Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2023 | Aug. 01, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-40829 | |
Entity Registrant Name | Sterling Check Corp. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 37-1784336 | |
Entity Address, Address Line One | 6150 Oak Tree Boulevard | |
Entity Address, Address Line Two | Suite 490 | |
Entity Address, City or Town | Independence | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 44131 | |
City Area Code | 800 | |
Local Phone Number | 853-3228 | |
Title of 12(b) Security | Common stock, $0.01 par value | |
Trading Symbol | STER | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 96,330,894 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q2 | |
Current Fiscal Year End Date | --12-31 | |
Entity Central Index Key | 0001645070 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 48,817 | $ 103,095 |
Accounts receivable (net of allowance of $3,200 and $3,194 as of December 31, 2022 and June 30, 2023, respectively) | 151,274 | 139,579 |
Insurance receivable | 3,421 | 921 |
Prepaid expenses | 11,795 | 13,433 |
Other current assets | 24,847 | 13,654 |
Total current assets | 240,154 | 270,682 |
Property and equipment, net | 7,354 | 10,341 |
Goodwill | 878,696 | 849,609 |
Intangible assets, net | 251,031 | 241,036 |
Deferred income taxes | 4,642 | 4,452 |
Operating leases right-of-use asset | 7,514 | 20,084 |
Other noncurrent assets, net | 11,212 | 11,050 |
TOTAL ASSETS | 1,400,603 | 1,407,254 |
CURRENT LIABILITIES: | ||
Accounts payable | 40,017 | 38,372 |
Litigation settlement obligation | 6,013 | 4,165 |
Accrued expenses | 58,118 | 67,047 |
Current portion of long-term debt | 11,250 | 7,500 |
Operating leases liability, current portion | 4,069 | 3,717 |
Other current liabilities | 13,712 | 12,939 |
Total current liabilities | 133,179 | 133,740 |
Long-term debt, net | 486,882 | 493,990 |
Deferred income taxes | 31,531 | 23,707 |
Long-term operating leases liability, net of current portion | 10,182 | 16,835 |
Other liabilities | 7,942 | 2,336 |
Total liabilities | 669,716 | 670,608 |
COMMITMENTS AND CONTINGENCIES (NOTE 13) | ||
STOCKHOLDERS’ EQUITY: | ||
Preferred stock ($0.01 par value; 100,000,000 shares authorized; no shares issued or outstanding) | 0 | 0 |
Common stock ($0.01 par value; 1,000,000,000 shares authorized; 97,765,120 shares issued and 96,717,883 shares outstanding as of December 31, 2022; 99,810,027 shares issued and 96,758,662 shares outstanding as of June 30, 2023) | 96 | 76 |
Additional paid-in capital | 960,781 | 942,789 |
Common stock held in treasury (1,047,237 and 3,051,365 shares as of December 31, 2022 and June 30, 2023, respectively) | (40,773) | (14,859) |
Accumulated deficit | (185,534) | (186,448) |
Accumulated other comprehensive loss | (3,683) | (4,912) |
Total stockholders’ equity | 730,887 | 736,646 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 1,400,603 | $ 1,407,254 |
UNAUDITED CONDENSED CONSOLIDA_2
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 3,194 | $ 3,200 |
Preferred stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 99,810,027 | 97,765,120 |
Common stock, shares outstanding (in shares) | 96,758,662 | 96,717,883 |
Treasury stock (in shares) | 3,051,365 | 1,047,237 |
UNAUDITED CONDENSED CONSOLIDA_3
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
REVENUES | $ 190,384 | $ 205,591 | $ 369,658 | $ 397,563 |
OPERATING EXPENSES: | ||||
Cost of revenues (exclusive of depreciation and amortization below) | 102,056 | 107,576 | 196,810 | 208,532 |
Corporate technology and production systems | 11,428 | 12,539 | 23,380 | 25,091 |
Selling, general and administrative | 44,910 | 41,886 | 92,361 | 84,219 |
Depreciation and amortization | 16,120 | 19,872 | 31,242 | 40,028 |
Impairments and disposals of long-lived assets | 7,039 | 612 | 7,145 | 612 |
Total operating expenses | 181,553 | 182,485 | 350,938 | 358,482 |
OPERATING INCOME | 8,831 | 23,106 | 18,720 | 39,081 |
OTHER EXPENSE (INCOME): | ||||
Interest expense, net | 8,990 | 6,619 | 17,598 | 12,955 |
Loss (gain) on interest rate swaps | 0 | 32 | 0 | (296) |
Other income | (397) | (508) | (809) | (862) |
Total other expense, net | 8,593 | 6,143 | 16,789 | 11,797 |
INCOME BEFORE INCOME TAXES | 238 | 16,963 | 1,931 | 27,284 |
Income tax provision (benefit) | (85) | 5,392 | 1,017 | 9,477 |
NET INCOME | 323 | 11,571 | 914 | 17,807 |
Unrealized gain (loss) on hedged transactions, net of tax (benefit) expense of $0, $(1,671), $0 and $144, respectively | 4,751 | 0 | (408) | 0 |
Foreign currency translation adjustments, net of tax of $0, $0, $0 and $0, respectively | 955 | (3,483) | 1,637 | (3,200) |
Total other comprehensive (loss) income | 5,706 | (3,483) | 1,229 | (3,200) |
COMPREHENSIVE INCOME | $ 6,029 | $ 8,088 | $ 2,143 | $ 14,607 |
Net income per share attributable to stockholders | ||||
Basic (in USD per share) | $ 0 | $ 0.12 | $ 0.01 | $ 0.19 |
Diluted (in USD per share) | $ 0 | $ 0.12 | $ 0.01 | $ 0.18 |
Weighted average number of shares outstanding | ||||
Basic (in shares) | 92,723,901 | 94,024,970 | 92,800,279 | 93,996,553 |
Diluted (in shares) | 94,498,666 | 99,344,563 | 94,924,080 | 99,265,668 |
UNAUDITED CONDENSED CONSOLIDA_4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||||
Tax (benefit) expense on unrealized gain (loss) on hedged transactions | $ (1,671) | $ 0 | $ 144 | $ 0 |
Tax on foreign currency translation adjustments | $ 0 | $ 0 | $ 0 | $ 0 |
UNAUDITED CONDENSED CONSOLIDA_5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | Total | Cumulative Effect, Period of Adoption, Adjustment | Common Stock | Additional Paid-In Capital | Common Stock Held in Treasury | Accumulated Deficit | Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2021 | 95,746,975 | 107,820 | ||||||
Beginning balance at Dec. 31, 2021 | $ 709,624 | $ (198) | $ 68 | $ 916,578 | $ (897) | $ (206,218) | $ (198) | $ 93 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 1,112 | |||||||
Common stock issued for exercise of employee stock options (in shares) | 8,486 | |||||||
Common stock issued for exercise of employee stock options | 80 | 80 | ||||||
Issuance of restricted shares, net of forfeitures and vesting (in shares) | 533,095 | |||||||
Issuance of restricted shares, net of forfeitures and vestings | 0 | $ 5 | (5) | |||||
Stock-based compensation | 5,108 | 5,108 | ||||||
Net income | 6,236 | 6,236 | ||||||
Foreign currency translation adjustment, net of tax | (8) | 283 | ||||||
Foreign currency translation adjustment, net of tax | 275 | |||||||
Ending Balance (in shares) at Mar. 31, 2022 | 96,289,668 | 107,820 | ||||||
Ending Balance at Mar. 31, 2022 | 721,125 | $ 73 | 921,753 | $ (897) | (200,180) | 376 | ||
Beginning balance (in shares) at Dec. 31, 2021 | 95,746,975 | 107,820 | ||||||
Beginning balance at Dec. 31, 2021 | 709,624 | $ (198) | $ 68 | 916,578 | $ (897) | (206,218) | $ (198) | 93 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Net income | 17,807 | |||||||
Unrealized gain (loss) on hedged transactions, net of tax | 0 | |||||||
Foreign currency translation adjustment, net of tax | (3,200) | |||||||
Ending Balance (in shares) at Jun. 30, 2022 | 96,410,267 | 107,820 | ||||||
Ending Balance at Jun. 30, 2022 | 735,946 | $ 73 | 928,486 | $ (897) | (188,609) | (3,107) | ||
Beginning balance (in shares) at Mar. 31, 2022 | 96,289,668 | 107,820 | ||||||
Beginning balance at Mar. 31, 2022 | 721,125 | $ 73 | 921,753 | $ (897) | (200,180) | 376 | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 1,812 | |||||||
Common stock issued for exercise of employee stock options (in shares) | 76,399 | |||||||
Common stock issued for exercise of employee stock options | 734 | 734 | ||||||
Issuance of restricted shares, net of forfeitures and vesting (in shares) | 42,388 | |||||||
Stock-based compensation | 6,023 | 6,023 | ||||||
Net income | 11,571 | 11,571 | ||||||
Unrealized gain (loss) on hedged transactions, net of tax | 0 | |||||||
Foreign currency translation adjustment, net of tax | (3,483) | (24) | (3,483) | |||||
Foreign currency translation adjustment, net of tax | (3,507) | |||||||
Ending Balance (in shares) at Jun. 30, 2022 | 96,410,267 | 107,820 | ||||||
Ending Balance at Jun. 30, 2022 | 735,946 | $ 73 | 928,486 | $ (897) | (188,609) | (3,107) | ||
Beginning balance (in shares) at Dec. 31, 2022 | 96,717,883 | 1,047,237 | ||||||
Beginning balance at Dec. 31, 2022 | 736,646 | $ 76 | 942,789 | $ (14,859) | (186,448) | (4,912) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 4,567 | |||||||
Issuance of restricted shares, net of forfeitures and vesting (in shares) | 1,894,310 | |||||||
Issuance of restricted shares, net of forfeitures and vestings | 0 | $ 19 | (19) | |||||
Repurchases of common stock (in shares) | 493,926 | 493,926 | ||||||
Repurchases of common stock | (7,712) | $ (7,712) | ||||||
Shares withheld to cover restricted share vestings tax (in shares) | 37,128 | 37,128 | ||||||
Shares withheld to cover restricted share vestings tax | (487) | $ (487) | ||||||
Stock-based compensation | 8,043 | 8,043 | ||||||
Net income | 591 | 591 | ||||||
Unrealized gain (loss) on hedged transactions, net of tax | (5,159) | (5,159) | ||||||
Foreign currency translation adjustment, net of tax | 682 | 682 | ||||||
Ending Balance (in shares) at Mar. 31, 2023 | 98,085,706 | 1,578,291 | ||||||
Ending Balance at Mar. 31, 2023 | 732,604 | $ 95 | 950,813 | $ (23,058) | (185,857) | (9,389) | ||
Beginning balance (in shares) at Dec. 31, 2022 | 96,717,883 | 1,047,237 | ||||||
Beginning balance at Dec. 31, 2022 | $ 736,646 | $ 76 | 942,789 | $ (14,859) | (186,448) | (4,912) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Repurchases of common stock (in shares) | 1,959,819 | |||||||
Repurchases of common stock | $ (25,300) | |||||||
Net income | 914 | |||||||
Unrealized gain (loss) on hedged transactions, net of tax | (408) | |||||||
Foreign currency translation adjustment, net of tax | 1,637 | |||||||
Ending Balance (in shares) at Jun. 30, 2023 | 96,758,662 | 3,051,365 | ||||||
Ending Balance at Jun. 30, 2023 | 730,887 | $ 96 | 960,781 | $ (40,773) | (185,534) | (3,683) | ||
Beginning balance (in shares) at Mar. 31, 2023 | 98,085,706 | 1,578,291 | ||||||
Beginning balance at Mar. 31, 2023 | 732,604 | $ 95 | 950,813 | $ (23,058) | (185,857) | (9,389) | ||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||||
Issuance of common stock (in shares) | 2,363 | |||||||
Common stock issued for exercise of employee stock options (in shares) | 63,336 | |||||||
Common stock issued for exercise of employee stock options | 611 | 611 | ||||||
Issuance of restricted shares, net of forfeitures and vesting (in shares) | 80,331 | |||||||
Issuance of restricted shares, net of forfeitures and vestings | $ 0 | $ 1 | (1) | |||||
Repurchases of common stock (in shares) | 1,465,893 | 1,465,893 | 1,465,893 | |||||
Repurchases of common stock | $ (17,630) | $ (17,630) | ||||||
Shares withheld to cover restricted share vestings tax (in shares) | 7,181 | 7,181 | ||||||
Shares withheld to cover restricted share vestings tax | (85) | $ (85) | ||||||
Stock-based compensation | 9,358 | 9,358 | ||||||
Net income | 323 | 323 | ||||||
Unrealized gain (loss) on hedged transactions, net of tax | 4,751 | 4,751 | ||||||
Foreign currency translation adjustment, net of tax | 955 | 955 | ||||||
Ending Balance (in shares) at Jun. 30, 2023 | 96,758,662 | 3,051,365 | ||||||
Ending Balance at Jun. 30, 2023 | $ 730,887 | $ 96 | $ 960,781 | $ (40,773) | $ (185,534) | $ (3,683) |
UNAUDITED CONDENSED CONSOLIDA_6
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) $ in Thousands | 12 Months Ended |
Dec. 31, 2021 USD ($) | |
Accounting Standards Update 2016-13 | |
Tax on cumulative effect adjustment for adoption of CECL | $ 56 |
UNAUDITED CONDENSED CONSOLIDA_7
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income | $ 914 | $ 17,807 |
Adjustments to reconcile net income to net cash provided by operations | ||
Depreciation and amortization | 31,242 | 40,028 |
Deferred income taxes | 188 | 3,409 |
Stock-based compensation | 17,401 | 11,131 |
Impairments and disposals of long-lived assets | 7,145 | 612 |
Provision for bad debts | 459 | 659 |
Amortization of financing fees | 539 | 218 |
Amortization of debt discount | 392 | 959 |
Deferred rent | 1,023 | (146) |
Unrealized translation (gain) loss on investment in foreign subsidiaries | 108 | (1,220) |
Changes in fair value of derivatives | 0 | (4,102) |
Interest rate swap settlements | 585 | 0 |
Changes in operating assets and liabilities | ||
Accounts receivable | (7,399) | (36,451) |
Insurance receivable | (2,500) | 0 |
Prepaid expenses | 2,251 | (702) |
Other assets | (8,650) | (3,180) |
Accounts payable | 1,314 | 14,249 |
Litigation settlement obligation | 1,848 | 0 |
Accrued expenses | (10,515) | (8,610) |
Other liabilities | (3,447) | (1,382) |
Net cash provided by operating activities | 32,898 | 33,279 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of property and equipment | (593) | (3,266) |
Purchases of intangible assets and capitalized software | (8,589) | (7,616) |
Acquisitions, net of cash acquired | (48,641) | 0 |
Proceeds from disposition of property and equipment | 125 | 9 |
Net cash used in investing activities | (57,698) | (10,873) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Issuance of common stock | 611 | 814 |
Repurchases of common stock | (25,342) | 0 |
Payments of initial public offering issuance costs | 0 | (225) |
Cash paid for tax withholding on vesting of restricted shares | (572) | 0 |
Payments of long-term debt | (3,750) | (3,231) |
Payment of contingent consideration for acquisition | (305) | (215) |
Payments of finance lease obligations | 0 | (1) |
Net cash used in financing activities | (29,358) | (2,858) |
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS | (120) | (1,735) |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (54,278) | 17,813 |
Beginning of period | 103,095 | 47,998 |
Cash and cash equivalents at end of period | 48,817 | 65,811 |
Cash paid during the period for | ||
Interest, net of capitalized amounts of $150 and $189 for the six months ended June 30, 2022 and 2023, respectively | 20,239 | 17,225 |
Income taxes | 9,703 | 9,531 |
Noncash investing activities | ||
Purchases of property and equipment in accounts payable and accrued expenses | 165 | 222 |
Noncash purchase price of business combinations | $ 4,706 | $ 0 |
UNAUDITED CONDENSED CONSOLIDA_8
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Statement of Cash Flows [Abstract] | ||
