40.4 35.0 — 35.0 Reimbursable expenses 3.2 — 3.2 2.1 — 2.1 Total professional services fees 220.9 — 220.9 224.7 — 224.7 Other services revenue* 1.5 0.3 1.8 1.9 0.4 2.3 Total services 222.4 0.3 222.7 226.6 0.4 227.0 Software and hardware — 0.5 0.5 — 0.6 0.6 Total revenues $ 222.4 $ 0.8 $ 223.2 $ 226.6 $ 1.0 $ 227.6 *Other services revenue primarily consists of hosting fees, maintenance, training, internally developed SaaS revenue and partner referral fees. Nine Months Ended September 30, 2023 2022 Over Time Point In Time Total Revenues Over Time Point In Time Total Revenues Time and materials contracts $ 508.9 $ — $ 508.9 $ 518.5 $ — $ 518.5 Fixed fee percent complete contracts 45.5 — 45.5 39.2 — 39.2 Fixed fee contracts 116.3 — 116.3 99.3 — 99.3 Reimbursable expenses 7.8 — 7.8 6.5 — 6.5 Total professional services fees 678.5 — 678.5 663.5 — 663.5 Other services revenue* 4.4 1.3 5.7 5.8 1.4 7.2 Total services 682.9 1.3 684.2 669.3 1.4 670.7 Software and hardware — 1.6 1.6 — 1.8 1.8 Total revenues $ 682.9 $ 2.9 $ 685.8 $ 669.3 $ 3.2 $ 672.5 *Other services revenue primarily consists of hosting fees, maintenance, training, internally developed SaaS revenue and partner referral fees. The following table presents revenue disaggregated by geographic area, as determined by the billing address of customers (in millions): Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 United States $ 214.4 $ 219.9 $ 661.0 $ 650.3 Other countries 8.8 7.7 24.8 22.2 Total revenues $ 223.2 $ 227.6 $ 685.8 $ 672.5 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Restricted stock activity | Restricted stock activity for the nine months ended September 30, 2023 was as follows (shares in thousands): RSAs (Shares) Weighted-Average Restricted stock awards outstanding at December 31, 2022 616 $ 72.02 Awards granted 240 73.50 Awards vested (179) 64.77 Awards forfeited (34) 72.46 Restricted stock awards outstanding at September 30, 2023 643 $ 74.57 |
Performance stock valuation assumptions | The Company estimated the grant date fair value of the PSAs using a Monte Carlo simulation model that included the following assumptions: Nine Months Ended September 30, 2023 Valuation assumptions: Expected dividend yield — Expected volatility 52.37 % Expected term (years) 3.44 Risk-free interest rate 4.45 % |
Net Income per Share (Tables)
Net Income per Share (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Earnings Per Share [Abstract] | |
Basic and diluted net income per share | The following table presents the calculation of basic and diluted net income per share (in thousands, except per share information): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Net income, basic $ 22,596 $ 23,015 $ 75,758 $ 77,933 Add back interest expense on convertible notes, net of tax 539 539 1,674 1,712 Net income, diluted $ 23,135 $ 23,554 $ 77,432 $ 79,645 Basic: Weighted-average shares of common stock outstanding 33,989 33,861 33,964 33,873 Shares used in computing basic net income per share 33,989 33,861 33,964 33,873 Effect of dilutive securities: Restricted stock and performance stock awards subject to vesting 154 255 147 298 Shares issuable for acquisition consideration (1) 140 13 168 66 Shares issuable for conversion of convertible senior notes 2,430 2,431 2,430 2,431 Shares issuable for exercise of warrants — 103 — 95 Shares used in computing diluted net income per share 36,713 36,663 36,709 36,763 Basic net income per share $ 0.66 $ 0.68 $ 2.23 $ 2.30 Diluted net income per share $ 0.63 $ 0.64 $ 2.11 $ 2.17 (1) For the three and nine months ended September 30, 2023, this represents the shares held in escrow pursuant to: (i) the Asset Purchase Agreement with Zeon Solutions Incorporated and certain related entities (collectively, “Zeon”); (ii) the Asset Purchase Agreement with Catalyst Networks, Inc. (“Brainjocks”); (iii) the Stock Purchase Agreement with the shareholders of Productora de Software S.A.S. (“PSL”); (iv) the Purchase Agreement with Talos LLC, Talos Digital LLC, Talos Digital SAS and TCOMM SAS (“Talos”); (v) the Stock Purchase Agreement with the shareholders of Izmul S.A. (“Overactive”); (vi) the Stock Purchase Agreement with the shareholders of Inflection Point Systems, Inc. (“Inflection Point”); and (vii) the Purchase Agreement with Ameex Technologies Corporation (“Ameex”), as part of the consideration. For the three and nine months ended September 30, 2022, this represents the shares held in escrow pursuant to: (i) the Asset Purchase Agreement with Zeon; (ii) the Asset Purchase Agreement with Brainjocks; (iii) the Stock Purchase Agreement with the shareholders of PSL; (iv) the Purchase Agreement with Talos; (v) the Stock Purchase Agreement with the shareholders of Overactive; and (vi) the Stock Purchase Agreement with the shareholders of Inflection Point, as part of the consideration. |
Antidilutive securities excluded from computation of earnings per share | The number of anti-dilutive securities not included in the calculation of diluted net income per share were as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Restricted stock and performance stock awards subject to vesting 153 76 191 78 Warrants related to the issuance of convertible senior notes 2,431 1,980 2,431 1,980 Total anti-dilutive securities 2,584 2,056 2,622 2,058 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Balance Sheet Related Disclosures [Abstract] | |
