Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Mar. 01, 2024 | Jun. 30, 2023 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2023 | ||
Document Transition Report | false | ||
Entity File Number | 001-33287 | ||
Entity Registrant Name | Information Services Group Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 20-5261587 | ||
Entity Address, Address Line One | 2187 Atlantic Street | ||
Entity Address, City or Town | Stamford | ||
Entity Address, State or Province | CT | ||
Entity Address, Postal Zip Code | 06902 | ||
City Area Code | 203 | ||
Local Phone Number | 517-3100 | ||
Title of 12(b) Security | Shares of Common Stock, $0.001 par value | ||
Trading Symbol | III | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
ICFR Auditor Attestation Flag | true | ||
Entity Shell Company | false | ||
Document Financial Statement Error Correction [Flag] | false | ||
Entity Public Float | $ 217,258,382 | ||
Entity Common Stock, Shares Outstanding | 48,335,220 | ||
Auditor Name | PricewaterhouseCoopers LLP | ||
Auditor Location | New York, New York | ||
Auditor Firm ID | 238 | ||
Entity Central Index Key | 0001371489 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2023 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 22,636 | $ 30,587 |
Accounts receivable and contract assets, net of allowance of $5,288 and $272, respectively | 82,117 | 80,170 |
Prepaid expenses and other current assets | 8,091 | 4,724 |
Total current assets | 112,844 | 115,481 |
Restricted cash | 173 | 83 |
Furniture, fixtures and equipment, net | 6,446 | 5,929 |
Right-of-use lease assets | 7,473 | 6,780 |
Goodwill | 97,232 | 94,972 |
Intangible assets, net | 12,615 | 14,380 |
Deferred tax assets | 4,775 | 2,818 |
Other assets | 5,787 | 2,585 |
Total assets | 247,345 | 243,028 |
Current liabilities | ||
Accounts payable | 11,302 | 15,925 |
Current maturities of long-term debt | 4,300 | |
Contract liabilities | 9,521 | 7,058 |
Accrued expenses and other current liabilities | 25,451 | 23,908 |
Total current liabilities | 46,274 | 51,191 |
Long-term debt, net of current maturities | 79,175 | 74,416 |
Deferred tax liabilities | 2,384 | 2,391 |
Operating lease liabilities | 5,287 | 4,857 |
Other liabilities | 12,143 | 9,742 |
Total liabilities | 145,263 | 142,597 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity | ||
Preferred stock, $0.001 par value; 10,000 shares authorized; none issued | ||
Common stock, $0.001 par value; 100,000 shares authorized; 49,472 shares issued and 48,653 outstanding at December 31, 2023 and 49,472 shares issued and 48,300 outstanding at December 31, 2022 | 49 | 49 |
Additional paid-in capital | 217,684 | 226,293 |
Treasury stock (819 and 1,172 common shares, respectively, at cost) | (3,959) | (7,487) |
Accumulated other comprehensive loss | (8,989) | (9,677) |
Accumulated deficit | (102,703) | (108,747) |
Total stockholders' equity | 102,082 | 100,431 |
Total liabilities and stockholders' equity | $ 247,345 | $ 243,028 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
CONSOLIDATED BALANCE SHEETS | ||
Accounts receivables and contract assets, allowances | $ 5,288 | $ 272 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000 | 10,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000 | 100,000 |
Common stock, shares issued | 49,472 | 49,472 |
Common stock, shares outstanding | 48,653 | 48,300 |
Treasury stock, shares | 819 | 1,172 |
CONSOLIDATED STATEMENT OF INCOM
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME | |||
Revenues | $ 291,054 | $ 286,267 | $ 277,832 |
Operating expenses | |||
Direct costs and expenses for advisors | 178,913 | 169,650 | 168,475 |
Selling, general and administrative | 91,271 | 81,769 | 78,759 |
Depreciation and amortization | 6,258 | 5,368 | 5,331 |
Operating income | 14,612 | 29,480 | 25,267 |
Interest income | 497 | 189 | 142 |
Interest expense | (6,190) | (3,157) | (2,342) |
Foreign currency transaction (loss) gain | (158) | 170 | 44 |
Income before taxes | 8,761 | 26,682 | 23,111 |
Income tax provision | 2,607 | 6,956 | 7,582 |
Net income | $ 6,154 | $ 19,726 | $ 15,529 |
Weighted average shares outstanding: | |||
Basic | 48,609 | 48,175 | 48,638 |
Diluted | 50,175 | 50,420 | 51,756 |
Earnings per share: | |||
Basic | $ 0.13 | $ 0.41 | $ 0.32 |
Diluted | $ 0.12 | $ 0.39 | $ 0.30 |
Comprehensive income: | |||
Net income | $ 6,154 | $ 19,726 | $ 15,529 |
Foreign currency translation gain (loss), net of tax expense (benefit) of $212, ($859) and ($724), respectively | 688 | (2,737) | (2,269) |
Comprehensive income | $ 6,842 | $ 16,989 | $ 13,260 |
CONSOLIDATED STATEMENT OF INC_2
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME | |||
Foreign currency translation loss (gain), tax expense (benefit) | $ 212 | $ (859) | $ (724) |
CONSOLIDATED STATEMENT OF STOCK
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In-Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Accumulated Deficit Cumulative effect adjustment | Accumulated Deficit | Cumulative effect adjustment | Total |
Balance at Dec. 31, 2020 | $ 48 | $ 248,018 | $ (256) | $ (4,671) | $ (144,002) | $ 99,137 | ||
Balance (in shares) at Dec. 31, 2020 | 48,297 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net Income (Loss) | 15,529 | 15,529 | ||||||
Other comprehensive gain (loss) | (2,269) | (2,269) | ||||||
Treasury shares repurchased | (16,331) | (16,331) | ||||||
Proceeds from issuance of ESPP shares | 61 | 549 | 610 | |||||
Issuance of treasury shares | (12,167) | 12,167 | ||||||
Issuance of common stock for RSUs vested | $ 1 | (1) | ||||||
Issuance of common stock for RSUs vested (in shares) | 1,065 | |||||||
Accrued dividends on unvested shares | (313) | (313) | ||||||
Cash dividends paid to shareholders | (4,437) | (4,437) | ||||||
Stock based compensation | 6,467 | 6,467 | ||||||
Balance at Dec. 31, 2021 | $ 49 | 237,628 | (3,871) | (6,940) | (128,473) | 98,393 | ||
Balance (in shares) at Dec. 31, 2021 | 49,362 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net Income (Loss) | 19,726 | 19,726 | ||||||
Other comprehensive gain (loss) | (2,737) | (2,737) | ||||||
Treasury shares repurchased | (16,124) | (16,124) | ||||||
Proceeds from issuance of ESPP shares | (249) | 1,193 | 944 | |||||
Issuance of common stock for RSUs vested | (11,315) | 11,315 | ||||||
Accrued dividends on unvested shares | (370) | (370) | ||||||
Cash dividends paid to shareholders | (7,461) | (7,461) | ||||||
Issuance of common stock for Change 4 Growth acquisition | $ 0 | 600 | 600 | |||||
Issuance of common stock for Change 4 Growth acquisition (in shares) | 110 | |||||||
Stock based compensation | 7,460 | 7,460 | ||||||
Balance at Dec. 31, 2022 | $ 49 | 226,293 | (7,487) | (9,677) | $ (110) | (108,747) | $ (110) | $ 100,431 |
Balance (in shares) at Dec. 31, 2022 | 49,472 | 49,472 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net Income (Loss) | 6,154 | $ 6,154 | ||||||
Other comprehensive gain (loss) | 688 | 688 | ||||||
Treasury shares repurchased | (6,220) | (6,220) | ||||||
Proceeds from issuance of ESPP shares | (347) | 1,277 | 930 | |||||
Issuance of common stock for RSUs vested | (8,471) | 8,471 | ||||||
Accrued dividends on unvested shares | (236) | (236) | ||||||
Cash dividends paid to shareholders | (8,687) | (8,687) | ||||||
Stock based compensation | 9,132 | 9,132 | ||||||
Balance at Dec. 31, 2023 | $ 49 | $ 217,684 | $ (3,959) | $ (8,989) | $ (102,703) | $ 102,082 | ||
Balance (in shares) at Dec. 31, 2023 | 49,472 | 49,472 |
CONSOLIDATED STATEMENT OF STO_2
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - $ / shares | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY | |||
Cash dividends paid to shareholders (USD per share) | $ 0.18 | $ 0.15 | $ 0.09 |
CONSOLIDATED STATEMENT OF CASH
CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Cash flows from operating activities | |||
Net income | $ 6,154 | $ 19,726 | $ 15,529 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | |||
Depreciation expense | 3,094 | 3,045 | 2,688 |
Amortization of intangible assets | 3,164 | 2,323 | 2,643 |
Deferred tax benefit from stock issuances | (241) | (1,290) | (2,389) |
Write-off of deferred financing costs | 379 | ||
Amortization of deferred financing costs | 238 | 340 | 354 |
Stock-based compensation | 9,132 | 7,460 | 6,467 |
Change in fair value of contingent consideration | 104 | 1,420 | 101 |
Provisions for credit losses | 5,434 | 320 | (138) |
Deferred tax (benefit) provision | (1,966) | 757 | 2,330 |
Changes in operating assets and liabilities: | |||
Accounts receivable and contract assets | (6,662) | (13,989) | 2,648 |
Prepaid expenses and other assets | (6,471) | (948) | (243) |
Accounts payable | (4,962) | (699) | 4,503 |
Contract liabilities | 1,101 | (76) | 1,928 |
Accrued expenses and other liabilities | 3,774 | (7,243) | 5,521 |
Net cash provided by operating activities | 12,272 | 11,146 | 41,942 |
Cash flows from investing activities | |||
Change 4 Growth acquisition (Note 4) | (3,450) | ||
Ventana Research acquisition (Note 4) | (1,000) | ||
Purchase of furniture, fixtures and equipment | (3,433) | (3,423) | (2,320) |
Net cash used in investing activities | (4,433) | (6,873) | (2,320) |
Cash flows from financing activities | |||
Proceeds from revolving facility (Note 12) | 84,175 | 9,000 | |
Repayment of outstanding debt (Note 12) | (84,175) | ||
Principal payments on borrowings | (4,300) | (4,300) | |
Proceeds from issuance of employee stock purchase plan shares | 930 | 944 | 610 |
Debt financing costs | (827) | ||
Payments related to tax withholding for stock-based compensation | (2,657) | (4,054) | (7,109) |
Payment of contingent consideration | (1,460) | (1,000) | (2,558) |
Cash dividends paid to shareholders | (8,687) | (7,461) | (4,437) |
Treasury shares repurchased | (3,497) | (12,070) | (16,331) |
Net cash used in financing activities | (16,198) | (18,941) | (34,125) |
Effect of exchange rate changes on cash | 498 | (2,271) | (1,713) |
Net (decrease) increase in cash, cash equivalents, and restricted cash | (7,861) | (16,939) | 3,784 |
Cash, cash equivalents, and restricted cash, beginning of period | 30,670 | 47,609 | 43,825 |
Cash, cash equivalents, and restricted cash, end of period | 22,809 | 30,670 | 47,609 |
Supplemental disclosures of cash flow information: | |||
Interest | 5,263 | 2,397 | 1,875 |
Taxes, net of refunds | 8,239 | 12,516 | 3,582 |
Non-cash investing and financing activities: | |||
Issuance of treasury stock for vested restricted stock units | $ 8,471 | $ 11,315 | $ 12,167 |
DESCRIPTION OF ORGANIZATION AND
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | 12 Months Ended |
Dec. 31, 2023 | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | |
DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIONS | NOTE 1—DESCRIPTION OF ORGANIZATION AND BUSINESS OPERATIO NS Information Services Group, Inc. (the “Company”, or “ISG”) was founded in 2006 with the strategic vision to become a high-growth, leading provider of information-based advisory services. The Company specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; technology strategy and operations design; change management; market intelligence and technology research and analysis. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. These consolidated financial statements and footnotes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Unless the context requires otherwise, references to the Company include ISG and its consolidated subsidiaries. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the revenue recognition guidance for contracts in which control is transferred to the customer over time affect the amounts of revenues, expenses, contract assets and contract liabilities. Numerous internal and external factors can affect estimates. Estimates are also used for but not limited to allowance for doubtful accounts, useful lives of furniture, fixtures and equipment and definite lived intangible assets, depreciation expense, fair value assumptions in evaluating goodwill for impairment, income taxes and deferred tax asset valuation and the valuation of stock-based compensation. Business Combinations We have acquired businesses critical to the Company’s long-term growth strategy. Results of operations for acquisitions are included in the accompanying consolidated statement of comprehensive income from the date of acquisition. Acquisitions are accounted for using the purchase method of accounting and the purchase price is allocated to the net assets acquired based upon their estimated fair values at the date of acquisition. The excess of the purchase price over the net assets is recorded as goodwill. Acquisition-related costs are expensed as incurred and recorded in selling, general and administrative expenses. Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents, including certain money market accounts. The Company principally maintains its cash in money market and bank deposit accounts in the United States of America, which typically exceed applicable insurance limits. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. Restricted Cash Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes. Accounts Receivable, Contract Assets and Allowance for Doubtful Accounts Our trade receivables primarily consist of amounts due for services already performed. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to pay fees or for disputes that affect its ability to fully collect billed accounts receivable. The allowance for these risks is prepared by reviewing the status of all accounts and recording reserves on a specific identification method based on previous experiences and historical bad debts. However, our actual experience may vary from these estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay their invoices, we may need to record additional allowances or write-offs in future periods. To the extent the provision relates to a client’s inability or unwillingness to make required payments, the provision is recorded as bad debt expense, which is classified within selling, general and administrative expense in the accompanying consolidated statement of comprehensive income. Historically, the Company’s bad debt reserves and write-offs have not been significant. The provision for unbilled services is recorded as a bad debt expense to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. Historically, the Company’s unbilled receivable reserves and write-offs have not been significant. During the fourth quarter of 2023, a client that had engaged us for two multi-year projects, which previously commenced in 2021 and 2022, failed to make payments as per the contracted payment schedule and we ceased performing services under the agreements. After unsuccessful negotiations, we provided the client with notice that we would be terminating the respective projects. Accordingly, during the fourth quarter of 2023, the Company recorded through bad debt expense an allowance for doubtful accounts reserve of 31, 2023 represents management' s best estimate of the probable amount of collection related to the outstanding amounts under these agreements. In the event that collection efforts prove unsuccessful, the Company may seek payment through other means, including legal action. Actual collections from the client may differ from the Company's estimate. