Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 16, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | CARS | ||
Entity Registrant Name | Cars.com Inc. | ||
Entity Central Index Key | 0001683606 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Entity Shell Company | false | ||
Entity Public Float | $ 643,540,920 | ||
Entity Common Stock, Shares Outstanding | 66,153,878 | ||
Entity File Number | 001-37869 | ||
Entity Tax Identification Number | 81-3693660 | ||
Entity Address, Address Line One | 300 S. Riverside Plaza | ||
Entity Address, Address Line Two | Suite 1000 | ||
Entity Address, City or Town | Chicago | ||
Entity Address, State or Province | IL | ||
Entity Address, Postal Zip Code | 60606 | ||
City Area Code | 312 | ||
Local Phone Number | 601-5000 | ||
Entity Interactive Data Current | Yes | ||
ICFR Auditor Attestation Flag | true | ||
Title of 12(b) Security | Common Stock, Par Value $0.01 Per Share | ||
Security Exchange Name | NYSE | ||
Entity Incorporation, State or Country Code | DE | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Documents Incorporated by Reference | Portions of the Registrant’s Definitive Proxy Statement relating to the Annual Meeting of Stockholders, scheduled to be held on or about June 7, 2023, are incorporated by reference into Part III of this Report. | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Location | Chicago, Illinois | ||
Auditor Firm ID | 42 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 31,715 | $ 39,069 |
Accounts receivable, net | 107,930 | 98,893 |
Prepaid expenses | 8,377 | 7,810 |
Other current assets | 605 | 1,665 |
Total current assets | 148,627 | 147,437 |
Property and equipment, net | 45,218 | 43,005 |
Goodwill | 102,856 | 26,227 |
Intangible assets, net | 707,088 | 769,424 |
Investments and other assets, net | 21,081 | 21,112 |
Total assets | 1,024,870 | 1,007,205 |
Current liabilities: | ||
Accounts payable | 18,230 | 15,420 |
Accrued compensation | 19,316 | 23,612 |
Current portion of long-term debt, net | 14,134 | 8,941 |
Other accrued liabilities | 54,332 | 46,317 |
Total current liabilities | 106,012 | 94,290 |
Noncurrent liabilities: | ||
Long-term debt, net | 458,249 | 457,383 |
Other noncurrent liabilities | 76,179 | 57,512 |
Total noncurrent liabilities | 534,428 | 514,895 |
Total liabilities | 640,440 | 609,185 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred Stock at par, $0.01 par value; 5,000 shares authorized; no shares issued and outstanding as of December 31, 2022 and 2021, respectively | 0 | 0 |
Common Stock at par, $0.01 par value; 300,000 shares authorized; 66,287 and 69,170 shares issued and outstanding as of December 31, 2022 and 2021, respectively | 662 | 692 |
Additional paid-in capital | 1,511,944 | 1,544,712 |
Accumulated deficit | (1,128,176) | (1,145,382) |
Accumulated other comprehensive loss | 0 | (2,002) |
Total stockholders' equity | 384,430 | 398,020 |
Total liabilities and stockholders' equity | $ 1,024,870 | $ 1,007,205 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 69,170,000 | 66,287,000 |
Common stock, shares outstanding | 69,170,000 | 66,287,000 |
Consolidated Statements of Inco
Consolidated Statements of Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue: | |||
Total revenue | $ 653,876 | $ 623,683 | $ 547,503 |
Operating expenses: | |||
Cost of revenue and operations | 114,959 | 114,200 | 101,536 |
Product and technology | 89,015 | 77,316 | 60,664 |
Marketing and sales | 221,879 | 208,335 | 183,448 |
General and administrative | 67,593 | 73,562 | 59,051 |
Affiliate revenue share | 0 | 0 | 10,970 |
Depreciation and amortization | 94,394 | 101,932 | 113,276 |
Goodwill and intangible asset impairment | 0 | 0 | 905,885 |
Total operating expenses | 587,840 | 575,345 | 1,434,830 |
Operating income (loss) | 66,036 | 48,338 | (887,327) |
Nonoperating expense: | |||
Interest expense, net | (35,320) | (38,729) | (37,856) |
Other expense, net | (8,140) | (126) | (11,226) |
Total nonoperating expense, net | (43,460) | (38,855) | (49,082) |
Income (loss) before income taxes | 22,576 | 9,483 | (936,409) |
Income tax expense (benefit) | 5,370 | (1,308) | (147,303) |
Net (loss) income | $ 17,206 | $ 10,791 | $ (789,106) |
Weighted-average common shares outstanding: | |||
Basic | 68,215 | 68,727 | 67,241 |
Diluted | 69,649 | 71,337 | 67,241 |
Earnings (Loss) Per Share | |||
Basic | $ 0.25 | $ 0.16 | $ (11.74) |
Diluted | $ 0.25 | $ 0.15 | $ (11.74) |
Dealer | |||
Revenue: | |||
Total revenue | $ 579,222 | $ 549,923 | $ 463,018 |
OEM and National | |||
Revenue: | |||
Total revenue | 58,557 | 65,085 | 73,176 |
Other | |||
Revenue: | |||
Total revenue | $ 16,097 | $ 8,675 | $ 11,309 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 17,206 | $ 10,791 | $ (789,106) |
Other comprehensive income (loss), net of tax: | |||
Interest rate swap | 0 | 0 | (8,910) |
Reclassification of Accumulated other comprehensive loss on interest rate swap into Net income (loss) | 2,002 | 4,802 | 9,748 |
Total other comprehensive income | 2,002 | 4,802 | 838 |
Comprehensive income (loss) | $ 19,208 | $ 15,593 | $ (788,268) |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Balance at Dec. 31, 2019 | $ 1,141,068 | $ 668 | $ 1,515,109 | $ (367,067) | $ (7,642) |
Balance, Shares at Dec. 31, 2019 | 66,764,000 | ||||
Net income (loss) | (789,106) | (789,106) | |||
Other comprehensive income, net of tax | 838 | 838 | |||
Shares issued in connection with stock-based compensation plans, net | 235 | $ 6 | 229 | ||
Shares issued in connection with stock-based compensation plans, net, Shares | 623,000 | ||||
Stock-based compensation | 15,155 | 15,155 | |||
Balance at Dec. 31, 2020 | 368,190 | $ 674 | 1,530,493 | (1,156,173) | (6,804) |
Balance, Shares at Dec. 31, 2020 | 67,387,000 | ||||
Net income (loss) | 10,791 | 10,791 | |||
Other comprehensive income, net of tax | 4,802 | 4,802 | |||
Shares issued in connection with stock-based compensation plans, net | (7,194) | $ 18 | (7,212) | ||
Shares issued in connection with stock-based compensation plans, net, Shares | 1,783,000 | ||||
Stock-based compensation | 21,431 | 21,431 | |||
Balance at Dec. 31, 2021 | $ 398,020 | $ 692 | 1,544,712 | (1,145,382) | (2,002) |
Balance, Shares at Dec. 31, 2021 | 66,287,000 | 69,170,000 | |||
Net income (loss) | $ 17,206 | 17,206 | |||
Other comprehensive income, net of tax | 2,002 | $ 2,002 | |||
Repurchases of common stock | (48,982) | $ (41) | (48,941) | ||
Repurchases of common stock, Shares | (4,168,000) | ||||
Shares issued in connection with stock-based compensation plans, net | (6,256) | $ 11 | (6,267) | ||
Shares issued in connection with stock-based compensation plans, net, Shares | 1,285,000 | ||||
Stock-based compensation | 22,440 | 22,440 | |||
Balance at Dec. 31, 2022 | $ 384,430 | $ 662 | $ 1,511,944 | $ (1,128,176) | |
Balance, Shares at Dec. 31, 2022 | 69,170,000 | 66,287,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 17,206 | $ 10,791 | $ (789,106) |
Adjustments to reconcile Net income (loss) to Net cash provided by operating activities: | |||
Depreciation | 16,380 | 16,290 | 18,943 |
Amortization of intangible assets | 78,014 | 85,642 | 94,333 |
Goodwill and intangible asset impairment | 0 | 0 | 905,885 |
Impairment of non-marketable security | 0 | 0 | 9,447 |
Amortization of Accumulated other comprehensive loss on interest rate swap | 2,362 | 5,670 | 8,623 |
Changes in fair value of contingent consideration | 8,130 | 0 | 0 |
Stock-based compensation | 22,342 | 21,431 | 15,155 |
Deferred income taxes | 1,283 | (2,927) | (134,383) |
Provision for doubtful accounts | 1,888 | 164 | 4,380 |
Amortization of debt issuance costs | 3,235 | 3,360 | 5,108 |
Amortization of deferred revenue related to Accu-Trade Acquisition | (4,417) | 0 | 0 |
Other, net | 1,202 | 1,416 | 181 |
Changes in operating assets and liabilities, net of Acquisitions: | |||
Accounts receivable | (9,337) | (5,352) | 3,733 |
Prepaid expenses and other assets | (423) | 6,141 | (9,514) |
Accounts payable | 2,611 | (1,099) | 3,993 |
Accrued compensation | (4,296) | 5,293 | 1,581 |
Other liabilities | (7,669) | (8,817) | 257 |
Net cash provided by operating activities | 128,511 | 138,003 | 138,616 |
Cash flows from investing activities: | |||
Payments for acquisitions, net of cash acquired | (64,663) | (20,258) | 0 |
Purchase of property and equipment | (19,714) | (19,192) | (16,712) |
Net cash used in investing activities | (84,377) | (39,450) | (16,712) |
Cash flows from financing activities: | |||
Proceeds from Revolving Loan borrowings and issuance of long-term debt | 45,000 | 0 | 565,000 |
Payments of long-term debt | (41,250) | (120,000) | (615,625) |
Payments for stock-based compensation plans, net | (6,256) | (7,194) | 235 |
Repurchases of common stock | (48,982) | 0 | 0 |
Payments of debt issuance costs and other fees | 0 | (9) | (17,344) |
Net cash used in financing activities | (51,488) | (127,203) | (67,734) |
Net (decrease) increase in cash and cash equivalents | (7,354) | (28,650) | 54,170 |
Cash and cash equivalents at beginning of period | 39,069 | 67,719 | 13,549 |
Cash and cash equivalents at end of period | 31,715 | 39,069 | 67,719 |
Supplemental cash flow information: | |||
Cash paid (received) for income taxes | 545 | (7,992) | 805 |
Cash paid for interest and swap | $ 33,370 | $ 38,342 | $ 26,433 |
Description of Business
Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Description of Business | Note 1. Description of Business Description of Business. Cars.com Inc. (the “Company” or “CARS”) is a leading automotive marketplace platform that provides a robust set of digital solutions that connect car shoppers with sellers. The Company empowers shoppers with the data, resources and digital tools needed to make informed buying decisions and seamlessly connect with automotive retailers. In a rapidly changing market, CARS enables dealers and automotive manufacturers (“OEMs”), with innovative technical solutions and data-driven intelligence, to better reach and influence ready-to-buy shoppers, increase inventory turn and gain market share. In addition to Cars.com, the Company’s brands include Dealer Inspire®, a website and digital solutions provider enabling dealers to be more efficient through connected digital experiences; FUEL, an advertising solution providing dealers and OEMs the benefit of leveraging targeted digital video and display marketing to Cars.com’s audience of in-market car shoppers; DealerRater®, a leading car dealer review and reputation management technology solution; CreditIQ®, digital financing technology and Accu-Trade, vehicle valuation and appraisal technology. The Company's portfolio of brands also includes PickupTrucks.com. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Note 2. Significant Accounting Policies Basis of Presentation . These accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. The Consolidated Financial Statements include the accounts of CARS and its 100 % owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation. Use of Estimates. The preparation of the accompanying Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. Reclassifications . Certain prior year balances have been reclassified to conform to the current year presentation. Correction of Certain Amounts Relating to Previously Issued Financial Statements. During the first quarter of 2022, the Company identified a $ 30.8 million overstatement of the valuation allowance recorded against deferred tax assets that originated in 2020. In addition, the Company adjusted 2020 to refl ect an immaterial income tax adjustment related to this same period. The Company has concluded that these items are not material to the previously issued Consolidated Financial Statements and has therefore corrected these prior period amounts as presented in the Consolidated Financial Statements for the year ended December 31, 2022. The impact of correcting the items on the related financial statement line items for the year ended December 31, 2021 is as follows (in thousands, except per share data): Consolidated Balance Sheet and Consolidated Statement of Stockholders' Equity, as applicable As of December 31, 2021 Financial statement line item As reported Adjustment As adjusted Deferred tax liability $ 31,086 $ ( 31,086 ) $ — Total noncurrent liabilities 545,981 ( 31,086 ) 514,895 Total liabilities 640,271 ( 31,086 ) 609,185 Accumulated deficit ( 1,176,468 ) 31,086 ( 1,145,382 ) Total stockholders' equity 366,934 31,086 398,020 Consolidated Statements of Income (Loss), Comprehensive Income (Loss) and Consolidated Statement of Stockholders' Equity, as applicable Year ended December 31, 2021 Financial statement line item As reported Adjustment As adjusted Income tax expense (benefit) $ 1,764 $ ( 3,072 ) $ ( 1,308 ) Net income (loss) 7,719 3,072 10,791 Comprehensive income (loss) 12,521 3,072 15,593 Basic Earnings (loss) per share 0.11 0.05 0.16 Diluted Earnings (loss) per share 0.11 0.04 0.15 Consolidated Statements of Cash Flows Year ended December 31, 2021 Financial statement line item As reported Adjustment As adjusted Net income (loss) $ 7,719 $ 3,072 $ 10,791 Deferred income taxes ( 2,641 ) ( 286 ) ( 2,927 ) Other liabilities ( 6,031 ) ( 2,786 ) ( 8,817 ) The impact of correcting the misstatements on the related financial statement line items for the year ended December 31, 2020 is as follows (in thousands, except per share data): Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Year ended December 31, 2020 Financial statement line item As reported Adjustment As adjusted Income tax expense (benefit) $ ( 119,289 ) $ ( 28,014 ) $ ( 147,303 ) Net income (loss) ( 817,120 ) 28,014 ( 789,106 ) Comprehensive income (loss) ( 816,282 ) 28,014 ( 788,268 ) Basic and Diluted Earnings (loss) per share ( 12.15 ) 0.41 ( 11.74 ) Consolidated Statement of Stockholders' Equity Year ended December 31, 2020 Financial statement line item As reported Adjustment As adjusted Net income (loss) $ ( 817,120 ) $ 28,014 $ ( 789,106 ) Accumulated deficit ( 1,184,187 ) 28,014 ( 1,156,173 ) Total stockholders' equity 340,176 28,014 368,190 Consolidated Statements of Cash Flows Year ended December 31, 2020 Financial statement line item As reported Adjustment As adjusted Net income (loss) $ ( 817,120 ) $ 28,014 $ ( 789,106 ) Deferred income taxes ( 103,582 ) ( 30,801 ) ( 134,383 ) Other liabilities ( 2,530 ) 2,787 257 Revenue. The Company accounts for a customer arrangement when the Company and the customer have an approved contract that specifies the rights and obligations of each party and the payment terms, and the Company believes it is probable that the Company will collect substantially all of the consideration to which the Company will be entitled in exchange for the services that will be provided to the customer. The Company periodically enters into arrangements that include multiple promises that the Company evaluates to determine whether the promises are separate performance obligations. The Company identifies performance obligations based on services to be transferred to a customer that are distinct within the context of the contractual terms. The Company allocates the contractual transaction price to each distinct performance obligation based on the relative standalone selling price and recognizes revenue when it satisfies a performance obligation by providing a service to a customer. Revenue is primarily generated through the Company’s direct sales force. Marketplace Subscription Advertising Revenue. The Company’s primary source of revenue is through the sale of marketplace subscription advertising packages to dealer customers. Our subscription packages allow dealer customers and OEMs to showcase their new and used vehicle inventory to in-market shoppers on the Cars.com website. The subscription packages are generally a fixed price arrangement with varying contract terms, typically ranging from three to six months , that are automatically renewed, typically on a month-to-month basis. The Company recognizes subscription package revenue ratably as the service is provided over the contract term. Marketplace subscription advertising revenue is recorded in Dealer revenue in the Consolidated Statements of Income (Loss). The Company also offers its customers several add-on products to the subscription packages, as well as FUEL. Add-on products include premium advertising products that can be uniquely tailored to an individual dealer customer’s current needs. Substantially all of the Company’s add-on products, as well as FUEL, are not sold separately from the subscription packages as the customer cannot benefit from add-on products on their own. Therefore, the subscription packages and add-on products are combined as a single performance obligation, and the Company recognizes the related revenue ratably as the services are provided over the contract term. The Company also provides services, including hosting flexible, custom-designed website platforms supporting highly personalized digital marketing campaigns, digital retailing and messaging platform products. In addition, the Company also provides dealers with vehicle valuation and appraisal services through Accu-Trade. The Company recognizes revenue related to these services ratably as the service is provided over the contract term. The related revenue is recorded in Dealer revenue in the Consolidated Statements of Income (Loss). Display Advertising Products and Services Revenue. The Company also earns revenue through the sale of display advertising on the Company’s website to dealers, OEMs and other national advertisers, pursuant to transaction-based contracts, which are billed for impressions delivered or click-throughs on their advertisements. An impression is the display of an advertisement to an end-user on the website and is a measure of volume. A click-through occurs when an end-user clicks on an impression. The Company recognizes revenue as the impressions or click-throughs are delivered. If the impressions or click-throughs delivered are less than the amount invoiced to the customer, the difference is recorded as deferred revenue and recognized as revenue when earned. The Company recognizes revenue related to these services at the point in time the service is provided. Display advertising products revenue sold to OEMs and other national advertisers is recorded in OEM and National revenue in the Consolidated Statements of Income (Loss). The Company also provides services related to customized digital marketing and customer acquisition services, including paid, organic, social and creative services to dealer customers. The Company recognizes revenue related to these services at the point in time the service is provided. Display advertising products revenue sold to dealers is recorded in Dealer revenue in the Consolidated Statements of Income (Loss). Pay Per Lead Revenue. The Company also sells leads, which are connections from consumers to dealer customers in the form of phone calls, emails and text messages, to dealer customers, OEMs and third-party resellers. The Company recognizes pay per lead revenue primarily on a per-lead basis at the point in time in which the lead has been delivered. Revenue related to pay per lead is recorded in Dealer revenue, OEM and National revenue or Other revenue depending on the customer who is purchasing this product, in the Consolidated Statements of Income (Loss). Other Revenue. Other revenue primarily includes revenue related to vehicle listing data sold to third parties. The Company recognizes other revenue either ratably as the services are provided or at the point in time the services have been performed. In connection with the Accu-Trade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product. The recognition of revenue associated with the license fee is recorded in Other revenue. Other revenue is recorded in Other revenue in the Consolidated Statements of Income (Loss). Cash and Cash Equivalents. All cash balances and liquid investments with original maturities of three months or less on their acquisition date are classified as cash and cash equivalents. Accounts Receivable and Allowance for Doubtful Accounts . Accounts receivable are primarily derived from sales to customers and recorded at invoiced amounts. The allowance for doubtful accounts reflects the Company’s estimate of credit exposure, determined principally on the basis of its collection experience, aging of its receivables, expected losses and any specific reserves needed for certain customers based on their credit risk. Bad debt expense is included in Marketing and sales in the Consolidated Statements of Income (Loss). The allowance for doubtful accounts was $ 1.9 million and $ 1.7 million as of December 31, 2022 and 2021, respectively. Concentrations of Credit Risk. The Company’s financial instruments, consisting primarily of cash and cash equivalents and customer receivables, are exposed to concentrations of credit risk. The Company invests its cash and cash equivalents with highly rated financial institutions. Investments . Investments in non-marketable equity securities are measured at fair value with changes in fair value recognized in Net income (loss). The Company utilizes the measurement alternative for equity investments without readily determinable fair values and revalues these investments upon the occurrence of an observable price change for similar investments. On at least an annual basis, the Company assesses its investments to determine whether any events have occurred, or circumstances have changed, which might have a significant adverse effect on their fair value and which may be indicative of impairment. In the first quarter of 2020, the Company recorded a full impairment of $ 9.4 million, triggered by the novel coronavirus disease 2019 (“COVID-19”) pandemic and the related restrictions, for the year ended December 31, 2020. The impairment was included in the Other expense, net in the Consolidated Statements of Income (Loss). The non-marketable investments recorded within Investments and other assets, net on the Consolidated Balance Sheets were zero as of December 31, 2022 and 2021. For further information on the triggering event, see Note 6 (Goodwill and Other Intangible Assets, net). Property and Equipment . Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives as follows (in thousands): December 31, Asset 2022 2021 Estimated Useful Life Computer software $ 79,682 $ 65,461 18 months - 5 years Computer hardware 12,550 11,998 3 years - 5 years Leasehold improvements 18,581 18,656 Lesser of useful life or lease term Furniture and fixtures 4,140 4,293 10 years Property and equipment, gross 114,953 100,408 Less: Accumulated depreciation ( 69,735 ) ( 57,403 ) Property and equipment, net $ 45,218 $ 43,005 Normal repairs and maintenance are expensed as incurred. Any resulting gain or loss from the disposition of fixed assets is included in General and administrative expense on the Consolidated Statements of Income (Loss). Internally Developed Technology . The Company capitalizes costs associated with customized internal-use software systems and website development that have reached the application development stage. Such capitalized costs include external direct costs utilized in developing or obtaining the applications and payroll and payroll-related expenses for employees who are directly associated with the applications. Capitalization of such costs begins when the preliminary project stage is complete and ceases at the point in which the project is substantially complete and ready for its intended purpose. The Company reviews the carrying amount of internally developed technology for impairment and useful lives whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Capitalized software costs, excluding cloud computing arrangements, for the years ended December 31, 2022, 2021 and 2020 were $ 18.1 million, $ 17.9 million and $ 16.3 million, respectively. Capitalized costs, excluding those for cloud computing arrangements, are included in Property and equipment, net on the Consolidated Balance Sheets. Research and development costs are expensed as incurred. Cloud Computing Arrangements. The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed technology. Any amortization is recorded in the same manner on the Consolidated Statements of Income (Loss) as the expense associated with the underlying host arrangement. These capitalized costs as of December 31, 2022 were $ 1.0 million and $ 4.7 million in Prepaid expenses and Investments and other assets, net on the Consolidated Balance Sheets, respectively. These capitalized costs as of December 31, 2021 were $ 0.6 million and $ 2.6 million in Prepaid expenses and Investments and other assets, net on the Consolidated Balance Sheets, respectively. Research and development costs are expensed as incurred. Goodwill and Other Intangible Assets . Goodwill represents the excess of acquisition cost over the fair value of assets acquired, including identifiable intangible assets, net of liabilities assumed. Goodwill is tested for impairment on an annual basis or between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’s goodwill is tested for impairment at a level referred to as the reporting unit. The level at which the Company tested goodwill for impairment requires the Company to determine whether the operations below the business segment level constitute a business for which discrete financial information is available and segment management regularly reviews the operating results. The Company determined that it operated as a single reporting unit. The process of estimating the fair value of goodwill is subjective and required the Company to make estimates that may significantly impact the outcome of the analysis. A qualitative assessment considers events and circumstances such as macroeconomic conditions, industry and market conditions, cost factors and overall financial performance, as well as company specifications. If after performing this assessment, the Company concluded it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then the Company performed the quantitative test. Under the quantitative test, a goodwill impairment is identified by comparing the fair value of the reporting unit to the carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, goodwill is considered impaired and an impairment charge is recognized in an amount equal to the excess, not to exceed the carrying amount of goodwill. If a quantitative test is performed, the Company estimates the fair value of the reporting unit with an income approach using the discounted cash flow (“DCF”) analysis and the Company also considers a market-based valuation methodology using comparable public company trading values and the Company’s market capitalization. Determining fair value requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates, the discount rate and relevant comparable public company earnings multiples. The cash flows employed in the DCF analysis are based on the Company’s best estimate of future sales, earnings and cash flows after considering factors such as general market conditions and recent operating performance. The discount rate utilized in the DCF analysis is based on the reporting unit’s weighted-average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the Company’s reporting unit. Impairment assessment inherently involves management judgments regarding a number of assumptions described above. The reporting unit fair value also depends on the future strength of the U.S. economy. New and developing competition as well as technological change could also adversely affect future fair value estimates. Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of the Company’s recorded goodwill, differences in assumptions could have a material effect on the estimated fair values. For further information, see Note 6 (Goodwill and Other Intangible Assets, net). The Company’s indefinite-lived intangible asset relates to the Cars.com trade name. Intangible assets with indefinite lives are tested for impairment annually, or more often if circumstances dictate, and written down to fair value as required. The estimates of fair value are determined using the “relief from royalty” methodology, which is a variation of the income approach. The discount rate assumption is based on an assessment of the risk inherent in the projected future cash flows generated by the trade name intangible asset. Amortizable intangible assets are amortized on a straight-line basis over the estimated useful lives as follows: Intangible Asset Estimated Useful Life Acquired software 2 - 7 years Customer relationships 3 - 14 years Other trade names 10 - 12 years Valuation of Long-Lived Assets . The Company reviews the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Once an indicator of potential impairment has occurred, the impairment test is based on whether the intent is to hold the asset for continued use or to hold the asset for sale. If the intent is to hold the asset for continued use, the impairment test first requires a comparison of projected undiscounted future cash flows against the carrying amount of the asset group. If the carrying value of the asset group exceeds the estimated undiscounted future cash flows, the asset group would be deemed to be potentially impaired. The impairment, if any, would be measured based on the amount by which the carrying amount exceeds the fair value. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. No material impairment losses for long-lived assets were recognized for the periods presented in the Consolidated Statements of Income (Loss). Fair Value of Financial Instruments . Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. The three-level hierarchy of fair value measurements is based on whether the inputs to those measurements are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The fair-value hierarchy requires the use of observable market data when available and consists of the following levels: • Level 1—Quoted prices for identical instruments in active markets; • Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and • Level 3—Valuations derived from valuation techniques in which one or more significant inputs are unobservable The Company’s financial instruments include the contingent consideration related to our acquisitions and, before the year ended December 31, 2022, the interest rate swap (the “Swap”), both recorded at fair value. Financial instruments also include accounts receivable, accounts payable and other liabilities. The carrying values of these instruments approximate their fair values. The Company’s debt is classified as Level 2 in the fair value hierarchy and the fair value is measured based on comparable trading prices, ratings, sectors, coupons and maturities of similar instruments. Level 2 assets and liabilities are based on observable inputs other than quoted prices, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. As of December 31, 2022, the fair value of the outstanding indebtedness was approximately $ 435.4 million, compared to the carrying value of $ 481.3 million. As of December 31, 2021, the fair value of the outstanding indebtedness was approximately $ 502.7 million, compared to the carrying value of $ 477.5 million. The contingent consideration is classified as Level 3 in the fair value hierarchy and the fair value is measured based on a Monte Carlo simulation or a scenario-based method, depending on the earn-out achievement objective, utilizing projections about future performance. Significant inputs include volatility and projected financial information. Contingent Consideration. The Company's contingent consideration obligations are from arrangements resulting from acquisitions that involve potential future payment of consideration that is contingent upon the achievement of certain financial metrics or lender market share. Contingent consideration was recognized at its estimated fair value at the date of acquisition based on our expected future payment, discounted using a weighted average cost of capital in accordance with accepted valuation methodologies. The Company reviews and reassesses the estimated fair value of contingent consideration liabilities at each reporting period and the updated fair value could differ materially from the initial estimates. The Company measures contingent consideration recognized in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified as Level 3 inputs. The fair value is measured based on a Monte Carlo simulation or a scenario-based method, depending on the earnout objective. The fair value measurement includes the following significant inputs: volatility and projected financial information. Significant increases or decreases to any of these inputs in isolation could result in a significantly higher or lower liability. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate on the acquisition date and each reporting period and the amount paid will be recognized in earnings. Derivative Financial Instrument. The interest rate on borrowings under the Company’s Term Loan is floating and, therefore, subject to fluctuations. In order to manage the risk associated with changes in interest rates on its borrowing under the Term Loan, the Company entered into the Swap effective December 31, 2018. Under the terms of the Swap, the Company is locked into a fixed rate of interest of 2.96 %, as defined in the Credit Agreement, on a notional amount of $ 300 million. The amendment entered into in June 2020 (the “Second Amendment”) resulted in the loss of hedge accounting. For further information, see Note 8 (Interest Rate Swap). As a result, as of the date of the Second Amendment, the unrealized loss included within Accumulated other comprehensive loss was ratably reclassified into Net income (loss) over the remaining life of the Swap. Each period, a portion of the unrealized loss was recorded to Interest expense, net and Income tax expense (benefit) within the Consolidated Statements of Income (Loss). Subsequent to the Second Amendment, any changes in the fair value of the Swap were recorded within Other expense, net on the Consolidated Statements of Income (Loss). A third amendment was entered into in October 2020 (the “Third Amendment”), which resulted in the partial extinguishment of the existing debt at the time of the amendment. Due to the reduction in value of the underlying Term Loan upon the Third Amendment as compared to the notional amount of the Swap, a proportional amount of the frozen Accumulated other comprehensive loss balance was immediately reclassified into Interest expense, net. The Swap expired on May 31, 2022 and, as such, is no longer recorded on the Consolidated Balance Sheets. As of December 31, 2021 the Swap was recognized within Other accrued liabilities on the Consolidated Balance Sheets at fair value. Income Taxes . Income taxes are presented on the Consolidated Financial Statements using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying amount of assets and liabilities and their respective tax basis, as well as from operating loss and tax credit carryforwards. Deferred income taxes reflect expected future tax benefits (i.e. assets) and future tax costs (i.e. liabilities). The Company measures deferred tax assets and liabilities using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The Company recognizes the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. Valuation allowances are established if, based upon the weight of available evidence, management determines it is “more likely than not” that some portion or all of the deferred tax asset will not be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon ultimate resolution. The Company’s uncertain tax position reserves are reviewed periodically and are adjusted as events occur that affect its estimates, such as the availability of new information, the lapsing of applicable statutes of limitation, the conclusion of tax audits, the measurement of additional estimated liability, the identification of new tax matters, the release of administrative tax guidance affecting its estimates of tax liabilities or the rendering of relevant court decisions. The Company records penalties and interest relating to uncertain tax positions in Income tax expense (benefit) in the Consolidated Statements of Income (Loss). For further information, see Note 14 (Income Taxes). Stock-Based Compensation. Stock-based compensation expense is recognized on a straight-line basis over the vesting period. Forfeitures are recorded at the time the forfeiture event occurs. For further information, see Note 12 (Stock-Based Compensation) . Advertising Costs . The Company expenses advertising costs as they are incurred and are included in Marketing and sales in the Consolidated Statements of Income (Loss). Advertising expense for the years ended December 31, 2022, 2021 and 2020 was $ 107.1 million, $ 104.4 million and $ 80.4 million, respectively. Cost of Revenue and Operations. Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, pay per lead products, product fulfillment and compensation costs for the product fulfillment and customer service teams. Affiliate Revenue Share Expense. In connection with the October 2014 acquisition of CARS by the Company’s former parent, the Company entered into affiliate agreements with the former owners of CARS. The Company amended five of its affiliate agreements (Gannett, McClatchy, TEGNA, tronc, and the Washington Post) and as a result, had a direct relationship with these dealer customers before the original contractual conversion date specified. As part of the amendments to the affiliate agreements, Gannett, McClatchy, TEGNA, tronc, and the Washington Post agreed to perform certain marketing support and transition services through varying dates, the latest of which was June 29, 2020. The fees the Company incurred associated with the amended affiliate agreements were recorded as Affiliate revenue share expense within Operating expenses in the Consolidated Statements of Income (Loss). A s of June 30, 2020, the Company no longer incurs affiliate revenue share expense. Defined Contribution Plans. The Company’s employees are eligible to participate in a defined contribution plan. Participants are eligible on their date of hire and are allowed to make tax-deferred contributions up to 90 % of annual compensation, subject to limitations specified by the Internal Revenue Code of 1986, as amended. Employer contributions consist of matching contributions and/or non-elective employer contributions. The Company provides a maximum match for 4 % of the employee’s salary and contributions are immediately fully vested. As part of the cost reduction efforts in response to the COVID-19 pandemic and related restrictions, beginning in the second quarter of 2020, the Company temporarily suspended the employer match of employees’ defined contribution plans for a portion of the year ended December 31, 2020. As of December 31, 2020, the Company’s match was fully reinstated. The Company’s contributions to its defined contribution plans for the years ended December 31, 2022, 2021 and 2020 were $ 5.5 million, $ 5.0 million and $ 2.4 million, respectively . |
Business Combination
Business Combination | 12 Months Ended |
Dec. 31, 2022 | |
Business Combinations [Abstract] | |
Business Combination | Note 3. Business Combinations Accu-Trade Acquisition. On March 1, 2022, the Company acquired certain of the assets and assumed certain liabilities of Accu-Trade, LLC; Accu-Trade Canada, LLC; Galves Market Data; and Headstart Logistics, LLC d/b/a/ MADE Logistics (collectively, “Accu-Trade”), which provides dealers with VIN-specific vehicle valuation and appraisal data, instant offer capabilities and logistics technology (the “Accu-Trade Acquisition”). The Company expensed as incurred total acquisition costs of $ 2.0 million, of which $ 1.0 million were recorded during the year ended December 31, 2022. These costs were recorded in General and administrative expenses in the Consolidated Statements of Income (Loss). Preliminary Purchase Price Allocation. The preliminary fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s estimates and assumptions, as well as other information compiled by management, including third-party valuations that utilize customary valuation procedures and techniques, such as the multi-period excess earnings and the relief of royalty methods. These preliminary fair values are subject to change within the one-year measurement period. The Accu-Trade Acquisition purchase price allocation is as follows (in thousands): Preliminary Cash consideration $ 64,663 Other consideration (1) 5,300 Contingent consideration (2) 23,936 Total purchase consideration $ 93,899 Assets acquired (3) $ 1,595 Identified intangible assets (4) 15,679 Total assets acquired 17,274 Total liabilities assumed (5) ( 235 ) Net identifiable assets 17,039 Goodwill 76,860 Total purchase consideration $ 93,899 (1) In connection with the Accu-Trade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product. The preliminary fair value of the license was determined to be $ 6.5 million, of which the Company received $ 1.2 million in cash upon the close of the Accu-Trade Acquisition. The $ 5.3 million difference between the fair value of $ 6.5 million and the $ 1.2 million in cash was recorded as non-cash consideration and the $ 6.5 million license fee was recorded in Other accrued liabilities as a contract liability on the Consolidated Balance Sheets and is being amortized into Other revenue on the Consolidated Statements of Income (Loss) over the one-year contract term. The current period revenue related to the non-cash consideration of $ 5.3 million is a non-cash reconciling item titled Amortization of deferred revenue related to Accu-Trade Acquisition on the Consolidated Statements of Cash Flows. (2) As part of the Accu-Trade Acquisition, the Company may be required to pay additional consideration to the former owners based on the achievement of certain financial targets. The Company has the option to pay consideration in cash or certain amounts in stock, which would result in a variable number of shares being issued. The amount to be paid will be determined by the acquired business’ future performance to be attained over a three-year performance period; based on certain tiered performance metrics the maximum amount to be paid is $ 63.0 million, of which a maximum of $ 15.0 million could be in stock, with additional upside for performance that exceeds the tiered performance metrics. The contingent consideration is classified as Level 3 in the fair value hierarchy. The fair value is measured based on a Monte Carlo simulation. This amount represents the estimated fair value at the time of the acquisition. For more information on the fair value of the Accu-Trade contingent consideration, see Note 4 (Fair Value Measurements). (3) Assets acquired primarily consist of accounts receivable. (4) Preliminary information regarding the identifiable intangible assets acquired is as follows: Acquisition-Date Amortization Period Acquired software $ 12,926 5 Trade name 1,446 10 Customer relationships 1,307 7 Total $ 15,679 (5) Total liabilities assumed primarily consist of accounts payable. In connection with the Accu-Trade Acquisition, the Company recorded goodwill in the amount of $ 76.9 million, which is primarily attributable to sales growth from existing and future technology, product offerings, customers and the value of the acquired assembled workforce. All of the goodwill is considered deductible for income tax purposes. The Accu-Trade Acquisition would have had an immaterial impact on the Company’s Consolidated financial statements for the year ended December 31, 2021 and 2020. CreditIQ Acquisition. On November 5, 2021, the Company acquired all of the outstanding stock of CreditIQ, (the “CIQ Acquisition”) an automotive fintech platform that provides instant online loan screening and approvals to facilitate online car buying. Through the CIQ Acquisition, the Company now provides dealers with access to advanced digital financing technology across the CARS platform. The Company expensed as incurred total acquisition costs of $ 1.3 million during the year ended December 31, 2021. These costs were recorded in General and administrative in the Consolidated Statements of Income (Loss). In connection with the CIQ Acquisition, CreditIQ’s unvested equity awards were cash settled for a total of $ 9.6 million. The fair value of these awards was based on the price paid per common share to the owners of the acquired business and recognized immediately after the CIQ Acquisition as compensation expense in the Company’s Consolidated Statements of Income (Loss). Purchase Price Allocation. The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were determined based on management’s final estimates and assumptions, as well as other information compiled by management, including third-party valuations that utilize customary valuation procedures and techniques, such as the multi-period excess earnings and the relief of royalty methods. The CIQ Acquisition purchase price allocation is as follows (in thousands): Acquisition-date Cash consideration (1) $ 29,965 Contingent consideration (2) 23,805 Cash settlement of CIQ Acquisition's unvested equity awards (3) ( 9,626 ) Total purchase consideration $ 44,144 Assets acquired (4) $ 193 Identified intangible assets (5) 19,900 Total assets acquired 20,093 Total liabilities assumed (6) (7) ( 1,945 ) Net identifiable assets 18,148 Goodwill (7) 25,996 Total purchase consideration $ 44,144 (1) A reconciliation of cash consideration to Payments for the CIQ Acquisition, net of cash acquired in the Consolidated Statements of Cash Flows is as follows (in thousands): Cash consideration $ 29,965 Less: Cash settlement of CIQ Acquisition's unvested equity awards (3) ( 9,626 ) Less: Cash acquired ( 81 ) Payments for CIQ Acquisition, net of cash acquired $ 20,258 (2) As part of the CIQ Acquisition, the Company may be required to pay up to an additional $ 50.0 million in cash consideration to the former owners based on two earn-out achievement objectives, including an earnings-related metric and lender market share. The actual amount to be paid will be based on the acquired business’s future performance to be attained over a three-year performance period. The fair value was estimated utilizing a Monte Carlo simulation or a scenario-based method, depending on the achievement objective. For more information on the fair value of the CIQ contingent consideration, see Note 4 (Fair Value Measurements). (3) In connection with the Acquisition, CreditIQ’s unvested equity awards were cash settled. The fair value of these awards was $ 9.6 million and was based on the price paid per common share to the owners of the acquired business and recognized immediately after the Acquisition as compensation expense in General and administrative expense on the Company’s Consolidated Statements of Income (Loss). (4) Assets acquired includes cash and cash equivalents, accounts receivable and other identifiable assets. (5) Information regarding the identifiable intangible assets acquired is as follows: Acquisition-Date Weighted-Average Trade name $ 900 10 Acquired software 19,000 5 Total $ 19,900 (6) Total liabilities assumed includes accounts payable, deferred income tax liabilities, net and other liabilities. (7) During the year ended December 31, 2022, the Company recorded a $ 0.2 million purchase accounting adjustment. In connection with the CIQ Acquisition, the Company recorded goodwill in the amount of $ 26.0 million, which is primarily attributable to sales growth from existing and future technology, product offerings, customers and the value of the acquired assembled workforce. All of the goodwill is considered non-deductible for income tax purposes. The CIQ Acquisition would have had an immaterial impact on the Company’s Consolidated financial statements for the year ended December 31, 2021 and 2020. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Note 4. Fair Value Measurements The Company's contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands): Fair value measurement at reporting date Total as of Level 1 Level 2 Level 3 Contingent consideration $ 55,871 $ — $ — $ 55,871 Total $ 55,871 $ — $ — $ 55,871 Fair value measurement at reporting date Total as of Level 1 Level 2 Level 3 Contingent consideration $ 23,805 $ — $ — $ 23,805 Total $ 23,805 $ — $ — $ 23,805 The rollforward of the Level 3 contingent consideration from December 31, 2021 is as follows (in thousands): As of Addition Related to Fair Value (1) As of Contingent consideration $ 23,805 $ 23,936 $ 8,130 $ 55,871 (1) Fair value adjustments on contingent considerations are reflected within Other expense, net in the Consolidated Statements of Income (Loss). 9.4 million and $ 46.5 million were included within Other accrued liabilities and Other noncurrent liabilities on the Consolidated Balance Sheets. As of December 31, 2021, $ 23.8 million was included within Other noncurrent liabilities on the Consolidated Balance Sheets. The significant inputs and assumptions that were used in the contingent consideration valuations as of December 31, 2022 related to volatility ranged from 25 % to 49 %. We expect to make payments on the contingent consideration in 2023, 2024 and 2025. For more information relating to contingent consideration, see Note 3 (Business Combinations ). |
Revenue
Revenue | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Note 5. Revenue Revenue Summary . In the table below (in thousands), revenue is disaggregated by major products and services. The Company only has one reportable segment; therefore, further disaggregation is not applicable at this time. Year Ended December 31, Major products and services 2022 2021 2020 Subscription advertising and digital solutions $ 540,829 $ 518,270 $ 436,441 Display advertising 88,397 85,169 84,630 Pay per lead 9,351 12,346 18,557 Other 15,299 7,898 7,875 Total revenue $ 653,876 $ 623,683 $ 547,503 |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Note 6. Goodwill and Other Intangible Assets, net Goodwill and Indefinite-Lived Intangible Asset Summary. The changes in the carrying amount of goodwill and indefinite-lived intangible asset are as follows (in thousands): Goodwill Cars.com December 31, 2020 $ — $ 390,020 Additions (1) 26,227 — December 31, 2021 $ 26,227 $ 390,020 Additions (1) 76,860 — Adjustments (2) ( 231 ) — December 31, 2022 $ 102,856 $ 390,020 (1) In connection with the CreditIQ and Accu-Trade acquisitions, the Company recorded preliminary goodwill in the amount of $ 26.2 million and $ 76.9 million, respectively. No impairment was noted for the years ended December 31, 2022 and 2021. For more information on the acquisition, see Note 3 (Business Combinations). (2) During the year ended December 31, 2022, the Company recorded a purchase accounting adjustment related to CreditIQ. Goodwill and Indefinite-Lived Intangible Asset 2020 Impairments. In March 2020, the Company determined there was a triggering event, caused by the economic impacts of the COVID-19 pandemic and related restrictions. In March 2020, the World Health Organization categorized COVID-19 as a pandemic, and it has since spread throughout the United States and the rest of the world with different geographical locations impacted more than others. The pandemic resulted in governmental authorities around the country implementing numerous measures to contain the virus, such as quarantines, shelter-in-place orders and business shutdowns (the “related restrictions”). The related restrictions have had, and the Company expects they will continue to have, a negative impact on regional and national economies and the automotive industry for an uncertain duration. During the first quarter of 2020, the COVID-19 pandemic and related restrictions caused a widespread increase in unemployment and resulted in reduced consumer spending and an economic recession. As a result of overall uncertainty related to the automotive industry, in the second half of March 2020, the Company’s customers began to adjust, reduce or suspend their operating and marketing activities. This resulted in decreased subscription revenue and reduced demand for the Company’s services. The effects of the COVID-19 pandemic, particularly reduced consumer spending and the discounts that the Company provided its dealer customers in the second quarter of 2020, negatively impacted its results of operations, cash flows and financial position. Thus, the amount and timing of future cash flows, used in the valuation models to estimate the fair value of the Company’s assets, were significantly and negatively impacted by the COVID-19 pandemic. The Company performed interim quantitative impairment tests as of March 31, 2020. The results of the goodwill and indefinite-lived intangible asset impairment tests indicated that the carrying values exceeded the estimated fair values and thus, the Company recorded an impairment of $ 505.9 million and $ 400.0 million related to its goodwill and indefinite-lived intangible asset, respectively. This impairment charge reduced the goodwill balance to zero at March 31, 2020. 2021 and 2022 Goodwill and Indefinite-Lived Intangible Asset Impairment Test. The Company performed impairment tests for goodwill and the indefinite-lived intangible asset. The Company performed a qualitative assessment that considers events and circumstances such as macroeconomic conditions, industry and market conditions, cost factors and overall financial performance, as well as company specifications. After performing this assessment, the Company concluded there were no indicators of impairment and therefore, the Company did not perform a quantitative test and did not record an impairment to goodwill or the indefinite-lived intangible asset. Definite Lived Intangible Assets . The Company’s definite-lived intangible assets by major asset class are as follows (in thousands): December 31, 2022 December 31, 2021 Gross Accumulated Net Gross Accumulated Net Customer relationships $ 833,847 $ ( 556,053 ) $ 277,794 $ 832,540 $ ( 487,782 ) $ 344,758 Acquired software 73,626 ( 48,288 ) 25,338 60,700 ( 40,981 ) 19,719 Other trade names 26,246 ( 12,310 ) 13,936 24,800 ( 9,873 ) 14,927 Content library 2,100 ( 2,100 ) — 2,100 ( 2,100 ) — Total $ 935,819 $ ( 618,751 ) $ 317,068 $ 920,140 $ ( 540,736 ) $ 379,404 As of December 31, 2022, projected annual amortization expense for amortizable intangible assets is as follows (in thousands): 2023 $ 76,634 2024 74,028 2025 59,285 2026 37,876 2027 31,619 Thereafter 37,626 Total $ 317,068 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Note 7. Debt Credit Agreement. On May 31, 2017, the Company and certain of its domestic wholly-owned subsidiaries (collectively, the “Guarantors”) entered into what was originally a $900 million Credit Agreement (the “Credit Agreement”) with the lenders named therein. Subsequent to the initial Credit Agreement, the Company has entered into three amendments. The Credit Agreement’s initial maturity was May 31, 2022 and originally included (a) revolving loan commitments in an aggregate principal amount of up to $ 450 million (of which up to $ 25 million may be in the form of letters of credit at its request) and (b) term loans in an aggregate principal amount of $ 450 million. Interest on the borrowings under the Credit Agreement is payable based on either (i) the London Interbank Offered Rate (“LIBOR”) or (ii) the Alternate Base Rate (“ABR”), as defined in the Credit Agreement, in either case plus an applicable margin and fees which, after the second full fiscal quarter following the closing date, was based upon its Total Net Leverage Ratio. The Credit Agreement required a maximum Total Net Leverage Ratio of 4.25 x with an incremental step down to 3.75 x on or after May 31, 2019 and a minimum Interest Coverage Ratio of 3.0 x (each as defined in the Credit Agreement). The Credit Agreement allowed for with a temporary step up to the maximum Total Net Leverage Ratio for material permitted acquisitions. First Amendment. In October 2019, the Company entered into an amendment to its Credit Agreement to increase the maximum Total Net Leverage Ratio to 4.50 x for periods ending on or after December 31, 2019, with step downs through maturity, while preserving the favorable pricing structure from the original agreement. Second Amendment. In June 2020, the Company entered into an amendment to provide flexibility during the uncertain COVID-19 period which provided for a waiver with respect to the Total Net Leverage Ratio and Consolidated Interest Coverage Ratio financial covenants for the covenant testing periods through December 31, 2020 (the “Covenant Adjustment Period”). The Second Amendment also included the following: • A revised maximum permitted Total Net Leverage Ratio beginning March 31, 2021 (after the Covenant Adjustment Period) of 6.50 x, with step downs thereafter; • A revised minimum permitted Consolidated Interest Coverage Ratio beginning March 31, 2021 (after the Covenant Adjustment Period) of 2.75 x and 3.00 x beginning June 30, 2020; • A LIBOR floor of 0.75 %; • A minimum liquidity requirement of $ 75.0 million and the addition of an anti-cash hoarding covenant, which requires, during the Covenant Adjustment Period, mandatory prepayments of the Revolving Credit Facility with the amount of any unrestricted cash in excess of $ 75.0 million; and • A revised interest rate grid updated to reflect a maximum ABR margin of 1.50 % and a maximum Eurodollar margin of 2.50 %; during the Covenant Adjustment Period the applicable margins were increased by 0.50 %. Third Amendment. On October 30, 2020, the Company entered into the Third Amendment to its Credit Agreement in connection with a broader refinancing, in which the Company reduced the size of the outstanding borrowings under the Credit Agreement to an aggregate principal amount of $ 430.0 million, comprised of a $ 230.0 million Revolving Credit Facility and a $ 200.0 million Term Loan, and extended the maturity date to May 31, 2025 . The Third Amendment also included the following: • A maximum Senior Secured Leverage Ratio of 3.50 x (as defined within the Credit Agreement, as amended), with a temporary step up for material permitted acquisitions; • A minimum Interest Coverage Ratio of 2.75 x and 3.00 x beginning June 30, 2023; • A revised interest rate grid updated to reflect a maximum ABR margin of 1.75 % and a maximum Eurodollar margin of 2.75 %; • Reduction of the LIBOR floor to 0.50 %; • Certain modifications to negative covenants restricting additional indebtedness, investments, acquisitions, debt repayments and certain dividends and distribution; • Provisions to accommodate the replacement of the existing LIBOR Rate with a successor benchmark interest rate; and • Ended the Covenant Adjustment Period and removed the related minimum liquidity requirement and anti-cash hoarding covenant that were implemented pursuant to the Second Amendment. Term Loan. As of December 31, 2022, the outstanding principal amount under the Term Loan was $ 66.3 million and the interest rate in effect was 6.7 %. During the year ended December 31, 2022, the Company made $ 11.3 million in Term Loan payments. Revolving Loan. As of December 31, 2022, the outstanding borrowings under the Revolving Loan were $ 15.0 million and the interest rate in effect was 6.4 %. During the twelve months ended December 31, 2022, the Company borrowed $ 45.0 million and made $ 30.0 million in Revolving Loan payments. As of December 31, 2022, $ 215.0 million was available to borrow under the Revolving Loan. The Company’s borrowings are limited by its Senior Secured Leverage Ratio and Consolidated Interest Coverage Ratio, which are calculated in accordance with our Credit Agreement, and were 0.4 x and 5.7 x as of December 31, 2022, respectively. Senior Unsecured Notes. In October 2020, the Company issued $ 400.0 million aggregate principal amount of 6.375 % senior unsecured notes due 2028. Interest on the notes is due semi-annually on May 1 and November 1. Debt Issuance Costs. Debt issuance costs related to the various amendments and issuances were $ 11.1 million and $ 14.3 million as of December 31, 2022 and December 31, 2021, respectively. Depending on the nature of the debt issuance costs and the underlying debt to which it relates, they are recorded as either a reduction of debt and accreted using the effective interest method or as a deferred asset and accreted using the straight-line method with the amortization recorded in Interest expense, net on the Consolidated Statements of Income (Loss). Debt Extinguishment. The Third Amendment resulted in a partial extinguishment of $ 1.8 million of the previously capitalized debt issuance costs which is included in Other expense, net in the Consolidated Statements of Income (Loss) for the year ended December 31, 2020. Debt Guarantors, Collateral, Covenants and Restrictions. The obligations under the debt agreements are guaranteed by the Company and its subsidiary guarantors. The Guarantors secured their respective obligations under the debt agreements by granting liens in favor of the agent on substantially all of their assets. The terms of the debt agreement include representations and warranties, affirmative and negative covenants (including certain financial covenants) and events of default that are customary for credit facilities of this nature. The negative covenants place restrictions and limitations on the Company’s ability to incur additional indebtedness, make distributions or other restricted payments, create liens, make certain equity or debt investments, engage in mergers or consolidations and engage in certain transactions with affiliates. As of December 31, 2022, the Company is in compliance with the covenants under its debt agreements. Long-term Debt Maturities. Long-term debt includes future principal payments on long-term borrowings through scheduled maturity dates. Excluded from these amounts are the amortization of debt issuance and other costs related to indebtedness. As of December 31, 2022, the Company’s contractual payments under then-outstanding long-term debt agreements in each of the next five calendar years and thereafter are as follows (in thousands): 2023 $ 16,250 2024 20,000 2025 45,000 2026 — 2027 — Thereafter 400,000 Total $ 481,250 |
Interest Rate Swap