Accounts receivable | September 30, 2023 (unaudited) December 31, 2022 Accounts receivable: (in millions) Billed accounts receivable, net $ 107.7 $ 134.5 Unbilled revenues, net 77.4 67.8 Total $ 185.1 $ 202.3 |
Other current assets | Other non-current assets: Non-current unbilled revenue $ 1.9 $ 1.6 Company owned life insurance (“COLI ” ) asset 11.5 10.5 Long term deposits 1.8 1.9 Credit facility deferred finance fees, net 1.1 0.5 Other non-current assets 12.7 8.5 Deferred income taxes 18.3 18.1 Total $ 47.3 $ 41.1 |
Property and equipment | Property and equipment: Computer hardware (useful life of 3 years) $ 26.4 $ 26.3 Software (useful life of 1 to 7 years) 9.1 11.9 Furniture and fixtures (useful life of 5 years) 4.5 4.7 Leasehold improvements (useful life of 5 years) 7.7 7.7 Less: Accumulated depreciation (33.8) (32.6) Total $ 13.9 $ 18.0 |
Other non-current assets | Other current assets: Miscellaneous receivables $ 4.4 $ 2.9 Contractual commitment asset 1.8 0.9 Federal/state income tax receivable 9.9 9.2 Other current assets 3.0 3.8 Total $ 19.1 $ 16.8 |
Other current liabilities | Other current liabilities: Estimated fair value of contingent consideration liability (Note 9) $ 4.5 $ 32.7 Accrued variable compensation 11.4 21.1 Current operating lease liabilities 7.3 10.3 Payroll related costs 11.6 8.9 Deferred revenues 5.3 12.7 Other current liabilities 4.5 9.7 Accrued medical claims expense 3.4 2.9 Professional fees 1.6 2.2 Accrued IT expenses 5.4 4.3 Total $ 55.0 $ 104.8 |
Other non-current liabilities | September 30, 2023 (unaudited) December 31, 2022 Other non-current liabilities: (in millions) Deferred income taxes $ 7.5 $ 8.7 Reserve for uncertain tax positions 17.8 17.5 Deferred compensation liability 10.0 9.3 Other non-current liabilities 3.6 5.9 Non-current software accrual 2.3 2.1 Total $ 41.2 $ 43.5 |
Allowance for Credit Losses (Ta
Allowance for Credit Losses (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Credit Loss [Abstract] | |
Allowance for credit losses | Activity in the allowance for credit losses is summarized as follows (in millions): Nine Months Ended September 30, 2023 2022 Opening balance at January 1 $ 5.8 $ 2.9 Charges to expense, net of recoveries (0.4) 3.2 Other (1) (2.0) (0.4) Balance at September 30 $ 3.4 $ 5.7 (1) Other is primarily related to uncollected balances written off, business acquisitions, and currency translation adjustments. |
Business Combinations (Tables)
Business Combinations (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Business Combinations [Abstract] | |
Allocation of total purchase price consideration | The acquisition date fair value of the consideration transferred for the 2022 acquisitions consisted of the following (in millions): Ameex Inflection Point Cash, net of cash acquired $ 26.1 $ 44.6 Company common stock issued at closing 4.2 3.0 Contingent consideration (1) 4.3 (2) 6.6 (3) Net working capital adjustment due to the seller(s) 1.5 (0.2) Total allocable purchase price consideration $ 36.1 $ 54.0 (1) Represents the initial fair value estimate of additional revenue and earnings-based contingent consideration, which may be realized by the sellers 12 months after the closing date of the acquisition. (2) The maximum cash payout that may be realized by the sellers in the Ameex acquisition is $5.7 million. As of September 30, 2023, the fair value of the contingent consideration was $4.0 million. The Company recorded a pre-tax adjustment to reduce the liability in “Adjustment to fair value of contingent consideration” on the Unaudited Condensed Consolidated Statements of Operations of $0.4 million during both the three and nine months ended September 30, 2023. (3) The maximum cash payout that may be realized by the sellers in the Inflection Point acquisition is $13.0 million. As of September 30, 2023, the fair value of the contingent consideration was $0.5 million. The Company recorded a pre-tax adjustment to reduce the liability in “Adjustment to fair value of contingent consideration” on the Unaudited Condensed Consolidated Statements of Operations of $1.3 million and $6.2 million during the three and nine months ended September 30, 2023, respectively. The Company has estimated the preliminary allocation of the total purchase price consideration between tangible assets, identified intangible assets, liabilities, and goodwill as follows (in millions): Ameex Inflection Point Acquired tangible assets $ 6.8 $ 3.3 Identified intangible assets 13.2 20.1 Liabilities assumed (5.6) (10.5) Goodwill 21.7 41.1 Total allocable purchase price consideration $ 36.1 $ 54.0 |
Schedule of finite-lived intangible assets acquired | The following table presents details as of September 30, 2023 of the intangible assets acquired during the year ended December 31, 2022 (dollars in millions). Weighted Average Useful Life Estimated Useful Life Aggregate Acquisitions Customer relationships 10 years 10 years $ 29.9 Customer backlog 1 year 1 year 2.8 Non-compete agreements 5 years 5 years 0.3 Trade name 1 year 1 year 0.3 Total acquired intangible assets $ 33.3 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | The changes in the carrying amount of goodwill for the nine months ended September 30, 2023 are as follows (in millions): Balance at December 31, 2022 $ 565.2 Measurement period adjustments for acquisitions 3.0 Effect of foreign currency translation adjustments 9.4 Balance at September 30, 2023 $ 577.6 |