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of prepaid expenses for insurance, conferences, deposits for facilities, programs, software and promotion items. Furniture, Fixtures and Equipment, net Furniture, fixtures and equipment are recorded at cost. Depreciation is computed by applying the straight-line method over the estimated useful life of the assets, which ranges from two two The Company capitalizes internal-use software and website development costs and records these amounts within Furniture, Fixtures and Equipment, net. Accounting standards require that certain costs related to the development or purchase of internal-use software and systems as well as the costs incurred in the application development stage related to its website be capitalized and amortized over the estimated useful life of the software or system. They also require that costs related to the preliminary project stage, data conversion and post implementation/operation stage of an internal-use software development project be expensed as incurred. During the years ended December 31, 2023, 2022 and 2021 the Company capitalized $1.7 million, $1.7 million and $0.8 million, respectively, of costs associated with system and website development. Goodwill Our goodwill represents the excess of the cost of businesses acquired over the fair value of the net assets acquired at the date of acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with accounting and disclosure requirements for goodwill and other indefinite-lived intangible assets. This test is performed by us during our fourth fiscal quarter or more frequently if we believe impairment indicators are present. A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the fair value of the reporting unit is less than its carrying amount. If, based on the evaluation, it is determined to be more likely than not that the fair value is less than the carrying value then goodwill is tested further for impairment. If the fair value of goodwill is lower than its carrying amount, an impairment loss is recognized in an amount equal to the difference. Subsequent increases in value are not recognized in the financial statements. There was no impairment of goodwill during the years ended December 31, 2023, 2022 and 2021. There were no indicators identified in 2023, 2022 or 2021 that would suggest that it is more likely than not that the Company’s reporting unit is impaired. Long-Lived Assets Long-lived assets, excluding goodwill and indefinite-lived intangibles, to be held and used by the Company are reviewed to determine whether any significant change in the long-lived asset’s physical condition, a change in industry conditions or a reduction in cash flows associated with the asset group that contains the long-lived asset. If these or other factors indicate the carrying amount of the asset group, which is the lowest level for which identifiable cash flows exist that are separately identifiable from other cash flows, may not be recoverable, the Company determines whether impairment has occurred through the use of an undiscounted cash flow analysis. If impairment has occurred, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset group. The fair value of the asset group is measured using market prices or, in the absence of market prices, an estimate of discounted cash flows. Cash flows are generally discounted at an interest rate commensurate with our weighted average cost of capital. Assets are classified as held for sale when the Company has a plan for disposal of certain assets and those assets meet the held for sale criteria. Debt Issuance Costs Costs directly incurred in obtaining long-term financing, typically bank and attorney fees, are deferred and are amortized over the life of the related loan. Deferred issuance costs are classified as a direct deduction to the long-term debt in the accompanying consolidated balance sheet. Amortization of debt issuance costs is included in interest expense and totaled $0.2 million, $0.3 million and $0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. Revenue Recognition six Reimbursable Expenditures Amounts billed to customers for reimbursable expenditures are included in revenues and the associated costs incurred by the Company are included in direct costs and expenses for advisors in the accompanying consolidated statement of comprehensive income. Non-reimbursable amounts are expensed as incurred. Reimbursable expenditures totaled $1.5 million $0.8 million and $0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. The increase was attributable to pandemic-related travel restrictions being lifted and attending more in person meetings with clients to drive revenue. Direct Costs and Expenses for Advisors Direct costs and expenses for advisors include payroll expenses and advisory fees directly associated with the generation of revenues and other program expenses. Direct costs and expenses for advisors are expensed as incurred. Direct costs and expenses for advisors also include expense accruals for discretionary bonus payments. Bonus accrual levels are adjusted throughout the year based on actual and projected Company performance. Stock-Based Compensation We grant restricted stock units with a fair value that is determined based on the closing price of our common stock on the date of grant. Such grants generally vest ratably over a two four - We follow the provisions of accounting and disclosure requirements for share-based payments, including the measurement and recognition of all share-based compensation under the fair value method. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash investments with high-quality financial institutions. The Company extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history and generally does not require collateral. Treasury Stock The Company makes treasury stock purchases in the open market pursuant to the share repurchase program, which was most recently approved by the Board of Directors on August 1, 2023. Treasury stock is recorded on the consolidated balance sheet at cost as a reduction of stockholders’ equity. Shares are released from Treasury at original cost on a first-in, first-out basis, with any gain or loss on the sale reflected as an adjustment to additional paid-in capital. Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenue and expense items are translated at average exchange rates for the reporting period. Resulting translation adjustments are included in the accompanying statement of comprehensive income and accompanying statement of stockholders’ equity as a component of Accumulated Other Comprehensive Loss The functional currency of the Company and its subsidiaries is the respective local currency. The Company has contracts denominated in foreign currencies, and therefore a portion of the Company’s revenues are subject to foreign currency risks. Transactional currency gains and losses that arise from transactions denominated in currencies other than the functional currencies of our operations are recorded in Foreign Currency Translation Fair Value of Financial Instruments The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities and accrued interest approximate fair value. Fair value measurements were applied with respect to our nonfinancial assets and liabilities measured on a nonrecurring basis, which would consist of measurements primarily to goodwill, intangible assets and other long-lived assets and assets acquired and liabilities assumed in a business combination. Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy: ● ● ● During 2023, there were no transfers of our financial assets between Level 1, Level 3 fair value The following tables summarize assets and liabilities measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements December 31, 2023 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 7,067 $ — $ — $ 7,067 Total $ 7,067 $ — $ — $ 7,067 Liabilities: Contingent consideration (1) $ — $ — $ 5,894 $ 5,894 $ — $ — $ 5,894 $ 5,894 Basis of Fair Value Measurements December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 5,593 $ 5,593 $ — $ — $ 5,593 $ 5,593 (1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities,” and “Other liabilities”, respectively, as of December 31, 2023 and December 31, 2022. The fair value measurement of contingent consideration is classified within Level 3 of the fair value hierarchy and reflects the Company’s own assumptions in measuring fair values using the income approach discounted using a rate The following table represents the change in the contingent consideration liability during the years ended December 31, 2023 and 2022: December 31, 2023 2022 Beginning Balance $ 5,593 $ 2,420 Neuralify earnout adjustment (1) — (1,420) Neuralify earnout payment — (1,000) Change 4 Growth contingent consideration payment (1,460) — Change 4 Growth contingent consideration accrued — 5,560 Ventana contingent consideration accrued 1,657 — Accretion of contingent consideration 104 33 Ending Balance $ 5,894 $ 5,593 (1) Neuralify earnout adjustment relates to a change in the achievement of a certain milestone specific to the acquisition. The Company’s financial instruments include outstanding borrowings of $79.2 million both as of December 31, 2023 and December 31, 2022, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company’s outstanding borrowings was approximately $79.8 million and $76.5 million at December 31, 2023 and December 31, 2022, respectively. The fair values of debt have been estimated using a discounted cash flow Income Taxes We use the asset and liability method to account for income taxes, including recognition of deferred tax assets and liabilities for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax basis. We review our deferred tax assets for recovery. A valuation allowance is established when we believe that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in the valuation allowance from period to period are included in our tax provision in the period of change. For uncertain tax positions, we use the prescribed model for assessing the financial recognition and measurement of all tax positions taken or expected to be taken in tax returns. This guidance provides clarification on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as well as the related interest. Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable and contract assets, and available for sale debt securities. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses and additional disclosures. We adopted this standard using the modified retrospective approach with an effective date of January 1, 2023 . |
REVENUE
REVENUE | 12 Months Ended |
Dec. 31, 2023 | |
REVENUE | |
REVENUE | NOTE 3—REVENUE The majority of our revenue is derived from contracts that can span from a few months to several years. We enter into contracts that can include various combinations of services, which, depending on contract type, are sometimes capable of being distinct. If services are determined to be distinct, they are accounted for as separate performance obligations. A performance obligation is a promise in a contract to transfer a distinct good or service to the client and is the unit of account. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The majority of our contracts have a single performance obligation as the promise to transfer the individual services is not separately identifiable from other promises in the contracts and, therefore, is not distinct. For contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation using our best estimate of the standalone selling price, or SSP, of each distinct product or service in the contract. The Company establishes SSP based on management’s estimated selling price or observable prices of products or services sold separately in comparable circumstances to similar clients. Our contracts may include promises to transfer multiple services and products to a client. Determining whether services and products are considered distinct performance obligations that should be accounted for separately versus together may require judgment. Contract Balances The timing of revenue recognition, billings and cash collections result in billed accounts receivables, unbilled receivables (contract assets) and customer advances and deposits (contract liabilities). Our clients are billed based on the type of arrangement. A portion of our services is billed monthly based on hourly or daily rates. There are also client engagements in which we bill a fixed amount for our services. This may be one single amount covering the whole engagement or several amounts for various phases, functions, or milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we sometimes receive advances or deposits before revenue is recognized, resulting in contract liabilities. Contract assets and liabilities are generally reported in the current assets and current liabilities sections of the consolidated balance sheet, at the end of each reporting period, based on the timing of the satisfaction of the related performance obligation(s). For multi-year software sales with annual invoicing, we perform a significant financing component calculation and recognize the associated interest income throughout the duration of the financing period. In addition, we reclassify the resulting contract asset balances as current and noncurrent receivables as receipt of the consideration is conditional only on the passage of time and there are no performance risk factors present. See the table below for a breakdown of contract assets and contract liabilities. December 31, December 31, 2023 2022 Contract assets $ 30,176 $ 32,249 Contract liabilities $ 9,521 $ 7,058 Revenue recognized for the year ended December 31, 2023 that was included in the contract liability balance at January 1, 2023 was $5.5 million and represented primarily revenue from our fixed-fee, research, and subscription contracts. Remaining performance obligations As of December 31, 2023, the Company had $109.1 million of remaining performance obligations, the majority of which are expected to be satisfied within the next year. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2023 | |
ACQUISITIONS | |