Interest Rate Swap | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Interest Rate Swap | Note 8. Interest Rate Swap The interest rate on borrowings under the Company’s Term Loan is floating and, therefore, subject to fluctuations. In order to manage the risk associated with changes in interest rates on its borrowing under the initial Term Loan, the Company entered into an interest rate swap (the “Swap”) effective December 31, 2018. Under the terms of the Swap, the Company is locked into a fixed rate of interest of 2.96 %, on a notional amount of $ 300 million until May 31, 2022. The Swap was initially designated as a cash flow hedge of interest rate risk. During the second quarter of 2020, the Company entered into the second amendment to the Credit Agreement, which triggered a quantitative hedge effectiveness test that resulted in the loss of hedge accounting. As a result, as of the date of the second amendment, the unrealized loss included within Accumulated other comprehensive loss was frozen and then was ratably reclassified into Net income (loss) over the remaining life of the Swap through Interest expense, net and Income tax expense (benefit) within the Consolidated Statements of Income (Loss). Subsequent to the second amendment, any changes in the fair value of the Swap were recorded within Other expense, net on the Consolidated Statements of Income (Loss). During the fourth quarter of 2020, the Company entered into the third amendment to the Credit Agreement, which triggered a partial debt extinguishment, including a partial extinguishment of the underlying Term Loan. Due to the reduction in the Term Loan as compared to the notional amount of the Swap, the Company wrote-off a proportional amount of the frozen Accumulated other comprehensive loss balance as of the date of the partial extinguishment proportional to the reduction in the underlying notional amount of Term Loan. The Company will continue to amortize the remaining Accumulated other comprehensive loss to Interest expense, net and Income tax expense (benefit) within the Consolidated Statements of Income (Loss) through the remainder of the term of the Swap. Any changes in the fair value of the Swap will continue to be recorded within Other expense, net on the Consolidated Statements of Income (Loss). The Swap expired on May 31, 2022 and, as such, is no longer recorded on the Consolidated Balance Sheets. As of December 31, 2021, the fair value of the Swap was an unrealized loss of $ 3.5 million, which is recorded in Other accrued liabilities on the Consolidated Balance Sheets. During the years ended December 31, 2022, 2021 and 2020, $ 2.4 million, $ 5.7 million and $ 11.1 million was reclassified from Accumulated other comprehensive loss and recorded in Interest expense, net, respectively. During the years ended December 31, 2022, 2021 and 2020 the Company made payments of $ 3.3 million, $ 8.6 million and $ 7.0 million related to the Swap. During the years ended December 31, 2022, 2021 and 2020, $ 0.4 million, $ 0.9 million and $ 1.3 million was reclassified as a tax benefit from Accumulated other comprehensive loss into Income tax expense (benefit) on the Consolidated Statements of Income (Loss). |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Leases | Note 9. Leases Leases. The Company is obligated as a lessee under certain non-cancelable operating leases for office space, and is also obligated to pay insurance, maintenance and other executory costs associated with the leases. In May 2016, the Company entered into a lease of office space in Chicago, Illinois, which is our most material lease. The lease extends through June 2031 and monthly rental payments under the lease escalate by 2.5 % each year throughout the lease. As of December 31, 2022, the Company’s scheduled future minimum lease payments under operating leases having initial noncancelable lease terms of more than one year, is as follows (in thousands): 2023 $ 4,042 2024 4,154 2025 4,570 2026 4,684 2027 3,991 Thereafter 17,750 Total minimum lease payments 39,191 Less: Imputed interest (1) ( 10,652 ) Present value of the minimum lease payments 28,539 Less: Current maturities of lease obligations ( 1,984 ) Long-term lease obligations $ 26,555 (1) The Company’s lease agreements do not provide a readily determinable implicit rate nor is it available from the Company’s lessors. Therefore, in order to discount lease payments to present value, the Company has estimated its incremental borrowing rate based on information available at either the lease transition date (for those leases that commenced prior to January 1, 2019) or the lease commencement date (for those leases that commenced after January 1, 2019). As of December 31, 2022 and 2021, the Company’s operating lease assets, included in Investments and other assets , net, were $ 13.7 million and $ 14.6 million, respectively, and operating lease liabilities were $ 28.5 million and $ 30.8 million, respectively, the current maturities of which is included in Other accrued liabilities and the long-term portion of which is included in Other noncurrent liabilities . The difference between the operating lease assets and the operating lease liabilities is primarily due to a lease incentive received in 2017 related to the lease in Chicago, Illinois. Other information related to the Company’s operating leases for the years ended December 31, 2022, 2021 and 2020 is as follows (in thousands, except months and percentages): Year Ended December 31, Income statement information: 2022 2021 2020 Operating lease cost $ 2,993 $ 3,541 $ 3,848 Short-term lease cost 137 600 856 Variable lease cost 3,443 3,034 2,834 Total lease cost $ 6,573 $ 7,175 $ 7,538 Other information: Cash paid for operating leases $ 4,470 $ 4,856 $ 3,320 Weighted-average remaining lease term (in months) 101 112 122 Weighted-average discount rate as of December 31, 7.5 % 7.4 % 7.4 % |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingences | Note 10. Commitments and Contingencies From time to time, the Company and its subsidiaries are parties in legal and administrative proceedings involving matters incidental to its business. These matters, whether pending, threatened or unasserted, if decided adversely to the Company or settled, may result in liabilities material to its financial position, results of operations or cash flows. The Company records a liability when it believes that it is both probable that a loss will be incurred and the amount of loss can be reasonably estimated. The Company evaluates, at least quarterly, developments in its legal matters that could affect the amount of liability that has been previously accrued and makes adjustments as appropriate. Significant judgment is required to determine both the probability and the estimated amount. |
Stockholders Equity
Stockholders Equity | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Stockholders Equity | Note 11. Stockholders' Equity In February 2022, the Company's Board of Directors authorized a three-year share repurchase program to acquire up to $ 200 million of the Company 's common stock. The Company may repurchase shares from time to time in open market transactions or through privately negotiated transactions in accordance with applicable federal securities laws and other applicable legal requirements and subject to the Company's blackout periods. The timing and amounts of any purchases under the share repurchase program will be based on market conditions and other factors, including price. The repurchase program may be suspended or discontinued at any time and does not obligate the Company to repurchase any dollar amount or particular amount of shares. The Company funds the share repurchase program principally with cash from operations. During the year ended December 31, 2022, the Company repurchased and subsequently retired 4.2 million shares for $ 49.0 million at an average price per share of $ 11.75 . |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Note 12. Stock-Based Compensation Omnibus Plan. In May 2017, the Company’s Board of Directors approved the Cars.com Inc. Omnibus Incentive Compensation Plan (the “Omnibus Plan”), which provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and other stock-based and cash-based awards. A maximum of 18.0 million common shares may be issued under the Omnibus Plan. As of December 31, 2022, there were 6.8 million common shares available for future grants. The Company issues new shares of CARS common stock for shares delivered under the Omnibus Plan. Information related to stock-based compensation expense is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Stock-based compensation expense $ 22,342 $ 21,431 $ 15,155 Income tax benefit related to stock-based — — — S tock-based compensation expense by financial statement line item on the Company’s Consolidated Statements of Income (Loss) is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Cost of revenue and operations $ 955 $ 876 $ 593 Product and technology 6,647 5,455 3,314 Marketing and sales 4,921 5,202 3,612 General and administrative 9,819 9,898 7,636 Total $ 22,342 $ 21,431 $ 15,155 For the years ended December 31, 2022 excluded from stock-based compensation expense is $ 0.1 million of capitalized internally developed technology costs. Information related to outstanding stock-based compensation awards as of December 31, 2022 for restricted share units (“RSUs”), performance share units (“PSUs”), stock options and the Cars.com Employee Stock Purchase Plan (“ESPP”) is as follows (in thousands, except for weighted-average remaining period): Unearned Weighted-Average RSUs $ 29,099 2.0 PSUs 533 2.2 Stock Options 2,993 1.7 ESPP 251 0.3 Total $ 32,876 Restricted Share Units ("RSUs"). RSUs represent the right to receive unrestricted shares of the Company’s common stock at the time of vesting, subject to any restrictions as specified in the individual holder’s award agreement. RSUs are subject to graded vesting, generally ranging between one and four years and the fair value of the RSUs is equal to the Company's common stock price on the date of grant. RSU activity for the year ended December 31, 2022 is as follows (in thousands, except for weighted-average grant date fair value): Number Weighted-Average Outstanding as of December 31, 2021 3,683 $ 10.95 Granted 2,526 14.21 Vested and delivered ( 1,598 ) 10.65 Forfeited ( 840 ) 12.68 Outstanding as of December 31, 2022 (1) 3,771 12.88 (1) Includes 63 RSUs that were vested, but not yet delivered. The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2021 and 2020 was $ 14.94 and $ 5.87 , respectively. The total grant-date fair value of RSUs that vested during the years ended December 31, 2022, 2021 and 2020 was $ 16.9 million, $ 14.7 million and $ 8.9 million, respectively. Performance Share Units. PSUs represent the right to receive unrestricted shares of the Company’s common stock at the time of vesting. The fair value of the PSUs is equal to the Company’s common stock price on the date of grant. Expense related to PSUs is recognized when the performance conditions are probable of being achieved. The percentage of PSUs that shall vest will range from 0 % to 200 % of the number of PSUs granted based on the Company’s future performance related to certain revenue and adjusted earnings before interest, income taxes, depreciation and amortization targets over a three-year performance period. These PSUs are subject to cliff vesting after the end of the respective performance period. PSU activity for the year ended December 31, 2022 is as follows (in thousands, except for weighted-average grant date fair value): Number Weighted-Average Outstanding as of December 31, 2021 142 $ 23.98 Granted 305 14.84 Vested and delivered ( 142 ) 23.98 Forfeited ( 60 ) 15.07 Outstanding as of December 31, 2022 245 14.78 Stock Options. Stock options represent the right to purchase shares of the Company’s common stock at the time of vesting, subject to any restrictions as specified in the individual holder’s award agreement. Stock options are subject to three-year cliff vesting and expire 10 years from the grant date. Stock option activity for the year ended December 31, 2022 is as follows (in thousands, except for weighted-average grant date fair value and weighted-average remaining contractual term): Number Weighted-Average Weighted-Average Aggregate Outstanding as of December 31, 2021 804 $ 5.27 8.58 $ 5,754 Granted 263 9.39 — — Exercised — — — — Forfeited — — — — Outstanding as of December 31, 2022 1,067 6.28 7.98 4,296 Exercisable as of December 31, 2022 — — — — The fair value of the stock options granted during the years ended December 31, 2022, 2021 and 2020 are estimated on the grant date using the Black-Scholes option pricing model, using the following assumptions: 2022 2021 2020 Risk-free interest rate 2.21 % 1.15 % 1.01 % Weighted-average volatility 65.22 % 69.00 % 53.08 % Dividend yield 0 % 0 % 0 % Expected years until exercise 6.5 6.5 6.5 Employee Stock Purchase Plan ("ESPP"). Eligible employees may authorize payroll deductions of up to 10 % of the employee’s base earnings with a maximum of $ 10,000 per every six-month offering period to purchase CARS common stock at a purchase price per share equal to 85 % of the lower of (i) the closing market price per share of CARS at the beginning of the offering period or (ii) the closing market price per share at the end of the offering period. A maximum of three million shares are available for issuance under the ESPP. As of December 31, 2022, 2.1 million shares were available for issuance under the ESPP. The Company issued 0.2 million, 0.2 million and 0.3 million shares related to the ESPP and recorded $ 0.6 million, $ 0.7 million and $ 0.7 million of stock-based compensation expense related to the ESPP for the years ended December 31, 2022, 2021 and 2020, respectively. |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
(Loss) Earnings Per Share | Note 13. Earnings (Loss) Per Share Basic earnings (loss) per share is calculated by dividing Net income (loss) by the weighted-average number of shares of common stock outstanding. Diluted earnings (loss) per share is similarly calculated, except that the calculation includes the dilutive effect of the assumed issuance of shares under stock-based compensation plans, unless the inclusion of such shares would have an anti-dilutive impact. As part of the Accu-Trade Acquisition, the Company may pay up to $ 15.0 million of the contingent consideration in stock at a future date. Those potential shares have been excluded from the computations below because they are contingently issuable shares, and the contingency to which the issuance relates was not met at the end of the reporting period . The computations of the Company’s basic and diluted earnings (loss) per share is as follows (in thousands, except per share amounts): Year Ended December 31, 2022 2021 2020 Net income (loss) $ 17,206 $ 10,791 $ ( 789,106 ) Basic weighted-average common shares outstanding 68,215 68,727 67,241 Effect of dilutive stock-based compensation awards (1) 1,434 2,610 — Diluted weighted-average common shares outstanding 69,649 71,337 67,241 Earnings (loss) per share, basic $ 0.25 $ 0.16 $ ( 11.74 ) Earnings (loss) per share, diluted 0.25 0.15 ( 11.74 ) (1) There were 2,033, 1,304 and 2,727 potential common shares excluded from diluted weighted-average common shares outstanding for the years ended December 31, 2022, 2021 and 2020 respectively, as their inclusion would have had an anti-dilutive effect. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 14. Income Taxes Selected Information Related to Income Taxes. Significant components of Income (Loss) before income taxes are as follows (in thousands): Year Ended December 31, 2022 2021 2020 U.S. $ 22,533 $ 9,444 $ ( 938,248 ) Non-U.S. 43 39 1,839 Income (loss) before income taxes $ 22,576 $ 9,483 $ ( 936,409 ) Year Ended December 31, 2022 2021 2020 Current: U.S. federal $ 2,991 $ 516 $ ( 13,799 ) U.S. state and local 1,122 1,267 715 Non-U.S. ( 26 ) ( 164 ) 164 Total current income tax expense (benefit) 4,087 1,619 ( 12,920 ) Deferred: U.S. federal 579 ( 2,599 ) ( 100,211 ) U.S. state and local 671 ( 332 ) ( 34,181 ) Non-U.S. 33 4 9 Total deferred income tax expense (benefit) 1,283 ( 2,927 ) ( 134,383 ) Income tax expense (benefit) $ 5,370 $ ( 1,308 ) $ ( 147,303 ) The income tax provision differed from amounts computed at the statutory federal income tax rate, as follows (in thousands, except percentages): Year Ended December 31, 2022 2021 2020 $ % $ % $ % Income tax provision (benefit) at statutory rate $ 4,743 21.0 % $ 1,994 21.0 % $ ( 196,646 ) 21.0 % State income taxes, net of federal income tax expense (benefit) 1,122 5.0 378 4.0 ( 37,566 ) 4.0 Nondeductible executive compensation 1,974 8.7 1,365 14.4 625 ( 0.1 ) Nondeductible transaction expenses ( 2,608 ) ( 11.6 ) 2,638 27.8 — — Tax credits ( 1,455 ) ( 6.4 ) ( 2,379 ) ( 25.1 ) ( 2,375 ) 0.3 Goodwill impairment — — — — ( 13,683 ) 1.5 Effect of change in apportionment factors — — — — ( 2,228 ) 0.2 NOL carrybacks rate differential — — — — ( 3,270 ) 0.3 Stock-based compensation ( 1,432 ) ( 6.3 ) ( 3,010 ) ( 31.7 ) 1,062 ( 0.1 ) Return to provision adjustments 4,627 20.5 ( 453 ) ( 4.8 ) ( 289 ) — Uncertain tax positions ( 4,042 ) ( 17.9 ) 1,551 16.4 1,317 ( 0.1 ) Valuation allowance 1,194 5.3 ( 3,943 ) ( 41.6 ) 106,042 ( 11.3 ) Other, net 1,247 5.5 551 5.8 ( 292 ) — Income tax expense (benefit) $ 5,370 23.8 % $ ( 1,308 ) ( 13.8 ) % $ ( 147,303 ) 15.7 % Deferred Tax Assets and Liabilities. The Company has recorded deferred tax assets related to federal and state income tax net operating loss (“NOL”) carryforwards of approximately $ 2.5 million and $ 10.6 million as of December 31, 2022, and 2021, respectively. The federal NOL, and a small portion of the state NOLs, can be carried forward indefinitely, although certain jurisdictions, including federal and numerous states, limit NOL carryforwards to a percentage of current year taxable income. The Company also has recorded deferred tax assets related to federal and state research and development (“R&D”) tax credit carryforwards of $ 1.2 million and $ 4.2 million, net of uncertain tax positions, as of December 31, 2022, and 2021, respectively. The federal and state R&D tax credits generally may be carried forward 20 years and 5 years, respectively. The Tax Cuts and Jobs Act enacted in December 2017, amended Internal Revenue Code Section 174 to require that specific research and experimental expenditures be capitalized and amortized over five years (15 years for non-U.S. R&D expenditures) beginning in the Company’s 2022 fiscal year. Significant components of the deferred tax assets and liabilities are as follows (in thousands): December 31, 2022 2021 Deferred income tax liabilities: Definite lived intangibles $ — $ ( 16,973 ) Depreciation ( 5,787 ) ( 8,428 ) Indefinite lived intangibles ( 4,237 ) — Right of use assets ( 3,445 ) ( 3,687 ) Other ( 2,833 ) ( 1,708 ) Total deferred tax liabilities $ ( 16,302 ) $ ( 30,796 ) Deferred income tax assets: Accrued compensation $ 8,748 $ 10,613 Capitalized research and development costs 15,242 — Definite lived intangibles 239 — Goodwill 79,994 91,756 Indefinite lived intangibles — 5,734 Lease obligations 7,161 7,762 NOL and tax credit carryforwards 3,688 14,804 Other 3,171 2,286 Total deferred tax assets $ 118,243 $ 132,955 Less: Valuation allowance ( 103,294 ) ( 102,099 ) Net deferred tax (liability) asset $ ( 1,353 ) $ 60 The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2022 and 2021 were as follows (in thousands): December 31, 2022 2021 Investments and other assets, net $ 48 $ 60 Other noncurrent liabilities ( 1,401 ) — Net deferred tax (liability) asset $ ( 1,353 ) $ 60 Uncertain Tax Positions. A summary of the Company’s uncertain tax positions is as follows (in thousands): Year Ended December 31, 2022 2021 Balance as of January 1 $ 9,851 $ 8,788 Additions based on tax positions related to the current year 382 550 Additions for tax positions of prior years 294 862 Reductions for tax positions of prior years ( 7,974 ) ( 349 ) Balance as of December 31 $ 2,553 $ 9,851 The Company believes it is reasonably possible that within the next twelve months the amount of the Company's uncertain tax positions may be decreased by approximately $ 0.4 million. The Company has recorded its best estimate of the potential exposure for these issues. As of December 31, 2022, 2021 and 2020, the Company had $ 0.3 million, $ 2.6 million, and $ 1.6 million, respectively, of uncertain tax positions that if recognized, would affect the annual tax rate. The Company files a consolidated U.S. federal income tax return as well as income tax returns in various state and local jurisdictions. The Company's tax returns are routinely audited by federal and state tax authorities and these tax audits are at various stages of completion at any given time. The Company’s tax returns open to examination by a federal or state taxing authority are for years beginning on or after January 1, 2017. |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | Note 15. Segment Information Operating segments are components of an enterprise where separate financial information is available that is evaluated regularly by the chief operating decision maker (the “CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM is the CARS Chief Executive Officer. The CODM makes resource allocation decisions to maximize the Company’s consolidated financial results. For the years ended December 31, 2022, 2021 and 2020, the Company had one operating and reportable segment. For the years ended December 31, 2022, 2021 and 2020, the Company did not have any one customer that generated greater than 10% of total revenue. Substantially all revenue and long-lived assets were generated and located within the U.S. |
Schedule II Valuation and Quali
Schedule II Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2021 | |
SEC Schedule, 12-09, Valuation and Qualifying Accounts [Abstract] | |
Schedule II Valuation and Qualifying Accounts | Schedule II Valuation and Qualifying Accounts For the Years Ended December 31, 2022, 2021 and 2020 (In thousands) Description Balance at Additions Write-offs Recoveries Balance at Allowance for doubtful accounts: 2022 $ 1,665 $ 1,888 $ ( 2,314 ) $ 651 $ 1,890 2021 4,364 164 ( 3,268 ) 405 1,665 2020 5,045 4,380 ( 5,330 ) 269 4,364 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation . These accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the SEC. The Consolidated Financial Statements include the accounts of CARS and its 100 % owned subsidiaries. All intercompany transactions and accounts have been eliminated in consolidation. |
Use of Estimates | Use of Estimates. The preparation of the accompanying Consolidated Financial Statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying disclosures. Although these estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future, actual results may differ from those estimates. |
Reclassifications | Reclassifications . Certain prior year balances have been reclassified to conform to the current year presentation. |