Intangible assets | The following table presents a summary of the Company’s intangible assets that are subject to amortization (in millions): September 30, 2023 (unaudited) December 31, 2022 Gross Accumulated Net Gross Accumulated Net Customer relationships $ 119.0 $ (46.9) $ 72.1 $ 151.9 $ (68.4) $ 83.5 Non-compete agreements 1.1 (0.5) 0.6 1.7 (1.0) 0.7 Customer backlog 0.9 (0.9) — 2.7 (0.7) 2.0 Trade name 0.7 (0.7) — 0.9 (0.7) 0.2 Developed software 8.4 (6.2) 2.2 7.8 (5.3) 2.5 Total $ 130.1 $ (55.2) $ 74.9 $ 165.0 $ (76.1) $ 88.9 |
Estimated useful lives of intangible assets | The estimated useful lives of identifiable intangible assets are as follows: Customer relationships 5 - 10 years Non-compete agreements 4 - 5 years Customer backlog 1 year Trade name 1 year Developed software 1 - 7 years |
Estimated annual amortization expense | Estimated annual amortization expense for the next five years ended December 31 and thereafter is as follows (in millions): 2023 remaining $ 4.2 2024 $ 15.4 2025 $ 12.0 2026 $ 9.6 2027 $ 7.3 Thereafter $ 26.4 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of long-term debt instruments | The 2025 Notes and 2026 Notes consisted of the following (in millions): September 30, 2023 (unaudited) Long-term debt: 2026 Notes 2025 Notes Principal $ 380.0 $ 23.3 Less: Unamortized debt issuance costs (6.7) (0.3) Net carrying amount $ 373.3 $ 23.0 December 31, 2022 Long-term debt: 2026 Notes 2025 Notes Principal $ 380.0 $ 23.3 Less: Unamortized debt issuance costs (8.3) (0.4) Net carrying amount $ 371.7 $ 22.9 Interest expense for the three and nine months ended September 30, 2023 and 2022 related to the 2026 Notes and 2025 Notes consisted of the following (in millions): 2026 Notes Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Coupon interest $ 0.1 $ 0.1 $ 0.4 $ 0.4 Amortization of debt issuance costs 0.6 0.6 1.6 1.6 Total interest expense recognized $ 0.7 $ 0.7 $ 2.0 $ 2.0 2025 Notes Three Months Ended Nine Months Ended September 30, September 30, 2023 2022 2023 2022 Coupon interest $ 0.1 $ 0.1 $ 0.2 $ 0.2 Amortization of debt issuance costs — — 0.1 0.1 Total interest expense recognized $ 0.1 $ 0.1 $ 0.3 $ 0.3 |
Derivatives (Tables)
Derivatives (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of notional amounts of outstanding derivative positions | The notional amounts of the Company’s derivative instruments outstanding were as follows (in millions): September 30, 2023 (unaudited) December 31, 2022 Derivatives not designated as hedges Foreign exchange contracts $ 28.7 $ 31.0 Total derivatives not designated as hedges $ 28.7 $ 31.0 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Summary of lease liabilities | Supplemental balance sheet information related to leases was as follows (in millions): September 30, 2023 (unaudited) December 31, 2022 Other current liabilities $ 7.3 $ 10.3 Operating lease liabilities 18.1 18.5 Total $ 25.4 $ 28.8 |
Future minimum leases payments under ASC topic 842 | Future minimum lease payments as of September 30, 2023 were as follows (in millions): September 30, 2023 (unaudited) 2023 remaining $ 1.2 2024 8.9 2025 6.3 2026 3.9 2027 3.6 Thereafter 3.5 Total future lease payments 27.4 Less implied interest (2.0) Total $ 25.4 |
Recent Accounting Pronounceme_2
Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 | Jan. 01, 2022 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 454,021 | $ 378,263 | |
Long-term debt, net | $ 396,303 | $ 394,587 | |
Cumulative effect, period of adoption, adjustment | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Retained earnings | $ 2,100 | ||
Long-term debt, net | 66,200 | ||
Deferred Tax Assets, Tax Deferred Expense | 16,800 | ||
Additional Paid in Capital | $ 51,500 |
Revenue - Services Revenue (Det
Revenue - Services Revenue (Details) - Technology Service | 9 Months Ended |
Sep. 30, 2023 | |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Notice period to cancel or terminate contract | 10 days |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Notice period to cancel or terminate contract | 30 days |
Revenue - Deferred Revenue (Det
Revenue - Deferred Revenue (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue balance | $ 5.3 | $ 12.7 |
Revenue - Disaggregation of Rev
Revenue - Disaggregation of Revenue by Revenue Source and Pattern of 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] | ||||
Revenues | $ 223,238 | $ 227,614 | $ 685,751 | $ 672,463 |
Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 222,400 | 226,600 | 682,900 | 669,300 |
Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 800 | 1,000 | 2,900 | 3,200 |
Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 222,700 | 227,000 | 684,200 | 670,700 |
Services | Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 222,400 | 226,600 | 682,900 | 669,300 |
Services | Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 300 | 400 | 1,300 | 1,400 |