ACQUISITIONS | NOTE 4 — ACQUISITION Ventana Research Acquisition On October 31, 2023, a subsidiary of the Company executed an Asset Purchase Agreement with Ventana Research, Inc. (“Ventana Research”) and consummated the acquisition of substantially all assets, and assumed certain liabilities, of Ventana Research. The purchase price was comprised of $1.0 million of cash consideration paid at closing. Ventana Research will also have the right to receive additional consideration paid via earn-out payments, if certain financial targets are met. At the agreement date, the Company estimated such earn-out payment would be $1.7 million. The following table summarizes the preliminary consideration transferred to acquire Ventana Research, Inc. and the amount of identified assets acquired, and liabilities assumed, as of the agreement date: Cash $ 1,000 Contingent consideration 1,657 Total allocable purchase price $ 2,657 The amount of recognized identifiable assets acquired and liabilities assumed as of the agreement date: Accounts receivable $ 404 Intangible assets 1,400 Contract liabilities (1,362) Net assets acquired $ 442 Goodwill $ 2,215 The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, were the inclusion of the legacy Ventana Research workforce and allowing the Company to penetrate an entirely new market sector: software technology vendors. Costs associated with this acquisition are included in the selling, general and administrative expense in the Consolidated Statement of Income and Comprehensive Income and totaled $0.1 million during the year ended December 31, 2023. This business combination was accounted for under the acquisition method of accounting, and as such, the aggregate purchase price was allocated on a preliminary basis to the assets acquired and liabilities assumed based on estimated fair values as of the closing date. Based on the valuation and other factors as described above, the purchase price assigned to intangible assets and the amortization period was as follows: Purchase Price Estimated Allocation Useful Lives Amortizable intangible assets: Trademark and trade name $ 600 3 years Customer relationships 700 7 years Noncompete agreements 100 2 years Total intangible assets $ 1,400 The Consolidated Statement of Income and Comprehensive Income includes revenue from the Ventana Research acquisition subsequent to the closing. Had the acquisition occurred as of January 1, 2023, approximately $3.9 million of revenue would have been recognized. Change 4 Growth Acquisition On October 31, 2022, a subsidiary of the Company executed an Asset Purchase Agreement with Change 4 Growth, LLC (“Change 4 Growth”) and consummated the acquisition of substantially all the assets, and assumed certain liabilities, of Change 4 Growth. The purchase price was comprised of $3.8 million of cash consideration, $0.6 million of shares of ISG common stock issued promptly after closing and Change 4 Growth will also have the right to receive additional consideration paid via earn-out payments, if certain financial targets are met. At the agreement date, the company estimated such earn-out payment would be $5.6 million. Cash $ 3,450 Accrued working capital adjustment 378 ISG common stock 600 Contingent consideration 5,560 Total allocable purchase price $ 9,988 This acquisition was accounted for under the acquisition method of accounting, and as such, the aggregate purchase price was allocated to the assets acquired and liabilities assumed based on the fair values as of the closing date. Based on the valuation and other factors as described above, the purchase price assigned to intangible assets was as follows: Accounts receivable and contract assets $ 1,841 Intangible assets 4,300 Accounts payable and accrued expense (428) Contract liabilities (85) Net assets acquired $ 5,628 Goodwill $ 4,360 The primary factors that drove the goodwill recognized, the majority of which is deductible for tax purposes, were the inclusion of legacy Change 4 Growth workforce and associated organizational change management expertise to enhance and expand the offerings of the ISG Enterprise Change service line. Costs associated with this acquisition are included in the selling, general and administrative expense in the Consolidated Statement of Income and Comprehensive Income and totaled $0.2 million during year ended December 31, 2022. Based on the valuation and other factors as described above, the purchase price assigned to intangible assets and the amortization period were as follows: Purchase Price Estimated Allocation Useful Lives Amortizable intangible assets: Trademark and trade name $ 1,100 3 years Customer relationships 2,900 8 years Noncompete agreements 300 2 years Total intangible assets $ 4,300 |
NET INCOME PER COMMON SHARE
NET INCOME PER COMMON SHARE | 12 Months Ended |
Dec. 31, 2023 | |
NET INCOME PER COMMON SHARE | |
NET INCOME PER COMMON SHARE | NOTE 5—NET INCOME PER COMMON SHARE Basic earnings per share is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that would share in the net income of the Company. For the year ended December 31, 2023, 2.3 million restricted stock units have not been considered in the diluted earnings per share calculation, as the effect would anti-dilutive. The following tables set forth the computation of basic and diluted earnings per share: Year Ended December 31, 2023 2022 2021 Basic: Net income $ 6,154 $ 19,726 $ 15,529 Weighted average common shares 48,609 48,175 48,638 Earnings per share $ 0.13 $ 0.41 $ 0.32 Diluted: Net income $ 6,154 $ 19,726 $ 15,529 Basic weighted average common shares 48,609 48,175 48,638 Potential common shares 1,566 2,245 3,118 Diluted weighted average common shares 50,175 50,420 51,756 Diluted earnings per share $ 0.12 $ 0.39 $ 0.30 |
ACCOUNTS RECEIVABLE AND CONTRAC
ACCOUNTS RECEIVABLE AND CONTRACT ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
ACCOUNTS RECEIVABLE AND CONTRACT ASSETS | |
ACCOUNTS RECEIVABLE AND CONTRACT ASSETS | NOTE 6—ACCOUNTS RECEIVABLE AND CONTRACT ASSETS Accounts receivable and contract assets, net of allowance, consisted of the following: Years Ended December 31, 2023 2022 Accounts receivable $ 51,758 $ 47,611 Contract assets 30,176 32,249 Receivables from related parties 183 310 $ 82,117 $ 80,170 |
FURNITURE, FIXTURES AND EQUIPME
FURNITURE, FIXTURES AND EQUIPMENT | 12 Months Ended |
Dec. 31, 2023 | |
FURNITURE, FIXTURES AND EQUIPMENT | |
FURNITURE, FIXTURES AND EQUIPMENT | NOTE 7—FURNITURE, FIXTURES AND EQUIPMENT Furniture, fixtures and equipment consisted of the following: Years Ended December 31, Estimated Useful Lives 2023 2022 Computer hardware, software and other office equipment 2 to 5 years $ 4,010 $ 3,343 Furniture, fixtures and leasehold improvements 2 to 5 years 3,188 3,235 Software and development costs 3 to 5 years 12,553 10,870 Accumulated depreciation (13,305) (11,519) $ 6,446 $ 5,929 Depreciation expense was $3.1 million, $3.0 million and $2.7 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2023 | |
LEASES | |
LEASES | NOTE 8—LEASES The Company recognizes lease payments in the consolidated statements of income on a straight-line basis over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of the lease payments. The Company leases its office space and office equipment under long-term operating lease agreements which expire at various dates through November 2030, some of which include options to extend the leases for up to 3 years, and some of which included options to terminate the leases within 1 year. Under the operating leases, the Company pays certain operating expenses relating to the office equipment and leased property. The components of lease expense were as follows: Years Ended December 31, 2023 2022 Lease cost Operating lease cost $ 2,501 $ 2,128 Finance lease cost: Amortization of right-of-use assets 121 375 Interest on lease liabilities 7 40 Short-term lease cost 45 44 Variable lease cost 159 225 Sublease income — (187) Total lease cost $ 2,833 $ 2,625 Supplemental cash flow information related to leases was as follows Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 7 $ 40 Operating cash flows from operating leases $ 2,562 $ 2,594 Financing cash flows from finance leases $ 132 $ 381 Supplemental balance sheet information related to leases was as follows: (In thousands, except lease term and discount rate) Years Ended December 31, 2023 2022 Operating leases Operating lease right-of-use assets $ 7,473 $ 6,780 Current operating lease liabilities (1) $ 2,589 2,399 Non-current operating lease liabilities 5,287 4,857 Total operating lease liabilities $ 7,876 $ 7,256 Finance leases Finance lease right-of-use assets (2) $ 188 $ 110 Current finance lease liabilities (1) $ 120 381 Non-current finance lease liabilities 64 46 Total finance lease liabilities $ 184 $ 427 Weighted average remaining lease term (in years) Operating leases 4.7 3.8 Finance leases 2.1 2.0 Weighted average discount rate Operating leases 9.4% 7.9% Finance leases 10.4% 5.4% (1) Current lease liabilities are included in “Accrued expenses and other current liabilities.” (2) Finance lease right-of-assets are included in “Furniture, fixtures and equipment, net.” Maturities of lease liabilities were as follows: Operating Finance Leases Leases Year Ending December 31, 2024 $ 2,766 $ 123 2025 2,543 50 2026 1,850 8 2027 865 8 2028 543 8 Thereafter 1,886 1 Total lease payments 10,453 198 Less imputed interest (2,577) (14) Total $ 7,876 $ 184 |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2023 | |
INTANGIBLE ASSETS | |
INTANGIBLE ASSETS | NOTE 9—INTANGIBLE ASSETS The carrying amount of intangible assets, net of accumulated amortization and impairment charges, as of December 31, 2023 and 2022 consisted of the following: 2023 Gross Carrying Accumulated Currency Net Book Estimated Useful Lives Amount Acquisitions Amortization Impact Value Amortizable intangibles: Customer relationships 2 to 15 years $ 78,183 700 $ (72,220) $ (120) $ 6,543 Noncompete agreements 4 to 7 years 6,262 100 (6,146) 1 217 Software 3 to 4 years 1,660 — (1,580) — 80 Backlog 1 to 2 years 5,002 — (4,981) (21) — Databases 4 to 15 years 13,218 — (8,455) (180) 4,583 Trademark and trade names 3 to 5 years 2,590 600 (1,998) — 1,192 Intangibles $ 106,915 $ 1,400 $ (95,380) $ (320) $ 12,615 2022 Gross Carrying Accumulated Currency Net Book Estimated Useful Lives Amount Acquisitions Amortization Impact Value Amortizable intangibles: Customer relationships 2 to 15 years $ 75,283 $ 2,900 $ (70,273) $ (115) $ 7,795 Noncompete agreements 4 to 7 years 5,962 300 (5,987) — 275 Software 3 to 4 years 1,660 — (1,557) — 103 Backlog 1 to 2 years 5,002 — (4,981) (21) — Databases 4 to 15 years 13,218 — (7,905) (183) 5,130 Trademark and trade names 3 to 5 years 1,490 1,100 (1,513) — 1,077 Intangibles $ 102,615 $ 4,300 $ (92,216) $ (319) $ 14,380 Amortization expense was $3.2 million, $2.3 million and $2.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. The estimated future amortization expense subsequent to December 31, 2023 is as follows: 2024 $ 2,927 2025 2,391 2026 1,774 2027 1,444 2028 1,253 Thereafter 2,826 $ 12,615 |
GOODWILL
GOODWILL | 12 Months Ended |
Dec. 31, 2023 | |
GOODWILL | |
GOODWILL | NOTE 10—GOODWILL The changes in the carrying amount of goodwill for the years ended December 31, 2023 and 2022 are as follows: December 31, 2023 2022 Balance as of January 1 Goodwill $ 95,490 $ 91,130 Foreign currency impact (518) (340) Balance as of January 1 94,972 90,790 Acquisitions 2,215 4,360 Foreign currency impact and adjustments 45 (178) 2,260 4,182 Balance as of December 31 Goodwill 97,705 95,490 Foreign currency impact and adjustments (473) (518) Balance as of December 31 $ 97,232 $ 94,972 |
ACCRUED EXPENSES AND OTHER CURR
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | 12 Months Ended |
Dec. 31, 2023 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | NOTE 11—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES The components of accrued liabilities for the years ended December 31, 2023 and 2022 are as follows: December 31, 2023 2022 Accrued payroll, incentive, and vacation $ 3,582 $ 7,107 Accrued corporate and payroll related taxes 701 1,762 Accrued contractors expenses 8,615 3,508 Contingent consideration-current 2,285 1,460 Current operating lease liability 2,589 2,399 Accrued license expense 5,257 2,582 Other 2,422 5,090 $ 25,451 $ 23,908 |
FINANCING ARRANGEMENTS AND LONG
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | 12 Months Ended |
Dec. 31, 2023 | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | NOTE 12—FINANCING ARRANGEMENTS AND LONG-TERM DEBT Long-term debt consists of the following: December 31, 2023 2022 Senior secured credit facility $ — $ 70,175 Revolving borrowings 79,175 9,000 Debt issuance costs — (459) 79,175 78,716 Less current installments on long term debt — 4,300 Long-term debt $ 79,175 $ 74,416 The revolving loan repayment of the outstanding principal amount and interest payment is due on the maturity date of February 22, 2028. On February 22, 2023, the Company amended and restated its senior secured credit facility to increase the revolving commitments per the revolving facility (the “2023 Credit Agreement”) from $54.0 million to $140.0 million and eliminate its term loan. The material terms under the 2023 Credit Agreement are as follows. Capitalized terms used but not defined herein have the meanings ascribed to them in the 2023 Credit Agreement: ● The revolving credit facility has a maturity date of February 22, 2028. ● The credit facility is secured by all of the equity interests owned by the Company, and its direct and indirect domestic subsidiaries and, subject to agreed exceptions, the Company’s direct and indirect “first-tier” foreign subsidiaries, and a perfected first priority security interest in all of the Company’s and its direct and indirect domestic subsidiaries’ tangible and intangible assets. ● The Company’s direct and indirect existing and future wholly owned domestic subsidiaries serve as guarantors to the Company’s obligations under the senior secured facility. ● At the Company’s option, the credit facility bears interest at a rate per annum equal to either (i) the “Base Rate” (which is the highest of (a) the rate publicly announced from time to time by the administrative agent as its “prime rate,” (b) the Federal Funds Rate plus 0.5% per annum and (c) Term SOFR, plus 1.0% ), plus the applicable margin (as defined below) or (ii) Term SOFR (which is the Term SOFR screen rate for the relevant interest period plus a credit spread adjustment of 0.10% ) as determined by the administrative agent, plus the applicable margin. The applicable margin is adjusted quarterly based upon the Company’s consolidated leverage ratio. Prior to the end of the first quarter-end following the closing of the credit facility, the applicable margin shall be a percentage per annum equal to 0.50% for the revolving loans maintained as Base Rate loans or 1.50% for the revolving loans maintained as Term SOFR loans. ● The senior secured credit facility contains a number of covenants that, among other things, place restrictions on matters customarily restricted in senior secured credit facilities, including restrictions on indebtedness (including guarantee obligations), liens, fundamental changes, sales or dispositions of property or assets, investments (including loans, advances, guarantees and acquisitions), transactions with affiliates, dividends and other payments in respect of capital stock, optional payments and modifications of other material debt instruments, negative pledges and agreements restricting subsidiary distributions and changes in line of business. In addition, the Company is required to comply with a consolidated leverage ratio and consolidated interest coverage ratio. ● The senior secured credit facility contains customary events of default, including cross-default to other material agreements, judgment default and change of control. The Company’s financial statements include outstanding borrowings of $79.2 million both as of December 31, 2023 and December 31, 2022, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company's outstanding borrowings was approximately $79.8 million and $76.5 million at December 31, 2023 and December 31, 2022, respectively. The fair values of debt have been estimated using a discounted cash flow rate used to |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2023 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | NOTE 13—COMMITMENTS AND CONTINGENCIES The Company is subject to contingencies which arise through the ordinary course of business. All material liabilities of which management is aware are properly reflected in the financial statements at December 31, 2023 and 2022. Ventana Research Contingent Consideration As of December 31, 2023, the Company has recorded a liability of $1.7 million representing the estimated fair value of contingent consideration related to the acquisition of Ventana Research, which was classified as “Accrued expenses and other current liabilities” and “Other liabilities” on the consolidated balance sheet. Change 4 Growth Contingent Consideration As of December 31, 2023, the Company has recorded a liability of $4.2 million representing the estimated fair value of contingent consideration related to the acquisition of Change 4 Growth, which was classified as “Accrued expenses and other current liabilities” and “Other liabilities” on the consolidated balance sheet. In April 2023, the Company made a contingent consideration payment of $1.5 million. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2023 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 14—RELATED PARTY TRANSACTIONS From time to time, the Company may have receivables and payables with employees and shareholders. The Company had outstanding receivables from related parties, including shareholders, totaling $0.2 million and $0.3 million as of December 31, 2023 and 2022, respectively, and no outstanding payables. These transactions related to personal withholding taxes paid on behalf of expatriate employees. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