Interest, capitalized amounts | $ 189 | $ 150 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business | Description of BusinessSterling Check Corp. (the “Company”), a Delaware corporation headquartered in Independence, Ohio, is a global provider of technology-enabled background and identity verification services. The Company provides the foundation of trust and safety its clients need to create effective environments for their most essential resource—people. The Company offers a comprehensive hiring and risk management solution that begins with identity verification, followed by criminal background screening, credential verification, drug and health screening, employee onboarding document processing and ongoing risk monitoring. As of June 30, 2023, the Company is 51.5% owned by an investment group consisting of entities advised by or affiliated with The Goldman Sachs Group, Inc. (“Goldman Sachs”) and Caisse de dépôt et placement du Québec (“CDPQ” and, together with Goldman Sachs, our “Sponsor”). CDPQ owns its equity interest in the Company indirectly through a limited partnership controlled by Goldman Sachs. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. These unaudited condensed consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with US GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2023. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and judgments that can affect the reported amount of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Significant estimates include the impairment of long-lived assets, goodwill impairment, the determination of the fair value of acquired assets and liabilities, collectability of receivables, the valuation of stock-based awards and stock-based compensation and sales and income tax liabilities. The Company also applies an estimated useful life of three years to internally developed software assets. This is based on the historical observed pace of change in the Company’s delivery, technology, and product offerings as well as market competition. The Company believes that the estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. Segment Information The Company has one operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Cash and Cash Equivalents Cash and cash equivalents of $103.1 million and $48.8 million as of December 31, 2022 and June 30, 2023, respectively, include money market instruments with maturities of three months or less. The Company maintained cash outside the U.S. as of December 31, 2022 of $28.0 million with the largest deposits being held in Canada and India, with balances of $9.2 million and $5.1 million, respectively. Cash outside the U.S. was $25.5 million as of June 30, 2023, with the largest deposits being held in India and Canada, with balances of $4.8 million and $3.2 million, respectively. Foreign Currency Assets and liabilities of operations having non-USD functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains or losses resulting from translating foreign currency financial statements, net of any related tax effects, are reflected in Accumulated Other Comprehensive Income or Loss (“OCI”), a separate component of stockholders’ equity on the unaudited condensed consolidated balance sheets. Gains or losses resulting from foreign currency transactions incurred in currencies other than the local functional currency are included in other income in the unaudited condensed consolidated statements of operations and comprehensive income. The cumulative translation adjustment resulted in losses of $5.6 million and $3.6 million as of December 31, 2022 and June 30, 2023, respectively. Accounts Receivable and Allowance for Credit Losses Accounts receivable balances consist of trade receivables that are recorded at the invoiced amount, net of allowances for expected credit losses and for potential sales credits and reserves. Sales credits and reserves were $0.9 million and $0.5 million as of December 31, 2022 and June 30, 2023 , respectively. The Company adopted the Fin ancial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments - Credit Losses (“CECL”) on January 1, 2022. The adoption of CECL resulted in a $0.3 million cumulative effect adjustment recorded in retained earnings as of January 1, 2022. CECL requires an entity to utilize an impairment model to estimate its lifetime expected credit losses and record an allowance that, when deducted from the amortized cost basis of a financial asset, presents the net amount expected to be collected on the financial asset. The Company maintains an allowance for expected credit losses in order to record accounts receivable at their net realizable value. Inherent in the assessment of the allowance for expected credit losses are certain judgments and estimates relating to, among other things, the Company’s customers’ access to capital, customers’ willingness and ability to pay, general economic conditions and the ongoing relationship with customers. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. The allowance for expected credit losses is determined by analyzing the Company’s historical write-offs, the current aging of receivables, the financial condition of customers and the general economic climate. Adjustments to the allowance may be required in future periods depending on how such potential issues are resolved or if the financial condition of the Company’s customers were to deteriorate resulting in an impairment of their ability to make payments. The Company has not historically had material write-offs due to uncollectible accounts receivable. Allowances for expected credit losses were $2.3 million and $2.7 million as of December 31, 2022 and June 30, 2023, respectively. The following table summarizes changes in the allowance for expected credit losses for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Balance at beginning of period $ 1,842 $ 2,473 $ 2,949 $ 2,304 Cumulative effect of accounting change upon adoption of CECL — — 254 — Additions 351 215 659 459 Write-offs, net of recoveries (22) (30) (1,691) (108) Foreign currency translation adjustment (10) — (10) 3 Balance at end of period $ 2,161 $ 2,658 $ 2,161 $ 2,658 Corporate Technology and Production Systems Corporate technology and production systems includes costs related to maintaining the Company’s corporate information technology infrastructure and non-capitalizable costs to develop and maintain its production systems. The following table sets forth expenses included in each category of corporate technology and production systems for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Corporate information technology $ 6,290 $ 4,922 $ 12,413 $ 10,189 Development of platform and product initiatives 4,115 4,280 8,364 8,694 Production support and maintenance 2,134 2,226 4,314 4,497 Total production systems 6,249 6,506 12,678 13,191 Corporate technology and production systems $ 12,539 $ 11,428 $ 25,091 $ 23,380 Corporate information technology consists of salaries and benefits of personnel (including stock-based compensation expense) supporting internal operations such as information technology support and the maintenance of information security and business continuity functions. Also included are third-party costs including cloud computing costs that support the Company’s corporate internal systems, software licensing and maintenance, telecommunications and other technology infrastructure costs. Production systems costs consist of non-capitalizable personnel costs including contractor costs incurred for the development of platform and product initiatives and production support and maintenance. Platform and product initiatives facilitate the development of the Company’s technology platform and the launch of new screening products. Production support and maintenance includes costs to support and maintain the technology underlying the Company’s existing screening products and to enhance the ease of use of the Company’s cloud applications. Certain personnel costs related to new products and features are capitalized and amortized to depreciation and amortization. |
Recent Accounting Standards Upd
Recent Accounting Standards Updates | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Standards Updates | Recent Accounting Standards Updates The Company qualifies as an emerging growth company under the Jumpstart Our Business Startups Act (the “JOBS Act”). The JOBS Act permits extended transition periods for complying with new or revised accounting standards affecting public companies. The Company has elected to use the extended transition periods and is adopting new or revised accounting standards on the FASB‘s non-public company timeline. As such, the Company’s financial statements may not be comparable to financial statements of public entities that comply with new or revised accounting standards on a non-delayed basis. The Company will cease to be an emerging growth company upon the earliest of (a) the last day of the fiscal year in which it has total annual gross revenues of $1.235 billion or more; (b) the last day of its fiscal year following the fifth anniversary of the date of its initial public offering (“IPO”); (c) the date on which it has issued more than $1.0 billion in nonconvertible debt during the previous three years; or (d) the date on which it is |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions Socrates and A-Check Acquisitions On January 4, 2023, the Company acquired all of the outstanding shares of Socrates Limited and its affiliates (“Socrates”), a screening company in Latin America, pursuant to a share purchase agreement. The Socrates acquisition expands the Company’s global presence into Latin America to serve the rapidly growing regional hiring needs of both multi-national and local clients. On March 1, 2023, the Company acquired all of the outstanding shares of A-Check Global (“A-Check”), a U.S.-based employment screening organization, pursuant to a share purchase agreement. The A-Check acquisition provides the Company access to a high quality, enterprise-focused customer base diversified across verticals including healthcare and telecom. The aggregate purchase price for the acquisitions totaled approximately $65.6 million, was funded with available cash on hand and is subject to certain closing adjustments specified in the share purchase agreements and includes contingent consideration related to the A-Check acquisition of $4.7 million recorded at fair value. The contingent consideration will be determined based on actual future results. As of June 30, 2023, the fair value of the contingent consideration consisted of $2.6 million for an earn-out payable one year after the acquisition based upon revenue retention and a $2.1 million payable throughout the second and third year following the acquisition based on revenue retention and referral revenue. The Company recorded a preliminary allocation of the purchase price to assets acquired and liabilities assumed based on their estimated fair values as of their respective purchase dates. Additionally, in connection with the Socrates acquisition, $5.0 million is payable to certain senior employees two years after the acquisition date based on certain retention requirements. The Company incurred approximately $0.3 million and $2.0 million of transaction expenses related to the acquisitions during the three and six months ended June 30, 2023, respectively. The preliminary allocation of the purchase price is based on the fair value of assets acquired and liabilities assumed as of the applicable acquisition date. The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed: Preliminary Purchase Price Allocation Adjusted Purchase Price Allocation (in thousands) March 31, Purchase Price Adjustments June 30, Consideration Cash $ 11,935 $ — $ 11,935 Other current assets Accounts receivable 4,279 (3) 4,276 Other current assets 805 2 807 Property and equipment 177 (1) 176 Intangible assets 32,141 (1,268) 30,873 Other long-term assets 6 — 6 Total assets acquired $ 49,343 $ (1,270) $ 48,073 Accounts payable and accrued expenses 1,156 94 1,250 Other current liabilities 1,291 (72) 1,219 Deferred tax liability 8,388 (143) 8,245 Other liabilities 2 — 2 Total liabilities assumed $ 10,837 $ (121) $ 10,716 Total identifiable net assets 38,506 (1,149) 37,357 Goodwill 27,352 874 28,226 Total consideration $ 65,858 $ (275) $ 65,583 Goodwill recognized is primarily attributable to assembled workforce and expected synergies and is not tax deductible in future years. Intangible assets acquired consist largely of customer lists in the amount of $28.0 million to be amortized over 15 years. The remaining intangible assets include trade names, developed technology and a non-compete agreement, which will be amortized over two years, eight years, and five years, respectively. The acquisitions are not material to the Company's financial position as of June 30, 2023 or results of operations for the three and six months ended June 30, 2023, and therefore, pro forma operating results and other disclosures for the acquisitions are not presented. EBI Acquisition On November 30, 2021, the Company acquired all of the outstanding shares of Employment Background Investigations, Inc. (“EBI”) for a purchase price of $67.8 million, consisting of $66.3 million of cash and $1.5 million of contingent consideration recorded at fair value. As of December 31, 2022, the purchase price was reduced by $0.3 million reflecting the final determination of the post-closing adjustment of the purchase price in accordance with the purchase agreement with EBI, resulting in an adjusted purchase price of $67.5 million. The receivable related to this adjustment was collected in February 2023. |
Property and Equipment, Net
Property and Equipment, Net | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net (in thousands) December 31, June 30, Furniture and fixtures $ 2,568 $ 1,411 Computers and equipment 41,084 37,542 Leasehold improvements 6,565 2,073 50,217 41,026 Less: Accumulated depreciation (39,876) (33,672) Total property and equipment, net $ 10,341 $ 7,354 Depreciation expense on property and equipment was $1.1 million and $0.9 million during the three months ended June 30, 2022 and 2023, respectively, and $2.2 million and $2.0 million for the six months ended June 30, 2022 and 2023, respectively. Write down of abandoned property and equipment no longer in use totaled $0.6 million during the three and six months ended June 30, 2022. Write down of abandoned property and equipment no longer in use was $1.7 million for the three and six months ended June 30, 2023. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill The changes in the carrying amount of goodwill for the periods presented were as follows: (in thousands) Goodwill as of December 31, 2022 $ 849,609 Acquisitions 28,226 Foreign currency translation adjustment 861 Goodwill as of June 30, 2023 $ 878,696 Intangible Assets Intangible assets, net consisted of the following for the periods presented: December 31, 2022 June 30, 2023 (dollars in thousands) Estimated Useful Lives Gross Accumulated Net Gross Accumulated Net Customer lists 7 - 17 years $ 506,015 $ (340,579) $ 165,436 $ 532,853 $ (357,449) $ 175,404 Trademarks 2 - 16 years 77,198 (37,519) 39,679 77,760 (40,597) 37,163 Non-compete agreement 1 - 5 years 3,179 (2,584) 595 3,974 (2,708) 1,266 Technology 3 - 8 years 246,220 (216,330) 29,890 257,035 (224,935) 32,100 Domain names 2 - 15 years 10,118 (4,682) 5,436 10,117 (5,019) 5,098 $ 842,730 $ (601,694) $ 241,036 $ 881,739 $ (630,708) $ 251,031 Included within technology is $28.1 million and $29.8 million of internal-use software, net of accumulated amortization, as of December 31, 2022 and June 30, 2023, respectively. As of June 30, 2023, $5.1 million of technology assets have not yet been put in service. The Company capitalized $7.6 million of costs to develop internal-use software included in technology during the six months ended June 30, 2022 (consisting of internal costs of $6.1 million and external costs of $1.5 million). The Company cap italized $8.6 million of costs to develop internal-use software included in technology during the six months ended June 30, 2023 (consisting of internal costs of $7.3 million and external costs of $1.3 million). For the three and six months ended June 30, 2022, the Company recorded no write-down of capitalized software. For the three and six months ended June 30, 2023, the Company recorded a write-down related to the impairment of capitalized software in the amount of $0.1 million and $0.2 million, respectively . Amortization expense was $18.7 million and $15.2 million for the three months ended June 30, 2022 and 2023, respectively, and $37.8 million and $29.3 million for the six months ended June 30, 2022 and 2023, respectively. Except for the customer lists, which are amortized utilizing an accelerated method, all other intangible assets are amortized on a straight-line basis, which approximates the pattern in which economic benefits are consumed. Estimated amortization expense as of June 30, 2023 is as follows for each of the next five years: (in thousands) Year Ending December 31, Remainder of fiscal year 2023 $ 32,638 2024 49,827 2025 40,918 2026 31,240 2027 24,739 Thereafter 71,669 $ 251,031 |