Professional services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 220,900 | 224,700 | 678,500 | 663,500 |
Professional services | Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 220,900 | 224,700 | 678,500 | 663,500 |
Professional services | Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Professional services | Time and materials contracts | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 162,800 | 176,300 | 508,900 | 518,500 |
Professional services | Time and materials contracts | Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 162,800 | 176,300 | 508,900 | 518,500 |
Professional services | Time and materials contracts | Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Professional services | Fixed fee percent complete contracts | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 14,500 | 11,300 | 45,500 | 39,200 |
Professional services | Fixed fee percent complete contracts | Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 14,500 | 11,300 | 45,500 | 39,200 |
Professional services | Fixed fee percent complete contracts | Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Professional services | Fixed fee contracts | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 40,400 | 35,000 | 116,300 | 99,300 |
Professional services | Fixed fee contracts | Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 40,400 | 35,000 | 116,300 | 99,300 |
Professional services | Fixed fee contracts | Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Professional services | Reimbursable expenses | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,200 | 2,100 | 7,800 | 6,500 |
Professional services | Reimbursable expenses | Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,200 | 2,100 | 7,800 | 6,500 |
Professional services | Reimbursable expenses | Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Other services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,800 | 2,300 | 5,700 | 7,200 |
Other services | Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,500 | 1,900 | 4,400 | 5,800 |
Other services | Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 300 | 400 | 1,300 | 1,400 |
Software and hardware | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 500 | 600 | 1,600 | 1,800 |
Software and hardware | Over Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Software and hardware | Point In Time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 500 | $ 600 | $ 1,600 | $ 1,800 |
Revenue - Disaggregation of R_2
Revenue - Disaggregation of Revenue by Geographic Area (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] | ||||
Revenues | $ 223,238 | $ 227,614 | $ 685,751 | $ 672,463 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 214,400 | 219,900 | 661,000 | 650,300 |
Other countries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 8,800 | $ 7,700 | $ 24,800 | $ 22,200 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Award Plans (Details) - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Stock-Based Compensation [Abstract] | ||||
Requisite service period (in years) | 3 years | |||
Stock-based compensation expense | $ 6.7 | $ 6.1 | $ 20.9 | $ 18.1 |
Stock-based compensation expense for retirement savings plan contributions | 1.1 | 1.1 | 3.5 | 3.3 |
Associated current and future income tax benefits recognized | 2 | $ 1.8 | 5.6 | $ 4.6 |
Performance Stock Awards | ||||
Stock-Based Compensation [Abstract] | ||||
Total unrecognized compensation cost related to non-vested share-based awards | 0.8 | $ 0.8 | ||
Unrecognized compensation cost, weighted-average period for recognition (in years) | 3 years | |||
Restricted stock and performance stock awards subject to vesting | ||||
Stock-Based Compensation [Abstract] | ||||
Total unrecognized compensation cost related to non-vested share-based awards | $ 31.9 | $ 31.9 | ||
Unrecognized compensation cost, weighted-average period for recognition (in years) | 2 years | |||
2012 Long term incentive plan | ||||
Stock-Based Compensation [Abstract] | ||||
Maximum number of shares authorized under plan (in shares) | 8.5 | 8.5 | ||
Number of shares available for issuance under the incentive plan (in shares) | 2.2 | 2.2 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Activity (Details) | 9 Months Ended |
Sep. 30, 2023 $ / shares shares | |
Performance Stock Awards | |
RSAs (Shares) | |
Awards granted (in shares) | shares | 10,842 |
Weighted-Average Grant Date Fair Value | |
Awards granted (in dollars per share) | $ / shares | $ 80.90 |
2012 Long term incentive plan | Restricted stock and performance stock awards subject to vesting | |
RSAs (Shares) | |
Restricted stock awards outstanding at beginning of period (in shares) | shares | 616,000 |
Awards granted (in shares) | shares | 240,000 |
Awards vested (in shares) | shares | (179,000) |
Awards forfeited (in shares) | shares | (34,000) |
Restricted stock awards outstanding at end of period (in shares) | shares | 643,000 |
Weighted-Average Grant Date Fair Value | |
Awards outstanding at beginning of period (in dollars per share) | $ / shares | $ 72.02 |
Awards granted (in dollars per share) | $ / shares | 73.50 |
Awards vested (in dollars per share) | $ / shares | 64.77 |
Awards forfeited (in dollars per share) | $ / shares | 72.46 |