INCOME TAXES | NOTE 15—INCOME TAXES The components of income before income taxes for the years ended December 31, 2023, 2022 and 2021 consist of the following: Years Ended December 31, 2023 2022 2021 Domestic $ 5,008 $ 17,281 $ 9,984 Foreign 3,753 9,401 13,127 Total income before income taxes $ 8,761 $ 26,682 $ 23,111 The components of the 2023, 2022 and 2021 income tax provision are as follows: Years Ended December 31, 2023 2022 2021 Current: Federal $ 1,939 $ 3,840 $ 2,194 State 421 929 617 Foreign 2,454 2,720 4,830 Total current provision 4,814 7,489 7,641 Deferred: Federal (1,860) (226) (786) State (243) 113 38 Foreign (104) (420) 689 Total deferred benefit (2,207) (533) (59) Total $ 2,607 $ 6,956 $ 7,582 The differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate of 21% for each of the years ended December 31, 2023, 2022 and 2021 were as follows: Years Ended December 31, 2023 2022 2021 Tax provision computed at 21% $ 1,840 $ 5,603 $ 4,853 Nondeductible expenses 468 149 91 State income taxes, net of federal benefit 229 875 624 Tax impact of foreign operations — 238 2,045 Valuation allowances increase (release) (95) (44) 52 Net decrease of uncertain tax positions — — (31) Other 165 135 (52) Income tax provision $ 2,607 $ 6,956 $ 7,582 Effective income tax rates 29.8 % 26.1 % 32.8 % December 31, 2023 2022 Noncurrent deferred tax asset Compensation related expenses $ 2,636 $ 1,748 Foreign currency translation 3,069 3,281 U.S. foreign tax credit carryovers 2,705 2,527 Foreign net operating loss carryovers 2,286 2,129 Accruals and reserves 1,307 557 Operating lease right-of-use assets 2,500 2,080 Other 771 316 Valuation allowance for deferred tax assets (3,785) (3,704) Total noncurrent deferred tax asset 11,489 8,934 Noncurrent deferred tax liability Depreciable assets (433) (367) Prepaids (82) (137) Intangible assets (1,370) (1,235) Investment in foreign subsidiaries (2,363) (2,370) Foreign earnings distribution taxes (1,461) (1,224) Foreign intangibles and reserves (967) (1,211) Operating lease liabilities (2,422) (1,963) Total noncurrent deferred tax liability (9,098) (8,507) Net noncurrent deferred tax assets 2,391 427 Net deferred tax assets $ 2,391 $ 427 Uncertain tax positions Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more likely than not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more likely than not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more likely than not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. It is the Company’s policy to accrue for interest and penalties related to its uncertain tax positions within income tax expense. A tabular reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period is as follows: December 31, 2023 2022 2021 Balance, beginning of year $ 1,715 $ 1,639 $ 1,569 Additions as a result of tax positions taken during the current period 36 76 101 Reductions as a result of tax positions taken during a prior period — — (31) Balance, end of year $ 1,751 $ 1,715 $ 1,639 We do not expect our unrecognized tax benefits to significantly change in the next twelve months. The Company has recognized through income tax expense approximately $1.0 million of interest and penalties related to uncertain tax positions. The amount of unrecognized tax benefit, if recognized, that would impact the effective tax rate is $1.8 million. With few exceptions, the Company is no longer subject to U.S. federal, state, local or non-U.S. income tax examinations by tax authorities for years before 2016. |
STOCK BASED COMPENSATION PLANS
STOCK BASED COMPENSATION PLANS | 12 Months Ended |
Dec. 31, 2023 | |
STOCK BASED COMPENSATION PLANS | |
STOCK BASED COMPENSATION PLANS | NOTE 16—STOCK-BASED COMPENSATION PLANS The Amended and Restated 2007 Equity and Incentive Award Plan (“Incentive Plan”) and Amended and Restated 2007 Employee Stock Purchase Plan (“ESPP”) were approved by the Company’s stockholders at our 2014 annual meeting with a subsequent amendment to the Incentive Plan approved by the Company’s stockholders at our 2017 annual meeting as discussed below. Subject to the terms of the Incentive Plan, the Incentive Plan authorizes the grant of awards, which awards may be made in the form of (i) nonqualified stock options; (ii) stock options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code (stock options described in clause (i) and (ii), “options”); (iii) stock appreciation rights (“SARs”); (iv) restricted stock and/or restricted stock units; (v) other stock based awards; (vi) performance-based awards, which are equity awards or incentive awards intended to qualify for full tax deductibility by the company under Code Section 162 (m); and (vii) incentive awards, a cash-denominated award earnable by achievement of performance goals. The issuance of shares or the payment of cash upon the exercise of an award or in consideration of the cancellation or termination of an award shall reduce the total number of shares available under the Incentive Plan, as applicable. The provisions of each award will vary based on the type of award granted and will be specified by the Compensation Committee of the Board of Directors. Those awards which are based on a specific contractual term will be granted with a term not to exceed ten years. The SARs granted under the Incentive Plan are granted with an exercise price equal to the fair market value of the Common Shares at the time the SARs are granted. At the 2020 annual meeting, our stockholders approved an amendment to the Incentive Plan to increase the number of shares of common stock available for issuance under the Incentive Plan by 5,500,000 shares (the “Incentive Plan Amendment”). As of December 31, 2023, there were 2,231,197 and 640,318 shares available for grant under the Incentive Plan and ESPP, respectively. The Company recognized $9.1 million, $7.5 million and $6.5 million in employee stock-based compensation expense during the years ended December 31, 2023, 2022 and 2021, respectively. This expense was recorded in selling, general and administrative in the consolidated statement of comprehensive income. Restricted Share Awards/Units The Incentive Plan provides for the granting of restricted share units (“RSU”), the vesting of which is subject to conditions and limitations established at the time of the grant. Recipients of RSU awards will not have the rights of a shareholder of the Company until such date as the shares of common stock are issued or transferred to the recipient. If the employee retires (at the normal retirement age stated in the applicable retirement plan or applicable law, if there is a mandatory retirement age), the restricted shares continue to vest on the same schedule as if the employee remained employed with the Company. Upon a termination of employment due to an employee’s death or permanent disability, the restricted shares become 100% vested. Dividends accrue and will be paid if and when the restricted shares vest. The Company also granted RSUs to specific employees which have the following characteristics: ● Performance-Based RSU Vesting (Stock Price): ● Time-Based RSU Vesting: If an employee’s employment is terminated (i) at any time during the vesting period due to the employee’s death, disability or retirement prior to the applicable vesting date or (ii) so long as the employee continues to be employed through the vesting dates detailed in the award agreement, the RSUs will become vested according to the agreement. However, no shares will be distributed until the applicable pro rata vesting date (and, in the case of the Performance-Based RSUs, only if and to the extent that the performance target is achieved). In all other terminations occurring prior to the applicable vesting date, the RSUs will expire. Pursuant to the terms of the Incentive Plan, in the event of a change in control, the Compensation Committee of the Board of Directors may accelerate vesting of the outstanding awards of RSUs then held by participants. All RSUs will be payable in shares of the Company’s common stock immediately upon vesting. As part of the Incentive Plan Amendment, dividends/dividend equivalents may be paid or credited on other stock-based awards (such as restricted stock units), but those dividends/dividend equivalents must be subject to the same vesting (or more stringent vesting) applicable to the underlying awards. The fair value of RSUs is determined based on the closing price of the Company’s shares on the grant date. The total fair value is amortized to expense on a straight-line basis over the vesting period. A summary of the status of the Company’s RSUs issued under its Incentive Plan as of December 31, 2023 and changes during the years then ended, is presented below: Weighted- Average Grant Date RSU Fair Value Non-vested at December 31, 2020 6,866 $ 2.31 Granted 1,112 $ 6.07 Vested (3,680) $ 2.46 Forfeited (278) $ 2.51 Non-vested at December 31, 2021 4,020 $ 3.20 Granted 1,527 $ 6.57 Vested (1,610) $ 2.88 Forfeited (117) $ 3.37 Non-vested at December 31, 2022 3,820 $ 4.68 Granted 2,295 $ 4.61 Vested (1,409) $ 4.35 Forfeited (785) $ 2.87 Non-vested at December 31, 2023 3,921 $ 5.10 The total fair value of RSUs vested during the years ended December 31, 2023, 2022 and 2021 was $6.1 million, $4.7 million and $9.0 million, respectively. As of December 31, 2023, there was $11.7 million of unrecognized compensation cost related to RSUs, which is expected to be recognized over a weighted-average period of 1.5 years. There were 2.9 million shares available for issuance at December 31, 2023 under the Incentive Plan. Employee Stock Purchase Plan The Company uses the Black-Scholes option pricing model to estimate the fair value of shares expected to be issued under the Company’s employee stock purchase plan. The ESPP provides that a total of 3.6 million shares of common stock are reserved for issuance under the plan. The ESPP, which is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code, is implemented utilizing three three 20 automatically upon termination of employment. The Compensation Committee may at any time amend or terminate the ESPP, except that no such amendment or termination may adversely affect shares previously granted under the ESPP. The Company may issue new shares for the ESPP using treasury shares or newly issued shares. For the year ended December 31, 2023, the Company issued 206,806 shares for the ESPP. There were 640,318 shares available for purchase at December 31, 2023 under the ESPP. |
SEGMENT AND GEOGRAPHICAL INFORM
SEGMENT AND GEOGRAPHICAL INFORMATION | 12 Months Ended |
Dec. 31, 2023 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
SEGMENT AND GEOGRAPHICAL INFORMATION | NOTE 17—SEGMENT AND GEOGRAPHICAL INFORMATION The Company operates in one segment, fact-based sourcing advisory services. The Company operates principally in the Americas, Europe and Asia Pacific. The Company’s foreign operations are subject to local government regulations and to the economic and political uncertainties of those areas. Geographical information for the segment is as follows: Year Ended December 31, 2023 2022 2021 Revenues Americas (1) $ 177,131 $ 166,661 $ 160,181 Europe (2) 87,074 89,908 90,256 Asia Pacific (3) 26,849 29,698 27,395 $ 291,054 $ 286,267 $ 277,832 Fixed assets Americas $ 2,696 $ 3,225 $ 2,598 Europe 2,926 1,685 2,119 Asia Pacific 824 1,019 576 $ 6,446 $ 5,929 $ 5,293 (1) Substantially all relates to operations in the United States. (2) Includes revenues from operations in Germany of $34.6 million, $44.2 million and $50.0 million in 2023, 2022 and 2021, respectively. Includes revenues from operations in the United Kingdom of $28.2 million, $18.6 million and $15.2 million in 2023, 2022 and 2021, respectively. (3) Includes revenues from operations in Australia of $22.6 million, $22.9 million and $23.1 million in 2023, 2022 and 2021, respectively. The segregation of revenues by geographic region is based upon the location of the legal entity performing the services. The Company does not measure or monitor gross profit or operating income by geography or any other measure or metric, other than consolidated, for the purposes of making operating decisions or allocating resources. |
SUBSEQUENT EVENT
SUBSEQUENT EVENT | 12 Months Ended |
Dec. 31, 2023 | |
SUBSEQUENT EVENT. | |
SUBSEQUENT EVENT | NOTE 18—SUBSEQUENT EVENT On March 5, 2024, the Board approved a first-quarter dividend of $0.045 per share, payable March 28, 2024, to shareholders of record as of March 19, 2024. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2023 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | INFORMATION SERVICES GROUP, INC. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (in thousands) Balance at Charges to Balance at Beginning Costs and Additions/ End of Description of Period Expenses (Deduction) Period Year ended December 31, 2023 Allowance for doubtful accounts $ 272 5,434 (418) $ 5,288 Allowance for tax valuation $ 3,704 (95) 176 $ 3,785 Year ended December 31, 2022 Allowance for doubtful accounts $ 40 (320) 552 $ 272 Allowance for tax valuation $ 3,315 (44) 433 $ 3,704 Year ended December 31, 2021 Allowance for doubtful accounts $ 368 138 (466) $ 40 Allowance for tax valuation $ 3,707 52 (444) $ 3,315 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. These consolidated financial statements and footnotes are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. Unless the context requires otherwise, references to the Company include ISG and its consolidated subsidiaries. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates. The complexity of the estimation process and issues related to the assumptions, risks and uncertainties inherent in the application of the revenue recognition guidance for contracts in which control is transferred to the customer over time affect the amounts of revenues, expenses, contract assets and contract liabilities. Numerous internal and external factors can affect estimates. Estimates are also used for but not limited to allowance for doubtful accounts, useful lives of furniture, fixtures and equipment and definite lived intangible assets, depreciation expense, fair value assumptions in evaluating goodwill for impairment, income taxes and deferred tax asset valuation and the valuation of stock-based compensation. |