Accrued Expenses
Accrued Expenses | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued Expenses Accrued expenses on the unaudited condensed consolidated balance sheets as of the periods presented consisted of the following: (in thousands) December 31, June 30, Accrued compensation $ 29,835 $ 19,202 Accrued cost of revenues 15,721 22,660 Accrued interest 3,143 112 Other accrued expenses 18,348 16,144 Total accrued expenses $ 67,047 $ 58,118 |
Leases
Leases | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Leases | Leases Effective January 1, 2022 using the effective date method, the Company adopted the FASB’s Accounting Standards Update No. 2016-02, “Leases” (“ASC 842”), which requires the recognition of all leases, including operating leases on the unaudited condensed consolidated balance sheets by recording a right-of-use (“ROU”) asset and related liability, and elected to exclude short-term leases from adoption. The lease liability and ROU asset will be remeasured when there is a change in the lease term (or upon the occurrence of another reassessment trigger). Upon adoption on January 1, 2022, the Company recognized a ROU asset of $23.5 million and a lease liability of $23.8 million. The Company determines if a contract is a lease or contains a lease at inception. Operating lease liabilities are measured, on each reporting date, based on the present value of the future minimum lease payments over the remaining lease term. The Company’s leases generally do not provide an implicit rate and, therefore, the Company used the incremental borrowing rate of the former first lien term loan credit agreement of 4.50% for all leases entered into for the period prior to November 29, 2022. Operating lease assets are measured by adjusting the lease liability for lease incentives, initial direct costs incurred and asset impairments. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term with the operating lease asset reduced by the amount of the expense. Lease terms may include options to extend or terminate a lease when they are reasonably certain to occur. The Company leases real estate and equipment for use in its operations. The Company has 17 operating leases with remaining lease terms ranging from 3 months to 67 months as of June 30, 2023. In connection with the real estate consolidation program, during the three months ended June 30, 2023, the Company exited additional offices including the Company’s former principal executive office and headquarters in New York. A reduction of the operating leases ROU asset of $5.3 million for impairment charges was recorded in impairments and disposals of long-lived assets in the unaudited condensed consolidated statements of operations and comprehensive income. The Company exercised termination options reducing the lease terms on certain operating leases and recorded lease remeasurements to the operating lease liability and corresponding reductions to the operating leases ROU asset in the amount of $4.7 million during the three months ended June 30, 2023. $1.5 million was recorded to de-recognize the operating lease ROU asset related to certain leases in selling, general and administrative expense due to abandonment, during the three months ended June 30, 2023. The components of lease expense for the periods presented are as follows: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Components of total lease costs Operating lease expense (1) $ 1,302 $ 2,607 $ 2,601 $ 3,986 Sublease income (216) (343) (288) (565) Total net lease costs $ 1,086 $ 2,264 $ 2,313 $ 3,421 ___________________ (1) Includes $1.5 million of lease expense to de-recognize certain operating ROU assets which were abandoned during the three months ended June 30, 2023. Information related to the Company’s ROU assets and lease liabilities for the period presented is as follows: (dollars in thousands) June 30, 2023 Operating leases Operating leases right-of-use asset $ 7,514 Operating leases liability, current portion $ 4,069 Long-term operating leases liability, net of current portion 10,182 Total operating leases liability $ 14,251 Weighted average remaining lease term in years - operating leases 3.7 Weighted average discount rate - operating leases 5.14 % Total remaining lease payments under the Company’s operating leases for the period presented are as follows: (in thousands) June 30, 2023 Remainder of fiscal year 2023 $ 2,771 2024 5,284 2025 2,338 2026 2,118 2027 2,149 2028 1,028 Thereafter 85 Total future minimum lease payments $ 15,773 Less: imputed interest (1,522) Total $ 14,251 |
Debt
Debt | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt On November 29, 2022, Sterling Infosystems, Inc. (the “Borrower”), a Delaware corporation and a subsidiary of the Company, entered into a credit agreement (the “2022 Credit Agreement”) by and among the Borrower, as borrower, Sterling Intermediate Corp., KeyBank National Association, as administrative agent (the “Administrative Agent”), certain guarantors party thereto and the lenders party thereto. The 2022 Credit Agreement provides for aggregate principal borrowings of $700.0 million, comprised of $300.0 million aggregate principal amount of term loans (the “Term Loans”) and a $400.0 million revolving credit facility (the “Revolving Credit Facility”). The Term Loans and the Revolving Credit Facility mature on November 29, 2027. The table below sets forth the Company’s long-term debt as presented in the unaudited condensed consolidated balance sheets for the periods presented: (in thousands) December 31, June 30, Current portion of long-term debt Term Loans $ 7,500 $ 11,250 Total current portion of long-term debt $ 7,500 $ 11,250 Long-term debt Term Loans, due November 29, 2027 (6.76% and 7.45% at December 31, 2022 and June 30, 2023, respectively) 292,500 285,000 Revolving Credit Facility 205,494 205,494 Unamortized discount and debt issuance costs (4,004) (3,612) Total long-term debt, net $ 493,990 $ 486,882 The estimated fair value of the Company’s 2022 Credit Agreement was $487.1 million and $484.3 million as of December 31, 2022 and June 30, 2023, respectively. These fair values were determined based on quoted prices in markets with similar instruments that are less active (Level 2 inputs as defined below) as an observable price of the 2022 Credit Agreement or similar liabilities is not readily available. The Company was in compliance with all financial covenants under its credit agreement as of June 30, 2023. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. An asset or liability’s level in the hierarchy is based on the lowest level of input that is significant to the fair value measurement. The three levels of inputs used to measure fair value are as follows: Level 1 Quoted prices in active markets for identical assets and liabilities. Level 2 Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flows methodologies and similar techniques that use significant unobservable inputs. The Company considers the recorded value of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses to approximate the fair value of the respective assets and liabilities as of December 31, 2022 and June 30, 2023 based upon the short-term nature of such assets and liabilities (Level 1). See Note 9, “Debt” for discussion of the fair value of the Company’s debt. Interest rate swaps are measured at fair value on a recurring basis in the Company’s financial statements and are considered Level 2 financial instruments. Interest rate swaps are measured based on quoted prices for similar financial instruments and other observable inputs recognized. The currency forward agreements are typically cash settled in U.S. dollars for their fair value at or close to their settlement date. As of December 31, 2022, the fair value of contingent consideration related to the November 30, 2021 acquisition of EBI totaled $1.2 million and consisted of a $0.9 million earn-out payable two years after the acquisition based upon revenue retention and $0.3 million remaining payable throughout the year following the acquisition based on customer collections on acquired receivables and is considered a Level 3 financial instrument. As of June 30, 2023, contingent consideration for the earn-out payable related to the acquisition of EBI totaled $0.9 million and is considered a Level 3 financial instrument. As of June 30, 2023, contingent consideration related to the A-Check acquisition completed in 2023 totaled $4.7 million and consisted of $2.6 million for an earn-out payable one year after the acquisition based upon revenue retention and a $2.1 million payable throughout the second and third year following the acquisition based on revenue retention and referral revenue. Contingent consideration related to acquisitions is considered a Level 3 financial instrument. The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of December 31, 2022: (in thousands) Level 1 Level 2 Level 3 Liabilities Contingent consideration - acquisition of EBI $ — $ — $ 1,219 The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of June 30, 2023: (in thousands) Level 1 Level 2 Level 3 Assets Interest rate swaps $ — $ 2,857 $ — Liabilities Interest rate swaps — 3,408 — Contingent consideration - acquisition of EBI — — 914 Contingent consideration - acquisition of A-Check — — 4,706 |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Interest Rate Swap Hedges To reduce exposure to variability in expected future cash outflows on variable rate debt attributable to the changes in the applicable interest rates under the 2022 Credit Agreement, the Company entered into interest rate swaps to economically offset a portion of this risk. For interest rate swap derivatives designated and that qualify as hedges for accounting purposes, the unrealized gain or loss on the derivative is recorded in OCI. As of June 30, 2023, the Company had the following outstanding interest rate swap derivatives that were used to hedge its interest rate risks: Product Number of Instruments Effective Date Maturity Date Notional (1) Interest Rate Swaps 4 February 28, 2023 November 29, 2027 $300.0 million USD __________ (1) The notional value steps down from $300.0 million to $150.0 million on February 27, 2026. All financial derivative instruments are carried at their fair value on the balance sheet. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the unaudited condensed consolidated balance sheets as of the dates presented: Asset Derivatives As of December 31, 2022 As of June 30, 2023 (in thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps Other current assets $ — Other current assets $ 2,857 Liability Derivatives As of December 31, 2022 As of June 30, 2023 (in thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps Other liabilities — Other liabilities $ 3,408 The tables below present the effect of cash flow hedge accounting on accumulated OCI for the periods presented: Three Months Ended Three Months Ended (in thousands) 2022 2023 2022 2023 Derivatives designated as hedging instruments: Amount of Gain or (Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Interest rate swaps $ — $ 6,975 Interest expense $ — $ 552 Six Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Derivatives designated as hedging instruments: Amount of Gain or (Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Interest rate swaps $ — $ 98 Interest expense $ — $ 649 The tables below present the effect of the Company’s cash flow hedge accounting on the unaudited condensed consolidated statements of operations and comprehensive income for the periods presented: Three Months Ended 2022 2023 (in thousands) Interest Expense Interest Expense Total amounts of income and expense line items in which the effects of cash flow hedges are recorded $ 6,619 $ 8,990 Gain or (loss) on cash flow hedging relationships Interest rate swaps: Amount of gain or (loss) reclassified from accumulated OCI into income $ — $ 552 Six Months Ended 2022 2023 (in thousands) Interest Expense Interest Expense Total amounts of income and expense line items in which the effects of cash flow hedges are recorded $ 12,955 $ 17,598 Gain or (loss) on cash flow hedging relationships Interest rate swaps: Amount of gain or (loss) reclassified from accumulated OCI into income $ — 649 Non-designated Derivatives Derivatives not designated as hedges are not speculative and are used to manage the Company’s exposure to interest rate movements and other identified risks but do not meet the strict hedge accounting requirements and/or the Company has not elected to apply hedge accounting. Changes in the fair value of derivatives not designated in hedging relationships are recorded directly in earnings. As of June 30, 2023, the Company did not have any outstanding derivatives not designated as a hedge in qualifying hedging relationships. The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments in the unaudited condensed consolidated statements of operations and comprehensive income for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Derivatives Not Designated as Hedging Instruments Location of Loss (Gain) Recognized in Income on Derivatives Amount of Loss (Gain) Recognized in Income on Derivatives Interest rate swaps Loss (gain) on interest rate swaps $ 32 $ — $ (296) $ — |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe computation of the provision for or benefit from income taxes for interim periods is determined by applying the estimated annual effective tax rate to year-to-date income before tax and adjusting for discrete tax items recorded in the period, if any.The Company recorded a tax provision of $5.4 million and a benefit of $0.1 million for the three months ended June 30, 2022 and 2023, respectively, which resulted in an effective tax rate of 31.8% and (35.7)%, respectively. The Company recorded a tax provision of $9.5 million and $1.0 million for the six months ended June 30, 2022 and 2023, respectively, which resulted in an effective tax rate of 34.7% and 52.7%, respectively. For the three and six months ended June 30, 2022 and 2023, the effective rate differs from the statutory rate mainly due to a jurisdictional mix of earnings and permanent items. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Litigation The Company is party to both class actions and individual actions in the ordinary course of business. The matters typically allege violations of the Fair Credit Reporting Act (“FCRA”), as well as other claims. In addition, from time to time, the Company receives inquiries from regulatory bodies regarding its business. The Company accrues for the cost of resolving matters where it can be determined that a loss is both estimable and probable. Certain matters are in litigation and an estimate of the outcome and potential losses, if any, cannot be determined. Certain of these matters are covered by the Company’s insurance policies, subject to policy terms, including retentions. The Company does not believe that the resolution of current matters will result in a material adverse effect on the financial position, results of operations, or cash flows of the Company. As of December 31, 2022, the Company recorded a legal settlement obligation of $4.2 million and an offsetting insurance receivable of $0.9 million for the settlement of legal matters. As of June 30, 2023, the Company recorded a legal settlement obligation of $6.0 million and an offsetting insurance receivable of $3.4 million for the settlement of legal matters. |
Equity
Equity | 6 Months Ended |