Revenue | Revenue. The Company accounts for a customer arrangement when the Company and the customer have an approved contract that specifies the rights and obligations of each party and the payment terms, and the Company believes it is probable that the Company will collect substantially all of the consideration to which the Company will be entitled in exchange for the services that will be provided to the customer. The Company periodically enters into arrangements that include multiple promises that the Company evaluates to determine whether the promises are separate performance obligations. The Company identifies performance obligations based on services to be transferred to a customer that are distinct within the context of the contractual terms. The Company allocates the contractual transaction price to each distinct performance obligation based on the relative standalone selling price and recognizes revenue when it satisfies a performance obligation by providing a service to a customer. Revenue is primarily generated through the Company’s direct sales force. Marketplace Subscription Advertising Revenue. The Company’s primary source of revenue is through the sale of marketplace subscription advertising packages to dealer customers. Our subscription packages allow dealer customers and OEMs to showcase their new and used vehicle inventory to in-market shoppers on the Cars.com website. The subscription packages are generally a fixed price arrangement with varying contract terms, typically ranging from three to six months , that are automatically renewed, typically on a month-to-month basis. The Company recognizes subscription package revenue ratably as the service is provided over the contract term. Marketplace subscription advertising revenue is recorded in Dealer revenue in the Consolidated Statements of Income (Loss). The Company also offers its customers several add-on products to the subscription packages, as well as FUEL. Add-on products include premium advertising products that can be uniquely tailored to an individual dealer customer’s current needs. Substantially all of the Company’s add-on products, as well as FUEL, are not sold separately from the subscription packages as the customer cannot benefit from add-on products on their own. Therefore, the subscription packages and add-on products are combined as a single performance obligation, and the Company recognizes the related revenue ratably as the services are provided over the contract term. The Company also provides services, including hosting flexible, custom-designed website platforms supporting highly personalized digital marketing campaigns, digital retailing and messaging platform products. In addition, the Company also provides dealers with vehicle valuation and appraisal services through Accu-Trade. The Company recognizes revenue related to these services ratably as the service is provided over the contract term. The related revenue is recorded in Dealer revenue in the Consolidated Statements of Income (Loss). Display Advertising Products and Services Revenue. The Company also earns revenue through the sale of display advertising on the Company’s website to dealers, OEMs and other national advertisers, pursuant to transaction-based contracts, which are billed for impressions delivered or click-throughs on their advertisements. An impression is the display of an advertisement to an end-user on the website and is a measure of volume. A click-through occurs when an end-user clicks on an impression. The Company recognizes revenue as the impressions or click-throughs are delivered. If the impressions or click-throughs delivered are less than the amount invoiced to the customer, the difference is recorded as deferred revenue and recognized as revenue when earned. The Company recognizes revenue related to these services at the point in time the service is provided. Display advertising products revenue sold to OEMs and other national advertisers is recorded in OEM and National revenue in the Consolidated Statements of Income (Loss). The Company also provides services related to customized digital marketing and customer acquisition services, including paid, organic, social and creative services to dealer customers. The Company recognizes revenue related to these services at the point in time the service is provided. Display advertising products revenue sold to dealers is recorded in Dealer revenue in the Consolidated Statements of Income (Loss). Pay Per Lead Revenue. The Company also sells leads, which are connections from consumers to dealer customers in the form of phone calls, emails and text messages, to dealer customers, OEMs and third-party resellers. The Company recognizes pay per lead revenue primarily on a per-lead basis at the point in time in which the lead has been delivered. Revenue related to pay per lead is recorded in Dealer revenue, OEM and National revenue or Other revenue depending on the customer who is purchasing this product, in the Consolidated Statements of Income (Loss). Other Revenue. Other revenue primarily includes revenue related to vehicle listing data sold to third parties. The Company recognizes other revenue either ratably as the services are provided or at the point in time the services have been performed. In connection with the Accu-Trade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product. The recognition of revenue associated with the license fee is recorded in Other revenue. Other revenue is recorded in Other revenue in the Consolidated Statements of Income (Loss). |
Cash and Cash Equivalents | Cash and Cash Equivalents. All cash balances and liquid investments with original maturities of three months or less on their acquisition date are classified as cash and cash equivalents. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts . Accounts receivable are primarily derived from sales to customers and recorded at invoiced amounts. The allowance for doubtful accounts reflects the Company’s estimate of credit exposure, determined principally on the basis of its collection experience, aging of its receivables, expected losses and any specific reserves needed for certain customers based on their credit risk. Bad debt expense is included in Marketing and sales in the Consolidated Statements of Income (Loss). The allowance for doubtful accounts was $ 1.9 million and $ 1.7 million as of December 31, 2022 and 2021, respectively. |
Concentrations of Credit Risk | Concentrations of Credit Risk. The Company’s financial instruments, consisting primarily of cash and cash equivalents and customer receivables, are exposed to concentrations of credit risk. The Company invests its cash and cash equivalents with highly rated financial institutions. |
Investments | Investments . Investments in non-marketable equity securities are measured at fair value with changes in fair value recognized in Net income (loss). The Company utilizes the measurement alternative for equity investments without readily determinable fair values and revalues these investments upon the occurrence of an observable price change for similar investments. On at least an annual basis, the Company assesses its investments to determine whether any events have occurred, or circumstances have changed, which might have a significant adverse effect on their fair value and which may be indicative of impairment. In the first quarter of 2020, the Company recorded a full impairment of $ 9.4 million, triggered by the novel coronavirus disease 2019 (“COVID-19”) pandemic and the related restrictions, for the year ended December 31, 2020. The impairment was included in the Other expense, net in the Consolidated Statements of Income (Loss). The non-marketable investments recorded within Investments and other assets, net on the Consolidated Balance Sheets were zero as of December 31, 2022 and 2021. For further information on the triggering event, see Note 6 (Goodwill and Other Intangible Assets, net). |
Property and Equipment | Property and Equipment . Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives as follows (in thousands): December 31, Asset 2022 2021 Estimated Useful Life Computer software $ 79,682 $ 65,461 18 months - 5 years Computer hardware 12,550 11,998 3 years - 5 years Leasehold improvements 18,581 18,656 Lesser of useful life or lease term Furniture and fixtures 4,140 4,293 10 years Property and equipment, gross 114,953 100,408 Less: Accumulated depreciation ( 69,735 ) ( 57,403 ) Property and equipment, net $ 45,218 $ 43,005 Normal repairs and maintenance are expensed as incurred. Any resulting gain or loss from the disposition of fixed assets is included in General and administrative expense on the Consolidated Statements of Income (Loss). |
Internally Developed Technology | Internally Developed Technology . The Company capitalizes costs associated with customized internal-use software systems and website development that have reached the application development stage. Such capitalized costs include external direct costs utilized in developing or obtaining the applications and payroll and payroll-related expenses for employees who are directly associated with the applications. Capitalization of such costs begins when the preliminary project stage is complete and ceases at the point in which the project is substantially complete and ready for its intended purpose. The Company reviews the carrying amount of internally developed technology for impairment and useful lives whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Capitalized software costs, excluding cloud computing arrangements, for the years ended December 31, 2022, 2021 and 2020 were $ 18.1 million, $ 17.9 million and $ 16.3 million, respectively. Capitalized costs, excluding those for cloud computing arrangements, are included in Property and equipment, net on the Consolidated Balance Sheets. Research and development costs are expensed as incurred. |
Cloud Computing Arrangements | Cloud Computing Arrangements. The Company capitalizes costs associated with the development of cloud computing arrangements in a manner consistent with internally developed technology. Any amortization is recorded in the same manner on the Consolidated Statements of Income (Loss) as the expense associated with the underlying host arrangement. These capitalized costs as of December 31, 2022 were $ 1.0 million and $ 4.7 million in Prepaid expenses and Investments and other assets, net on the Consolidated Balance Sheets, respectively. These capitalized costs as of December 31, 2021 were $ 0.6 million and $ 2.6 million in Prepaid expenses and Investments and other assets, net on the Consolidated Balance Sheets, respectively. Research and development costs are expensed as incurred. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets . Goodwill represents the excess of acquisition cost over the fair value of assets acquired, including identifiable intangible assets, net of liabilities assumed. Goodwill is tested for impairment on an annual basis or between annual tests if events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company’s goodwill is tested for impairment at a level referred to as the reporting unit. The level at which the Company tested goodwill for impairment requires the Company to determine whether the operations below the business segment level constitute a business for which discrete financial information is available and segment management regularly reviews the operating results. The Company determined that it operated as a single reporting unit. The process of estimating the fair value of goodwill is subjective and required the Company to make estimates that may significantly impact the outcome of the analysis. A qualitative assessment considers events and circumstances such as macroeconomic conditions, industry and market conditions, cost factors and overall financial performance, as well as company specifications. If after performing this assessment, the Company concluded it is more likely than not that the fair value of the reporting unit is less than its carrying amount, then the Company performed the quantitative test. Under the quantitative test, a goodwill impairment is identified by comparing the fair value of the reporting unit to the carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds the fair value of the reporting unit, goodwill is considered impaired and an impairment charge is recognized in an amount equal to the excess, not to exceed the carrying amount of goodwill. If a quantitative test is performed, the Company estimates the fair value of the reporting unit with an income approach using the discounted cash flow (“DCF”) analysis and the Company also considers a market-based valuation methodology using comparable public company trading values and the Company’s market capitalization. Determining fair value requires the exercise of significant judgments, including the amount and timing of expected future cash flows, long-term growth rates, the discount rate and relevant comparable public company earnings multiples. The cash flows employed in the DCF analysis are based on the Company’s best estimate of future sales, earnings and cash flows after considering factors such as general market conditions and recent operating performance. The discount rate utilized in the DCF analysis is based on the reporting unit’s weighted-average cost of capital, which takes into account the relative weights of each component of capital structure (equity and debt) and represents the expected cost of new capital, adjusted as appropriate to consider the risk inherent in future cash flows of the Company’s reporting unit. Impairment assessment inherently involves management judgments regarding a number of assumptions described above. The reporting unit fair value also depends on the future strength of the U.S. economy. New and developing competition as well as technological change could also adversely affect future fair value estimates. Due to the many variables inherent in the estimation of a reporting unit’s fair value and the relative size of the Company’s recorded goodwill, differences in assumptions could have a material effect on the estimated fair values. For further information, see Note 6 (Goodwill and Other Intangible Assets, net). The Company’s indefinite-lived intangible asset relates to the Cars.com trade name. Intangible assets with indefinite lives are tested for impairment annually, or more often if circumstances dictate, and written down to fair value as required. The estimates of fair value are determined using the “relief from royalty” methodology, which is a variation of the income approach. The discount rate assumption is based on an assessment of the risk inherent in the projected future cash flows generated by the trade name intangible asset. Amortizable intangible assets are amortized on a straight-line basis over the estimated useful lives as follows: Intangible Asset Estimated Useful Life Acquired software 2 - 7 years Customer relationships 3 - 14 years Other trade names 10 - 12 years |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets . The Company reviews the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Once an indicator of potential impairment has occurred, the impairment test is based on whether the intent is to hold the asset for continued use or to hold the asset for sale. If the intent is to hold the asset for continued use, the impairment test first requires a comparison of projected undiscounted future cash flows against the carrying amount of the asset group. If the carrying value of the asset group exceeds the estimated undiscounted future cash flows, the asset group would be deemed to be potentially impaired. The impairment, if any, would be measured based on the amount by which the carrying amount exceeds the fair value. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair values are reduced for the cost to dispose. No material impairment losses for long-lived assets were recognized for the periods presented in the Consolidated Statements of Income (Loss). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments . Fair value is the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. The three-level hierarchy of fair value measurements is based on whether the inputs to those measurements are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The fair-value hierarchy requires the use of observable market data when available and consists of the following levels: • Level 1—Quoted prices for identical instruments in active markets; • Level 2—Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are observable in active markets; and • Level 3—Valuations derived from valuation techniques in which one or more significant inputs are unobservable The Company’s financial instruments include the contingent consideration related to our acquisitions and, before the year ended December 31, 2022, the interest rate swap (the “Swap”), both recorded at fair value. Financial instruments also include accounts receivable, accounts payable and other liabilities. The carrying values of these instruments approximate their fair values. The Company’s debt is classified as Level 2 in the fair value hierarchy and the fair value is measured based on comparable trading prices, ratings, sectors, coupons and maturities of similar instruments. Level 2 assets and liabilities are based on observable inputs other than quoted prices, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data. As of December 31, 2022, the fair value of the outstanding indebtedness was approximately $ 435.4 million, compared to the carrying value of $ 481.3 million. As of December 31, 2021, the fair value of the outstanding indebtedness was approximately $ 502.7 million, compared to the carrying value of $ 477.5 million. The contingent consideration is classified as Level 3 in the fair value hierarchy and the fair value is measured based on a Monte Carlo simulation or a scenario-based method, depending on the earn-out achievement objective, utilizing projections about future performance. Significant inputs include volatility and projected financial information. |
Contingent Consideration | Contingent Consideration. The Company's contingent consideration obligations are from arrangements resulting from acquisitions that involve potential future payment of consideration that is contingent upon the achievement of certain financial metrics or lender market share. Contingent consideration was recognized at its estimated fair value at the date of acquisition based on our expected future payment, discounted using a weighted average cost of capital in accordance with accepted valuation methodologies. The Company reviews and reassesses the estimated fair value of contingent consideration liabilities at each reporting period and the updated fair value could differ materially from the initial estimates. The Company measures contingent consideration recognized in connection with acquisitions at fair value on a recurring basis using significant unobservable inputs classified as Level 3 inputs. The fair value is measured based on a Monte Carlo simulation or a scenario-based method, depending on the earnout objective. The fair value measurement includes the following significant inputs: volatility and projected financial information. Significant increases or decreases to any of these inputs in isolation could result in a significantly higher or lower liability. Ultimately, the liability will be equivalent to the amount paid, and the difference between the fair value estimate on the acquisition date and each reporting period and the amount paid will be recognized in earnings. |
Derivative Financial Instrument | Derivative Financial Instrument. The interest rate on borrowings under the Company’s Term Loan is floating and, therefore, subject to fluctuations. In order to manage the risk associated with changes in interest rates on its borrowing under the Term Loan, the Company entered into the Swap effective December 31, 2018. Under the terms of the Swap, the Company is locked into a fixed rate of interest of 2.96 %, as defined in the Credit Agreement, on a notional amount of $ 300 million. The amendment entered into in June 2020 (the “Second Amendment”) resulted in the loss of hedge accounting. For further information, see Note 8 (Interest Rate Swap). As a result, as of the date of the Second Amendment, the unrealized loss included within Accumulated other comprehensive loss was ratably reclassified into Net income (loss) over the remaining life of the Swap. Each period, a portion of the unrealized loss was recorded to Interest expense, net and Income tax expense (benefit) within the Consolidated Statements of Income (Loss). Subsequent to the Second Amendment, any changes in the fair value of the Swap were recorded within Other expense, net on the Consolidated Statements of Income (Loss). A third amendment was entered into in October 2020 (the “Third Amendment”), which resulted in the partial extinguishment of the existing debt at the time of the amendment. Due to the reduction in value of the underlying Term Loan upon the Third Amendment as compared to the notional amount of the Swap, a proportional amount of the frozen Accumulated other comprehensive loss balance was immediately reclassified into Interest expense, net. The Swap expired on May 31, 2022 and, as such, is no longer recorded on the Consolidated Balance Sheets. As of December 31, 2021 the Swap was recognized within Other accrued liabilities on the Consolidated Balance Sheets at fair value. |