Business Combinations | Business Combinations We have acquired businesses critical to the Company’s long-term growth strategy. Results of operations for acquisitions are included in the accompanying consolidated statement of comprehensive income from the date of acquisition. Acquisitions are accounted for using the purchase method of accounting and the purchase price is allocated to the net assets acquired based upon their estimated fair values at the date of acquisition. The excess of the purchase price over the net assets is recorded as goodwill. Acquisition-related costs are expensed as incurred and recorded in selling, general and administrative expenses. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid instruments with an original maturity of three months or less to be cash equivalents, including certain money market accounts. The Company principally maintains its cash in money market and bank deposit accounts in the United States of America, which typically exceed applicable insurance limits. The Company believes it is not exposed to any significant credit risk on cash and cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash consists of cash and cash equivalents which the Company has committed for rent deposits and are not available for general corporate purposes. |
Accounts Receivable, Contract Assets and Allowance for Doubtful Accounts | Accounts Receivable, Contract Assets and Allowance for Doubtful Accounts Our trade receivables primarily consist of amounts due for services already performed. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to pay fees or for disputes that affect its ability to fully collect billed accounts receivable. The allowance for these risks is prepared by reviewing the status of all accounts and recording reserves on a specific identification method based on previous experiences and historical bad debts. However, our actual experience may vary from these estimates. If the financial condition of our clients were to deteriorate, resulting in their inability or unwillingness to pay their invoices, we may need to record additional allowances or write-offs in future periods. To the extent the provision relates to a client’s inability or unwillingness to make required payments, the provision is recorded as bad debt expense, which is classified within selling, general and administrative expense in the accompanying consolidated statement of comprehensive income. Historically, the Company’s bad debt reserves and write-offs have not been significant. The provision for unbilled services is recorded as a bad debt expense to the extent the provision relates to fee adjustments and other discretionary pricing adjustments. Historically, the Company’s unbilled receivable reserves and write-offs have not been significant. During the fourth quarter of 2023, a client that had engaged us for two multi-year projects, which previously commenced in 2021 and 2022, failed to make payments as per the contracted payment schedule and we ceased performing services under the agreements. After unsuccessful negotiations, we provided the client with notice that we would be terminating the respective projects. Accordingly, during the fourth quarter of 2023, the Company recorded through bad debt expense an allowance for doubtful accounts reserve of 31, 2023 represents management' s best estimate of the probable amount of collection related to the outstanding amounts under these agreements. In the event that collection efforts prove unsuccessful, the Company may seek payment through other means, including legal action. Actual collections from the client may differ from the Company's estimate. |
Prepaid Expenses and Other Current Assets | Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist primarily of prepaid expenses for insurance, conferences, deposits for facilities, programs, software and promotion items. |
Furniture, Fixtures and Equipment, net | Furniture, Fixtures and Equipment, net Furniture, fixtures and equipment are recorded at cost. Depreciation is computed by applying the straight-line method over the estimated useful life of the assets, which ranges from two two The Company capitalizes internal-use software and website development costs and records these amounts within Furniture, Fixtures and Equipment, net. Accounting standards require that certain costs related to the development or purchase of internal-use software and systems as well as the costs incurred in the application development stage related to its website be capitalized and amortized over the estimated useful life of the software or system. They also require that costs related to the preliminary project stage, data conversion and post implementation/operation stage of an internal-use software development project be expensed as incurred. During the years ended December 31, 2023, 2022 and 2021 the Company capitalized $1.7 million, $1.7 million and $0.8 million, respectively, of costs associated with system and website development. |
Goodwill | Goodwill Our goodwill represents the excess of the cost of businesses acquired over the fair value of the net assets acquired at the date of acquisition. Goodwill is not amortized but rather tested for impairment at least annually in accordance with accounting and disclosure requirements for goodwill and other indefinite-lived intangible assets. This test is performed by us during our fourth fiscal quarter or more frequently if we believe impairment indicators are present. A qualitative assessment is performed to determine whether the existence of events or circumstances leads to a determination that it is more likely than not the fair value of the reporting unit is less than its carrying amount. If, based on the evaluation, it is determined to be more likely than not that the fair value is less than the carrying value then goodwill is tested further for impairment. If the fair value of goodwill is lower than its carrying amount, an impairment loss is recognized in an amount equal to the difference. Subsequent increases in value are not recognized in the financial statements. There was no impairment of goodwill during the years ended December 31, 2023, 2022 and 2021. There were no indicators identified in 2023, 2022 or 2021 that would suggest that it is more likely than not that the Company’s reporting unit is impaired. |
Long-Lived Assets | Long-Lived Assets Long-lived assets, excluding goodwill and indefinite-lived intangibles, to be held and used by the Company are reviewed to determine whether any significant change in the long-lived asset’s physical condition, a change in industry conditions or a reduction in cash flows associated with the asset group that contains the long-lived asset. If these or other factors indicate the carrying amount of the asset group, which is the lowest level for which identifiable cash flows exist that are separately identifiable from other cash flows, may not be recoverable, the Company determines whether impairment has occurred through the use of an undiscounted cash flow analysis. If impairment has occurred, the Company recognizes a loss for the difference between the carrying amount and the fair value of the asset group. The fair value of the asset group is measured using market prices or, in the absence of market prices, an estimate of discounted cash flows. Cash flows are generally discounted at an interest rate commensurate with our weighted average cost of capital. Assets are classified as held for sale when the Company has a plan for disposal of certain assets and those assets meet the held for sale criteria. |
Debt Issuance Costs | Debt Issuance Costs Costs directly incurred in obtaining long-term financing, typically bank and attorney fees, are deferred and are amortized over the life of the related loan. Deferred issuance costs are classified as a direct deduction to the long-term debt in the accompanying consolidated balance sheet. Amortization of debt issuance costs is included in interest expense and totaled $0.2 million, $0.3 million and $0.4 million for the years ended December 31, 2023, 2022 and 2021, respectively. |
Revenue Recognition | Revenue Recognition six |
Reimbursable Expenditures | Reimbursable Expenditures Amounts billed to customers for reimbursable expenditures are included in revenues and the associated costs incurred by the Company are included in direct costs and expenses for advisors in the accompanying consolidated statement of comprehensive income. Non-reimbursable amounts are expensed as incurred. Reimbursable expenditures totaled $1.5 million $0.8 million and $0.3 million for the years ended December 31, 2023, 2022 and 2021, respectively. The increase was attributable to pandemic-related travel restrictions being lifted and attending more in person meetings with clients to drive revenue. |
Direct Costs and Expenses for Advisors | Direct Costs and Expenses for Advisors Direct costs and expenses for advisors include payroll expenses and advisory fees directly associated with the generation of revenues and other program expenses. Direct costs and expenses for advisors are expensed as incurred. Direct costs and expenses for advisors also include expense accruals for discretionary bonus payments. Bonus accrual levels are adjusted throughout the year based on actual and projected Company performance. |
Stock-Based Compensation | Stock-Based Compensation We grant restricted stock units with a fair value that is determined based on the closing price of our common stock on the date of grant. Such grants generally vest ratably over a two four - We follow the provisions of accounting and disclosure requirements for share-based payments, including the measurement and recognition of all share-based compensation under the fair value method. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and accounts receivable. The Company places its cash investments with high-quality financial institutions. The Company extends credit to its customers based upon an evaluation of the customer’s financial condition and credit history and generally does not require collateral. |
Treasury Stock | Treasury Stock The Company makes treasury stock purchases in the open market pursuant to the share repurchase program, which was most recently approved by the Board of Directors on August 1, 2023. Treasury stock is recorded on the consolidated balance sheet at cost as a reduction of stockholders’ equity. Shares are released from Treasury at original cost on a first-in, first-out basis, with any gain or loss on the sale reflected as an adjustment to additional paid-in capital. |
Foreign Currency Translation | Foreign Currency Translation The assets and liabilities of the Company’s foreign subsidiaries are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenue and expense items are translated at average exchange rates for the reporting period. Resulting translation adjustments are included in the accompanying statement of comprehensive income and accompanying statement of stockholders’ equity as a component of Accumulated Other Comprehensive Loss The functional currency of the Company and its subsidiaries is the respective local currency. The Company has contracts denominated in foreign currencies, and therefore a portion of the Company’s revenues are subject to foreign currency risks. Transactional currency gains and losses that arise from transactions denominated in currencies other than the functional currencies of our operations are recorded in Foreign Currency Translation |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of the Company’s cash and cash equivalents, receivables, accounts payable, other current liabilities and accrued interest approximate fair value. Fair value measurements were applied with respect to our nonfinancial assets and liabilities measured on a nonrecurring basis, which would consist of measurements primarily to goodwill, intangible assets and other long-lived assets and assets acquired and liabilities assumed in a business combination. Fair value is the price that would be received upon a sale of an asset or paid upon a transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). Market participants can use market data or assumptions in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market-corroborated or generally unobservable. The use of unobservable inputs is intended to allow for fair value determinations in situations where there is little, if any, market activity for the asset or liability at the measurement date. Under the fair-value hierarchy: ● ● ● During 2023, there were no transfers of our financial assets between Level 1, Level 3 fair value The following tables summarize assets and liabilities measured at fair value on a recurring basis at the dates indicated: Basis of Fair Value Measurements December 31, 2023 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 7,067 $ — $ — $ 7,067 Total $ 7,067 $ — $ — $ 7,067 Liabilities: Contingent consideration (1) $ — $ — $ 5,894 $ 5,894 $ — $ — $ 5,894 $ 5,894 Basis of Fair Value Measurements December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 5,593 $ 5,593 $ — $ — $ 5,593 $ 5,593 (1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities,” and “Other liabilities”, respectively, as of December 31, 2023 and December 31, 2022. The fair value measurement of contingent consideration is classified within Level 3 of the fair value hierarchy and reflects the Company’s own assumptions in measuring fair values using the income approach discounted using a rate The following table represents the change in the contingent consideration liability during the years ended December 31, 2023 and 2022: December 31, 2023 2022 Beginning Balance $ 5,593 $ 2,420 Neuralify earnout adjustment (1) — (1,420) Neuralify earnout payment — (1,000) Change 4 Growth contingent consideration payment (1,460) — Change 4 Growth contingent consideration accrued — 5,560 Ventana contingent consideration accrued 1,657 — Accretion of contingent consideration 104 33 Ending Balance $ 5,894 $ 5,593 (1) Neuralify earnout adjustment relates to a change in the achievement of a certain milestone specific to the acquisition. The Company’s financial instruments include outstanding borrowings of $79.2 million both as of December 31, 2023 and December 31, 2022, which are carried at amortized cost. The fair value of debt is classified within Level 3 of the fair value hierarchy. The fair value of the Company’s outstanding borrowings was approximately $79.8 million and $76.5 million at December 31, 2023 and December 31, 2022, respectively. The fair values of debt have been estimated using a discounted cash flow |