Awards outstanding at end of period (in dollars per share) | $ / shares | $ 74.57 |
Stock-Based Compensation - Perf
Stock-Based Compensation - Performance Stock Valuation Assumptions (Details) - Performance Stock Awards | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected dividend yield | $ 0 |
Expected volatility | 52.37% |
Expected term (years) | 3 years 5 months 8 days |
Risk-free interest rate | 4.45% |
Net Income per Share - Basic an
Net Income per Share - Basic and Diluted (Details) - USD ($) $ / shares in Units, shares in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |||||
Net income | $ 22,596,000 | $ 23,015,000 | $ 75,758,000 | $ 77,933,000 | |
Add back interest expense on convertible notes, net of tax | 539,000 | 539,000 | 1,674,000 | 1,712,000 | |
Net income, diluted | $ 23,135,000 | $ 23,554,000 | $ 77,432,000 | $ 79,645,000 | |
Basic: | |||||
Weighted-average shares of common stock outstanding | 33,989 | 33,861 | 33,964 | 33,873 | |
Shares used in computing basic net income per share | 33,989 | 33,861 | 33,964 | 33,873 | |
Effect of dilutive securities: | |||||
Restricted stock and performance stock awards subject to vesting | 154 | 255 | 147 | 298 | |
Shares issuable for acquisition consideration (in shares) | 140 | 13 | 168 | 66 | |
Shares issuable for conversion of convertible senior notes (in shares) | 2,430 | 2,431 | 2,430 | 2,431 | |
Shares issuable for exercise of warrants (in shares) | 0 | 103 | 0 | 95 | |
Shares used in computing diluted net income per share | 36,713 | 36,663 | 36,709 | 36,763 | |
Basic net income per share (in dollars per share) | $ 0.66 | $ 0.68 | $ 2.23 | $ 2.30 | |
Diluted net income per share (in dollars per share) | $ 0.63 | $ 0.64 | $ 2.11 | $ 2.17 | |
Shares authorized to repurchase | $ 375,000,000 | ||||
Shares issuable for exercise of warrants (in shares) | 0 | 103 | 0 | 95 |
Net Income per Share - Anti-dil
Net Income per Share - Anti-dilutive Securities (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 2,584 | 2,056 | 2,622 | 2,058 |
Restricted stock and performance stock awards subject to vesting | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 153 | 76 | 191 | 78 |
Warrants related to the issuance of convertible senior notes | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Anti-dilutive securities | 2,431 | 1,980 | 2,431 | 1,980 |
Net Income per Share - Addition
Net Income per Share - Additional Information (Details) - USD ($) shares in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Earnings Per Share [Abstract] | ||
Shares authorized to repurchase | $ 375,000,000 | |
Cumulative amount repurchased | $ 287,400,000 | |
Cumulative number of shares repurchased (in shares) | 16.5 | |
Earnings Per Share, Basic, by Common Class, Including Two Class Method [Line Items] | ||
Shares authorized to repurchase | $ 375,000,000 |
Balance Sheet Components - Acco
Balance Sheet Components - Accounts Receivable (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Balance Sheet Related Disclosures [Abstract] | ||
Billed accounts receivable, net | $ 107,700 | $ 134,500 |
Unbilled revenues, net | 77,400 | 67,800 |
Total | $ 185,140 | $ 202,298 |
Balance Sheet Components - Othe
Balance Sheet Components - Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Offsetting [Abstract] | ||
Miscellaneous receivables | $ 4,400 | $ 2,900 |
Contractual commitment asset | 1,800 | 900 |
Federal/state income tax receivable | 9,900 | 9,200 |
Other current assets | 3,000 | 3,800 |
Other current assets | $ 19,148 | $ 16,756 |
Balance Sheet Components - Prop
Balance Sheet Components - Property and Equipment) (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Property and Equipment [Abstract] | ||
Less: Accumulated depreciation | $ (33,800) | $ (32,600) |
Property and equipment, net | 13,918 | 17,970 |
Computer hardware | ||
Property and Equipment [Abstract] | ||
Property and equipment | $ 26,400 | 26,300 |
Useful life | 3 years | |
Software | ||
Property and Equipment [Abstract] | ||
Property and equipment | $ 9,100 | 11,900 |
Furniture and fixtures | ||
Property and Equipment [Abstract] | ||
Property and equipment | $ 4,500 | 4,700 |
Useful life | 5 years | |
Leasehold improvements | ||
Property and Equipment [Abstract] | ||
Property and equipment | $ 7,700 | $ 7,700 |
Useful life | 5 years | |
Minimum | Software | ||
Property and Equipment [Abstract] | ||
Useful life | 1 year | |
Maximum | Software | ||
Property and Equipment [Abstract] | ||
Useful life | 7 years |
Balance Sheet Components - Ot_2
Balance Sheet Components - Other Non-current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Offsetting [Abstract] | ||
Non-current unbilled revenue | $ 1,900 | $ 1,600 |
Company owned life insurance (“COLI”) asset | 11,500 | 10,500 |
Long term deposits | 1,800 | 1,900 |
Credit facility deferred finance fees, net | 1,100 | 500 |
Other non-current assets | 12,700 | 8,500 |
Deferred income taxes | 18,300 | 18,100 |
Total | $ 47,266 | $ 41,116 |
Balance Sheet Components - Ot_3
Balance Sheet Components - Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Other current liabilities: | ||
Estimated fair value of contingent consideration liability | $ 4,500 | $ 32,700 |
Current operating lease liabilities | 7,300 | 10,300 |
Accrued variable compensation | 11,400 | 21,100 |