Income Taxes | Income Taxes . Income taxes are presented on the Consolidated Financial Statements using the asset and liability method, under which deferred tax assets and liabilities are recognized based on the future tax consequences attributable to temporary differences that exist between the financial statement carrying amount of assets and liabilities and their respective tax basis, as well as from operating loss and tax credit carryforwards. Deferred income taxes reflect expected future tax benefits (i.e. assets) and future tax costs (i.e. liabilities). The Company measures deferred tax assets and liabilities using the enacted tax rate expected to apply to taxable income in the years in which those temporary differences are expected to be recoverable or settled. The Company recognizes the effect on deferred taxes of a change in tax rates in income in the period that includes the enactment date. Valuation allowances are established if, based upon the weight of available evidence, management determines it is “more likely than not” that some portion or all of the deferred tax asset will not be realized. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50 % likelihood of being realized upon ultimate resolution. The Company’s uncertain tax position reserves are reviewed periodically and are adjusted as events occur that affect its estimates, such as the availability of new information, the lapsing of applicable statutes of limitation, the conclusion of tax audits, the measurement of additional estimated liability, the identification of new tax matters, the release of administrative tax guidance affecting its estimates of tax liabilities or the rendering of relevant court decisions. The Company records penalties and interest relating to uncertain tax positions in Income tax expense (benefit) in the Consolidated Statements of Income (Loss). For further information, see Note 14 (Income Taxes). |
Stock-Based Compensation | Stock-Based Compensation. Stock-based compensation expense is recognized on a straight-line basis over the vesting period. Forfeitures are recorded at the time the forfeiture event occurs. For further information, see Note 12 (Stock-Based Compensation) |
Advertising Costs | Advertising Costs . The Company expenses advertising costs as they are incurred and are included in Marketing and sales in the Consolidated Statements of Income (Loss). Advertising expense for the years ended December 31, 2022, 2021 and 2020 was $ 107.1 million, $ 104.4 million and $ 80.4 million, respectively. |
Cost of Revenue and Operations | Cost of Revenue and Operations. Cost of revenue and operations expense primarily consists of costs related to processing dealer vehicle inventory, pay per lead products, product fulfillment and compensation costs for the product fulfillment and customer service teams. |
Affiliate Revenue Share Expense | Affiliate Revenue Share Expense. In connection with the October 2014 acquisition of CARS by the Company’s former parent, the Company entered into affiliate agreements with the former owners of CARS. The Company amended five of its affiliate agreements (Gannett, McClatchy, TEGNA, tronc, and the Washington Post) and as a result, had a direct relationship with these dealer customers before the original contractual conversion date specified. As part of the amendments to the affiliate agreements, Gannett, McClatchy, TEGNA, tronc, and the Washington Post agreed to perform certain marketing support and transition services through varying dates, the latest of which was June 29, 2020. The fees the Company incurred associated with the amended affiliate agreements were recorded as Affiliate revenue share expense within Operating expenses in the Consolidated Statements of Income (Loss). A s of June 30, 2020, the Company no longer incurs affiliate revenue share expense. |
Defined Contribution Plans | Defined Contribution Plans. The Company’s employees are eligible to participate in a defined contribution plan. Participants are eligible on their date of hire and are allowed to make tax-deferred contributions up to 90 % of annual compensation, subject to limitations specified by the Internal Revenue Code of 1986, as amended. Employer contributions consist of matching contributions and/or non-elective employer contributions. The Company provides a maximum match for 4 % of the employee’s salary and contributions are immediately fully vested. As part of the cost reduction efforts in response to the COVID-19 pandemic and related restrictions, beginning in the second quarter of 2020, the Company temporarily suspended the employer match of employees’ defined contribution plans for a portion of the year ended December 31, 2020. As of December 31, 2020, the Company’s match was fully reinstated. The Company’s contributions to its defined contribution plans for the years ended December 31, 2022, 2021 and 2020 were $ 5.5 million, $ 5.0 million and $ 2.4 million, respectively |
Uncertain Tax Positions | Uncertain Tax Positions. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Consolidated Financial Statements | The impact of correcting the items on the related financial statement line items for the year ended December 31, 2021 is as follows (in thousands, except per share data): Consolidated Balance Sheet and Consolidated Statement of Stockholders' Equity, as applicable As of December 31, 2021 Financial statement line item As reported Adjustment As adjusted Deferred tax liability $ 31,086 $ ( 31,086 ) $ — Total noncurrent liabilities 545,981 ( 31,086 ) 514,895 Total liabilities 640,271 ( 31,086 ) 609,185 Accumulated deficit ( 1,176,468 ) 31,086 ( 1,145,382 ) Total stockholders' equity 366,934 31,086 398,020 Consolidated Statements of Income (Loss), Comprehensive Income (Loss) and Consolidated Statement of Stockholders' Equity, as applicable Year ended December 31, 2021 Financial statement line item As reported Adjustment As adjusted Income tax expense (benefit) $ 1,764 $ ( 3,072 ) $ ( 1,308 ) Net income (loss) 7,719 3,072 10,791 Comprehensive income (loss) 12,521 3,072 15,593 Basic Earnings (loss) per share 0.11 0.05 0.16 Diluted Earnings (loss) per share 0.11 0.04 0.15 Consolidated Statements of Cash Flows Year ended December 31, 2021 Financial statement line item As reported Adjustment As adjusted Net income (loss) $ 7,719 $ 3,072 $ 10,791 Deferred income taxes ( 2,641 ) ( 286 ) ( 2,927 ) Other liabilities ( 6,031 ) ( 2,786 ) ( 8,817 ) The impact of correcting the misstatements on the related financial statement line items for the year ended December 31, 2020 is as follows (in thousands, except per share data): Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) Year ended December 31, 2020 Financial statement line item As reported Adjustment As adjusted Income tax expense (benefit) $ ( 119,289 ) $ ( 28,014 ) $ ( 147,303 ) Net income (loss) ( 817,120 ) 28,014 ( 789,106 ) Comprehensive income (loss) ( 816,282 ) 28,014 ( 788,268 ) Basic and Diluted Earnings (loss) per share ( 12.15 ) 0.41 ( 11.74 ) Consolidated Statement of Stockholders' Equity Year ended December 31, 2020 Financial statement line item As reported Adjustment As adjusted Net income (loss) $ ( 817,120 ) $ 28,014 $ ( 789,106 ) Accumulated deficit ( 1,184,187 ) 28,014 ( 1,156,173 ) Total stockholders' equity 340,176 28,014 368,190 Consolidated Statements of Cash Flows Year ended December 31, 2020 Financial statement line item As reported Adjustment As adjusted Net income (loss) $ ( 817,120 ) $ 28,014 $ ( 789,106 ) Deferred income taxes ( 103,582 ) ( 30,801 ) ( 134,383 ) Other liabilities ( 2,530 ) 2,787 257 |
Schedule of Property and Equipment Recorded at Cost and Depreciated on Straight-line Basis Over Estimated Useful Lives | Property and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives as follows (in thousands): December 31, Asset 2022 2021 Estimated Useful Life Computer software $ 79,682 $ 65,461 18 months - 5 years Computer hardware 12,550 11,998 3 years - 5 years Leasehold improvements 18,581 18,656 Lesser of useful life or lease term Furniture and fixtures 4,140 4,293 10 years Property and equipment, gross 114,953 100,408 Less: Accumulated depreciation ( 69,735 ) ( 57,403 ) Property and equipment, net $ 45,218 $ 43,005 |
Schedule of Amortizable Intangible Assets Amortized on Straight-line Basis over Estimated Useful Lives | Amortizable intangible assets are amortized on a straight-line basis over the estimated useful lives as follows: Intangible Asset Estimated Useful Life Acquired software 2 - 7 years Customer relationships 3 - 14 years Other trade names 10 - 12 years |
Business Combination (Tables)
Business Combination (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
AccuTrade Acquisition | |
Business Acquisition [Line Items] | |
Acquisition Purchase Price Allocation | The Accu-Trade Acquisition purchase price allocation is as follows (in thousands): Preliminary Cash consideration $ 64,663 Other consideration (1) 5,300 Contingent consideration (2) 23,936 Total purchase consideration $ 93,899 Assets acquired (3) $ 1,595 Identified intangible assets (4) 15,679 Total assets acquired 17,274 Total liabilities assumed (5) ( 235 ) Net identifiable assets 17,039 Goodwill 76,860 Total purchase consideration $ 93,899 (1) In connection with the Accu-Trade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product. The preliminary fair value of the license was determined to be $ 6.5 million, of which the Company received $ 1.2 million in cash upon the close of the Accu-Trade Acquisition. The $ 5.3 million difference between the fair value of $ 6.5 million and the $ 1.2 million in cash was recorded as non-cash consideration and the $ 6.5 million license fee was recorded in Other accrued liabilities as a contract liability on the Consolidated Balance Sheets and is being amortized into Other revenue on the Consolidated Statements of Income (Loss) over the one-year contract term. The current period revenue related to the non-cash consideration of $ 5.3 million is a non-cash reconciling item titled Amortization of deferred revenue related to Accu-Trade Acquisition on the Consolidated Statements of Cash Flows. (2) As part of the Accu-Trade Acquisition, the Company may be required to pay additional consideration to the former owners based on the achievement of certain financial targets. The Company has the option to pay consideration in cash or certain amounts in stock, which would result in a variable number of shares being issued. The amount to be paid will be determined by the acquired business’ future performance to be attained over a three-year performance period; based on certain tiered performance metrics the maximum amount to be paid is $ 63.0 million, of which a maximum of $ 15.0 million could be in stock, with additional upside for performance that exceeds the tiered performance metrics. The contingent consideration is classified as Level 3 in the fair value hierarchy. The fair value is measured based on a Monte Carlo simulation. This amount represents the estimated fair value at the time of the acquisition. For more information on the fair value of the Accu-Trade contingent consideration, see Note 4 (Fair Value Measurements). (3) Assets acquired primarily consist of accounts receivable. (4) Preliminary information regarding the identifiable intangible assets acquired is as follows: Acquisition-Date Amortization Period Acquired software $ 12,926 5 Trade name 1,446 10 Customer relationships 1,307 7 Total $ 15,679 (5) Total liabilities assumed primarily consist of accounts payable. |
Credit IQ Acquisition | |
Business Acquisition [Line Items] | |
Acquisition Purchase Price Allocation | The CIQ Acquisition purchase price allocation is as follows (in thousands): Acquisition-date Cash consideration (1) $ 29,965 Contingent consideration (2) 23,805 Cash settlement of CIQ Acquisition's unvested equity awards (3) ( 9,626 ) Total purchase consideration $ 44,144 Assets acquired (4) $ 193 Identified intangible assets (5) 19,900 Total assets acquired 20,093 Total liabilities assumed (6) (7) ( 1,945 ) Net identifiable assets 18,148 Goodwill (7) 25,996 Total purchase consideration $ 44,144 (1) A reconciliation of cash consideration to Payments for the CIQ Acquisition, net of cash acquired in the Consolidated Statements of Cash Flows is as follows (in thousands): Cash consideration $ 29,965 Less: Cash settlement of CIQ Acquisition's unvested equity awards (3) ( 9,626 ) Less: Cash acquired ( 81 ) Payments for CIQ Acquisition, net of cash acquired $ 20,258 (2) As part of the CIQ Acquisition, the Company may be required to pay up to an additional $ 50.0 million in cash consideration to the former owners based on two earn-out achievement objectives, including an earnings-related metric and lender market share. The actual amount to be paid will be based on the acquired business’s future performance to be attained over a three-year performance period. The fair value was estimated utilizing a Monte Carlo simulation or a scenario-based method, depending on the achievement objective. For more information on the fair value of the CIQ contingent consideration, see Note 4 (Fair Value Measurements). (3) In connection with the Acquisition, CreditIQ’s unvested equity awards were cash settled. The fair value of these awards was $ 9.6 million and was based on the price paid per common share to the owners of the acquired business and recognized immediately after the Acquisition as compensation expense in General and administrative expense on the Company’s Consolidated Statements of Income (Loss). (4) Assets acquired includes cash and cash equivalents, accounts receivable and other identifiable assets. (5) Information regarding the identifiable intangible assets acquired is as follows: Acquisition-Date Weighted-Average Trade name $ 900 10 Acquired software 19,000 5 Total $ 19,900 (6) Total liabilities assumed includes accounts payable, deferred income tax liabilities, net and other liabilities. (7) During the year ended December 31, 2022, the Company recorded a $ 0.2 million purchase accounting adjustment. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Company's Liabilities Measured at Fair Value on a Recurring Basis | The Company's contingent consideration measured at fair value on a recurring basis consisted of the following (in thousands): Fair value measurement at reporting date Total as of Level 1 Level 2 Level 3 Contingent consideration $ 55,871 $ — $ — $ 55,871 Total $ 55,871 $ — $ — $ 55,871 Fair value measurement at reporting date Total as of Level 1 Level 2 Level 3 Contingent consideration $ 23,805 $ — $ — $ 23,805 Total $ 23,805 $ — $ — $ 23,805 |
Schedule Of Contingent Consideration | The rollforward of the Level 3 contingent consideration from December 31, 2021 is as follows (in thousands): As of Addition Related to Fair Value (1) As of Contingent consideration $ 23,805 $ 23,936 $ 8,130 $ 55,871 (1) Fair value adjustments on contingent considerations are reflected within Other expense, net in the Consolidated Statements of Income (Loss). |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Revenue Disaggregated by Sales Channel and Major Products and Services | Revenue Summary . In the table below (in thousands), revenue is disaggregated by major products and services. The Company only has one reportable segment; therefore, further disaggregation is not applicable at this time. Year Ended December 31, Major products and services 2022 2021 2020 Subscription advertising and digital solutions $ 540,829 $ 518,270 $ 436,441 Display advertising 88,397 85,169 84,630 Pay per lead 9,351 12,346 18,557 Other 15,299 7,898 7,875 Total revenue $ 653,876 $ 623,683 $ 547,503 |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Changes in the Carrying Amount of Goodwill and Indefinite-lived Intangible Asset | The changes in the carrying amount of goodwill and indefinite-lived intangible asset are as follows (in thousands): Goodwill Cars.com December 31, 2020 $ — $ 390,020 Additions (1) 26,227 — December 31, 2021 $ 26,227 $ 390,020 Additions (1) 76,860 — Adjustments (2) ( 231 ) — December 31, 2022 $ 102,856 $ 390,020 (1) In connection with the CreditIQ and Accu-Trade acquisitions, the Company recorded preliminary goodwill in the amount of $ 26.2 million and $ 76.9 million, respectively. No impairment was noted for the years ended December 31, 2022 and 2021. For more information on the acquisition, see Note 3 (Business Combinations). (2) During the year ended December 31, 2022, the Company recorded a purchase accounting adjustment related to CreditIQ. |
Definite-Lived Intangible Assets by Major Asset Class | The Company’s definite-lived intangible assets by major asset class are as follows (in thousands): December 31, 2022 December 31, 2021 Gross Accumulated Net Gross Accumulated Net Customer relationships $ 833,847 $ ( 556,053 ) $ 277,794 $ 832,540 $ ( 487,782 ) $ 344,758 Acquired software 73,626 ( 48,288 ) 25,338 60,700 ( 40,981 ) 19,719 Other trade names 26,246 ( 12,310 ) 13,936 24,800 ( 9,873 ) 14,927 Content library 2,100 ( 2,100 ) — 2,100 ( 2,100 ) — Total $ 935,819 $ ( 618,751 ) $ 317,068 $ 920,140 $ ( 540,736 ) $ 379,404 |
Projected Annual Amortization Expense for Amortizable Intangible Assets | As of December 31, 2022, projected annual amortization expense for amortizable intangible assets is as follows (in thousands): 2023 $ 76,634 2024 74,028 2025 59,285 2026 37,876 2027 31,619 Thereafter 37,626 Total $ 317,068 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Company's Contractual Payments | As of December 31, 2022, the Company’s contractual payments under then-outstanding long-term debt agreements in each of the next five calendar years and thereafter are as follows (in thousands): 2023 $ 16,250 2024 20,000 2025 45,000 2026 — 2027 — Thereafter 400,000 Total $ 481,250 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Scheduled Future Minimum Lease Payments Under Operating Leases | As of December 31, 2022, the Company’s scheduled future minimum lease payments under operating leases having initial noncancelable lease terms of more than one year, is as follows (in thousands): 2023 $ 4,042 2024 4,154 2025 4,570 2026 4,684 2027 3,991 Thereafter 17,750 Total minimum lease payments 39,191 Less: Imputed interest (1) ( 10,652 ) Present value of the minimum lease payments 28,539 Less: Current maturities of lease obligations ( 1,984 ) Long-term lease obligations $ 26,555 (1) The Company’s lease agreements do not provide a readily determinable implicit rate nor is it available from the Company’s lessors. Therefore, in order to discount lease payments to present value, the Company has estimated its incremental borrowing rate based on information available at either the lease transition date (for those leases that commenced prior to January 1, 2019) or the lease commencement date (for those leases that commenced after January 1, 2019). |
Other Information Related to Operating Leases | Other information related to the Company’s operating leases for the years ended December 31, 2022, 2021 and 2020 is as follows (in thousands, except months and percentages): Year Ended December 31, Income statement information: 2022 2021 2020 Operating lease cost $ 2,993 $ 3,541 $ 3,848 Short-term lease cost 137 600 856 Variable lease cost 3,443 3,034 2,834 Total lease cost $ 6,573 $ 7,175 $ 7,538 Other information: Cash paid for operating leases $ 4,470 $ 4,856 $ 3,320 Weighted-average remaining lease term (in months) 101 112 122 Weighted-average discount rate as of December 31, 7.5 % 7.4 % 7.4 % |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock-based Compensation Expense | Information related to stock-based compensation expense is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Stock-based compensation expense $ 22,342 $ 21,431 $ 15,155 Income tax benefit related to stock-based — — — |
Summary of Stock-based Compensation Expense by Financial Statement | tock-based compensation expense by financial statement line item on the Company’s Consolidated Statements of Income (Loss) is as follows (in thousands): Year Ended December 31, 2022 2021 2020 Cost of revenue and operations $ 955 $ 876 $ 593 Product and technology 6,647 5,455 3,314 Marketing and sales 4,921 5,202 3,612 General and administrative 9,819 9,898 7,636 Total $ 22,342 $ 21,431 $ 15,155 |
Schedule of Outstanding Stock-based Compensation Awards | Information related to outstanding stock-based compensation awards as of December 31, 2022 for restricted share units (“RSUs”), performance share units (“PSUs”), stock options and the Cars.com Employee Stock Purchase Plan (“ESPP”) is as follows (in thousands, except for weighted-average remaining period): Unearned Weighted-Average RSUs $ 29,099 2.0 PSUs 533 2.2 Stock Options 2,993 1.7 ESPP 251 0.3 Total $ 32,876 |
Summary of RSU Activity | RSU activity for the year ended December 31, 2022 is as follows (in thousands, except for weighted-average grant date fair value): Number Weighted-Average Outstanding as of December 31, 2021 3,683 $ 10.95 Granted 2,526 14.21 Vested and delivered ( 1,598 ) 10.65 Forfeited ( 840 ) 12.68 Outstanding as of December 31, 2022 (1) 3,771 12.88 (1) Includes 63 RSUs that were vested, but not yet delivered. |
Summary of PSU Activity | PSU activity for the year ended December 31, 2022 is as follows (in thousands, except for weighted-average grant date fair value): Number Weighted-Average Outstanding as of December 31, 2021 142 $ 23.98 Granted 305 14.84 Vested and delivered ( 142 ) 23.98 Forfeited ( 60 ) 15.07 Outstanding as of December 31, 2022 245 14.78 |