Income Taxes | Income Taxes We use the asset and liability method to account for income taxes, including recognition of deferred tax assets and liabilities for the anticipated future tax consequences attributable to differences between financial statement amounts and their respective tax basis. We review our deferred tax assets for recovery. A valuation allowance is established when we believe that it is more likely than not that some portion of its deferred tax assets will not be realized. Changes in the valuation allowance from period to period are included in our tax provision in the period of change. For uncertain tax positions, we use the prescribed model for assessing the financial recognition and measurement of all tax positions taken or expected to be taken in tax returns. This guidance provides clarification on derecognition, classification, interest and penalties, accounting in interim periods, disclosures and transition. Our provision for income taxes also includes the impact of provisions established for uncertain income tax positions, as well as the related interest. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (FASB) issued new guidance on the measurement of credit losses for financial assets measured at amortized cost, which includes accounts receivable and contract assets, and available for sale debt securities. The new guidance replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses and additional disclosures. We adopted this standard using the modified retrospective approach with an effective date of January 1, 2023 . |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of assets measured at fair value on a recurring basis | Basis of Fair Value Measurements December 31, 2023 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 7,067 $ — $ — $ 7,067 Total $ 7,067 $ — $ — $ 7,067 Liabilities: Contingent consideration (1) $ — $ — $ 5,894 $ 5,894 $ — $ — $ 5,894 $ 5,894 Basis of Fair Value Measurements December 31, 2022 Level 1 Level 2 Level 3 Total Assets: Cash equivalents $ 18 $ — $ — $ 18 Total $ 18 $ — $ — $ 18 Liabilities: Contingent consideration (1) $ — $ — $ 5,593 $ 5,593 $ — $ — $ 5,593 $ 5,593 (1) The current and noncurrent contingent consideration are included in “Accrued expenses and other current liabilities,” and “Other liabilities”, respectively, as of December 31, 2023 and December 31, 2022. |
Schedule of change in the contingent consideration liability | December 31, 2023 2022 Beginning Balance $ 5,593 $ 2,420 Neuralify earnout adjustment (1) — (1,420) Neuralify earnout payment — (1,000) Change 4 Growth contingent consideration payment (1,460) — Change 4 Growth contingent consideration accrued — 5,560 Ventana contingent consideration accrued 1,657 — Accretion of contingent consideration 104 33 Ending Balance $ 5,894 $ 5,593 (1) Neuralify earnout adjustment relates to a change in the achievement of a certain milestone specific to the acquisition. |
REVENUE (Tables)
REVENUE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
REVENUE | |
Schedule of contract assets and contract liabilities | December 31, December 31, 2023 2022 Contract assets $ 30,176 $ 32,249 Contract liabilities $ 9,521 $ 7,058 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
Ventana Research | |
Business Acquisition | |
Schedule of consideration transferred and the amounts of identified assets acquired, and liabilities assumed as of the Agreement date | Cash $ 1,000 Contingent consideration 1,657 Total allocable purchase price $ 2,657 Accounts receivable $ 404 Intangible assets 1,400 Contract liabilities (1,362) Net assets acquired $ 442 Goodwill $ 2,215 |
Schedule of purchase price assigned to intangible assets and the amortization period | Purchase Price Estimated Allocation Useful Lives Amortizable intangible assets: Trademark and trade name $ 600 3 years Customer relationships 700 7 years Noncompete agreements 100 2 years Total intangible assets $ 1,400 |
Change 4 Growth | |
Business Acquisition | |
Schedule of consideration transferred and the amounts of identified assets acquired, and liabilities assumed as of the Agreement date | Cash $ 3,450 Accrued working capital adjustment 378 ISG common stock 600 Contingent consideration 5,560 Total allocable purchase price $ 9,988 Accounts receivable and contract assets $ 1,841 Intangible assets 4,300 Accounts payable and accrued expense (428) Contract liabilities (85) Net assets acquired $ 5,628 Goodwill $ 4,360 |
Schedule of purchase price assigned to intangible assets and the amortization period | Purchase Price Estimated Allocation Useful Lives Amortizable intangible assets: Trademark and trade name $ 1,100 3 years Customer relationships 2,900 8 years Noncompete agreements 300 2 years Total intangible assets $ 4,300 |
NET INCOME PER COMMON SHARE (Ta
NET INCOME PER COMMON SHARE (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
NET INCOME PER COMMON SHARE | |
Schedule of computation of basic and diluted earnings per share | Year Ended December 31, 2023 2022 2021 Basic: Net income $ 6,154 $ 19,726 $ 15,529 Weighted average common shares 48,609 48,175 48,638 Earnings per share $ 0.13 $ 0.41 $ 0.32 Diluted: Net income $ 6,154 $ 19,726 $ 15,529 Basic weighted average common shares 48,609 48,175 48,638 Potential common shares 1,566 2,245 3,118 Diluted weighted average common shares 50,175 50,420 51,756 Diluted earnings per share $ 0.12 $ 0.39 $ 0.30 |
ACCOUNTS RECEIVABLE AND CONTR_2
ACCOUNTS RECEIVABLE AND CONTRACT ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
ACCOUNTS RECEIVABLE AND CONTRACT ASSETS | |
Schedule of accounts receivable and contract assets, net of valuation allowance | Years Ended December 31, 2023 2022 Accounts receivable $ 51,758 $ 47,611 Contract assets 30,176 32,249 Receivables from related parties 183 310 $ 82,117 $ 80,170 |
FURNITURE, FIXTURES AND EQUIP_2
FURNITURE, FIXTURES AND EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
FURNITURE, FIXTURES AND EQUIPMENT | |
Schedule of furniture, fixtures and equipment | Years Ended December 31, Estimated Useful Lives 2023 2022 Computer hardware, software and other office equipment 2 to 5 years $ 4,010 $ 3,343 Furniture, fixtures and leasehold improvements 2 to 5 years 3,188 3,235 Software and development costs 3 to 5 years 12,553 10,870 Accumulated depreciation (13,305) (11,519) $ 6,446 $ 5,929 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
LEASES | |
Schedule of components of lease expense | Years Ended December 31, 2023 2022 Lease cost Operating lease cost $ 2,501 $ 2,128 Finance lease cost: Amortization of right-of-use assets 121 375 Interest on lease liabilities 7 40 Short-term lease cost 45 44 Variable lease cost 159 225 Sublease income — (187) Total lease cost $ 2,833 $ 2,625 Supplemental cash flow information related to leases was as follows Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from finance leases $ 7 $ 40 Operating cash flows from operating leases $ 2,562 $ 2,594 Financing cash flows from finance leases $ 132 $ 381 |
Schedule of supplemental balance sheet information related to leases | (In thousands, except lease term and discount rate) Years Ended December 31, 2023 2022 Operating leases Operating lease right-of-use assets $ 7,473 $ 6,780 Current operating lease liabilities (1) $ 2,589 2,399 Non-current operating lease liabilities 5,287 4,857 Total operating lease liabilities $ 7,876 $ 7,256 Finance leases Finance lease right-of-use assets (2) $ 188 $ 110 Current finance lease liabilities (1) $ 120 381 Non-current finance lease liabilities 64 46 Total finance lease liabilities $ 184 $ 427 Weighted average remaining lease term (in years) Operating leases 4.7 3.8 Finance leases 2.1 2.0 Weighted average discount rate Operating leases 9.4% 7.9% Finance leases 10.4% 5.4% (1) Current lease liabilities are included in “Accrued expenses and other current liabilities.” (2) Finance lease right-of-assets are included in “Furniture, fixtures and equipment, net.” |
Schedule of maturities of lease liabilities | Operating Finance Leases Leases Year Ending December 31, 2024 $ 2,766 $ 123 2025 2,543 50 2026 1,850 8 2027 865 8 2028 543 8 Thereafter 1,886 1 Total lease payments 10,453 198 Less imputed interest (2,577) (14) Total $ 7,876 $ 184 |
Schedule of maturities of lease liabilities | Operating Finance Leases Leases Year Ending December 31, 2024 $ 2,766 $ 123 2025 2,543 50 2026 1,850 8 2027 865 8 2028 543 8 Thereafter 1,886 1 Total lease payments 10,453 198 Less imputed interest (2,577) (14) Total $ 7,876 $ 184 |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INTANGIBLE ASSETS | |
Schedule of carrying amount of intangible assets, net of accumulated amortization and impairment charges | 2023 Gross Carrying Accumulated Currency Net Book Estimated Useful Lives Amount Acquisitions Amortization Impact Value Amortizable intangibles: Customer relationships 2 to 15 years $ 78,183 700 $ (72,220) $ (120) $ 6,543 Noncompete agreements 4 to 7 years 6,262 100 (6,146) 1 217 Software 3 to 4 years 1,660 — (1,580) — 80 Backlog 1 to 2 years 5,002 — (4,981) (21) — Databases 4 to 15 years 13,218 — (8,455) (180) 4,583 Trademark and trade names 3 to 5 years 2,590 600 (1,998) — 1,192 Intangibles $ 106,915 $ 1,400 $ (95,380) $ (320) $ 12,615 2022 Gross Carrying Accumulated Currency Net Book Estimated Useful Lives Amount Acquisitions Amortization Impact Value Amortizable intangibles: Customer relationships 2 to 15 years $ 75,283 $ 2,900 $ (70,273) $ (115) $ 7,795 Noncompete agreements 4 to 7 years 5,962 300 (5,987) — 275 Software 3 to 4 years 1,660 — (1,557) — 103 Backlog 1 to 2 years 5,002 — (4,981) (21) — Databases 4 to 15 years 13,218 — (7,905) (183) 5,130 Trademark and trade names 3 to 5 years 1,490 1,100 (1,513) — 1,077 Intangibles $ 102,615 $ 4,300 $ (92,216) $ (319) $ 14,380 |
Schedule of estimated future amortization expense | 2024 $ 2,927 2025 2,391 2026 1,774 2027 1,444 2028 1,253 Thereafter 2,826 $ 12,615 |
GOODWILL (Tables)
GOODWILL (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
GOODWILL | |
Schedule of changes in the carrying amount of goodwill | December 31, 2023 2022 Balance as of January 1 Goodwill $ 95,490 $ 91,130 Foreign currency impact (518) (340) Balance as of January 1 94,972 90,790 Acquisitions 2,215 4,360 Foreign currency impact and adjustments 45 (178) 2,260 4,182 Balance as of December 31 Goodwill 97,705 95,490 Foreign currency impact and adjustments (473) (518) Balance as of December 31 $ 97,232 $ 94,972 |
ACCRUED EXPENSES AND OTHER CU_2
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | |
Schedule of components of accrued liabilities | December 31, 2023 2022 Accrued payroll, incentive, and vacation $ 3,582 $ 7,107 Accrued corporate and payroll related taxes 701 1,762 Accrued contractors expenses 8,615 3,508 Contingent consideration-current 2,285 1,460 Current operating lease liability 2,589 2,399 Accrued license expense 5,257 2,582 Other 2,422 5,090 $ 25,451 $ 23,908 |
FINANCING ARRANGEMENTS AND LO_2
FINANCING ARRANGEMENTS AND LONG-TERM DEBT (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | |
Schedule of long-term debt | December 31, 2023 2022 Senior secured credit facility $ — $ 70,175 Revolving borrowings 79,175 9,000 Debt issuance costs — (459) 79,175 78,716 Less current installments on long term debt — 4,300 Long-term debt $ 79,175 $ 74,416 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
INCOME TAXES | |
Schedule of the components of income before income taxes | Years Ended December 31, 2023 2022 2021 Domestic $ 5,008 $ 17,281 $ 9,984 Foreign 3,753 9,401 13,127 Total income before income taxes $ 8,761 $ 26,682 $ 23,111 |
Schedule of the components of income tax provision | Years Ended December 31, 2023 2022 2021 Current: Federal $ 1,939 $ 3,840 $ 2,194 State 421 929 617 Foreign 2,454 2,720 4,830 Total current provision 4,814 7,489 7,641 Deferred: Federal (1,860) (226) (786) State (243) 113 38 Foreign (104) (420) 689 Total deferred benefit (2,207) (533) (59) Total $ 2,607 $ 6,956 $ 7,582 |
Schedule of the differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate | Years Ended December 31, 2023 2022 2021 Tax provision computed at 21% $ 1,840 $ 5,603 $ 4,853 Nondeductible expenses 468 149 91 State income taxes, net of federal benefit 229 875 624 Tax impact of foreign operations — 238 2,045 Valuation allowances increase (release) (95) (44) 52 Net decrease of uncertain tax positions — — (31) Other 165 135 (52) Income tax provision $ 2,607 $ 6,956 $ 7,582 Effective income tax rates 29.8 % 26.1 % 32.8 % |
Schedule of the deferred tax assets and liabilities | December 31, 2023 2022 Noncurrent deferred tax asset Compensation related expenses $ 2,636 $ 1,748 Foreign currency translation 3,069 3,281 U.S. foreign tax credit carryovers 2,705 2,527 Foreign net operating loss carryovers 2,286 2,129 Accruals and reserves 1,307 557 Operating lease right-of-use assets 2,500 2,080 Other 771 316 Valuation allowance for deferred tax assets (3,785) (3,704) Total noncurrent deferred tax asset 11,489 8,934 Noncurrent deferred tax liability Depreciable assets (433) (367) Prepaids (82) (137) Intangible assets (1,370) (1,235) Investment in foreign subsidiaries (2,363) (2,370) Foreign earnings distribution taxes (1,461) (1,224) Foreign intangibles and reserves (967) (1,211) Operating lease liabilities (2,422) (1,963) Total noncurrent deferred tax liability (9,098) (8,507) Net noncurrent deferred tax assets 2,391 427 Net deferred tax assets $ 2,391 $ 427 |
Schedule of reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period | December 31, 2023 2022 2021 Balance, beginning of year $ 1,715 $ 1,639 $ 1,569 Additions as a result of tax positions taken during the current period 36 76 101 Reductions as a result of tax positions taken during a prior period — — (31) Balance, end of year $ 1,751 $ 1,715 $ 1,639 |
STOCK BASED COMPENSATION PLANS
STOCK BASED COMPENSATION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
STOCK BASED COMPENSATION PLANS | |
Summary of the status of the Company's RSUs issued under its Incentive Plan | Weighted- Average Grant Date RSU Fair Value Non-vested at December 31, 2020 6,866 $ 2.31 Granted 1,112 $ 6.07 Vested (3,680) $ 2.46 Forfeited (278) $ 2.51 Non-vested at December 31, 2021 4,020 $ 3.20 Granted 1,527 $ 6.57 Vested (1,610) $ 2.88 Forfeited (117) $ 3.37 Non-vested at December 31, 2022 3,820 $ 4.68 Granted 2,295 $ 4.61 Vested (1,409) $ 4.35 Forfeited (785) $ 2.87 Non-vested at December 31, 2023 3,921 $ 5.10 |
SEGMENT AND GEOGRAPHICAL INFO_2
SEGMENT AND GEOGRAPHICAL INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2023 | |
SEGMENT AND GEOGRAPHICAL INFORMATION | |
Schedule of geographical revenue information for the segment | Year Ended December 31, 2023 2022 2021 Revenues Americas (1) $ 177,131 $ 166,661 $ 160,181 Europe (2) 87,074 89,908 90,256 Asia Pacific (3) 26,849 29,698 27,395 $ 291,054 $ 286,267 $ 277,832 Fixed assets Americas $ 2,696 $ 3,225 $ 2,598 Europe 2,926 1,685 2,119 Asia Pacific 824 1,019 576 $ 6,446 $ 5,929 $ 5,293 (1) Substantially all relates to operations in the United States. (2) Includes revenues from operations in Germany of $34.6 million, $44.2 million and $50.0 million in 2023, 2022 and 2021, respectively. Includes revenues from operations in the United Kingdom of $28.2 million, $18.6 million and $15.2 million in 2023, 2022 and 2021, respectively. (3) Includes revenues from operations in Australia of $22.6 million, $22.9 million and $23.1 million in 2023, 2022 and 2021, respectively. |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable, Contract Assets and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||||