Deferred revenues | 5,300 | 12,700 |
Other current liabilities | 4,500 | 9,700 |
Payroll related costs | 11,600 | 8,900 |
Professional fees | 1,600 | 2,200 |
Accrued IT expenses | 5,400 | 4,300 |
Accrued medical claims expense | 3,400 | 2,900 |
Total | $ 54,992 | $ 104,780 |
Balance Sheet Components - Ot_4
Balance Sheet Components - Other Non-Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Other non-current liabilities: | ||
Deferred income taxes | $ 7,500 | $ 8,700 |
Unrecognized Tax Benefits, Income Tax Penalties Accrued | 17,800 | 17,500 |
Deferred compensation liability | 10,000 | 9,300 |
Non-current software accrual | 2,300 | 2,100 |
Other non-current liabilities | 3,600 | 5,900 |
Total | $ 41,154 | $ 43,515 |
Allowance for Credit Losses (De
Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Charges to expense, net of recoveries | $ (400) | $ 3,200 |
Other (1) | (2,000) | (400) |
Balance at September 30 | 3,400 | 5,700 |
Cumulative effect, period of adoption, adjusted balance | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Beginning balance | $ 5,800 | $ 2,900 |
Business Combinations - Narrati
Business Combinations - Narrative (Details) - USD ($) $ in Millions | Oct. 11, 2022 | Sep. 07, 2022 |
Ameex | ||
Business Acquisition [Line Items] | ||
Total purchase price | $ 36.1 | $ 54 |
Business Combinations - Ameex a
Business Combinations - Ameex and Inflection Point (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Oct. 11, 2022 | Sep. 07, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||||||
Goodwill | $ 577,628 | $ 577,628 | $ 565,161 | ||||
Acquisition costs | 456 | $ 2,148 | 464 | $ 2,508 | |||
Ameex | |||||||
Business Acquisition [Line Items] | |||||||
Cash paid for acquisition | $ 26,100 | ||||||
Company common stock issued at closing | 4,200 | ||||||
Initial fair value estimate of additional earnings-based contingent consideration | 4,300 | 4,000 | |||||
Net working capital settlement | 1,500 | ||||||
Total purchase price | 36,100 | $ 54,000 | |||||
Acquired tangible assets | 6,800 | ||||||
Identified intangible assets | 13,200 | ||||||
Liabilities assumed | (5,600) | ||||||
Goodwill | 21,700 | ||||||
Contingent consideration, maximum cash payout | 5,700 | 5,700 | |||||
Acquisition costs | $ 1,700 | 1,600 | |||||
Inflection Point | |||||||
Business Acquisition [Line Items] | |||||||
Cash paid for acquisition | 44,600 | ||||||
Company common stock issued at closing | 3,000 | ||||||
Initial fair value estimate of additional earnings-based contingent consideration | 6,600 | 500 | |||||
Net working capital settlement | (200) | ||||||
Acquired tangible assets | 3,300 | ||||||
Identified intangible assets | 20,100 | ||||||
Liabilities assumed | (10,500) | ||||||
Goodwill | $ 41,100 | ||||||
Contingent consideration, maximum cash payout | 13,000 | 13,000 | |||||
Initial fair value estimate, Adjustments, as of the acquisition date, of potential payments under the contingent consideration arrangement including cash and shares. | 1,300 | 6,200 | |||||
Amex Technologies | |||||||
Business Acquisition [Line Items] | |||||||
Initial fair value estimate, Adjustments, as of the acquisition date, of potential payments under the contingent consideration arrangement including cash and shares. | $ 400 | $ 400 |
Business Combinations - Intangi
Business Combinations - Intangible Assets Acquired (Details) - Inflection Point $ in Millions | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Finite-Lived Intangible Assets, Gross [Abstract] | |
Aggregate Acquisitions | $ 33.3 |
Customer relationships | |
Finite-Lived Intangible Assets, Gross [Abstract] | |
Weighted average useful life (in years) | 10 years |
Estimated Useful Life | 10 years |
Aggregate Acquisitions | $ 29.9 |
Customer backlog | |
Finite-Lived Intangible Assets, Gross [Abstract] | |
Weighted average useful life (in years) | 1 year |
Estimated Useful Life | 1 year |
Aggregate Acquisitions | $ 2.8 |
Non-compete agreements | |
Finite-Lived Intangible Assets, Gross [Abstract] | |
Weighted average useful life (in years) | 5 years |
Estimated Useful Life | 5 years |
Aggregate Acquisitions | $ 0.3 |
Trade name | |
Finite-Lived Intangible Assets, Gross [Abstract] | |
Weighted average useful life (in years) | 1 year |
Estimated Useful Life | 1 year |
Aggregate Acquisitions | $ 0.3 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2022 | $ 565,161 |
Measurement period adjustments for acquisitions | 3,000 |
Effect of foreign currency translation adjustments | 9,400 |
Balance at September 30, 2023 | $ 577,628 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amounts | $ 130,100 | $ 165,000 |
Accumulated Amortization | (55,200) | (76,100) |
Net Carrying Amounts | 74,882 | 88,937 |
Customer relationships | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amounts | 119,000 | 151,900 |
Accumulated Amortization | (46,900) | (68,400) |
Net Carrying Amounts | 72,100 | 83,500 |
Non-compete agreements | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amounts | 1,100 | 1,700 |
Accumulated Amortization | (500) | (1,000) |
Net Carrying Amounts | 600 | 700 |
Customer backlog | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amounts | 900 | 2,700 |
Accumulated Amortization | (900) | (700) |
Net Carrying Amounts | 0 | 2,000 |