Jun. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Equity | Equity Under the Company’s Amended and Restated Certificate of Incorporation, a total of 1,100,000,000 shares of all classes of stock are authorized, divided as follows: (i) 1,000,000,000 shares of common stock, par value $0.01 per share (“common stock”); and (ii) 100,000,000 shares of undesignated preferred stock, par value $0.01 per share (“preferred stock”). Each share of common stock is entitled to one vote on all matters on which holders of common stock are entitled to vote generally. Holders of common stock are entitled to be paid ratably any dividends as may be declared by the Board of Directors (in its sole discretion), subject to any preferential dividend rights of outstanding preferred stock (if any). No dividends have been declared or paid on the Company’s common stock through June 30, 2023. The Board of Directors is authorized to direct the issuance of the undesignated preferred stock in one or more series and to fix the designation of such series, the powers (including voting powers), preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of such series of preferred stock and the number of shares of such series. On November 23, 2022, the Company’s board of directors authorized the repurchase of up to $100.0 million of the Company’s shares of common stock over a period through December 31, 2024. The share repurchase program is being executed on a discretionary basis through open market repurchases, private transactions, or other transactions, including through block trades and Rule 10b-18 and Rule 10b5-1 trading plans. The Company is not obligated to repurchase any specific number of shares, and the timing and amount |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense is recognized in cost of revenues, corporate technology and production systems, and selling, general and administrative expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive income as follows: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Stock-based compensation expense Cost of revenues $ 411 $ 394 $ 824 $ 822 Corporate technology and production systems 499 605 1,030 1,217 Selling, general and administrative 5,113 8,359 9,277 15,362 Total stock-based compensation expense $ 6,023 $ 9,358 $ 11,131 $ 17,401 Prior to the IPO, all share-based awards were issued to employees under the Company’s 2015 Long-Term Equity Incentive Plan (the “2015 Plan”). Upon the adoption of the Sterling Check Corp. 2021 Omnibus Incentive Plan (the “2021 Equity Plan”) on August 4, 2021 and as of September 22, 2021, all newly granted share-based awards have been issued under the 2021 Equity Plan. As of June 30, 2023, the Company had approximately $100.7 million of unrecognized pre-tax non-cash stock-based compensation expense related to awards granted under the 2021 Equity Plan, consisting of approximately $31.8 million related to non-qualified stock options (“NQSOs”), $67.9 million related to restricted stock, and approximately $1.0 million related to restricted stock units (“RSUs”), all of which the Company expects to recognize over a weighted average period of 2.61 years. 2015 Long-Term Equity Incentive Plan The table below provides a summary of service-based vesting options (“SVOs”) and performance-based stock options (“PSOs”) currently outstanding under the 2015 Plan for the six months ended June 30, 2023: Outstanding SVOs Outstanding PSOs Number of Weighted Weighted Aggregate Number of Weighted Weighted Aggregate (in thousands, except shares and per share amounts) Balances as of December 31, 2022 6,208,274 $ 9.59 5.00 $ 36,513 3,081,855 $ 10.05 3.32 $ 16,699 Granted — — — — Forfeited / Cancelled — — — — Exercised (63,336) 9.66 201 — — — Balances as of June 30, 2023 (1) 6,144,938 $ 9.59 4.48 $ 16,419 3,081,855 $ 10.05 2.82 $ 6,806 __________ (1) All SVOs and PSOs are exercisable as of June 30, 2023. On August 4, 2021, the Company amended each option outstanding under the 2015 Plan to (i) accelerate vesting upon an initial public offering and (ii) permit each option to be exercised following termination for any reason for the period set forth in the applicable award agreement or, if longer, an extended post-termination exercise period that would end on the date that is six months following the second anniversary of the effective date of the initial public offering, provided that if such date falls during a blackout period, the post-termination exercise period will be extended until the date that is thirty days after the commencement of the Company’s next open trading window. In connection with the option agreement amendments, the option holders agreed that any shares of common stock acquired by such individuals upon exercise of any options outstanding under the 2015 plan (the “LTIP Option Shares”) will be subject to the following transfer restrictions, in addition to any other lock-up restrictions, securities trading policies, and other limitations to which such individuals may be subject: (i) the holder will be able to transfer up to 25% of the LTIP Option Shares at any time after six months following the effectiveness of the registration statement of which the IPO Prospectus formed a part (or such earlier time as the transfer restrictions expire under the lock-up agreements described in the IPO Prospectus under “Shares Eligible for Future Sale—Lock-up Agreements”) but prior to the first anniversary of the effectiveness of the registration statement of which the IPO Prospectus formed a part; (ii) on or after the first anniversary but prior to the second anniversary of the effectiveness of the registration statement of which the IPO Prospectus formed a part, the holder will be able to transfer up to 50% of the LTIP Option Shares (reduced by any of the LTIP Option Shares sold prior to the first anniversary) and (iii) on or after the second anniversary of the effectiveness of the registration statement of which the IPO Prospectus forms a part, the holder will be able to transfer all of his or her LTIP Option Shares. The foregoing transfer restrictions will not apply to any shares of common stock held by any such individual that are not LTIP Option Shares. 2021 Omnibus Incentive Plan On August 4, 2021, the Company’s Board of Directors adopted, and on August 13, 2021 the Company’s stockholders approved, the 2021 Equity Plan. Equity awards under the 2021 Equity Plan are intended to retain and motivate the Company’s officers and employees, consultants and non-employee directors and to promote the success of the Company’s business by providing such participating individuals with a proprietary interest in the performance of the Company. The 2021 Equity Plan will terminate on the ten the total number of shares outstanding on the last day of the immediately preceding calendar year, and (y) such number of shares as determined by the Board of Directors, and no more than 9,433,000 shares may be issued upon the exercise of ISOs. As of June 30, 2023, 8,266,376 shares were available for issuance pursuant to future granted awards under the 2021 Equity Plan. Stock Options Options issued under the 2021 Equity Plan generally vest on various schedules over one The table below provides a summary of stock option activity under the 2021 Equity Plan for the six months ended June 30, 2023: Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (in years) Aggregate Intrinsic Value Weighted Average Fair Value Outstanding at December 31, 2022 4,387,501 $ 22.91 8.81 $ — Granted 909,431 12.77 $ 7.03 Forfeited / Cancelled — — Exercised / Released — — — Outstanding at June 30, 2023 5,296,932 $ 21.17 8.55 $ — Exercisable at June 30, 2023 102,995 $ 22.61 8.50 $ — Restricted Stock Restricted stock issued under the 2021 Equity Plan in connection with the Company’s initial public offering vests 50% on the second anniversary of the grant date and 25% on each of the third and four one The table below provides a summary of restricted stock activity under the 2021 Equity Plan for the six months ended June 30, 2023: Number of Shares Weighted Average Fair Value Unvested at December 31, 2022 3,421,920 $ 20.32 Granted 2,153,406 12.92 Forfeited / Cancelled (179,989) 20.49 Vested (174,084) 19.61 Unvested at June 30, 2023 5,221,253 $ 17.28 Restricted Stock Units Restricted stock units issued under the 2021 Equity Plan in connection with the Company’s initial public offering vest 50% on the second anniversary of the grant date and 25% on each of the third and four one table below provides a summary of RSU activity under the 2021 Equity Plan for the six months ended June 30, 2023: Number of Shares Weighted Average Fair Value Unvested at December 31, 2022 51,249 $ 21.18 Granted 27,279 12.32 Forfeited / Cancelled (2,378) 23.00 Vested (1,224) 22.35 Unvested at June 30, 2023 74,926 $ 17.88 Employee Stock Purchase Plan There were no stock employee purchase offerings under the 2021 Employee Stock Purchase Plan (the “ESPP”) during the three and six months ended June 30, 2023 and, accordingly, no eligible employees were enrolled in the ESPP during the three and six months ended June 30, 2023. |
Net Income per Share
Net Income per Share | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Net Income per Share | Net Income per Share The following table sets forth the computation of basic and diluted net income per share attributable to common stockholders for the periods presented: Three Months Ended Six Months Ended (in thousands, except share and per share amounts) 2022 2023 2022 2023 Numerator: Net income attributable to stockholders $ 11,571 $ 323 $ 17,807 $ 914 Less: Undistributed amounts allocated to participating securities — — — — Undistributed income allocated to stockholders $ 11,571 $ 323 $ 17,807 $ 914 Denominator: Weighted average number of shares outstanding, basic 94,024,970 92,723,901 93,996,553 92,800,279 Weighted average additional shares assuming conversion of potential common shares 5,319,593 1,774,765 5,269,115 2,123,801 Weighted average common shares outstanding - diluted 99,344,563 94,498,666 99,265,668 94,924,080 Net income per share attributable to stockholders, basic $ 0.12 $ 0.00 $ 0.19 $ 0.01 Net income per share attributable to stockholders, diluted $ 0.12 $ 0.00 $ 0.18 $ 0.01 The following table summarizes the weighted average potentially dilutive securities that were excluded from the computation of diluted net income per share because their effect would have been anti-dilutive for the periods presented: Three Months Ended Six Months Ended 2022 2023 2022 2023 Stock options 8,827,083 5,258,244 8,827,083 4,948,521 Restricted stock 2,719,936 4,376,479 2,719,936 3,879,743 Restricted stock units 42,704 47,703 42,704 48,707 |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Goldman Sachs and some of its affiliates, each an affiliate of our Sponsor, are clients of the Company and the Company had sales to Goldman Sachs and some of its affiliates in the amount of $1.7 million and $0.7 million for the three months ended June 30, 2022 and 2023, respectively, and $3.6 million and $1.8 million for the six months ended June 30, 2022 and 2023, respectively. Outstanding accounts receivable from Goldman Sachs as of December 31, 2022 and June 30, 2023 were $0.2 million and $0.4 million, respectively. Additionally, the Company is currently a party to a $75.0 million notional value interest rate swap through November 29, 2027 with J. Aron & Company LLC, a wholly-owned subsidiary of Goldman Sachs. During the three months ended June 30, 2023, in connection with the Secondary Public Offering, the Company repurchased 1,000,000 shares of common stock for $11.7 million directly from BSPI, an affiliate of Goldman Sachs. See Note 14, “Equity” for discussion of the Secondary Public Offering and the share repurchase. |
Revenue
Revenue | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Revenue Performance Obligations Substantially all of the Company’s revenues are recognized at a point in time as results from services are provided through a screening report and the customer takes control of the product when the report is completed. Accordingly, revenue is generally recognized at the point in time when the customer receives and can use the report. For revenue arrangements containing multiple products or services, the Company accounts for the individual products or services as separate performance obligations if they are distinct, the product or service is separately identifiable from other terms in the contract, and if a customer can benefit from it on its own or with other resources that are readily available to the customer. If these criteria are not met, the promised products or services are accounted for as a combined performance obligation. The Company allocates the contract price to each performance obligation based on the standalone selling prices of each distinct product or service in the contract. Disaggregation of Revenues The following tables set forth total revenue by type of service for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Screening services $ 204,282 $ 188,650 $ 394,030 $ 365,521 Other services 1,309 1,734 3,533 4,137 Total revenue $ 205,591 $ 190,384 $ 397,563 $ 369,658 The following table sets forth total revenue by geographic area in which the revenues and invoicing are recorded for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 United States $ 174,115 $ 162,198 $ 333,431 $ 311,940 All other countries 31,476 28,186 64,132 57,718 Total revenue $ 205,591 $ 190,384 $ 397,563 $ 369,658 Other than the U.S., no single country accounted for more than 10% of the Company’s total revenues during the three and six months ended June 30, 2022 and 2023. Substantially all of the Company’s long-lived assets were located in the U.S. as of December 31, 2022 and June 30, 2023. Contract Assets and Liabilities Incremental costs of obtaining a contract with a customer are recognized as an asset if the benefit of such costs is expected to be longer than one year, with a majority of contracts being multi-year. Incremental costs include commissions to the sales force and are amortized over three years, as management estimates that this corresponds to the period over which a customer benefits from the contract. As of December 31, 2022 and June 30, 2023, $3.3 million of deferred commissions are included in Other current assets on the unaudited condensed consolidated balance sheets and approximately $2.7 million and $2.8 million, respectively, of deferred commissions are included in Other noncurrent assets, net on the unaudited condensed consolidated balance sheets. The Company did not have any material contract liabilities as of December 31, 2022 and June 30, 2023. Concentrations For the three and six months ended June 30, 2022 and 2023, no single customer accounted for more than 10% of the Company’s revenue. No single customer had an accounts receivable balance greater than 10% of total accounts receivable as of December 31, 2022 and June 30, 2023. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Pay vs Performance Disclosure | ||||||
Net income | $ 323 | $ 591 | $ 11,571 | $ 6,236 | $ 914 | $ 17,807 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended | 6 Months Ended |
Jun. 30, 2023 shares | Jun. 30, 2023 shares | |
Trading Arrangements, by Individual | ||