Provision for doubtful accounts | $ 4,800 | $ 5,434 | $ 320 | $ (138) |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Furniture, Fixtures and Equipment, net to Reimbursable Expenditures (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Furniture, Fixtures and Equipment, net | |||
Capitalized costs associated with system and website development | $ 1,700,000 | $ 1,700,000 | $ 800,000 |
Goodwill | |||
Impairment of goodwill | 0 | 0 | 0 |
Debt Issuance Costs | |||
Amortization of debt issuance costs | $ 238,000 | 340,000 | 354,000 |
Revenue Recognition | |||
Notice period to terminate agreements early due to breach or for convenience | 30 days | ||
Reimbursable Expenditures | |||
Reimbursable expenditures | $ 1,500,000 | $ 800,000 | $ 300,000 |
Minimum | |||
Revenue Recognition | |||
Term of provisions | 6 months | ||
Maximum | |||
Revenue Recognition | |||
Term of provisions | 12 months | ||
Furniture Fixtures And Equipment | Minimum | |||
Furniture, Fixtures and Equipment, net | |||
Estimated useful life of assets | 2 years | ||
Furniture Fixtures And Equipment | Maximum | |||
Furniture, Fixtures and Equipment, net | |||
Estimated useful life of assets | 5 years | ||
Leasehold Improvements | Minimum | |||
Furniture, Fixtures and Equipment, net | |||
Estimated useful life of assets | 2 years | ||
Leasehold Improvements | Maximum | |||
Furniture, Fixtures and Equipment, net | |||
Estimated useful life of assets | 5 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-Based Compensation (Details) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2023 | |
Directors | |
Stock-Based Compensation | |
Award vesting period | 3 years |
Employee | Minimum | |
Stock-Based Compensation | |
Award vesting period | 2 years |
Employee | Maximum | |
Stock-Based Compensation | |
Award vesting period | 4 years |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments and Recently Issued Accounting Pronouncements (Details) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||||
Oct. 31, 2023 USD ($) | Oct. 31, 2022 USD ($) | Apr. 30, 2023 USD ($) | Sep. 30, 2023 USD ($) | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Fair Value of Financial Instruments | |||||||
Transfers of financial assets between Level 1 and Level 2 | $ 0 | ||||||
Transfers of financial assets between Level 2 and Level 1 | 0 | ||||||
Transfers of financial assets into Level 3 | 0 | ||||||
Transfers of financial assets out of Level 3 | 0 | ||||||
Liabilities: | |||||||
Contingent consideration | $ 5,894,000 | $ 5,593,000 | $ 2,420,000 | ||||
Contingent consideration, valuation technique extensible list | us-gaap:IncomeApproachValuationTechniqueMember | ||||||
Contingent consideration, measurement input extensible list | us-gaap:MeasurementInputDiscountRateMember | ||||||
Contingent consideration, measurement input | 0.049 | 0.025 | |||||
Change in the contingent consideration liability | |||||||
Beginning Balance | $ 5,593,000 | $ 2,420,000 | |||||
Contingent consideration payment | $ (1,500,000) | (1,460,000) | (1,000,000) | (2,558,000) | |||
Accretion of contingent consideration | 104,000 | 33,000 | |||||
Ending Balance | 5,894,000 | 5,593,000 | $ 2,420,000 | ||||
Outstanding borrowings | 79,200,000 | 79,200,000 | |||||
Fair value of outstanding borrowing | $ 79,800,000 | $ 76,500,000 | |||||
Debt instrument, valuation technique, extensible list | us-gaap:ValuationTechniqueDiscountedCashFlowMember | ||||||
Debt instrument, measurement input | 0.069 | 0.063 | |||||
Borrowing against revolver | $ 5,000,000 | $ 84,175,000 | $ 9,000,000 | ||||
Revolver repaid | $ 5,000,000 | 84,175,000 | |||||
Accumulated deficit | (102,703,000) | (108,747,000) | |||||
Allowance for credit losses | 5,288,000 | 272,000 | |||||
Cumulative effect adjustment | ASU 2016-13 | |||||||
Change in the contingent consideration liability | |||||||
Accumulated deficit | (100,000) | ||||||
Allowance for credit losses | 100,000 | ||||||
Neuralify | |||||||
Change in the contingent consideration liability | |||||||
Earnout adjustment | (1,420,000) | ||||||
Earnout payment | (1,000,000) | ||||||
Change 4 Growth | |||||||
Change in the contingent consideration liability | |||||||
Contingent consideration payment | (1,460,000) | ||||||
Contingent consideration accrued | $ 5,560,000 | 5,560,000 | |||||
Ventana Research | |||||||
Liabilities: | |||||||
Contingent consideration | 1,700,000 | ||||||
Change in the contingent consideration liability | |||||||
Contingent consideration accrued | $ 1,657,000 | 1,657,000 | |||||
Ending Balance | 1,700,000 | ||||||
Recurring | |||||||
Assets: | |||||||
Cash equivalents | 7,067,000 | 18,000 | |||||
Total | 7,067,000 | 18,000 | |||||
Liabilities: | |||||||
Contingent consideration | 5,894,000 | 5,593,000 | |||||
Total | 5,894,000 | 5,593,000 | |||||
Change in the contingent consideration liability | |||||||
Beginning Balance | 5,593,000 | ||||||
Ending Balance | 5,894,000 | 5,593,000 | |||||
Recurring | Level 1 | |||||||
Assets: | |||||||
Cash equivalents | 7,067,000 | 18,000 | |||||
Total | 7,067,000 | 18,000 | |||||
Recurring | Level 3 | |||||||
Liabilities: | |||||||
Contingent consideration | 5,894,000 | 5,593,000 | |||||
Total | 5,894,000 | 5,593,000 | |||||
Change in the contingent consideration liability | |||||||
Beginning Balance | 5,593,000 | ||||||
Ending Balance | $ 5,894,000 | $ 5,593,000 |
REVENUE - Contract Balances (De
REVENUE - Contract Balances (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
REVENUE | ||
Contract assets | $ 30,176 | $ 32,249 |
Contract liabilities | $ 9,521 | $ 7,058 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2023 USD ($) | |
REVENUE | |
Revenue recognized, included in contract liability balance | $ 5.5 |
Remaining performance obligations | $ 109.1 |
ACQUISITIONS - Total allocable
ACQUISITIONS - Total allocable purchase price (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Oct. 31, 2023 | Oct. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||||
Cash consideration | $ 1,000 | |||
Cash | $ 3,450 | |||
Ventana Research | ||||
Business Acquisition [Line Items] | ||||
Cash consideration | $ 1,000 | |||
Contingent consideration | 1,657 | $ 1,657 | ||
Total allocable purchase price | $ 2,657 | |||
Change 4 Growth | ||||
Business Acquisition [Line Items] | ||||
Cash consideration | $ 3,800 | |||
Cash | 3,450 | |||
Accrued working capital adjustment | 378 | |||
ISG common stock | 600 | |||
Contingent consideration | 5,560 | $ 5,560 | ||
Total allocable purchase price | $ 9,988 |
ACQUISITIONS - Recognized ident
ACQUISITIONS - Recognized identifiable assets acquired and liabilities assumed and acquisition costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2023 | Dec. 31, 2022 | Oct. 31, 2023 | Oct. 31, 2022 | Dec. 31, 2021 | |
Identified assets acquired, and liabilities assumed | |||||
Goodwill | $ 97,232 | $ 94,972 | $ 90,790 | ||
Ventana Research | |||||
Identified assets acquired, and liabilities assumed | |||||
Accounts receivable | $ 404 | ||||
Intangible assets | 1,400 | ||||
Contract liabilities | (1,362) | ||||
Net assets acquired | 442 | ||||
Goodwill | $ 2,215 | ||||
Ventana Research | Selling, general and administrative expenses | |||||
Identified assets acquired, and liabilities assumed | |||||
Acquisition related cost | $ 100 | ||||
Change 4 Growth | |||||
Identified assets acquired, and liabilities assumed | |||||
Accounts receivable and contract assets | $ 1,841 | ||||
Intangible assets | 4,300 | ||||
Accounts payable and accrued expense | (428) | ||||
Contract liabilities | (85) | ||||
Net assets acquired | 5,628 | ||||
Goodwill | $ 4,360 | ||||
Acquisition related cost | $ 200 |
ACQUISITION - Amortizable intan
ACQUISITION - Amortizable intangible assets and period (Details) - USD ($) $ in Thousands | Oct. 31, 2023 | Jan. 01, 2023 | Oct. 31, 2022 |
Ventana Research | |||
Amortizable intangible assets: | |||
Total intangible assets | $ 1,400 | ||
Revenue | $ 3,900 | ||
Ventana Research | Trademark and trade name | |||
Amortizable intangible assets: | |||
Total intangible assets | $ 600 | ||
Estimated useful life | 3 years | ||
Ventana Research | Customer relationships | |||
Amortizable intangible assets: | |||
Total intangible assets | $ 700 | ||
Estimated useful life | 7 years | ||
Ventana Research | Noncompete agreements | |||
Amortizable intangible assets: | |||
Total intangible assets | $ 100 | ||
Estimated useful life | 2 years | ||
Change 4 Growth, LLC | |||
Amortizable intangible assets: | |||
Total intangible assets | $ 4,300 | ||
Change 4 Growth, LLC | Trademark and trade name | |||
Amortizable intangible assets: | |||
Total intangible assets | $ 1,100 | ||
Estimated useful life | 3 years | ||
Change 4 Growth, LLC | Customer relationships | |||
Amortizable intangible assets: | |||
Total intangible assets | $ 2,900 | ||
Estimated useful life | 8 years | ||
Change 4 Growth, LLC | Noncompete agreements | |||
Amortizable intangible assets: | |||
Total intangible assets | $ 300 | ||
Estimated useful life | 2 years |
NET INCOME PER COMMON SHARE - A
NET INCOME PER COMMON SHARE - Antidilutive Securities (Details) shares in Millions | 12 Months Ended |
Dec. 31, 2023 shares | |
Restricted Stock Units | |
Antidilutive securities | |
Securities considered antidilutive (in shares) | 2.3 |
NET INCOME PER COMMON SHARE - C
NET INCOME PER COMMON SHARE - Computation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Basic: | |||
Net income | $ 6,154 | $ 19,726 | $ 15,529 |
Weighted average common shares (in shares) | 48,609 | 48,175 | 48,638 |
Earnings per share (in dollars per share) | $ 0.13 | $ 0.41 | $ 0.32 |
Diluted: | |||
Net income | $ 6,154 | $ 19,726 | $ 15,529 |
Basic weighted average common shares (in shares) | 48,609 | 48,175 | 48,638 |
Potential common shares (in shares) | 1,566 | 2,245 | 3,118 |
Diluted weighted average common shares (in shares) | 50,175 | 50,420 | 51,756 |
Diluted earnings per share (in dollars per share) | $ 0.12 | $ 0.39 | $ 0.30 |
ACCOUNTS RECEIVABLE AND CONTR_3
ACCOUNTS RECEIVABLE AND CONTRACT ASSETS (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Contract assets | $ 30,176 | $ 32,249 |
Accounts receivable and contract assets, net | 82,117 | 80,170 |
Nonrelated parties | ||
Accounts receivable | 51,758 | 47,611 |
Related parties | ||
Accounts receivable | $ 183 | $ 310 |
FURNITURE, FIXTURES AND EQUIP_3
FURNITURE, FIXTURES AND EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Furniture, fixtures and equipment | |||
Accumulated depreciation | $ (13,305) | $ (11,519) | |
Furniture, fixtures and equipment, net | 6,446 | 5,929 | $ 5,293 |
Depreciation expense | 3,094 | 3,045 | $ 2,688 |
Computer hardware, software and other office equipment | |||
Furniture, fixtures and equipment | |||
Furniture, fixture and equipment, gross | $ 4,010 | 3,343 | |
Computer hardware, software and other office equipment | Minimum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives (in years) | 2 years | ||
Computer hardware, software and other office equipment | Maximum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives (in years) | 5 years | ||
Furniture, fixtures and leasehold improvements | |||
Furniture, fixtures and equipment | |||
Furniture, fixture and equipment, gross | $ 3,188 | 3,235 | |
Furniture, fixtures and leasehold improvements | Minimum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives (in years) | 2 years | ||
Furniture, fixtures and leasehold improvements | Maximum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives (in years) | 5 years | ||
Software and development costs | |||
Furniture, fixtures and equipment | |||
Furniture, fixture and equipment, gross | $ 12,553 | $ 10,870 | |
Software and development costs | Minimum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives (in years) | 3 years | ||
Software and development costs | Maximum | |||
Furniture, fixtures and equipment | |||
Estimated Useful Lives (in years) | 5 years |
LEASES (Details)
LEASES (Details) | 12 Months Ended |
Dec. 31, 2023 | |
Lessee, Lease, Description [Line Items] | |
Options to extend the leases | true |
Options to terminate the leases | true |
Maximum | |
Lessee, Lease, Description [Line Items] | |
Extended term (in years) | 3 years |
Term of options to terminate the leases (in years) | 1 year |
LEASES - Components of lease ex
LEASES - Components of lease expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Lease cost | ||
Operating lease cost | $ 2,501 | $ 2,128 |
Amortization of right-of-use assets | 121 | 375 |
Interest on lease liabilities | 7 | 40 |
Short-term lease cost | 45 | 44 |
Variable lease cost | 159 | 225 |
Sublease income | (187) | |
Total lease cost | 2,833 | 2,625 |
Supplemental cash flow information related to leases was as follows | ||
Operating cash flows from finance leases | 7 | 40 |
Operating cash flows from operating leases | 2,562 | 2,594 |
Financing cash flows from finance leases | $ 132 | $ 381 |
LEASES - Supplemental balance s
LEASES - Supplemental balance sheet information related to leases (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
LEASES | ||
Operating lease right-of-use assets | $ 7,473 | $ 6,780 |
Current operating lease liability | $ 2,589 | $ 2,399 |
Current operating lease liabilities, Statement of Financial Position | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Non-current operating lease liabilities | $ 5,287 | $ 4,857 |
Total operating lease liabilities | 7,876 | 7,256 |
Finance lease right-of-use assets | $ 188 | $ 110 |
Finance lease right-of-use assets, statement of financial position | Fixed assets | Fixed assets |
Current finance lease liabilities | $ 120 | $ 381 |
Current finance lease liabilities, Statement of Financial Position | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Non-current finance lease liabilities | $ 64 | $ 46 |
Non-current finance lease liabilities, statement of financial position | Other liabilities | Other liabilities |
Total finance lease liabilities | $ 184 | $ 427 |
Weighted average remaining lease term (in years) - Operating leases | 4 years 8 months 12 days | 3 years 9 months 18 days |
Weighted average remaining lease term (in years) - Finance leases | 2 years 1 month 6 days | 2 years |
Weighted average discount rate (as a percentage) - Operating leases | 9.40% | 7.90% |
Weighted average discount rate (as a percentage) - Finance leases | 10.40% | 5.40% |
LEASES - Maturities of lease li
LEASES - Maturities of lease liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Maturities of lease liabilities - Operating Leases | ||
2024 | $ 2,766 | |
2025 | 2,543 | |
2026 | 1,850 | |
2027 | 865 | |
2028 | 543 | |
Thereafter | 1,886 | |
Total lease payments | 10,453 | |
Less imputed interest | (2,577) | |
Total | 7,876 | $ 7,256 |
Maturities of lease liabilities - Finance Leases | ||
2024 | 123 | |
2025 | 50 | |
2026 | 8 | |
2027 | 8 | |
2028 | 8 | |
Thereafter | 1 | |
Total lease payments | 198 | |
Less imputed interest | (14) | |
Total | $ 184 | $ 427 |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Intangible assets | |||
Gross Carrying Amount | $ 106,915 | $ 102,615 | |