Summary of Stock Option Activity | Stock option activity for the year ended December 31, 2022 is as follows (in thousands, except for weighted-average grant date fair value and weighted-average remaining contractual term): Number Weighted-Average Weighted-Average Aggregate Outstanding as of December 31, 2021 804 $ 5.27 8.58 $ 5,754 Granted 263 9.39 — — Exercised — — — — Forfeited — — — — Outstanding as of December 31, 2022 1,067 6.28 7.98 4,296 Exercisable as of December 31, 2022 — — — — |
Summary of Fair Value of Stock Options Granted are Estimated Using Black Scholes Option Pricing Model | The fair value of the stock options granted during the years ended December 31, 2022, 2021 and 2020 are estimated on the grant date using the Black-Scholes option pricing model, using the following assumptions: 2022 2021 2020 Risk-free interest rate 2.21 % 1.15 % 1.01 % Weighted-average volatility 65.22 % 69.00 % 53.08 % Dividend yield 0 % 0 % 0 % Expected years until exercise 6.5 6.5 6.5 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted (Loss) Earnings Per Share | The computations of the Company’s basic and diluted earnings (loss) per share is as follows (in thousands, except per share amounts): Year Ended December 31, 2022 2021 2020 Net income (loss) $ 17,206 $ 10,791 $ ( 789,106 ) Basic weighted-average common shares outstanding 68,215 68,727 67,241 Effect of dilutive stock-based compensation awards (1) 1,434 2,610 — Diluted weighted-average common shares outstanding 69,649 71,337 67,241 Earnings (loss) per share, basic $ 0.25 $ 0.16 $ ( 11.74 ) Earnings (loss) per share, diluted 0.25 0.15 ( 11.74 ) (1) There were 2,033, 1,304 and 2,727 potential common shares excluded from diluted weighted-average common shares outstanding for the years ended December 31, 2022, 2021 and 2020 respectively, as their inclusion would have had an anti-dilutive effect. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Significant Components of (Loss) Income Before Income Taxes | Significant components of Income (Loss) before income taxes are as follows (in thousands): Year Ended December 31, 2022 2021 2020 U.S. $ 22,533 $ 9,444 $ ( 938,248 ) Non-U.S. 43 39 1,839 Income (loss) before income taxes $ 22,576 $ 9,483 $ ( 936,409 ) |
Schedule of Significant Components of the Income Tax Expense (Benefit) | Year Ended December 31, 2022 2021 2020 Current: U.S. federal $ 2,991 $ 516 $ ( 13,799 ) U.S. state and local 1,122 1,267 715 Non-U.S. ( 26 ) ( 164 ) 164 Total current income tax expense (benefit) 4,087 1,619 ( 12,920 ) Deferred: U.S. federal 579 ( 2,599 ) ( 100,211 ) U.S. state and local 671 ( 332 ) ( 34,181 ) Non-U.S. 33 4 9 Total deferred income tax expense (benefit) 1,283 ( 2,927 ) ( 134,383 ) Income tax expense (benefit) $ 5,370 $ ( 1,308 ) $ ( 147,303 ) |
Schedule of Income Tax Provision Differed from Amounts Computed at the Statutory Federal Income Tax Rate | The income tax provision differed from amounts computed at the statutory federal income tax rate, as follows (in thousands, except percentages): Year Ended December 31, 2022 2021 2020 $ % $ % $ % Income tax provision (benefit) at statutory rate $ 4,743 21.0 % $ 1,994 21.0 % $ ( 196,646 ) 21.0 % State income taxes, net of federal income tax expense (benefit) 1,122 5.0 378 4.0 ( 37,566 ) 4.0 Nondeductible executive compensation 1,974 8.7 1,365 14.4 625 ( 0.1 ) Nondeductible transaction expenses ( 2,608 ) ( 11.6 ) 2,638 27.8 — — Tax credits ( 1,455 ) ( 6.4 ) ( 2,379 ) ( 25.1 ) ( 2,375 ) 0.3 Goodwill impairment — — — — ( 13,683 ) 1.5 Effect of change in apportionment factors — — — — ( 2,228 ) 0.2 NOL carrybacks rate differential — — — — ( 3,270 ) 0.3 Stock-based compensation ( 1,432 ) ( 6.3 ) ( 3,010 ) ( 31.7 ) 1,062 ( 0.1 ) Return to provision adjustments 4,627 20.5 ( 453 ) ( 4.8 ) ( 289 ) — Uncertain tax positions ( 4,042 ) ( 17.9 ) 1,551 16.4 1,317 ( 0.1 ) Valuation allowance 1,194 5.3 ( 3,943 ) ( 41.6 ) 106,042 ( 11.3 ) Other, net 1,247 5.5 551 5.8 ( 292 ) — Income tax expense (benefit) $ 5,370 23.8 % $ ( 1,308 ) ( 13.8 ) % $ ( 147,303 ) 15.7 % |
Significant Components of Deferred Tax Assets and Liabilities | Significant components of the deferred tax assets and liabilities are as follows (in thousands): December 31, 2022 2021 Deferred income tax liabilities: Definite lived intangibles $ — $ ( 16,973 ) Depreciation ( 5,787 ) ( 8,428 ) Indefinite lived intangibles ( 4,237 ) — Right of use assets ( 3,445 ) ( 3,687 ) Other ( 2,833 ) ( 1,708 ) Total deferred tax liabilities $ ( 16,302 ) $ ( 30,796 ) Deferred income tax assets: Accrued compensation $ 8,748 $ 10,613 Capitalized research and development costs 15,242 — Definite lived intangibles 239 — Goodwill 79,994 91,756 Indefinite lived intangibles — 5,734 Lease obligations 7,161 7,762 NOL and tax credit carryforwards 3,688 14,804 Other 3,171 2,286 Total deferred tax assets $ 118,243 $ 132,955 Less: Valuation allowance ( 103,294 ) ( 102,099 ) Net deferred tax (liability) asset $ ( 1,353 ) $ 60 |
Schedule of Deferred Tax Assets and Liabilities Recognized in the Company's Consolidated Balance Sheets | The deferred tax assets and liabilities recognized in the Company’s Consolidated Balance Sheets as of December 31, 2022 and 2021 were as follows (in thousands): December 31, 2022 2021 Investments and other assets, net $ 48 $ 60 Other noncurrent liabilities ( 1,401 ) — Net deferred tax (liability) asset $ ( 1,353 ) $ 60 |
Summary of Uncertain Tax Positions | A summary of the Company’s uncertain tax positions is as follows (in thousands): Year Ended December 31, 2022 2021 Balance as of January 1 $ 9,851 $ 8,788 Additions based on tax positions related to the current year 382 550 Additions for tax positions of prior years 294 862 Reductions for tax positions of prior years ( 7,974 ) ( 349 ) Balance as of December 31 $ 2,553 $ 9,851 |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2020 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2022 | |
Significant Accounting Policies [Line Items] | |||||
Percentage of ownership by the company | 100% | ||||
Deferred tax assets, valuation allowance | $ 103,294,000 | $ 102,099,000 | $ 30,800,000 | ||
Allowance for doubtful accounts | 1,900,000 | 1,700,000 | |||
Prepaid expenses | 1,000,000 | 600,000 | |||
Investments and other assets | 4,700,000 | 2,600,000 | |||
Capitalized software costs | 18,100,000 | 17,900,000 | $ 16,300,000 | ||
Impairment of long-lived assets hold for continued use | 0 | 0 | 0 | ||
Impairment of long-lived assets hold for sale | 0 | 0 | 0 | ||
Outstanding indebtedness, carrying value | $ 458,249,000 | 457,383,000 | |||
Tax Benefit Recognized | 50% | ||||
Advertising expense | $ 107,100,000 | 104,400,000 | 80,400,000 | ||
Defined contribution plan maximum annual compensation | 90% | ||||
Defined contribution plan, contributions | $ 5,500,000 | 5,000,000 | $ 2,400,000 | ||
Level2 | |||||
Significant Accounting Policies [Line Items] | |||||
Outstanding indebtedness, fair value | 435,400,000 | 502,700,000 | |||
Outstanding indebtedness, carrying value | $ 481,300,000 | 477,500,000 | |||
Swap | Designated as Hedging Instrument | Cash Flow Hedging | |||||
Significant Accounting Policies [Line Items] | |||||
Fixed rate of interest | 2.96% | ||||
Notional amount | $ 300,000,000 | ||||
COVID-19 | |||||
Significant Accounting Policies [Line Items] | |||||
Impairments on non-marketable investments | $ 9,400,000 | ||||
Investments and Other Assets | |||||
Significant Accounting Policies [Line Items] | |||||
Non-marketable investments | $ 0 | $ 0 | |||
Minimum | |||||
Significant Accounting Policies [Line Items] | |||||
Base subscription contract term | 3 months | ||||
Maximum | |||||
Significant Accounting Policies [Line Items] | |||||
Base subscription contract term | 6 months | ||||
Percentage of employee contribution of the salary | 4% |
Significant Accounting Polici_5
Significant Accounting Policies - Schedule of Impact of Corrections on Consolidated Balance Sheet and Consolidated Statement of Stockholders' Equity (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Total noncurrent liabilities | $ 534,428 | $ 514,895 | ||
Total liabilities | 640,440 | 609,185 | ||
Accumulated deficit | (1,128,176) | (1,145,382) | $ (1,156,173) | |
Total stockholders' equity | $ 384,430 | 398,020 | 368,190 | $ 1,141,068 |
Previously Reported [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Deferred tax liability | 31,086 | |||
Total noncurrent liabilities | 545,981 | |||
Total liabilities | 640,271 | |||
Accumulated deficit | (1,176,468) | (1,184,187) | ||
Total stockholders' equity | 366,934 | 340,176 | ||
Prior Period, Adjustment [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Deferred tax liability | (31,086) | |||
Total noncurrent liabilities | (31,086) | |||
Total liabilities | (31,086) | |||
Accumulated deficit | 31,086 | 28,014 | ||
Total stockholders' equity | $ 31,086 | $ 28,014 |
Significant Accounting Polici_6
Significant Accounting Policies - Schedule of Impact of Corrections on Consolidated Statements of Income (Loss), Comprehensive Income (Loss) and Consolidated Statement of Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Income tax expense (benefit) | $ 5,370 | $ (1,308) | $ (147,303) |
Net income (loss) | 17,206 | 10,791 | (789,106) |
Comprehensive income (loss) | $ 19,208 | $ 15,593 | $ (788,268) |
Earnings (loss) per share, basic | $ 0.25 | $ 0.16 | $ (11.74) |
Earnings (loss) per share, diluted | $ 0.25 | $ 0.15 | $ (11.74) |
Previously Reported [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Income tax expense (benefit) | $ 1,764 | $ (119,289) | |
Net income (loss) | 7,719 | (817,120) | |
Comprehensive income (loss) | $ 12,521 | $ (816,282) | |
Earnings (loss) per share, basic | $ 0.11 | $ (12.15) | |
Earnings (loss) per share, diluted | $ 0.11 | $ (12.15) | |
Prior Period, Adjustment [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Income tax expense (benefit) | $ (3,072) | $ (28,014) | |
Net income (loss) | 3,072 | 28,014 | |
Comprehensive income (loss) | $ 3,072 | $ 28,014 | |
Earnings (loss) per share, basic | $ 0.05 | $ 0.41 | |
Earnings (loss) per share, diluted | $ 0.04 | $ 0.41 |
Significant Accounting Polici_7
Significant Accounting Policies - Schedule of Impact of Corrections on Consolidated Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | $ 17,206 | $ 10,791 | $ (789,106) |
Deferred income taxes | 1,283 | (2,927) | (134,383) |
Other liabilities | $ (7,669) | (8,817) | 257 |
Previously Reported [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | 7,719 | (817,120) | |
Deferred income taxes | (2,641) | (103,582) | |
Other liabilities | (6,031) | (2,530) | |
Prior Period, Adjustment [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Net income (loss) | 3,072 | 28,014 | |
Deferred income taxes | (286) | (30,801) | |
Other liabilities | $ (2,786) | $ 2,787 |
Significant Accounting Polici_8
Significant Accounting Policies - Schedule of Impact of Corrections on Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Income tax expense (benefit) | $ 5,370 | $ (1,308) | $ (147,303) |
Net income (loss) | 17,206 | 10,791 | (789,106) |
Comprehensive income (loss) | $ 19,208 | $ 15,593 | $ (788,268) |
Earnings (loss) per share, basic | $ 0.25 | $ 0.16 | $ (11.74) |
Earnings (loss) per share, diluted | $ 0.25 | $ 0.15 | $ (11.74) |
Previously Reported [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Income tax expense (benefit) | $ 1,764 | $ (119,289) | |
Net income (loss) | 7,719 | (817,120) | |
Comprehensive income (loss) | $ 12,521 | $ (816,282) | |
Earnings (loss) per share, basic | $ 0.11 | $ (12.15) | |
Earnings (loss) per share, diluted | $ 0.11 | $ (12.15) | |
Prior Period, Adjustment [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Income tax expense (benefit) | $ (3,072) | $ (28,014) | |
Net income (loss) | 3,072 | 28,014 | |
Comprehensive income (loss) | $ 3,072 | $ 28,014 | |
Earnings (loss) per share, basic | $ 0.05 | $ 0.41 | |
Earnings (loss) per share, diluted | $ 0.04 | $ 0.41 |
Significant Accounting Polici_9
Significant Accounting Policies - Schedule of Impact of Corrections on Consolidated Statement of Stockholders' Equity (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net income (loss) | $ 17,206 | $ 10,791 | $ (789,106) | |
Accumulated deficit | (1,128,176) | (1,145,382) | (1,156,173) | |
Total stockholders' equity | $ 384,430 | 398,020 | 368,190 | $ 1,141,068 |
Previously Reported [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net income (loss) | 7,719 | (817,120) | ||
Accumulated deficit | (1,176,468) | (1,184,187) | ||
Total stockholders' equity | 366,934 | 340,176 | ||
Prior Period, Adjustment [Member] | ||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||
Net income (loss) | 3,072 | 28,014 | ||
Accumulated deficit | 31,086 | 28,014 | ||
Total stockholders' equity | $ 31,086 | $ 28,014 |
Significant Accounting Polic_10
Significant Accounting Policies - Schedule of Property and Equipment Recorded at Cost and Depreciated on Straight-line Basis Over Estimated Useful Lives (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 114,953 | $ 100,408 |
Less: Accumulated depreciation | (69,735) | (57,403) |
Property and equipment, net | 45,218 | 43,005 |
Computer Software [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 79,682 | 65,461 |
Computer Software [Member] | Minimum | ||
Property Plant And Equipment [Line Items] | ||
Estimated useful lives | 18 months | |
Computer Software [Member] | Maximum | ||
Property Plant And Equipment [Line Items] | ||
Estimated useful lives | 5 years | |
Computer Hardware [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 12,550 | 11,998 |
Computer Hardware [Member] | Minimum | ||
Property Plant And Equipment [Line Items] | ||
Estimated useful lives | 3 years | |
Computer Hardware [Member] | Maximum | ||
Property Plant And Equipment [Line Items] | ||
Estimated useful lives | 5 years | |
Leasehold Improvements [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 18,581 | 18,656 |
Estimated useful lives | Lesser of useful life or lease term | |
Furniture and Fixtures [Member] | ||
Property Plant And Equipment [Line Items] | ||
Property and equipment, gross | $ 4,140 | $ 4,293 |
Estimated useful lives | 10 years |
Significant Accounting Polic_11
Significant Accounting Policies - Schedule of Amortizable Intangible Assets Amortized on Straight-line Basis over Estimated Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Acquired Software | Minimum | |
Finite Lived Intangible Assets [Line Items] | |
Amortizing intangible assets estimated useful lives | 2 years |
Acquired Software | Maximum | |
Finite Lived Intangible Assets [Line Items] | |
Amortizing intangible assets estimated useful lives | 7 years |
Customer Relationships | Minimum | |
Finite Lived Intangible Assets [Line Items] | |
Amortizing intangible assets estimated useful lives | 3 years |
Customer Relationships | Maximum | |
Finite Lived Intangible Assets [Line Items] | |
Amortizing intangible assets estimated useful lives | 14 years |
Other Trade Names | Minimum | |
Finite Lived Intangible Assets [Line Items] | |
Amortizing intangible assets estimated useful lives | 10 years |
Other Trade Names | Maximum | |
Finite Lived Intangible Assets [Line Items] | |
Amortizing intangible assets estimated useful lives | 12 years |
Business Combination - Addition
Business Combination - Additional Information (Details) - USD ($) $ in Thousands | Mar. 01, 2022 | Nov. 05, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Business Acquisition [Line Items] | |||||||
Goodwill | $ 102,856 | $ 26,227 | $ 0 | ||||
AccuTrade Acquisition | |||||||
Business Acquisition [Line Items] | |||||||
Business Acquisition, Transaction Costs | $ 2,000 | 1,000 | |||||
Business acquisition, total consideration | 93,899 | ||||||
Goodwill | $ 76,860 | 26,200 | |||||
Credit IQ Acquisition | |||||||
Business Acquisition [Line Items] | |||||||
Business Acquisition, Transaction Costs | $ 1,300 | ||||||
Cash settlement of Acquisition's unvested equity awards | [1] | $ 9,626 | |||||
Business acquisition, total consideration | 44,144 | ||||||
Goodwill | $ 25,996 | [2] | $ 76,900 | ||||
[1] In connection with the Acquisition, CreditIQ’s unvested equity awards were cash settled. The fair value of these awards was $ 9.6 million and was based on the price paid per common share to the owners of the acquired business and recognized immediately after the Acquisition as compensation expense in General and administrative expense on the Company’s Consolidated Statements of Income (Loss). During the year ended December 31, 2022, the Company recorded a $ 0.2 million purchase accounting adjustment. |
Business Combination - Acquisit
Business Combination - Acquisition Purchase Price Allocation (Details) - USD ($) $ in Thousands | Mar. 01, 2022 | Nov. 05, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Business Acquisition [Line Items] | |||||||
Identified intangible assets | $ 15,679 | $ 19,900 | |||||
Goodwill | $ 102,856 | $ 26,227 | $ 0 | ||||
AccuTrade Acquisition | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | 64,663 | ||||||
Other consideration | [1] | 5,300 | |||||
Contingent consideration | [2] | 23,936 | |||||
Total purchase consideration | 93,899 | ||||||
Assets acquired | [3] | 1,595 | |||||
Identified intangible assets | [4] | 15,679 | |||||
Total assets acquired | 17,274 | ||||||
Total liabilities assumed | [5] | (235) | |||||
Net identifiable assets | 17,039 | ||||||
Goodwill | 76,860 | 26,200 | |||||
Total consideration | $ 93,899 | ||||||
Credit IQ Acquisition | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | [6] | 29,965 | |||||
Contingent consideration | [7] | 23,805 | |||||
Cash settlement of CIQ Acquisition's unvested equity awards | [8] | (9,626) | |||||
Total purchase consideration | 44,144 | ||||||
Assets acquired | [9] | 193 | |||||
Identified intangible assets | [10] | 19,900 | |||||
Total assets acquired | 20,093 | ||||||
Total liabilities assumed | [11],[12] | (1,945) | |||||
Net identifiable assets | 18,148 | ||||||
Goodwill | 25,996 | [11] | $ 76,900 | ||||
Total consideration | $ 44,144 | ||||||
[1] In connection with the Accu-Trade Acquisition, the Company entered into an agreement to provide one of the former owners with a one-year license to a certain product. The preliminary fair value of the license was determined to be $ 6.5 million, of which the Company received $ 1.2 million in cash upon the close of the Accu-Trade Acquisition. The $ 5.3 million difference between the fair value of $ 6.5 million and the $ 1.2 million in cash was recorded as non-cash consideration and the $ 6.5 million license fee was recorded in Other accrued liabilities as a contract liability on the Consolidated Balance Sheets and is being amortized into Other revenue on the Consolidated Statements of Income (Loss) over the one-year contract term. The current period revenue related to the non-cash consideration of $ 5.3 million is a non-cash reconciling item titled Amortization of deferred revenue related to Accu-Trade Acquisition on the Consolidated Statements of Cash Flows. As part of the Accu-Trade Acquisition, the Company may be required to pay additional consideration to the former owners based on the achievement of certain financial targets. The Company has the option to pay consideration in cash or certain amounts in stock, which would result in a variable number of shares being issued. The amount to be paid will be determined by the acquired business’ future performance to be attained over a three-year performance period; based on certain tiered performance metrics the maximum amount to be paid is $ 63.0 million, of which a maximum of $ 15.0 million could be in stock, with additional upside for performance that exceeds the tiered performance metrics. The contingent consideration is classified as Level 3 in the fair value hierarchy. The fair value is measured based on a Monte Carlo simulation. This amount represents the estimated fair value at the time of the acquisition. For more information on the fair value of the Accu-Trade contingent consideration, see Note 4 (Fair Value Measurements). Assets acquired primarily consist of accounts receivable. Preliminary information regarding the identifiable intangible assets acquired is as follows: Total liabilities assumed primarily consist of accounts payable. A reconciliation of cash consideration to Payments for the CIQ Acquisition, net of cash acquired in the Consolidated Statements of Cash Flows is as follows (in thousands): As part of the CIQ Acquisition, the Company may be required to pay up to an additional $ 50.0 million in cash consideration to the former owners based on two earn-out achievement objectives, including an earnings-related metric and lender market share. The actual amount to be paid will be based on the acquired business’s future performance to be attained over a three-year performance period. The fair value was estimated utilizing a Monte Carlo simulation or a scenario-based method, depending on the achievement objective. For more information on the fair value of the CIQ contingent consideration, see Note 4 (Fair Value Measurements). In connection with the Acquisition, CreditIQ’s unvested equity awards were cash settled. The fair value of these awards was $ 9.6 million and was based on the price paid per common share to the owners of the acquired business and recognized immediately after the Acquisition as compensation expense in General and administrative expense on the Company’s Consolidated Statements of Income (Loss). Assets acquired includes cash and cash equivalents, accounts receivable and other identifiable assets. Information regarding the identifiable intangible assets acquired is as follows: During the year ended December 31, 2022, the Company recorded a $ 0.2 million purchase accounting adjustment. Total liabilities assumed includes accounts payable, deferred income tax liabilities, net and other liabilities. |