Trade name | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amounts | 700 | 900 |
Accumulated Amortization | (700) | (700) |
Net Carrying Amounts | 0 | 200 |
Developed software | ||
Finite-Lived Intangible Assets, Net [Abstract] | ||
Gross Carrying Amounts | 8,400 | 7,800 |
Accumulated Amortization | (6,200) | (5,300) |
Net Carrying Amounts | $ 2,200 | $ 2,500 |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Estimated Useful Lives (Details) | Sep. 30, 2023 |
Customer relationships | Minimum | |
Intangible Assets [Abstract] | |
Estimated useful lives (in years) | 5 years |
Customer relationships | Maximum | |
Intangible Assets [Abstract] | |
Estimated useful lives (in years) | 10 years |
Non-compete agreements | Minimum | |
Intangible Assets [Abstract] | |
Estimated useful lives (in years) | 4 years |
Non-compete agreements | Maximum | |
Intangible Assets [Abstract] | |
Estimated useful lives (in years) | 5 years |
Customer backlog | |
Intangible Assets [Abstract] | |
Estimated useful lives (in years) | 1 year |
Trade name | |
Intangible Assets [Abstract] | |
Estimated useful lives (in years) | 1 year |
Developed software | Minimum | |
Intangible Assets [Abstract] | |
Estimated useful lives (in years) | 1 year |
Developed software | Maximum | |
Intangible Assets [Abstract] | |
Estimated useful lives (in years) | 7 years |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Estimated Amortization Expense (Details) $ in Millions | Sep. 30, 2023 USD ($) |
Estimated Amortization Expense [Abstract] | |
2023 remaining | $ 4.2 |
2024 | 15.4 |
2025 | 12 |
2026 | 9.6 |
2027 | 7.3 |
Thereafter | $ 26.4 |
Long-term Debt - Revolving Cred
Long-term Debt - Revolving Credit Facility (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Mar. 29, 2023 | |
Line of Credit [Abstract] | |||
Payment for credit facility financing fees | $ 750,000 | $ 0 | |
Convertible debt | Minimum | |||
Line of Credit [Abstract] | |||
Line of Credit Facility, Commitment Fee Percentage | 0.15% | ||
Convertible debt | Maximum | |||
Line of Credit [Abstract] | |||
Line of Credit Facility, Commitment Fee Percentage | 0.20% | ||
Conversion Circumstance One | Convertible debt | |||
Line of Credit [Abstract] | |||
Conversion rate of the notes on trading day (as percent) | 130% | ||
Revolving credit facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Minimum | |||
Line of Credit [Abstract] | |||
Margin interest rate percentage | 1% | ||
Revolving credit facility | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | Maximum | |||
Line of Credit [Abstract] | |||
Margin interest rate percentage | 2% | ||
Revolving credit facility | Credit agreement | |||
Line of Credit [Abstract] | |||
Allowable amount of letters of credit for issuance | $ 10,000,000 | ||
Additional commitment increase | 75,000,000 | ||
Maximum borrowing capacity | $ 300,000,000 | ||
Payment for credit facility financing fees | 800,000 | ||
Available borrowing capacity | $ 300,000,000 | ||
Revolving credit facility | Credit agreement | Prime rate | |||
Line of Credit [Abstract] | |||
Interest rate at end of period | 8.50% | ||
Revolving credit facility | Credit agreement | Prime rate | Minimum | |||
Line of Credit [Abstract] | |||
Margin interest rate percentage | 0% | ||
Revolving credit facility | Credit agreement | Prime rate | Maximum | |||
Line of Credit [Abstract] | |||
Margin interest rate percentage | 1% | ||
Revolving credit facility | Credit agreement | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate | |||
Line of Credit [Abstract] | |||
Interest rate at end of period | 5.31% |
Long-term Debt - Convertible Se
Long-term Debt - Convertible Senior Notes (Additional Notes) (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | ||||
Nov. 09, 2021 USD ($) $ / shares | Aug. 14, 2020 USD ($) $ / shares | Sep. 30, 2023 USD ($) day $ / shares Rate | Dec. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | |
Debt Instrument [Line Items] | |||||
Share price at closing (in dollars per share) | $ / shares | $ 57.86 | ||||
Retained earnings | $ 454,021 | $ 378,263 | |||
Long-term debt, net | $ 396,303 | 394,587 | |||
Cumulative effect, period of adoption, adjustment | |||||
Debt Instrument [Line Items] | |||||
Retained earnings | $ 2,100 | ||||
Long-term debt, net | 66,200 | ||||
Deferred Tax Assets, Tax Deferred Expense | 16,800 | ||||
Additional Paid in Capital | $ 51,500 | ||||
2025 Notes | Warrants related to the issuance of convertible senior notes | |||||
Debt Instrument [Line Items] | |||||
Warrant exercise price (in dollars per share) | $ / shares | $ 81.05 | ||||
2026 Notes | Warrants related to the issuance of convertible senior notes | |||||
Debt Instrument [Line Items] | |||||
Warrant exercise price (in dollars per share) | $ / shares | $ 295.29 | ||||
Convertible debt | Conversion Circumstance One | |||||
Debt Instrument [Line Items] | |||||
Conversion rate of the notes on trading day (as percent) | 130% | ||||
Threshold trading days (whether or not consecutive) | day | 20 | ||||
Consecutive trading day period (in days) | day | 30 | ||||
Convertible debt | Conversion Circumstance Two | |||||
Debt Instrument [Line Items] | |||||
Conversion rate of the notes on trading day (as percent) | Rate | 98% | ||||