Material Terms of Trading Arrangement | During the three months ended June 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K, except as described in the table below. Director/Officer Name Title Date of Adoption/Termination Trading Arrangement Trading Arrangement End Date Aggregate Number of Securities to be Purchased or Sold Rule 10b5-1* Non-Rule 10b5-1** Joshua Peirez Chief Executive Officer and Director Adopted June 12, 2023, terminated prior plan as of June 13, 2023 (1) X September 11, 2025 Up to 2,380,426 shares of common stock issuable upon the exercise of options to be sold Peter Walker Executive Vice President and Chief Financial Officer Adopted June 13, 2023, terminated prior plan as of June 13, 2023 (2) X September 11, 2025 Up to 200,000 shares of common stock issuable upon the exercise of options to be sold and up to 72,292 shares of common stock to be sold Lou Paglia President and Chief Operating Officer Adopted June 20, 2023, prior plan expired as of June 20, 2023 X September 30, 2024 Up to 100,000 shares of common stock issuable upon the exercise of options to be sold and up to 40,000 shares of common stock to be sold Steven Barnett Executive Vice President, Secretary, and Chief Legal & Risk Officer Adopted May 10, 2023, prior plan expired as of June 20, 2023 X August 9, 2025 Up to 100,000 shares of common stock issuable upon the exercise of options to be sold and up to 22,505 shares of common stock to be sold * Intended to satisfy the affirmative defense of Rule 10b5-1(c). ** Not intended to satisfy the affirmative defense of Rule 10b5-1(c). (1) This trading arrangement was originally adopted on May 13, 2022 for the sale of up to 774,806 shares of common stock issuable upon the exercise of options to be sold until June 15, 2024 and was intended to satisfy the affirmative defense of Rule 10b5-1(c) as in effect at such time. | |
Rule 10b5-1 Arrangement Adopted | true | |
Non-Rule 10b5-1 Arrangement Adopted | false | |
Rule 10b5-1 Arrangement Terminated | false | |
Non-Rule 10b5-1 Arrangement Terminated | false | |
Joshua Peirez [Member] | ||
Trading Arrangements, by Individual | ||
Name | Joshua Peirez | |
Title | Chief Executive Officer and Director | |
Arrangement Duration | 822 days | |
Peter Walker [Member] | ||
Trading Arrangements, by Individual | ||
Name | Peter Walker | |
Title | Executive Vice President and Chief Financial Officer | |
Arrangement Duration | 821 days | |
Lou Paglia [Member] | ||
Trading Arrangements, by Individual | ||
Name | Lou Paglia | |
Title | President and Chief Operating Officer | |
Arrangement Duration | 468 days | |
Steven Barnett [Member] | ||
Trading Arrangements, by Individual | ||
Name | Steven Barnett | |
Title | Executive Vice President, Secretary, and Chief Legal & Risk Officer | |
Arrangement Duration | 822 days | |
Joshua Peirez 2023 Trading Arrangement [Member] | Joshua Peirez [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 2,380,426 | 2,380,426 |
Peter Walker 2023 Trading Arrangement, Options [Member] | Peter Walker [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 200,000 | 200,000 |
Peter Walker 2023 Trading Arrangement, Common Stock [Member] | Peter Walker [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 72,292 | 72,292 |
Lou Paglia Trading Arrangement, Options [Member] | Lou Paglia [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 100,000 | 100,000 |
Lou Paglia Trading Arrangement, Common Stock [Member] | Lou Paglia [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 40,000 | 40,000 |
Steven Barnett Trading Arrangement, Options [Member] | Steven Barnett [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 100,000 | 100,000 |
Steven Barnett Trading Arrangement, Common Stock [Member] | Steven Barnett [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 22,505 | 22,505 |
Joshua Peirez 2022 Trading Arrangement [Member] | Joshua Peirez [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 774,806 | 774,806 |
Peter Walker 2022 Trading Arrangement, Options [Member] | Peter Walker [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 179,700 | 179,700 |
Peter Walker 2022 Trading Arrangement, Common Stock [Member] | Peter Walker [Member] | ||
Trading Arrangements, by Individual | ||
Aggregate Available | 72,292 | 72,292 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and include accounts of the Company and its wholly-owned subsidiaries.These unaudited condensed consolidated financial statements are unaudited; however, in the opinion of management, they reflect all adjustments consisting only of normal recurring adjustments necessary to state fairly the financial position, results of operations and cash flows for the periods presented in conformity with US GAAP applicable to interim periods. The results of operations for the interim periods presented are not necessarily indicative of results for the full year or future periods. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements as of December 31, 2022 and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC on March 2, 2023. |
Consolidation | All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and judgments that can affect the reported amount of assets, liabilities, revenues, expenses and the disclosure of contingent assets and liabilities. Significant estimates include the impairment of long-lived assets, goodwill impairment, the determination of the fair value of acquired assets and liabilities, collectability of receivables, the valuation of stock-based awards and stock-based compensation and sales and income tax liabilities. The Company also applies an estimated useful life of three years to internally developed software assets. This is based on the historical observed pace of change in the Company’s delivery, technology, and product offerings as well as market competition. The Company believes that the estimates used in the preparation of these unaudited condensed consolidated financial statements are reasonable; however, actual results could differ materially from these estimates. |
Segment Information | Segment Information The Company has one operating and reportable segment. The Company’s chief operating decision maker is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents of $103.1 million and $48.8 million as of December 31, 2022 and June 30, 2023, respectively, include money market instruments with maturities of three months or less. The Company maintained cash outside the U.S. as of December 31, 2022 of $28.0 million with the largest deposits being held in Canada and India, with balances of $9.2 million and $5.1 million, respectively. Cash outside the U.S. was |
Foreign Currency | Foreign Currency Assets and liabilities of operations having non-USD functional currencies are translated at period-end exchange rates, and income statement accounts are translated at weighted average exchange rates for the period. Gains or losses resulting from translating foreign currency financial statements, net of any related tax effects, are reflected in Accumulated Other Comprehensive Income or Loss (“OCI”), a separate component of stockholders’ equity on the unaudited condensed consolidated balance sheets. Gains or losses resulting from foreign currency transactions incurred in currencies other than the local functional currency are included in other income in the unaudited condensed consolidated statements of operations and comprehensive income. |
Accounts Receivable and Allowance for Credit Losses | Accounts Receivable and Allowance for Credit Losses Accounts receivable balances consist of trade receivables that are recorded at the invoiced amount, net of allowances for expected credit losses and for potential sales credits and reserves. Sales credits and reserves were $0.9 million and $0.5 million as of December 31, 2022 and June 30, 2023 , respectively. The Company adopted the Fin ancial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments - Credit Losses (“CECL”) on January 1, 2022. The adoption of CECL resulted in a $0.3 million cumulative effect adjustment recorded in retained earnings as of January 1, 2022. CECL requires an entity to utilize an impairment model to estimate its lifetime expected credit losses and record an allowance that, when deducted from the amortized cost basis of a financial asset, presents the net amount expected to be collected on the financial asset. The Company maintains an allowance for expected credit losses in order to record accounts receivable at their net realizable value. Inherent in the assessment of the allowance for expected credit losses are certain judgments and estimates relating to, among other things, the Company’s customers’ access to capital, customers’ willingness and ability to pay, general economic conditions and the ongoing relationship with customers. Allowances have been recorded for receivables believed to be uncollectible, including amounts for the resolution of potential credit and other collection issues such as disputed invoices. The allowance for expected credit losses is determined by analyzing the Company’s historical write-offs, the current aging of receivables, the financial condition of customers and the general economic climate. |
Corporate Technology and Production Systems | Corporate Technology and Production Systems Corporate technology and production systems includes costs related to maintaining the Company’s corporate information technology infrastructure and non-capitalizable costs to develop and maintain its production systems. The following table sets forth expenses included in each category of corporate technology and production systems for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Corporate information technology $ 6,290 $ 4,922 $ 12,413 $ 10,189 Development of platform and product initiatives 4,115 4,280 8,364 8,694 Production support and maintenance 2,134 2,226 4,314 4,497 Total production systems 6,249 6,506 12,678 13,191 Corporate technology and production systems $ 12,539 $ 11,428 $ 25,091 $ 23,380 Corporate information technology consists of salaries and benefits of personnel (including stock-based compensation expense) supporting internal operations such as information technology support and the maintenance of information security and business continuity functions. Also included are third-party costs including cloud computing costs that support the Company’s corporate internal systems, software licensing and maintenance, telecommunications and other technology infrastructure costs. Production systems costs consist of non-capitalizable personnel costs including contractor costs incurred for the development of platform and product initiatives and production support and maintenance. Platform and product initiatives facilitate the development of the Company’s technology platform and the launch of new screening products. Production support and maintenance includes costs to support and maintain the technology underlying the Company’s existing screening products and to enhance the ease of use of the Company’s cloud applications. Certain personnel costs related to new products and features are capitalized and amortized to depreciation and amortization. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Accounts Receivable, Allowance for Credit Losses | The following table summarizes changes in the allowance for expected credit losses for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Balance at beginning of period $ 1,842 $ 2,473 $ 2,949 $ 2,304 Cumulative effect of accounting change upon adoption of CECL — — 254 — Additions 351 215 659 459 Write-offs, net of recoveries (22) (30) (1,691) (108) Foreign currency translation adjustment (10) — (10) 3 Balance at end of period $ 2,161 $ 2,658 $ 2,161 $ 2,658 |
Summary of Corporate Technology and Production Systems Expense | The following table sets forth expenses included in each category of corporate technology and production systems for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Corporate information technology $ 6,290 $ 4,922 $ 12,413 $ 10,189 Development of platform and product initiatives 4,115 4,280 8,364 8,694 Production support and maintenance 2,134 2,226 4,314 4,497 Total production systems 6,249 6,506 12,678 13,191 Corporate technology and production systems $ 12,539 $ 11,428 $ 25,091 $ 23,380 |
Acquisitions (Tables)
Acquisitions (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the consideration paid and the amounts recognized for the assets acquired and liabilities assumed: Preliminary Purchase Price Allocation Adjusted Purchase Price Allocation (in thousands) March 31, Purchase Price Adjustments June 30, Consideration Cash $ 11,935 $ — $ 11,935 Other current assets Accounts receivable 4,279 (3) 4,276 Other current assets 805 2 807 Property and equipment 177 (1) 176 Intangible assets 32,141 (1,268) 30,873 Other long-term assets 6 — 6 Total assets acquired $ 49,343 $ (1,270) $ 48,073 Accounts payable and accrued expenses 1,156 94 1,250 Other current liabilities 1,291 (72) 1,219 Deferred tax liability 8,388 (143) 8,245 Other liabilities 2 — 2 Total liabilities assumed $ 10,837 $ (121) $ 10,716 Total identifiable net assets 38,506 (1,149) 37,357 Goodwill 27,352 874 28,226 Total consideration $ 65,858 $ (275) $ 65,583 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, net | (in thousands) December 31, June 30, Furniture and fixtures $ 2,568 $ 1,411 Computers and equipment 41,084 37,542 Leasehold improvements 6,565 2,073 50,217 41,026 Less: Accumulated depreciation (39,876) (33,672) Total property and equipment, net $ 10,341 $ 7,354 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Summary of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the periods presented were as follows: (in thousands) Goodwill as of December 31, 2022 $ 849,609 Acquisitions 28,226 Foreign currency translation adjustment 861 Goodwill as of June 30, 2023 $ 878,696 |
Summary of Intangible Assets | Intangible assets, net consisted of the following for the periods presented: December 31, 2022 June 30, 2023 (dollars in thousands) Estimated Useful Lives Gross Accumulated Net Gross Accumulated Net Customer lists 7 - 17 years $ 506,015 $ (340,579) $ 165,436 $ 532,853 $ (357,449) $ 175,404 Trademarks 2 - 16 years 77,198 (37,519) 39,679 77,760 (40,597) 37,163 Non-compete agreement 1 - 5 years 3,179 (2,584) 595 3,974 (2,708) 1,266 Technology 3 - 8 years 246,220 (216,330) 29,890 257,035 (224,935) 32,100 Domain names 2 - 15 years 10,118 (4,682) 5,436 10,117 (5,019) 5,098 $ 842,730 $ (601,694) $ 241,036 $ 881,739 $ (630,708) $ 251,031 |
Summary of Estimated Future Amortization Expense | Estimated amortization expense as of June 30, 2023 is as follows for each of the next five years: (in thousands) Year Ending December 31, Remainder of fiscal year 2023 $ 32,638 2024 49,827 2025 40,918 2026 31,240 2027 24,739 Thereafter 71,669 $ 251,031 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Payables and Accruals [Abstract] | |
Summary of Accrued Expenses | Accrued expenses on the unaudited condensed consolidated balance sheets as of the periods presented consisted of the following: (in thousands) December 31, June 30, Accrued compensation $ 29,835 $ 19,202 Accrued cost of revenues 15,721 22,660 Accrued interest 3,143 112 Other accrued expenses 18,348 16,144 Total accrued expenses $ 67,047 $ 58,118 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases [Abstract] | |
Schedule of Lease Expense | The components of lease expense for the periods presented are as follows: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Components of total lease costs Operating lease expense (1) $ 1,302 $ 2,607 $ 2,601 $ 3,986 Sublease income (216) (343) (288) (565) Total net lease costs $ 1,086 $ 2,264 $ 2,313 $ 3,421 ___________________ (1) Includes $1.5 million of lease expense to de-recognize certain operating ROU assets which were abandoned during the three months ended June 30, 2023. |
Schedule of Right-of-Use Assets and Lease Liabilities | Information related to the Company’s ROU assets and lease liabilities for the period presented is as follows: (dollars in thousands) June 30, 2023 Operating leases Operating leases right-of-use asset $ 7,514 Operating leases liability, current portion $ 4,069 Long-term operating leases liability, net of current portion 10,182 Total operating leases liability $ 14,251 Weighted average remaining lease term in years - operating leases 3.7 Weighted average discount rate - operating leases 5.14 % |