Acquisitions | 1,400 | 4,300 | |
Accumulated Amortization | (95,380) | (92,216) | |
Currency Impact | (320) | (319) | |
Net Book Value | 12,615 | 14,380 | |
Amortization expense | 3,164 | 2,323 | $ 2,643 |
Estimated future amortization expense | |||
2024 | 2,927 | ||
2025 | 2,391 | ||
2026 | 1,774 | ||
2027 | 1,444 | ||
2028 | 1,253 | ||
Thereafter | 2,826 | ||
Estimated future amortization expense | 12,615 | ||
Customer relationships | |||
Intangible assets | |||
Gross Carrying Amount | 78,183 | 75,283 | |
Acquisitions | 700 | 2,900 | |
Accumulated Amortization | (72,220) | (70,273) | |
Currency Impact | (120) | (115) | |
Net Book Value | 6,543 | 7,795 | |
Noncompete agreements | |||
Intangible assets | |||
Gross Carrying Amount | 6,262 | 5,962 | |
Acquisitions | 100 | 300 | |
Accumulated Amortization | (6,146) | (5,987) | |
Currency Impact | 1 | ||
Net Book Value | 217 | 275 | |
Software | |||
Intangible assets | |||
Gross Carrying Amount | 1,660 | 1,660 | |
Accumulated Amortization | (1,580) | (1,557) | |
Net Book Value | 80 | 103 | |
Backlog | |||
Intangible assets | |||
Gross Carrying Amount | 5,002 | 5,002 | |
Accumulated Amortization | (4,981) | (4,981) | |
Currency Impact | (21) | (21) | |
Databases | |||
Intangible assets | |||
Gross Carrying Amount | 13,218 | 13,218 | |
Accumulated Amortization | (8,455) | (7,905) | |
Currency Impact | (180) | (183) | |
Net Book Value | 4,583 | 5,130 | |
Trademark and trade name | |||
Intangible assets | |||
Gross Carrying Amount | 2,590 | 1,490 | |
Acquisitions | 600 | 1,100 | |
Accumulated Amortization | (1,998) | (1,513) | |
Net Book Value | $ 1,192 | $ 1,077 | |
Minimum | Customer relationships | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 2 years | 2 years | |
Minimum | Noncompete agreements | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 4 years | 4 years | |
Minimum | Software | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 3 years | 3 years | |
Minimum | Backlog | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 1 year | 1 year | |
Minimum | Databases | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 4 years | 4 years | |
Minimum | Trademark and trade name | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 3 years | 3 years | |
Maximum | Customer relationships | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 15 years | 15 years | |
Maximum | Noncompete agreements | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 7 years | 7 years | |
Maximum | Software | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 4 years | 4 years | |
Maximum | Backlog | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 2 years | 2 years | |
Maximum | Databases | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 15 years | 15 years | |
Maximum | Trademark and trade name | |||
Intangible assets | |||
Estimated Useful Lives (in years) | 5 years | 5 years |
GOODWILL (Details)
GOODWILL (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2023 | Dec. 31, 2022 | |
Changes in the carrying amount of goodwill | ||
Gross balance at the beginning | $ 95,490 | $ 91,130 |
Foreign currency impact | (518) | (340) |
Balance at the beginning | 94,972 | 90,790 |
Acquisitions | 2,215 | 4,360 |
Foreign currency impact and adjustments | 45 | (178) |
Changes during the period | 2,260 | 4,182 |
Gross balance at the end | 97,705 | 95,490 |
Foreign currency impact and adjustments | (473) | (518) |
Balance at the end | $ 97,232 | $ 94,972 |
ACCRUED EXPENSES AND OTHER CU_3
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES | ||
Accrued payroll, incentive, and vacation | $ 3,582 | $ 7,107 |
Accrued corporate and payroll related taxes | 701 | 1,762 |
Accrued contractors expenses | 8,615 | 3,508 |
Contingent consideration-current | 2,285 | 1,460 |
Current operating lease liability | 2,589 | 2,399 |
Accrued license expense | 5,257 | 2,582 |
Other | 2,422 | 5,090 |
Accrued expenses and other current liabilities | $ 25,451 | $ 23,908 |
FINANCING ARRANGEMENTS AND LO_3
FINANCING ARRANGEMENTS AND LONG-TERM DEBT - Long-term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||
Senior secured credit facility | $ 70,175 | |
Revolving borrowings | $ 79,175 | 9,000 |
Debt issuance costs | (459) | |
Long-term debt, net | 79,175 | 78,716 |
Less current installments on long term debt | 4,300 | |
Long-term debt | $ 79,175 | $ 74,416 |
FINANCING ARRANGEMENTS AND LO_4
FINANCING ARRANGEMENTS AND LONG-TERM DEBT - Additional information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Feb. 22, 2023 USD ($) | Sep. 30, 2023 USD ($) | Mar. 31, 2023 | Dec. 31, 2023 USD ($) | Dec. 31, 2022 USD ($) | Feb. 21, 2023 USD ($) | |
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Outstanding borrowings | $ 79,200 | $ 79,200 | ||||
Fair value of outstanding borrowing | $ 79,800 | $ 76,500 | ||||
Debt Instrument, Valuation Technique [Extensible List] | us-gaap:ValuationTechniqueDiscountedCashFlowMember | |||||
Debt Instrument, Measurement Input [Extensible List] | us-gaap:MeasurementInputDiscountRateMember | |||||
Debt instrument, measurement input | 0.069 | 0.063 | ||||
Borrowing against revolver | $ 5,000 | $ 84,175 | $ 9,000 | |||
Revolver repaid | $ 5,000 | $ 84,175 | ||||
Credit Agreement 2023 | Base Rate | ||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Applicable margin (as a percent) | 0.50% | |||||
Credit Agreement 2023 | Federal Funds Rate | ||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Applicable margin (as a percent) | 0.50% | |||||
Credit Agreement 2023 | Secured Overnight Financing Rate (SOFR) | ||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Applicable margin (as a percent) | 1% | 1.50% | ||||
Credit Spread Adjustment Percentage | 0.10% | |||||
Credit Agreement 2023 | Revolving Credit Facility | ||||||
FINANCING ARRANGEMENTS AND LONG-TERM DEBT | ||||||
Maximum borrowing capacity | $ 140,000 | $ 54,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Apr. 30, 2023 | Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Contingent Consideration | ||||
Contingent consideration | $ 5,894 | $ 5,593 | $ 2,420 | |
Contingent consideration-current | 2,285 | 1,460 | ||
Contingent consideration payment | $ 1,500 | 1,460 | $ 1,000 | $ 2,558 |
Change 4 Growth Acquisition | ||||
Contingent Consideration | ||||
Contingent consideration | 4,200 | |||
Ventana Research | ||||
Contingent Consideration | ||||
Contingent consideration | $ 1,700 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Dec. 31, 2023 | Dec. 31, 2022 |
Payable to related parties | $ 0 | $ 0 |
Accounts Payable, Related Party, Type [Extensible Enumeration] | Related parties | Related parties |
Related parties | ||
Accounts receivable | $ 183 | $ 310 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Income before income taxes | |||
Domestic | $ 5,008 | $ 17,281 | $ 9,984 |
Foreign | 3,753 | 9,401 | 13,127 |
Income before taxes | 8,761 | 26,682 | 23,111 |
Current: | |||
Federal | 1,939 | 3,840 | 2,194 |
State | 421 | 929 | 617 |
Foreign | 2,454 | 2,720 | 4,830 |
Total current provision | 4,814 | 7,489 | 7,641 |
Deferred: | |||
Federal | (1,860) | (226) | (786) |
State | (243) | 113 | 38 |
Foreign | (104) | (420) | 689 |
Total deferred (benefit) expense | (2,207) | (533) | (59) |
Income tax provision | $ 2,607 | $ 6,956 | $ 7,582 |
U.S. federal statutory income tax rate (as a percent) | 21% | 21% | 21% |
Differences between the effective tax rates reflected in the total provision for income taxes and the U.S. federal statutory rate | |||
Tax provision computed at 21% | $ 1,840 | $ 5,603 | $ 4,853 |
Nondeductible expenses | 468 | 149 | 91 |
State income taxes, net of federal benefit | 229 | 875 | 624 |
Tax impact of foreign operations | 238 | 2,045 | |
Valuation allowances increase (release) | (95) | (44) | 52 |
Net decrease of uncertain tax positions | (31) | ||
Other | 165 | 135 | (52) |
Income tax provision | $ 2,607 | $ 6,956 | $ 7,582 |
Effective income tax rates (as a percent) | 29.80% | 26.10% | 32.80% |
Noncurrent deferred tax asset | |||
Compensation related expenses | $ 2,636 | $ 1,748 | |
Foreign currency translation | 3,069 | 3,281 | |
U.S. foreign tax credit carryovers | 2,705 | 2,527 | |
Foreign net operating loss carryovers | 2,286 | 2,129 | |
Accruals and reserves | 1,307 | 557 | |
Operating lease right-of-use assets | 2,500 | 2,080 | |
Other | 771 | 316 | |
Valuation allowance for deferred tax assets | (3,785) | (3,704) | |
Total noncurrent deferred tax asset | 11,489 | 8,934 | |
Noncurrent deferred tax liability | |||
Depreciable assets | (433) | (367) | |
Prepaids | (82) | (137) | |
Intangible assets | (1,370) | (1,235) | |
Investment in foreign subsidiaries | (2,363) | (2,370) | |
Foreign earnings distribution taxes | (1,461) | (1,224) | |
Foreign intangibles and reserves | (967) | (1,211) | |
Operating lease liabilities | (2,422) | (1,963) | |
Total noncurrent deferred tax liability | (9,098) | (8,507) | |
Net noncurrent deferred tax assets | 2,391 | 427 | |
Net deferred tax assets | 2,391 | 427 | |
Net operating loss (NOL) carryforwards | 10,200 | ||
Reconciliation of the total amounts of unrecognized tax benefits at the beginning and end of the period | |||
Balance, beginning of year | 1,715 | 1,639 | $ 1,569 |
Additions as a result of tax positions taken during the current period | 36 | 76 | 101 |
Reductions as a result of tax positions taken during a prior period | (31) | ||
Balance, end of year | 1,751 | $ 1,715 | $ 1,639 |
Income tax expense recognized of interest and penalties related to uncertain tax positions | 1,000 | ||
Unrecognized tax benefits that would impact the company's effective tax rate | 1,800 | ||
Foreign | |||
Noncurrent deferred tax liability | |||
Net operating loss (NOL) carryforwards | 10,200 | ||
Federal | |||
Noncurrent deferred tax liability | |||
Tax credit carryforward | $ 2,700 |
STOCK-BASED COMPENSATION PLANS
STOCK-BASED COMPENSATION PLANS (Details) - USD ($) | 12 Months Ended | |||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
STOCK-BASED COMPENSATION PLANS | ||||
Recognized employee stock-based compensation expense | $ 9,100,000 | $ 7,500,000 | $ 6,500,000 | |
Employee Stock Purchase Plan | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Shares available for grant | 640,318 | |||
Weighted-Average Grant Date Fair Value | ||||
Shares available under the plan | 3,600,000 | |||
Offering period for the plan (in months) | 3 months | |||
Period of interval between occurrence of purchases (in months) | 3 months | |||
IRS regulated cap for payroll deduction to purchase common stock | $ 25,000 | |||
Purchase price expressed as a percentage of fair market value of common stock (as a percent) | 90% | |||
Shares issued under ESPP | 206,806 | |||
Shares available for purchase under ESPP | 640,318 | |||
Minimum | Employee Stock Purchase Plan | ||||
Weighted-Average Grant Date Fair Value | ||||
Eligible service period of employees per week to participate in the plan (in hours) | 20 hours | |||
Eligible service period of employees in a calendar year to participate in the plan (in months) | 5 months | |||
Percentage of employees' eligible earnings as payroll deduction to purchase common stock | 1% | |||
Maximum | Employee Stock Purchase Plan | ||||
Weighted-Average Grant Date Fair Value | ||||
Percentage of employees' eligible earnings as payroll deduction to purchase common stock | 10% | |||
Restricted Stock Units | ||||
Weighted-Average Grant Date Fair Value | ||||
Weighted-average period to recognize unrecognized compensation cost | 1 year 6 months | |||
Incentive Plan | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Additional shares authorized | 5,500,000 | |||
Shares available for grant | 2,231,197 | |||
Weighted-Average Grant Date Fair Value | ||||
Total fair value RSUs vested (in dollars) | $ 6,100,000 | $ 4,700,000 | $ 9,000,000 | |
Unrecognized compensation cost related to the RSUs | $ 11,700,000 | |||
Shares available under the plan | 2,900,000 | |||
Incentive Plan | Maximum | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Expiration period (in years) | 10 years | |||
Incentive Plan | Restricted Stock Units | ||||
STOCK-BASED COMPENSATION PLANS | ||||
Percentage of vesting through the fourth anniversary of the grant date | 100% | |||
Percentage of vesting upon a termination of employment | 100% | |||
RSU | ||||
Non-vested at the beginning of the period (in shares) | 3,820,000 | 4,020,000 | 6,866,000 | |
Granted (in shares) | 2,295,000 | 1,527,000 | 1,112,000 | |
Vested (in shares) | (1,409,000) | (1,610,000) | (3,680,000) | |
Forfeited (in shares) | (785,000) | (117,000) | (278,000) | |
Non-vested at the end of the period (in shares) | 3,921,000 | 3,820,000 | 4,020,000 | 6,866,000 |
Weighted-Average Grant Date Fair Value | ||||
Non-vested at the beginning of the period (in dollars per share) | $ 4.68 | $ 3.20 | $ 2.31 | |
Granted (in dollars per share) | 4.61 | 6.57 | 6.07 | |
Vested (in dollars per share) | 4.35 | 2.88 | 2.46 | |
Forfeited (in dollars per share) | 2.87 | 3.37 | 2.51 | |
Non-vested at the end of the period (in dollars per share) | $ 5.10 | $ 4.68 | $ 3.20 | $ 2.31 |
SEGMENT AND GEOGRAPHICAL INFO_3
SEGMENT AND GEOGRAPHICAL INFORMATION (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 USD ($) segment | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | |
Segment and geographical information | |||
Number of segments | segment | 1 | ||
Revenues | $ 291,054 | $ 286,267 | $ 277,832 |
Fixed assets | 6,446 | 5,929 | 5,293 |
Americas | |||
Segment and geographical information | |||
Revenues | 177,131 | 166,661 | 160,181 |
Fixed assets | 2,696 | 3,225 | 2,598 |
Europe | |||
Segment and geographical information | |||
Revenues | 87,074 | 89,908 | 90,256 |
Fixed assets | 2,926 | 1,685 | 2,119 |
Asia Pacific | |||
Segment and geographical information | |||
Revenues | 26,849 | 29,698 | 27,395 |
Fixed assets | 824 | 1,019 | 576 |
Germany | |||
Segment and geographical information | |||
Revenues | 34,600 | 44,200 | 50,000 |
United Kingdom | |||
Segment and geographical information | |||
Revenues | 28,200 | 18,600 | 15,200 |
Australia | |||
Segment and geographical information | |||
Revenues | $ 22,600 | $ 22,900 | $ 23,100 |
SUBSEQUENT EVENT (Details)
SUBSEQUENT EVENT (Details) | Mar. 05, 2024 $ / shares |
Subsequent Event | |
SUBSEQUENT EVENT | |
Dividend approved (in US$ per share) | $ 0.045 |
SCHEDULE II - VALUATION AND Q_2
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Allowance for doubtful accounts | |||
Changes in valuation and qualifying accounts | |||
Balance at Beginning of Period | $ 272 | $ 40 | $ 368 |
Charges to Costs and Expenses | 5,434 | (320) | 138 |
Additions/(Deductions) | (418) | 552 | (466) |
Balance at End of Period | 5,288 | 272 | 40 |
Allowance for tax valuation | |||
Changes in valuation and qualifying accounts | |||
Balance at Beginning of Period | 3,704 | 3,315 | 3,707 |
Charges to Costs and Expenses | (95) | (44) | 52 |
Additions/(Deductions) | 176 | 433 | (444) |
Balance at End of Period | $ 3,785 | $ 3,704 | $ 3,315 |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | |
Pay vs Performance Disclosure | |||
Net Income (Loss) | $ 6,154 | $ 19,726 | $ 15,529 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Dec. 31, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Rule 10b5-1 Arrangement Modified | false |
Non-Rule 10b5-1 Arrangement Modified | false |