Threshold trading days (whether or not consecutive) | day | 5 | ||||
Consecutive trading day period (in days) | day | 10 | ||||
Convertible debt | 2025 Notes | |||||
Debt Instrument [Line Items] | |||||
Aggregated principal amount | $ 230,000 | ||||
Interest rate stated, percentage | 1.25% | ||||
Shares conversion rate | 19.3538 | ||||
Initial conversion price (in dollars per share) | $ / shares | $ 51.67 | ||||
Principal | $ 23,300 | 23,300 | |||
Long-term debt, net | $ 23,000 | 22,900 | |||
Convertible debt | 2026 Notes | |||||
Debt Instrument [Line Items] | |||||
Aggregated principal amount | $ 380,000 | ||||
Interest rate stated, percentage | 0.125% | ||||
Shares conversion rate | 5.2100 | ||||
Initial conversion price (in dollars per share) | $ / shares | $ 191.94 | ||||
Principal | $ 380,000 | 380,000 | |||
Long-term debt, net | $ 373,300 | $ 371,700 |
Long-term Debt - Liability and
Long-term Debt - Liability and Equity Component of Note (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Long-term debt: | ||
Net carrying amount | $ 396,303 | $ 394,587 |
Convertible debt | 2025 Notes | ||
Long-term debt: | ||
Principal | 23,300 | 23,300 |
Less: Unamortized debt issuance costs | (300) | (400) |
Net carrying amount | 23,000 | 22,900 |
Convertible debt | 2026 Notes | ||
Long-term debt: | ||
Principal | 380,000 | 380,000 |
Less: Unamortized debt issuance costs | (6,700) | (8,300) |
Net carrying amount | $ 373,300 | $ 371,700 |
Long-term Debt - Interest Expen
Long-term Debt - Interest Expense on Note (Details) - Senior notes - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
2025 Notes | ||||
Debt Instrument [Line Items] | ||||
Coupon interest | $ 100 | $ 100 | $ 200 | $ 200 |
Amortization of debt issuance costs | 0 | 0 | 100 | 100 |
Total interest expense recognized | 100 | 100 | 300 | 300 |
2026 Notes | ||||
Debt Instrument [Line Items] | ||||
Coupon interest | 100 | 100 | 400 | 400 |
Amortization of debt issuance costs | 600 | 600 | 1,600 | 1,600 |
Total interest expense recognized | $ 700 | $ 700 | $ 2,000 | $ 2,000 |
Long-term Debt - Convertible No
Long-term Debt - Convertible Note Hedges and Warrants (Details) - $ / shares shares in Millions | 9 Months Ended | ||
Nov. 09, 2021 | Aug. 14, 2020 | Sep. 30, 2023 | |
2025 Notes | |||
Debt Instrument [Line Items] | |||
Expiration period for Notes Warrants in trading days | 100 days | ||
2026 Notes | |||
Debt Instrument [Line Items] | |||
Expiration period for Notes Warrants in trading days | 80 days | ||
Convertible note hedges | 2025 Notes | |||
Debt Instrument [Line Items] | |||
Conversion option to acquire shares (in shares) | 0.5 | ||
Strike price (in dollars per share) | $ 51.67 | ||
Convertible note hedges | 2026 Notes | |||
Debt Instrument [Line Items] | |||
Conversion option to acquire shares (in shares) | 2 | ||
Strike price (in dollars per share) | $ 191.94 | ||
Warrant | 2025 Notes | |||
Debt Instrument [Line Items] | |||
Warrant exercise price (in dollars per share) | $ 81.05 | ||
Warrant | 2026 Notes | |||
Debt Instrument [Line Items] | |||
Warrant exercise price (in dollars per share) | $ 295.29 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Tax Credit [Line Items] | |||||
Effective tax rate | 29.40% | 29.40% | 26.90% | 25.20% | |
Deferred income taxes | $ 7.5 | $ 7.5 | $ 8.7 |
Derivatives - Notional Amounts
Derivatives - Notional Amounts (Details) - Total derivatives not designated as hedges - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | Dec. 31, 2022 | |
Notional Disclosures [Abstract] | |||||
Derivative notional amounts | $ 28,700 | $ 28,700 | $ 31,000 | ||
Gain (Loss) on Foreign Currency Derivatives Recorded in Earnings, Net | (200) | $ (1,000) | (1,800) | $ 900 | |
Foreign exchange contracts | |||||
Notional Disclosures [Abstract] | |||||
Derivative notional amounts | $ 28,700 | $ 28,700 | $ 31,000 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
COLI asset | $ 11.5 | $ 10.5 |
Level 2 | 2025 Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note, debt instrument | 29 | 33.8 |
Level 2 | 2026 Notes | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Note, debt instrument | 305.9 | 295.5 |
Money market funds | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents | $ 39 | $ 8.4 |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Sep. 30, 2023 | Sep. 30, 2022 | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease expense | $ 3.1 | $ 3.2 | $ 9.7 | $ 9.6 |
Minimum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease terms (in years) | 1 year | 1 year | ||
Maximum | ||||
Lessee, Lease, Description [Line Items] | ||||
Remaining lease terms (in years) | 7 years | 7 years |
Leases - Lease Liabilities (Det
Leases - Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Other current liabilities | $ 7,300 | $ 10,300 |
Operating lease liabilities | 18,052 | 18,528 |
Total | $ 25,400 | $ 28,800 |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments under ASC Topic 842 (Details) - USD ($) $ in Millions | Sep. 30, 2023 | Dec. 31, 2022 |
Commitments and Contingencies Disclosure [Abstract] | ||
2023 remaining | $ 1.2 | |
2024 | 8.9 | |
2025 | 6.3 | |
2026 | 3.9 | |
2027 | 3.6 | |
Thereafter | 3.5 | |
Total future lease payments | 27.4 | |
Less implied interest | (2) | |
Total | $ 25.4 | $ 28.8 |