Schedule of Remaining Lease Payments | Total remaining lease payments under the Company’s operating leases for the period presented are as follows: (in thousands) June 30, 2023 Remainder of fiscal year 2023 $ 2,771 2024 5,284 2025 2,338 2026 2,118 2027 2,149 2028 1,028 Thereafter 85 Total future minimum lease payments $ 15,773 Less: imputed interest (1,522) Total $ 14,251 |
Debt (Tables)
Debt (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Summary of Company's Long-term Debt | The table below sets forth the Company’s long-term debt as presented in the unaudited condensed consolidated balance sheets for the periods presented: (in thousands) December 31, June 30, Current portion of long-term debt Term Loans $ 7,500 $ 11,250 Total current portion of long-term debt $ 7,500 $ 11,250 Long-term debt Term Loans, due November 29, 2027 (6.76% and 7.45% at December 31, 2022 and June 30, 2023, respectively) 292,500 285,000 Revolving Credit Facility 205,494 205,494 Unamortized discount and debt issuance costs (4,004) (3,612) Total long-term debt, net $ 493,990 $ 486,882 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Fair Value Disclosures [Abstract] | |
Summary of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis | The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of December 31, 2022: (in thousands) Level 1 Level 2 Level 3 Liabilities Contingent consideration - acquisition of EBI $ — $ — $ 1,219 The following table presents information about the Company’s financial assets and liabilities that are measured at fair value on a recurring basis and their assigned levels within the valuation hierarchy as of June 30, 2023: (in thousands) Level 1 Level 2 Level 3 Assets Interest rate swaps $ — $ 2,857 $ — Liabilities Interest rate swaps — 3,408 — Contingent consideration - acquisition of EBI — — 914 Contingent consideration - acquisition of A-Check — — 4,706 |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Company's Outstanding Derivatives | As of June 30, 2023, the Company had the following outstanding interest rate swap derivatives that were used to hedge its interest rate risks: Product Number of Instruments Effective Date Maturity Date Notional (1) Interest Rate Swaps 4 February 28, 2023 November 29, 2027 $300.0 million USD __________ (1) The notional value steps down from $300.0 million to $150.0 million on February 27, 2026. |
Summary of Fair Value of Derivative Financial Instruments | All financial derivative instruments are carried at their fair value on the balance sheet. The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the unaudited condensed consolidated balance sheets as of the dates presented: Asset Derivatives As of December 31, 2022 As of June 30, 2023 (in thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps Other current assets $ — Other current assets $ 2,857 Liability Derivatives As of December 31, 2022 As of June 30, 2023 (in thousands) Balance Sheet Location Fair Value Balance Sheet Location Fair Value Derivatives designated as hedging instruments: Interest rate swaps Other liabilities — Other liabilities $ 3,408 |
Schedule of Derivative Instruments, Accumulated OCI | The tables below present the effect of cash flow hedge accounting on accumulated OCI for the periods presented: Three Months Ended Three Months Ended (in thousands) 2022 2023 2022 2023 Derivatives designated as hedging instruments: Amount of Gain or (Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Interest rate swaps $ — $ 6,975 Interest expense $ — $ 552 Six Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Derivatives designated as hedging instruments: Amount of Gain or (Loss) Recognized in OCI on Derivative Location of Gain or (Loss) Reclassified from Accumulated OCI into Income Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income Interest rate swaps $ — $ 98 Interest expense $ — $ 649 |
Summary of Cash Flow Hedge Accounting on Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income | The tables below present the effect of the Company’s cash flow hedge accounting on the unaudited condensed consolidated statements of operations and comprehensive income for the periods presented: Three Months Ended 2022 2023 (in thousands) Interest Expense Interest Expense Total amounts of income and expense line items in which the effects of cash flow hedges are recorded $ 6,619 $ 8,990 Gain or (loss) on cash flow hedging relationships Interest rate swaps: Amount of gain or (loss) reclassified from accumulated OCI into income $ — $ 552 Six Months Ended 2022 2023 (in thousands) Interest Expense Interest Expense Total amounts of income and expense line items in which the effects of cash flow hedges are recorded $ 12,955 $ 17,598 Gain or (loss) on cash flow hedging relationships Interest rate swaps: Amount of gain or (loss) reclassified from accumulated OCI into income $ — 649 |
Summary of Derivative Financial Instruments that are not Designated as Hedging Instruments | The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments in the unaudited condensed consolidated statements of operations and comprehensive income for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Derivatives Not Designated as Hedging Instruments Location of Loss (Gain) Recognized in Income on Derivatives Amount of Loss (Gain) Recognized in Income on Derivatives Interest rate swaps Loss (gain) on interest rate swaps $ 32 $ — $ (296) $ — |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Summary Of Stock-Based Compensation Expense | Stock-based compensation expense is recognized in cost of revenues, corporate technology and production systems, and selling, general and administrative expense in the accompanying unaudited condensed consolidated statements of operations and comprehensive income as follows: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Stock-based compensation expense Cost of revenues $ 411 $ 394 $ 824 $ 822 Corporate technology and production systems 499 605 1,030 1,217 Selling, general and administrative 5,113 8,359 9,277 15,362 Total stock-based compensation expense $ 6,023 $ 9,358 $ 11,131 $ 17,401 |
Share-based Payment Arrangement, Option, Activity | The table below provides a summary of service-based vesting options (“SVOs”) and performance-based stock options (“PSOs”) currently outstanding under the 2015 Plan for the six months ended June 30, 2023: Outstanding SVOs Outstanding PSOs Number of Weighted Weighted Aggregate Number of Weighted Weighted Aggregate (in thousands, except shares and per share amounts) Balances as of December 31, 2022 6,208,274 $ 9.59 5.00 $ 36,513 3,081,855 $ 10.05 3.32 $ 16,699 Granted — — — — Forfeited / Cancelled — — — — Exercised (63,336) 9.66 201 — — — Balances as of June 30, 2023 (1) 6,144,938 $ 9.59 4.48 $ 16,419 3,081,855 $ 10.05 2.82 $ 6,806 __________ (1) All SVOs and PSOs are exercisable as of June 30, 2023. The table below provides a summary of stock option activity under the 2021 Equity Plan for the six months ended June 30, 2023: Number of Shares Weighted Average Exercise Price Weighted Average Contractual Term (in years) Aggregate Intrinsic Value Weighted Average Fair Value Outstanding at December 31, 2022 4,387,501 $ 22.91 8.81 $ — Granted 909,431 12.77 $ 7.03 Forfeited / Cancelled — — Exercised / Released — — — Outstanding at June 30, 2023 5,296,932 $ 21.17 8.55 $ — Exercisable at June 30, 2023 102,995 $ 22.61 8.50 $ — |
Share-based Payment Arrangement, Restricted Stock Activity | The table below provides a summary of restricted stock activity under the 2021 Equity Plan for the six months ended June 30, 2023: Number of Shares Weighted Average Fair Value Unvested at December 31, 2022 3,421,920 $ 20.32 Granted 2,153,406 12.92 Forfeited / Cancelled (179,989) 20.49 Vested (174,084) 19.61 Unvested at June 30, 2023 5,221,253 $ 17.28 table below provides a summary of RSU activity under the 2021 Equity Plan for the six months ended June 30, 2023: Number of Shares Weighted Average Fair Value Unvested at December 31, 2022 51,249 $ 21.18 Granted 27,279 12.32 Forfeited / Cancelled (2,378) 23.00 Vested (1,224) 22.35 Unvested at June 30, 2023 74,926 $ 17.88 |
Net Income per Share (Tables)
Net Income per Share (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table sets forth the computation of basic and diluted net income per share attributable to common stockholders for the periods presented: Three Months Ended Six Months Ended (in thousands, except share and per share amounts) 2022 2023 2022 2023 Numerator: Net income attributable to stockholders $ 11,571 $ 323 $ 17,807 $ 914 Less: Undistributed amounts allocated to participating securities — — — — Undistributed income allocated to stockholders $ 11,571 $ 323 $ 17,807 $ 914 Denominator: Weighted average number of shares outstanding, basic 94,024,970 92,723,901 93,996,553 92,800,279 Weighted average additional shares assuming conversion of potential common shares 5,319,593 1,774,765 5,269,115 2,123,801 Weighted average common shares outstanding - diluted 99,344,563 94,498,666 99,265,668 94,924,080 Net income per share attributable to stockholders, basic $ 0.12 $ 0.00 $ 0.19 $ 0.01 Net income per share attributable to stockholders, diluted $ 0.12 $ 0.00 $ 0.18 $ 0.01 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table summarizes the weighted average potentially dilutive securities that were excluded from the computation of diluted net income per share because their effect would have been anti-dilutive for the periods presented: Three Months Ended Six Months Ended 2022 2023 2022 2023 Stock options 8,827,083 5,258,244 8,827,083 4,948,521 Restricted stock 2,719,936 4,376,479 2,719,936 3,879,743 Restricted stock units 42,704 47,703 42,704 48,707 |
Revenue (Tables)
Revenue (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following tables set forth total revenue by type of service for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 Screening services $ 204,282 $ 188,650 $ 394,030 $ 365,521 Other services 1,309 1,734 3,533 4,137 Total revenue $ 205,591 $ 190,384 $ 397,563 $ 369,658 |
Revenue from External Customers by Geographic Areas | The following table sets forth total revenue by geographic area in which the revenues and invoicing are recorded for the periods presented: Three Months Ended Six Months Ended (in thousands) 2022 2023 2022 2023 United States $ 174,115 $ 162,198 $ 333,431 $ 311,940 All other countries 31,476 28,186 64,132 57,718 Total revenue $ 205,591 $ 190,384 $ 397,563 $ 369,658 |
Description of Business (Detail
Description of Business (Details) | Jun. 30, 2023 |
Sterling Check Corp. | |
Organization, Consolidation and Presentation of Financial Statements [Line Items] | |
Ownership percentage | 51.50% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Additional information (Details) $ in Thousands | 6 Months Ended | 12 Months Ended | ||||||
Jun. 30, 2023 USD ($) Segment | Dec. 31, 2022 USD ($) | Mar. 31, 2023 USD ($) | Jun. 30, 2022 USD ($) | Mar. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 30, 2021 | |
Accounting Policies [Line Items] | ||||||||
Number of operating segments | Segment | 1 | |||||||
Cash and cash equivalents | $ 48,817 | $ 103,095 | ||||||
Cumulative translation adjustment losses | (3,600) | (5,600) | ||||||
Sales credits and reserves | 500 | 900 | ||||||
Allowance for expected credit losses | $ 2,658 | 2,304 | $ 2,473 | $ 2,161 | $ 1,842 | $ 2,949 | ||
Percentage of cloud-hosted revenue platforms | 80% | 98% | ||||||
Cumulative Effect, Period of Adoption, Adjustment | ||||||||
Accounting Policies [Line Items] | ||||||||
Allowance for expected credit losses | 0 | $ 0 | $ 0 | $ 254 | ||||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-13 | ||||||||
Accounting Policies [Line Items] | ||||||||
Retained earnings | $ 300 | |||||||
Outside US | ||||||||
Accounting Policies [Line Items] | ||||||||
Cash | $ 25,500 | 28,000 | ||||||
Canada | ||||||||
Accounting Policies [Line Items] | ||||||||
Cash | 3,200 | 9,200 | ||||||
India | ||||||||
Accounting Policies [Line Items] | ||||||||
Cash | $ 4,800 | $ 5,100 | ||||||
Internally Developed Software Assets | ||||||||
Accounting Policies [Line Items] | ||||||||
Estimated useful life | 3 years |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Schedule of Accounts Receivable, Allowance for Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Balance at beginning of period | $ 2,473 | $ 1,842 | $ 2,304 | $ 2,949 |
Additions | 215 | 351 | 459 | 659 |
Write-offs, net of recoveries | (30) | (22) | (108) | (1,691) |
Foreign currency translation adjustment | 0 | (10) | 3 | (10) |
Balance at end of period | 2,658 | 2,161 | 2,658 | 2,161 |
Cumulative Effect, Period of Adoption, Adjustment | ||||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||||
Balance at beginning of period | $ 0 | $ 0 | $ 0 | $ 254 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Summary of Corporate Technology and Production Systems Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Accounting Policies [Abstract] | ||||
Corporate information technology | $ 4,922 | $ 6,290 | $ 10,189 | $ 12,413 |
Development of platform and product initiatives | 4,280 | 4,115 | 8,694 | 8,364 |
Production support and maintenance | 2,226 | 2,134 | 4,497 | 4,314 |
Total production systems | 6,506 | 6,249 | 13,191 | 12,678 |
Corporate technology and production systems | $ 11,428 | $ 12,539 | $ 23,380 | $ 25,091 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | 13 Months Ended | ||||
Mar. 01, 2023 | Dec. 31, 2022 | Nov. 30, 2021 | Jun. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | ||||||||
Contingent consideration | $ 4,706,000 | $ 0 | ||||||
Socrates and A-Check | ||||||||
Business Acquisition [Line Items] | ||||||||
Purchase price | $ 65,600,000 | |||||||
Transaction expenses | $ 300,000 | 2,000,000 | ||||||
Tax deductible goodwill | 0 | |||||||
Total consideration, purchase price adjustment | 275,000 | |||||||
Socrates and A-Check | Customer lists | ||||||||
Business Acquisition [Line Items] | ||||||||
Finite lived assets acquired | $ 28,000,000 | |||||||
Useful life of assets acquired | 15 years | |||||||
Socrates and A-Check | Trade Names | ||||||||
Business Acquisition [Line Items] | ||||||||
Useful life of assets acquired | 2 years | |||||||
Socrates and A-Check | Developed Technology | ||||||||
Business Acquisition [Line Items] | ||||||||
Useful life of assets acquired | 8 years | |||||||
Socrates and A-Check | Non-compete agreement | ||||||||
Business Acquisition [Line Items] | ||||||||
Useful life of assets acquired | 5 years | |||||||
A-Check | ||||||||
Business Acquisition [Line Items] | ||||||||
Contingent consideration | $ 4,700,000 | |||||||
Current portion of contingent consideration | 2,600,000 | $ 2,600,000 | ||||||
Contingent consideration period | 1 year | |||||||
Noncurrent portion of contingent consideration | $ 2,100,000 | $ 2,100,000 | ||||||
Socrates | ||||||||
Business Acquisition [Line Items] | ||||||||
Retention requirements payable | $ 5,000,000 | |||||||
Period of retention requirements payable | 2 years | |||||||
EBI | ||||||||
Business Acquisition [Line Items] | ||||||||
Purchase price | $ 67,500,000 | $ 67,800,000 | ||||||
Contingent consideration | 1,500,000 | |||||||
Current portion of contingent consideration | 900,000 | $ 900,000 | $ 900,000 | |||||
Contingent consideration period | 2 years | |||||||
Noncurrent portion of contingent consideration | $ 300,000 | $ 300,000 | 300,000 | |||||
Cash purchase price | $ 66,300,000 | |||||||
Total consideration, purchase price adjustment | $ (300,000) |
Acquisitions - Assets and Liabi
Acquisitions - Assets and Liabilities Assumed (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Other current assets | |||
Goodwill | $ 878,696 | $ 849,609 | |
Socrates and A-Check | |||
Consideration | |||
Cash | 11,935 | $ 11,935 | |
Other current assets | |||
Accounts receivable | 4,276 | 4,279 | |
Other current assets | 807 | 805 | |
Property and equipment | 176 | 177 | |
Intangible assets | 30,873 | 32,141 | |
Other long-term assets | 6 | 6 | |
Total assets acquired | 48,073 | 49,343 | |
Accounts payable and accrued expenses | 1,250 | 1,156 | |
Other current liabilities | 1,219 | 1,291 | |
Deferred tax liability | 8,245 | 8,388 | |
Other liabilities | 2 | 2 | |
Total liabilities assumed | 10,716 | 10,837 | |
Total identifiable net assets | 37,357 | 38,506 | |
Goodwill | 28,226 | 27,352 | |
Total consideration | 65,583 | $ 65,858 | |
Purchase Price Adjustments | |||
Accounts receivable | (3) | ||
Other current assets | 2 | ||
Property and equipment | (1) | ||
Intangible assets | (1,268) | ||
Total assets acquired | (1,270) | ||
Accounts payable and accrued expenses | 94 | ||
Other current liabilities | (72) | ||
Deferred tax liability | (143) | ||
Total liabilities assumed | (121) | ||
Total identifiable net assets | (1,149) | ||
Goodwill | 874 | ||
Total consideration | $ (275) |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Property and Equipment (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 41,026 | $ 50,217 |
Less: Accumulated depreciation | (33,672) | (39,876) |
Total property and equipment, net | 7,354 | 10,341 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,411 | 2,568 |
Computers and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 37,542 | 41,084 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 2,073 | $ 6,565 |
Property and Equipment, Net - A
Property and Equipment, Net - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 0.9 | $ 1.1 | $ 2 | $ 2.2 |
Write down no longer use in property and equipment | $ 1.7 | $ 0.6 | $ 1.7 | $ 0.6 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2023 USD ($) | |
Goodwill [Roll Forward] | |
Goodwill, beginning balance | $ 849,609 |
Acquisitions | 28,226 |
Foreign currency translation adjustment | 861 |
Goodwill, ending balance | $ 878,696 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Summary of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 881,739 | $ 842,730 |
Accumulated Amortization | (630,708) | (601,694) |
Net | 251,031 | 241,036 |
Customer lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 532,853 | 506,015 |
Accumulated Amortization | (357,449) | (340,579) |
Net | 175,404 | 165,436 |
Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 77,760 | 77,198 |
Accumulated Amortization | (40,597) | (37,519) |
Net | 37,163 | 39,679 |
Non-compete agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 3,974 | 3,179 |
Accumulated Amortization | (2,708) | (2,584) |
Net | 1,266 | 595 |
Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 257,035 | 246,220 |
Accumulated Amortization | (224,935) | (216,330) |
Net | 32,100 | 29,890 |
Domain names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 10,117 | 10,118 |
Accumulated Amortization | (5,019) | (4,682) |
Net | $ 5,098 | $ 5,436 |
Minimum | Customer lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 7 years | |
Minimum | Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 2 years | |
Minimum | Non-compete agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 1 year | |
Minimum | Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 3 years | |
Minimum | Domain names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 2 years | |
Maximum | Customer lists | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 17 years | |
Maximum | Trademarks | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 16 years | |
Maximum | Non-compete agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 5 years | |
Maximum | Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 8 years | |
Maximum | Domain names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Estimated Useful Lives | 15 years |
Goodwill and Intangible Asset_4
Goodwill and Intangible Assets - Additional Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Indefinite-lived Intangible Assets [Line Items] | |||||
Net intangibles | $ 251,031,000 | $ 251,031,000 | $ 241,036,000 | ||
Capitalized computer software, impairments | 100,000 | $ 0 | 200,000 | $ 0 | |
Amortization of intangible assets | 15,200,000 | $ 18,700,000 | 29,300,000 | 37,800,000 | |
Software and Software Development Costs | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Net intangibles | 29,800,000 | 29,800,000 | $ 28,100,000 | ||
Finite lived intangible assets, not yet in service | $ 5,100,000 | 5,100,000 | |||
Capitalized computer software, additions | 8,600,000 | 7,600,000 | |||
Software and Software Development Costs | Internal Cost | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Capitalized computer software, additions | 7,300,000 | 6,100,000 | |||
Software and Software Development Costs | External Cost | |||||
Indefinite-lived Intangible Assets [Line Items] | |||||
Capitalized computer software, additions | $ 1,300,000 | $ 1,500,000 |
Goodwill and Intangible Asset_5
Goodwill and Intangible Assets - Summary of Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Remainder of fiscal year 2023 | $ 32,638 | |
2024 | 49,827 | |
2025 | 40,918 | |
2026 | 31,240 | |
2027 | 24,739 | |
Thereafter | 71,669 | |
Net | $ 251,031 | $ 241,036 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued compensation | $ 19,202 | $ 29,835 |
Accrued cost of revenues | 22,660 | 15,721 |
Accrued interest | 112 | 3,143 |
Other accrued expenses | 16,144 | 18,348 |
Total accrued expenses | $ 58,118 | $ 67,047 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2023 USD ($) lease | Dec. 31, 2022 USD ($) | Jan. 01, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | |||
Right-of-use asset | $ 7,514 | $ 20,084 | |
Lease liability | $ 14,251 | ||
Credit agreement incremental borrowing rate used for leases | 4.50% | ||
Number of operating leases | lease | 17 | ||
Reduction of operating leases ROU asset for impairment charges | $ 5,300 | ||
Increase to lease liability resulting from lease remeasurement | 4,700 | ||
Reduction to operating ROU asset resulting from lease remeasurement | 4,700 | ||
De-recognition of operating lease ROU asset related to certain leases due to abandonment | $ 1,500 | ||
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining operating lease term | 3 months | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Remaining operating lease term | 67 months | ||
Accounting Standards Update 2016-02 | |||
Lessee, Lease, Description [Line Items] | |||
Right-of-use asset | $ 23,500 | ||
Lease liability | $ 23,800 |
Leases - Schedule of Lease Expe
Leases - Schedule of Lease Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Components of total lease costs | ||||
Operating lease expense | $ 2,607 | $ 1,302 | $ 3,986 | $ 2,601 |
Sublease income | (343) | (216) | (565) | (288) |
Total net lease costs | 2,264 | $ 1,086 | $ 3,421 | $ 2,313 |
Lease expense to de-recognized certain operating ROU assets abandoned | $ 1,500 |
Leases - Schedule of Right-of-U
Leases - Schedule of Right-of-Use Assets and Lease Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Operating leases right-of-use asset | $ 7,514 | $ 20,084 |
Operating leases liability, current portion | 4,069 | 3,717 |
Long-term operating leases liability, net of current portion | 10,182 | $ 16,835 |
Total operating leases liability | $ 14,251 | |
Weighted average remaining lease term in years - operating leases | 3 years 8 months 12 days | |
Weighted average discount rate - operating leases | 5.14% |
Leases - Schedule of Remaining
Leases - Schedule of Remaining Lease Payments (Details) $ in Thousands | Jun. 30, 2023 USD ($) |
Leases [Abstract] | |
Remainder of fiscal year 2023 | $ 2,771 |
2024 | 5,284 |
2025 | 2,338 |
2026 | 2,118 |
2027 | 2,149 |
2028 | 1,028 |
Thereafter | 85 |
Total future minimum lease payments | 15,773 |
Less: imputed interest | (1,522) |
Total | $ 14,251 |
Debt - Additional Information (
Debt - Additional Information (Details) - Line of Credit - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | Nov. 29, 2022 |
Debt Instrument [Line Items] | |||
Aggregate amount of borrowings permitted | $ 700,000,000 | ||
Level 2 | |||
Debt Instrument [Line Items] | |||
Estimated fair value | $ 484,300,000 | $ 487,100,000 | |
Secured Debt | Term Loans | |||
Debt Instrument [Line Items] | |||
Aggregate amount of borrowings permitted | 300,000,000 | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Aggregate amount of borrowings permitted | $ 400,000,000 |
Debt - Summary of Company's Lon
Debt - Summary of Company's Long-term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Current portion of long-term debt | ||
Total current portion of long-term debt | $ 11,250 | $ 7,500 |
Long-term debt | ||
Unamortized discount and debt issuance costs | (3,612) | (4,004) |
Total long-term debt, net | 486,882 | 493,990 |
Line of Credit | Secured Debt | Term Loans | ||
Current portion of long-term debt | ||
Total current portion of long-term debt | 11,250 | 7,500 |
Long-term debt | ||
Long-term debt, gross | $ 285,000 | $ 292,500 |
Interest rates | 7.45% | 6.76% |
Line of Credit | Revolving Credit Facility | ||
Long-term debt | ||
Long-term debt, gross | $ 205,494 | $ 205,494 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Narrative (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
EBI | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 0.9 | $ 1.2 |
Current portion of contingent consideration | $ 0.9 | |
Contingent consideration period | 2 years | |
Noncurrent portion of contingent consideration | $ 0.3 | |
A-Check | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 4.7 | |
Current portion of contingent consideration | $ 2.6 | |
Contingent consideration period | 1 year | |
Noncurrent portion of contingent consideration | $ 2.1 |
Fair Value of Financial Instr_4
Fair Value of Financial Instruments - Summary of Assets and Liabilities that are Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
EBI | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 900 | $ 1,200 |
A-Check | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 4,700 | |
Fair Value, Recurring | Level 1 | Interest rate swaps | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | |
Liabilities | 0 | |
Fair Value, Recurring | Level 1 | EBI | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 0 | 0 |
Fair Value, Recurring | Level 1 | A-Check | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 0 | |
Fair Value, Recurring | Level 2 | Interest rate swaps | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 2,857 | |
Liabilities | 3,408 | |
Fair Value, Recurring | Level 2 | EBI | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 0 | 0 |
Fair Value, Recurring | Level 2 | A-Check | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 0 | |
Fair Value, Recurring | Level 3 | Interest rate swaps | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Assets | 0 | |
Liabilities | 0 | |
Fair Value, Recurring | Level 3 | EBI | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | 914 | $ 1,219 |
Fair Value, Recurring | Level 3 | A-Check | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration | $ 4,706 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Summary of Company's Outstanding Derivatives (Details) - Interest rate swaps $ in Millions | Feb. 27, 2026 USD ($) | Jun. 30, 2023 USD ($) instrument |
Derivative [Line Items] | ||
Number of Instruments | instrument | 4 | |
Notional(1) | $ 300 | |
Forecast | ||
Derivative [Line Items] | ||
Notional(1) | $ 150 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Summary of Fair Value of Derivative Financial Instruments (Details) - Derivatives designated as hedging instruments: - Interest rate swaps - USD ($) $ in Thousands | Jun. 30, 2023 | Dec. 31, 2022 |
Other current assets | ||
Derivative [Line Items] | ||
Asset Derivatives | $ 2,857 | $ 0 |
Other liabilities | ||
Derivative [Line Items] | ||
Liability Derivatives | $ 3,408 | $ 0 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Summary of Effect of Cash Flow Hedge Accounting on Accumulated OCI (Loss) (Details) - Derivatives designated as hedging instruments: - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Interest expense | ||||
Derivative [Line Items] | ||||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | $ 552 | $ 0 | $ 649 | $ 0 |
Interest rate swaps | ||||
Derivative [Line Items] | ||||
Amount of Gain or (Loss) Recognized in OCI on Derivative | 6,975 | 0 | 98 | 0 |
Interest rate swaps | Interest expense | ||||
Derivative [Line Items] | ||||
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income | $ 552 | $ 0 | $ 649 | $ 0 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activities - Summary of Cash Flow Hedge Accounting on Unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivative [Line Items] | ||||
Interest Expense | $ 8,990 | $ 6,619 | $ 17,598 | $ 12,955 |
Derivatives designated as hedging instruments: | ||||
Derivative [Line Items] | ||||
Interest Expense | 8,990 | 6,619 | 17,598 | 12,955 |
Derivatives designated as hedging instruments: | Interest expense | ||||
Derivative [Line Items] | ||||
Amount of gain or (loss) reclassified from accumulated OCI into income | 552 | 0 | 649 | 0 |
Derivatives designated as hedging instruments: | Interest rate swaps | Interest expense | ||||
Derivative [Line Items] | ||||
Amount of gain or (loss) reclassified from accumulated OCI into income | $ 552 | $ 0 | $ 649 | $ 0 |
Derivative Instruments and He_7
Derivative Instruments and Hedging Activities - Additional Information (Details) | 6 Months Ended |
Jun. 30, 2023 USD ($) instrument | |
Derivative [Line Items] | |
Estimated reclassification from other comprehensive income during next twelve months | $ 2,900,000 |
Gain (loss) reclassified from accumulated OCI into earnings from forecasted transaction that failed to occur | $ 0 |
Derivatives designated as hedging instruments: | |
Derivative [Line Items] | |
Number of Instruments | instrument | 0 |
Derivative Instruments and He_8
Derivative Instruments and Hedging Activities - Summary of Derivative Financial Instruments that are Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Derivatives designated as hedging instruments: | Interest rate swaps | Loss (gain) on interest rate swaps | ||||
Derivative [Line Items] | ||||
Amount of Loss (Gain) Recognized in Income on Derivatives | $ 0 | $ 32 | $ 0 | $ (296) |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax provision (benefit) | $ (85) | $ 5,392 | $ 1,017 | $ 9,477 |
Effective tax rate | (35.70%) | 31.80% | 52.70% | 34.70% |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Loss Contingencies [Line Items] | |||||
Litigation settlement obligation | $ 6,013 | $ 6,013 | $ 4,165 | ||
Insurance receivable | 3,400 | 3,400 | $ 900 | ||
Net legal settlement expense | $ 100 | $ 100 | $ 300 | ||
Maximum | |||||
Loss Contingencies [Line Items] | |||||
Net legal settlement expense | $ 100 |
Equity (Details)
Equity (Details) | 3 Months Ended | 6 Months Ended | |||||
Jun. 07, 2023 USD ($) $ / shares shares | Jun. 05, 2023 USD ($) shares | Jun. 30, 2023 USD ($) vote $ / shares shares | Mar. 31, 2023 USD ($) shares | Jun. 30, 2023 USD ($) vote $ / shares shares | Dec. 31, 2022 $ / shares shares | Nov. 23, 2022 USD ($) | |
Class of Stock [Line Items] | |||||||
Total shares authorized (in shares) | 1,100,000,000 | 1,100,000,000 | |||||
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | ||||
Common stock, par value (in USD per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Preferred stock, shares authorized (in shares) | 100,000,000 | 100,000,000 | 100,000,000 | ||||
Preferred stock, par value (in USD per share) | $ / shares | $ 0.01 | $ 0.01 | $ 0.01 | ||||
Number of votes entitled to each share of common stock | vote | 1 | 1 | |||||
Dividends declared (in USD per share) | $ / shares | $ 0 | ||||||
Authorized common stock repurchase amount | $ | $ 100,000,000 | ||||||
Common stock repurchased (in shares) | 1,465,893 | 1,959,819 | |||||
Value of common stock repurchased | $ | $ 17,630,000 | $ 7,712,000 | $ 25,300,000 | ||||
Common Stock Held in Treasury | |||||||
Class of Stock [Line Items] | |||||||
Common stock repurchased (in shares) | 1,465,893 | 493,926 | |||||
Value of common stock repurchased | $ | $ 17,630,000 | $ 7,712,000 | |||||
BSPI | Common Stock Held in Treasury | |||||||
Class of Stock [Line Items] | |||||||
Common stock repurchased (in shares) | 1,000,000 | ||||||
Value of common stock repurchased | $ | $ 11,700,000 | ||||||
Secondary Public Offering | Underwriters | |||||||
Class of Stock [Line Items] | |||||||
Number of shares issued in transaction (in shares) | 0 | ||||||
Proceeds from sale of stock | $ | $ 0 | ||||||
Secondary Public Offering | Selling Stockholders | |||||||
Class of Stock [Line Items] | |||||||
Common stock, par value (in USD per share) | $ / shares | $ 0.01 | ||||||
Number of shares issued in transaction (in shares) | 8,000,000 | ||||||
Over-Allotment Option | Selling Stockholders | Underwriters | |||||||
Class of Stock [Line Items] | |||||||
Number of shares issued in transaction (in shares) | 1,145,486 | ||||||
Period for option to purchase additional shares | 30 days | ||||||
Over-Allotment Option | Selling Stockholders | Underwriters | Maximum | |||||||
Class of Stock [Line Items] | |||||||
Number of shares issued in transaction (in shares) | 1,200,000 |
Stock-Based Compensation - Summ
Stock-Based Compensation - Summary of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 9,358 | $ 6,023 | $ 17,401 | $ 11,131 |
Cost of revenues | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 394 | 411 | 822 | 824 |
Corporate technology and production systems | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | 605 | 499 | 1,217 | 1,030 |
Selling, general and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation expense | $ 8,359 | $ 5,113 | $ 15,362 | $ 9,277 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Aug. 04, 2021 shares | Jun. 30, 2023 USD ($) employee shares | Jun. 30, 2023 USD ($) employee shares | Jun. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized share-based compensation expense | $ | $ 100.7 | $ 100.7 | ||
Weighted average period of recognition | 2 years 7 months 9 days | |||
2015 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Post-termination exercise period | 6 months | |||
Extended post-termination exercise period | 30 days | |||
Maximum threshold percentage transfer of long term option shares within one year | 25% | |||
Effectiveness period of transfer of long term option shares within one year | 6 months | |||
Maximum threshold percentage transfer of long term option shares after one year | 50% | |||
2021 Equity Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award expiration term | 10 years | |||
Share-based compensation arrangement by share-based payment award, shares issued in period (in shares) | shares | 9,433,000 | |||
Percentage of outstanding stock maximum | 5% | |||
Share based compensation by share based award number of shares authorized for issuance (in shares) | shares | 9,433,000 | |||
Share based compensation by share based award number of shares available for grant (in shares) | shares | 8,266,376 | 8,266,376 | ||
NQSO | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized share-based compensation expense related to options | $ | $ 31.8 | $ 31.8 | ||
Restricted stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized share-based compensation expense related to restricted stock | $ | 67.9 | $ 67.9 | ||
Restricted stock | 2021 Equity Plan | Share-based Payment Arrangement, Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 2 years | |||
Share based compensation by share based award vesting percentage | 50% | |||
Restricted stock | 2021 Equity Plan | Share-based Payment Arrangement, Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 3 years | |||
Share based compensation by share based award vesting percentage | 25% | |||
Restricted stock | 2021 Equity Plan | Share-based Payment Arrangement, Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 4 years | |||
Share based compensation by share based award vesting percentage | 25% | |||
Restricted stock units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized share-based compensation expense related to restricted stock | $ | $ 1 | $ 1 | ||
Restricted stock units | 2021 Equity Plan | Share-based Payment Arrangement, Tranche One | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 2 years | |||
Share based compensation by share based award vesting percentage | 50% | |||
Restricted stock units | 2021 Equity Plan | Share-based Payment Arrangement, Tranche Two | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 3 years | |||
Share based compensation by share based award vesting percentage | 25% | |||
Restricted stock units | 2021 Equity Plan | Share-based Payment Arrangement, Tranche Three | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 4 years | |||
Share based compensation by share based award vesting percentage | 25% | |||
Restricted stock units | 2021 Equity Plan | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 1 year | |||
Restricted stock units | 2021 Equity Plan | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 4 years | |||
Stock Options | 2021 Equity Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award expiration term | 10 years | |||
Stock Options | 2021 Equity Plan | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 1 year | |||
Stock Options | 2021 Equity Plan | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 4 years | |||
Other Restricted Stock | 2021 Equity Plan | Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 1 year | |||
Other Restricted Stock | 2021 Equity Plan | Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share based compensation by share based award vesting term | 4 years | |||
Employee Stock | ESPP | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation arrangement by share-based payment award, shares issued in period (in shares) | shares | 0 | 0 | ||
Number of eligible employees enrolled in ESPP | employee | 0 | 0 |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of Option Activity (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) $ / shares shares | |
2015 Plan | Service-Based Vesting Stock Options | ||
Number of Shares | ||
Balance at beginning of period (in shares) | shares | 6,208,274 | |
Granted (in shares) | shares | 0 | |
Forfeited / cancelled (in shares) | shares | 0 | |
Exercised (in shares) | shares | (63,336) | |
Balance at end of period (in shares) | shares | 6,144,938 | 6,208,274 |
Weighted Average Exercise Price | ||
Balance at beginning of period (in USD per share) | $ 9.59 | |
Granted (in USD per share) | 0 | |
Forfeited / cancelled (in USD per share) | 0 | |
Exercised (in USD per share) | 9.66 | |
Balance at end of period (in USD per share) | $ 9.59 | $ 9.59 |
Weighted Average Remaining Contractual Life (years) | ||
Weighted average contractual term of options outstanding | 4 years 5 months 23 days | 5 years |
Aggregate Intrinsic Value | ||
Balance at beginning of period | $ | $ 36,513 | |
Exercised | $ | 201 | |
Balance at beginning of period | $ | $ 16,419 | $ 36,513 |
2015 Plan | Performance-Based Stock Options | ||
Number of Shares | ||
Balance at beginning of period (in shares) | shares | 3,081,855 | |
Granted (in shares) | shares | 0 | |
Forfeited / cancelled (in shares) | shares | 0 | |
Exercised (in shares) | shares | 0 | |
Balance at end of period (in shares) | shares | 3,081,855 | 3,081,855 |
Weighted Average Exercise Price | ||
Balance at beginning of period (in USD per share) | $ 10.05 | |
Granted (in USD per share) | 0 | |
Forfeited / cancelled (in USD per share) | 0 | |
Exercised (in USD per share) | 0 | |
Balance at end of period (in USD per share) | $ 10.05 | $ 10.05 |
Weighted Average Remaining Contractual Life (years) | ||
Weighted average contractual term of options outstanding | 2 years 9 months 25 days | 3 years 3 months 25 days |
Aggregate Intrinsic Value | ||
Balance at beginning of period | $ | $ 16,699 | |
Exercised | $ | 0 | |
Balance at beginning of period | $ | $ 6,806 | $ 16,699 |
2021 Equity Plan | ||
Number of Shares | ||
Balance at beginning of period (in shares) | shares | 4,387,501 | |
Granted (in shares) | shares | 909,431 | |
Forfeited / cancelled (in shares) | shares | 0 | |
Exercised (in shares) | shares | 0 | |
Balance at end of period (in shares) | shares | 5,296,932 | 4,387,501 |
Exercisable (in shares) | shares | 102,995 | |
Weighted Average Exercise Price | ||
Balance at beginning of period (in USD per share) | $ 22.91 | |
Granted (in USD per share) | 12.77 | |
Forfeited / cancelled (in USD per share) | 0 | |
Exercised (in USD per share) | 0 | |
Balance at end of period (in USD per share) | 21.17 | $ 22.91 |
Exercisable (in USD per share) | $ 22.61 | |
Weighted Average Remaining Contractual Life (years) | ||
Weighted average contractual term of options outstanding | 8 years 6 months 18 days | 8 years 9 months 21 days |
Weighted average contractual term of options exercisable | 8 years 6 months | |
Aggregate Intrinsic Value | ||
Balance at beginning of period | $ | $ 0 | |
Exercised | $ | 0 | |
Balance at beginning of period | $ | 0 | $ 0 |
Aggregate intrinsic value of options exercisable | $ | $ 0 | |
Weighted average fair value of options granted (in USD per share) | $ 7.03 |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of Restricted Stock Activity (Details) - 2021 Equity Plan | 6 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Restricted stock | |
Number of Shares | |
Balance at beginning of period (in shares) | shares | 3,421,920 |
Granted (in shares) | shares | 2,153,406 |
Forfeited / cancelled (in shares) | shares | (179,989) |
Vested (in shares) | shares | (174,084) |
Balance at end of period (in shares) | shares | 5,221,253 |
Weighted Average Fair Value (per share) | |
Balance at beginning of period (in USD per share) | $ / shares | $ 20.32 |
Granted (in USD per share) | $ / shares | 12.92 |
Forfeited / cancelled (in USD per share) | $ / shares | 20.49 |
Vested (in USD per share) | $ / shares | 19.61 |
Balance at end of period (in USD per share) | $ / shares | $ 17.28 |
Restricted stock units | |
Number of Shares | |
Balance at beginning of period (in shares) | shares | 51,249 |
Granted (in shares) | shares | 27,279 |
Forfeited / cancelled (in shares) | shares | (2,378) |
Vested (in shares) | shares | (1,224) |
Balance at end of period (in shares) | shares | 74,926 |
Weighted Average Fair Value (per share) | |
Balance at beginning of period (in USD per share) | $ / shares | $ 21.18 |
Granted (in USD per share) | $ / shares | 12.32 |
Forfeited / cancelled (in USD per share) | $ / shares | 23 |
Vested (in USD per share) | $ / shares | 22.35 |
Balance at end of period (in USD per share) | $ / shares | $ 17.88 |
Net Income per Share - Schedule
Net Income per Share - Schedule of Earnings Per Share Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Mar. 31, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||||||
Net income attributable to stockholders | $ 323 | $ 591 | $ 11,571 | $ 6,236 | $ 914 | $ 17,807 |
Less: Undistributed amounts allocated to participating securities | 0 | 0 | 0 | 0 | ||
Undistributed income allocated to stockholders | $ 323 | $ 11,571 | $ 914 | $ 17,807 | ||
Denominator: | ||||||
Weighted average number of shares outstanding, basic (in shares) | 92,723,901 | 94,024,970 | 92,800,279 | 93,996,553 | ||
Weighted average additional shares assuming conversion of potential shares of common stock (in shares) | 1,774,765 | 5,319,593 | 2,123,801 | 5,269,115 | ||
Weighted average shares of common stock outstanding - diluted (in shares) | 94,498,666 | 99,344,563 | 94,924,080 | 99,265,668 | ||
Net income per share attributable to stockholders, basic (in USD per share) | $ 0 | $ 0.12 | $ 0.01 | $ 0.19 | ||
Net income per share attributable to stockholders, diluted (in USD per share) | $ 0 | $ 0.12 | $ 0.01 | $ 0.18 |
Net Income per Share - Schedu_2
Net Income per Share - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Stock options | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 5,258,244 | 8,827,083 | 4,948,521 | 8,827,083 |
Restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4,376,479 | 2,719,936 | 3,879,743 | 2,719,936 |
Restricted stock units | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 47,703 | 42,704 | 48,707 | 42,704 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 05, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Related Party Transaction [Line Items] | |||||||
Sales to related parties | $ 190,384 | $ 205,591 | $ 369,658 | $ 397,563 | |||
Accounts receivable from related parties | $ 151,274 | $ 151,274 | $ 139,579 | ||||
Common stock repurchased (in shares) | 1,465,893 | 1,959,819 | |||||
Value of common stock repurchased | $ 17,630 | $ 7,712 | $ 25,300 | ||||
Common Stock Held in Treasury | |||||||
Related Party Transaction [Line Items] | |||||||
Common stock repurchased (in shares) | 1,465,893 | 493,926 | |||||
Value of common stock repurchased | $ 17,630 | $ 7,712 | |||||
Interest rate swaps | |||||||
Related Party Transaction [Line Items] | |||||||
Notional value interest rate swap with related party | 300,000 | 300,000 | |||||
BSPI | Common Stock Held in Treasury | |||||||
Related Party Transaction [Line Items] | |||||||
Common stock repurchased (in shares) | 1,000,000 | ||||||
Value of common stock repurchased | $ 11,700 | ||||||
Goldman Sachs | |||||||
Related Party Transaction [Line Items] | |||||||
Sales to related parties | 700 | 1,700 | 1,800 | 3,600 | |||
Accounts receivable from related parties | 400 | 400 | 200 | ||||
Goldman Sachs | J. Aron & Company LLC | Interest rate swaps | |||||||
Related Party Transaction [Line Items] | |||||||
Notional value interest rate swap with related party | 75,000 | 75,000 | |||||
Stockholders | |||||||
Related Party Transaction [Line Items] | |||||||
Sales to related parties | 100 | $ 100 | 100 | $ 200 | |||
Stockholders | Maximum | |||||||
Related Party Transaction [Line Items] | |||||||
Accounts receivable from related parties | $ 100 | $ 100 | $ 100 |
Revenue - Summary of Total Reve
Revenue - Summary of Total Revenue by Type of Service (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 190,384 | $ 205,591 | $ 369,658 | $ 397,563 |
Screening services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 188,650 | 204,282 | 365,521 | 394,030 |
Other services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 1,734 | $ 1,309 | $ 4,137 | $ 3,533 |
Revenue - Summary of Total Re_2
Revenue - Summary of Total Revenue by Geographic Area Based on the Billing Address of its Customers (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 190,384 | $ 205,591 | $ 369,658 | $ 397,563 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 162,198 | 174,115 | 311,940 | 333,431 |
All other countries | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 28,186 | $ 31,476 | $ 57,718 | $ 64,132 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - USD ($) $ in Millions | Jun. 30, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Deferred commissions, amortization period | 3 years | |
Deferred commissions current | $ 3.3 | $ 3.3 |
Deferred commissions non-current | $ 2.8 | $ 2.7 |
Uncategorized Items - ster-2023
Label | Element | Value |
Accounting Standards Update [Extensible Enumeration] | us-gaap_AccountingStandardsUpdateExtensibleList | Accounting Standards Update 2016-13 [Member] |