Business Combination - Acquis_2
Business Combination - Acquisition Purchase Price Allocation (Parenthetical) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||
Mar. 01, 2022 | Nov. 05, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |||
Business Acquisition [Line Items] | |||||||
Acquisition-Date Fair Value | $ 15,679 | $ 19,900 | |||||
Goodwill | $ 102,856 | $ 26,227 | $ 0 | ||||
Amortization of deferred revenue | 4,417 | $ 0 | $ 0 | ||||
Purchase Accounting Adjustments | (231) | ||||||
Acquired Software | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition-Date Fair Value | $ 12,926 | $ 19,000 | |||||
Weighted-Average Amortization Period (in years) | 5 years | 5 years | |||||
Customer Relationships | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition-Date Fair Value | $ 1,307 | ||||||
Weighted-Average Amortization Period (in years) | 7 years | ||||||
Trade Names | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition-Date Fair Value | $ 1,446 | $ 900 | |||||
Weighted-Average Amortization Period (in years) | 10 years | 10 years | |||||
AccuTrade Acquisition | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | $ 64,663 | ||||||
Additional cash consideration required to be paid to former owners of acquired business | 63,000 | ||||||
Additional consideration required to be paid in stock to former owners of acquired business | 15,000 | ||||||
Revenue targets for contingent consideration performance period | 3 years | ||||||
Acquisition-Date Fair Value | [1] | $ 15,679 | |||||
Goodwill | 76,860 | 26,200 | |||||
Preliminary fair value of the license | 6,500 | ||||||
Amortization of deferred revenue | 5,300 | ||||||
Cash | $ 1,200 | ||||||
Preliminary Fair Value Difference | 5,300 | ||||||
License fee | 6,500 | ||||||
Credit IQ Acquisition | |||||||
Business Acquisition [Line Items] | |||||||
Cash consideration | [2] | $ 29,965 | |||||
Less: Cash settlement of CIQ Acquisition's unvested equity awards | [3] | (9,626) | |||||
Less: Cash acquired | (81) | ||||||
Payments for CIQ Acquisition, net of cash acquired | 20,258 | ||||||
Additional cash consideration required to be paid to former owners of acquired business | $ 50,000 | ||||||
Revenue targets for contingent consideration performance period | 3 years | ||||||
Acquisition-Date Fair Value | [4] | $ 19,900 | |||||
Goodwill | 25,996 | [5] | 76,900 | ||||
Cash settlement of Acquisition's unvested equity awards | [3] | $ 9,626 | |||||
Purchase Accounting Adjustments | $ 200 | ||||||
[1] Preliminary information regarding the identifiable intangible assets acquired is as follows: A reconciliation of cash consideration to Payments for the CIQ Acquisition, net of cash acquired in the Consolidated Statements of Cash Flows is as follows (in thousands): In connection with the Acquisition, CreditIQ’s unvested equity awards were cash settled. The fair value of these awards was $ 9.6 million and was based on the price paid per common share to the owners of the acquired business and recognized immediately after the Acquisition as compensation expense in General and administrative expense on the Company’s Consolidated Statements of Income (Loss). Information regarding the identifiable intangible assets acquired is as follows: During the year ended December 31, 2022, the Company recorded a $ 0.2 million purchase accounting adjustment. |
Fair Value Of Measurements - Sc
Fair Value Of Measurements - Schedule of Company's Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Level3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | $ 55,871 | $ 23,805 |
Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 55,871 | 23,805 |
Total | 55,871 | 23,805 |
Recurring | Level1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 0 | 0 |
Total | 0 | 0 |
Recurring | Level2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 0 | 0 |
Total | 0 | 0 |
Recurring | Level3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | 55,871 | 23,805 |
Total | $ 55,871 | $ 23,805 |
Fair Value Measurements - Sched
Fair Value Measurements - Schedule Of Contingent Consideration (Details) - Level3 $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 USD ($) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent consideration, Beginning | $ 23,805 | |
Addition Related to Accu-Trade Acquisition | 23,936 | |
Contingent consideration fair value adjustment | 8,130 | [1] |
Contingent Consideration,Ending | $ 55,871 | |
[1] Fair value adjustments on contingent considerations are reflected within Other expense, net in the Consolidated Statements of Income (Loss). |
Fair Value Measurements - Sch_2
Fair Value Measurements - Schedule the Range of Significant Inputs and Assumptions Used in the Contingent Consideration Valuations (Details) | Dec. 31, 2022 |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Contingent Consideration, volatility range | 49 |
Minimum | Volatility | |
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | |
Contingent Consideration, volatility range | 25 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Millions | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration, volatility range | 49 | |
Volatility | Minimum | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration, volatility range | 25 | |
Other Accrued Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | $ 9.4 | |
Other Noncurrent Liabilities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration | $ 46.5 | $ 23.8 |
Revenue - Additional Informatio
Revenue - Additional Information (Details) - Segment | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |||
Number of reportable segment | 1 | 1 | 1 |
Revenue - Summary of Revenue Di
Revenue - Summary of Revenue Disaggregated by Sales Channel and Major Products and Services (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 653,876 | $ 623,683 | $ 547,503 |
Subscription Advertising and Digital Solutions | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | 540,829 | 518,270 | 436,441 |
Display Advertising | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | 88,397 | 85,169 | 84,630 |
Pay Per Lead | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | 9,351 | 12,346 | 18,557 |
Other | |||
Disaggregation Of Revenue [Line Items] | |||
Total revenue | $ 15,299 | $ 7,898 | $ 7,875 |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets, net - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill And Other Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 102,856 | $ 26,227 | $ 0 |
Goodwill, impairment | $ 0 | $ 0 | 505,900 |
Indefinite-lived intangibles asset, impairment | $ 400,000 | ||
Impairment, Intangible Asset, Indefinite-Lived (Excluding Goodwill), Statement of Income or Comprehensive Income [Extensible Enumeration] | Goodwill and Intangible Asset Impairment |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets, net - Changes in the Carrying Amount of Goodwill and Indefinite-lived Intangible Asset (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill And Indefinite Lived Intangible Assets [Line Items] | ||
Goodwill, Beginning balance | $ 26,227 | $ 0 |
Goodwill, Additions | 76,860 | 26,227 |
Goodwill, Adjustments | (231) | |
Goodwill, Ending balance | 102,856 | 26,227 |
Trade Name | ||
Goodwill And Indefinite Lived Intangible Assets [Line Items] | ||
Indefinite lived intangibles asset, Beginning balance | 390,020 | 390,020 |
Goodwill, Additions | 0 | 0 |
Goodwill, Adjustments | 0 | |
Indefinite lived intangibles asset, Ending balance | $ 390,020 | $ 390,020 |
Goodwill and Other Intangible_5
Goodwill and Other Intangible Assets - Changes in the Carrying Amount of Goodwill and Indefinite-lived Intangible Asset (Parenthetical) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Mar. 01, 2022 | Nov. 05, 2021 | [1] | |
Goodwill And Indefinite Lived Intangible Assets [Line Items] | ||||||
Goodwill | $ 102,856 | $ 26,227 | $ 0 | |||
Goodwill, impairment | 0 | $ 0 | $ 505,900 | |||
AccuTrade Acquisition | ||||||
Goodwill And Indefinite Lived Intangible Assets [Line Items] | ||||||
Goodwill | 26,200 | $ 76,860 | ||||
Credit IQ Acquisition | ||||||
Goodwill And Indefinite Lived Intangible Assets [Line Items] | ||||||
Goodwill | $ 76,900 | $ 25,996 | ||||
[1] During the year ended December 31, 2022, the Company recorded a $ 0.2 million purchase accounting adjustment. |
Goodwill and Other Intangible_6
Goodwill and Other Intangible Assets, net - Definite-Lived Intangible Assets by Major Asset Class (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Finite Lived Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Carrying Amount | $ 935,819 | $ 920,140 |
Definite-lived intangible assets, Accumulated Amortization | (618,751) | (540,736) |
Definite-lived intangible assets, Net Carrying Amount | 317,068 | 379,404 |
Customer Relationships | ||
Finite Lived Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Carrying Amount | 833,847 | 832,540 |
Definite-lived intangible assets, Accumulated Amortization | (556,053) | (487,782) |
Definite-lived intangible assets, Net Carrying Amount | 277,794 | 344,758 |
Acquired Software | ||
Finite Lived Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Carrying Amount | 73,626 | 60,700 |
Definite-lived intangible assets, Accumulated Amortization | (48,288) | (40,981) |
Definite-lived intangible assets, Net Carrying Amount | 25,338 | 19,719 |
Other Trade Names | ||
Finite Lived Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Carrying Amount | 26,246 | 24,800 |
Definite-lived intangible assets, Accumulated Amortization | (12,310) | (9,873) |
Definite-lived intangible assets, Net Carrying Amount | 13,936 | 14,927 |
Content Library | ||
Finite Lived Intangible Assets [Line Items] | ||
Definite-lived intangible assets, Gross Carrying Amount | 2,100 | 2,100 |
Definite-lived intangible assets, Accumulated Amortization | (2,100) | (2,100) |
Definite-lived intangible assets, Net Carrying Amount | $ 0 | $ 0 |
Goodwill and Other Intangible_7
Goodwill and Other Intangible Assets, net - Projected Annual Amortization Expense for Amortizable Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 76,634 | |
2024 | 74,028 | |
2025 | 59,285 | |
2026 | 37,876 | |
2027 | 31,619 | |
Thereafter | 37,626 | |
Definite-lived intangible assets, Net Carrying Amount | $ 317,068 | $ 379,404 |
Debt - Additional Information (
Debt - Additional Information (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||||||
Oct. 30, 2020 USD ($) | May 31, 2019 | May 31, 2017 USD ($) | Jun. 30, 2020 | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Oct. 31, 2020 | Dec. 31, 2019 | |
Line Of Credit Facility [Line Items] | |||||||||
Basis spread on variable rate | 0.50% | 0.75% | |||||||
Net leverage ratio | 4.25 | ||||||||
Minimum interest coverage ratio | 3% | ||||||||
Net Leverage Ratio | 5.7 | ||||||||
Applicable margins | 0.50% | ||||||||
Cash and cash equivalents | $ 31,715 | $ 39,069 | |||||||
Debt Instrument, Payment Terms | Interest on the notes is due semi-annually on May 1 and November 1. | ||||||||
Senior Secured Leverage Ratio | 3.50 | ||||||||
Margin added to ABR | 1.75% | 1.50% | |||||||
Debt Instrument, Covenant Description | The Company’s borrowings are limited by its Senior Secured Leverage Ratio and Consolidated Interest Coverage Ratio, which are calculated in accordance with our Credit Agreement, and were 0.4x and 5.7x as of December 31, 2022, respectively. | ||||||||
Borrowings | $ 45,000 | 0 | $ 565,000 | ||||||
Repayment of borrowings | 41,250 | 120,000 | 615,625 | ||||||
Debt issuance costs | $ 11,100 | $ 14,300 | |||||||
Other (expense) income | $ 1,800 | ||||||||
January 1, 2021 through Maturity June 30, 2023 | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Interest coverage ratio | 3 | ||||||||
Credit Agreement Amendment (Third Amendment) | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Aggregate principal amount of debt refinanced | $ 430,000 | ||||||||
Revised debt instrument, maturity date | May 31, 2025 | ||||||||
6.375% Senior Unsecured Notes Due 2028 | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Proceeds from issuance initial public offering | $ 400,000 | ||||||||
Debt Instrument, Interest Rate, Stated Percentage | 6.375% | ||||||||
Minimum | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Net leverage ratio | 3.75 | ||||||||
Interest coverage ratio | 2.75 | ||||||||
Maximum | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Euro dollar rate margin | 2.75% | 2.50% | |||||||
Term Loan And Revolving Credit Facility | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Credit agreement maturity date | May 31, 2022 | ||||||||
Line of credit facility description | 0 | ||||||||
Net leverage ratio | 4.50 | ||||||||
Revolving Credit Facility | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Aggregate principal amount | $ 450,000 | ||||||||
Net leverage ratio | 6.50 | ||||||||
Net Leverage Ratio | 3 | 2.75 | |||||||
Cash and cash equivalents | $ 75,000 | ||||||||
Mandatory prepayment with unrestricted cash in excess of specified amount | $ 75,000 | ||||||||
Senior Secured Leverage Ratio | 0.4 | ||||||||
Borrowing capacity | $ 45,000 | ||||||||
Loan payments | $ 30,000 | ||||||||
Effective interest rate | 6.40% | ||||||||
Borrowings | $ 215,000 | ||||||||
Line of credit outstanding borrowings | 15,000 | ||||||||
Revolving Credit Facility | Credit Agreement Amendment (Third Amendment) | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Line of credit | $ 230,000 | ||||||||
Letter Of Credit | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Aggregate principal amount | 25,000 | ||||||||
Term Loan | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Aggregate principal amount | $ 450,000 | ||||||||
Line of credit | $ 66,300 | ||||||||
Effective interest rate | 6.70% | ||||||||
Repayment of loan | $ 11,300 | ||||||||
Line of credit facility, frequency of payments | 0 | ||||||||
Term Loan | Credit Agreement Amendment (Third Amendment) | |||||||||
Line Of Credit Facility [Line Items] | |||||||||
Line of credit | $ 200,000 |
Debt - Schedule of Company's Co
Debt - Schedule of Company's Contractual Payments (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Debt Disclosure [Abstract] | |
Long term debt, 2023 | $ 16,250 |
Long term debt, 2024 | 20,000 |
Long term debt, 2025 | 45,000 |
Long term debt, 2026 | 0 |
Long term debt, 2027 | 0 |
Thereafter | 400,000 |
Long term debt, Total | $ 481,250 |
Interest Rate Swap - Additional
Interest Rate Swap - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Derivative [Line Items] | |||
Reclassified from accumulated other comprehensive (loss) into Interest expense, net | $ 2.4 | $ 5.7 | $ 11.1 |
Derivative Instrument, Gain (Loss) Reclassified from AOCI into Income, Effective Portion, Statement of Income or Comprehensive Income [Extensible Enumeration] | Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax | Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax |
Reclassified from accumulated other comprehensive (loss) into income tax expenses (benefit) | $ (0.4) | $ (0.9) | $ (1.3) |
Swap | Designated as Hedging Instrument | Cash Flow Hedging | |||
Derivative [Line Items] | |||
Fixed rate of interest | 2.96% | ||
Notional amount | $ 300 | ||
Unrealized loss of fair value | 3.5 | ||
Payments related to fair value | $ 3.3 | $ 8.6 | $ 7 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
May 31, 2016 | Dec. 31, 2022 | Dec. 31, 2021 | |
Leases [Abstract] | |||
Lease expiration date | 2031-06 | ||
Lease escalate percentage per year | 2.50% | ||
Operating lease assets | $ 13,700 | $ 14,600 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Investments and other assets, net | Investments and other assets, net | |
Operating lease liabilities | $ 28,539 | $ 30,800 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Other accrued liabilities | Other accrued liabilities | |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other noncurrent liabilities | Other noncurrent liabilities |
Leases - Scheduled Future Minim
Leases - Scheduled Future Minimum Lease Payments Under Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
2023 | $ 4,042 | |
2024 | 4,154 | |
2025 | 4,570 | |
2026 | 4,684 | |
2027 | 3,991 | |
Thereafter | 17,750 | |
Total minimum lease payments | 39,191 | |
Less: Imputed interest | (10,652) | |
Present value of the minimum lease payments | 28,539 | $ 30,800 |
Less: Current maturities of lease obligations | (1,984) | |
Long-term lease obligations | $ 26,555 |
Leases - Other Information Rela
Leases - Other Information Related to Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income statement information: | |||
Operating lease cost | $ 2,993 | $ 3,541 | $ 3,848 |
Short-term lease cost | 137 | 600 | 856 |
Variable lease cost | 3,443 | 3,034 | 2,834 |
Total lease cost | 6,573 | 7,175 | 7,538 |
Other information: | |||
Cash paid for operating leases | $ 4,470 | $ 4,856 | $ 3,320 |
Weighted-average remaining lease term (in months) | 101 months | 112 months | 122 months |
Weighted-average discount rate as of December 31 | 7.50% | 7.40% | 7.40% |
Stockholders Equity - Additiona
Stockholders Equity - Additional Information (Details) - Common Stock - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 1 Months Ended | 12 Months Ended |
Feb. 28, 2022 | Dec. 31, 2022 | |
Stockholders Equity [Line Items] | ||
Share repurchase program, duration | 3 years | |
Share repurchase program, authorized amount | $ 200 | |
Share purchased and retired | 4.2 | |
Share purchased and retired, amount | $ 49 | |
Stock Purchased Average Price Per Share | $ 11.75 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, shares in Thousands | 1 Months Ended | 12 Months Ended | ||
May 31, 2017 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 22,342,000 | $ 21,431,000 | $ 15,155,000 | |
Award vesting period | 3 years | |||
Weighted average grant-date fair value of RSUs granted | $ 9.39 | |||
Options expiration period | 10 years | |||
Stock-based compensation | $ 22,342,000 | 21,431,000 | $ 15,155,000 | |
Developed technology costs | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Stock-based compensation expense | $ 100,000 | |||
Employee Stock Purchase Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Eligible employees payroll deductions percentage | 10% | |||
Description of terms of award | 0 | |||
Purchase price of common stock as percentage of market value | 85% | |||
Stock-based compensation | $ 600,000 | $ 700,000 | $ 700,000 | |
Shares available for issuance under ESPP | 2,100 | |||
Stock issued during period shares share based compensation | 200 | 200 | 300 | |
RSUs | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Weighted average grant-date fair value of RSUs granted | $ 14.94 | $ 5.87 | ||
Aggregate fair value of share appreciation rights vested | $ 16,900,000 | $ 14,700,000 | $ 8,900,000 | |
Number of share units granted | 2,526 | |||
PSUs | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share units performance period | 3 years | |||
Number of share units granted | 305 | |||
Maximum | Employee Stock Purchase Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Purchase price of common stock | $ 10,000 | |||
Shares available for issuance under ESPP | 3,000 | |||
Maximum | RSUs | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 4 years | |||
Maximum | PSUs | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share units vesting percentage | 200% | |||
Minimum | RSUs | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 1 year | |||
Minimum | PSUs | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Share units vesting percentage | 0% | |||
Omnibus Plan | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Common stock shares available for future grants | 6,800 | |||
Omnibus Plan | Maximum | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Common stock shares issued | 18,000 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Payment Arrangement [Abstract] | |||
Stock-based compensation expense | $ 22,342 | $ 21,431 | $ 15,155 |
Income tax benefit related to stock-based compensation expense | $ 0 | $ 0 | $ 0 |
Stock-based compensation - Summ
Stock-based compensation - Summary of Stock-based Compensation Expense by Financial Statement (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Total | $ 22,342 | $ 21,431 | $ 15,155 |
Cost of Revenue and Operations | |||
Total | 955 | 876 | 593 |
Product and Technology | |||
Total | 6,647 | 5,455 | 3,314 |
Marketing and Sales | |||
Total | 4,921 | 5,202 | 3,612 |
General and Administrative | |||
Total | $ 9,819 | $ 9,898 | $ 7,636 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Outstanding Stock-based Compensation Awards (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unearned Compensation | $ 32,876 |
RSUs | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unearned Compensation | $ 29,099 |
Weighted-Average Remaining Period (in years) | 2 years |
PSUs | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unearned Compensation | $ 533 |
Weighted-Average Remaining Period (in years) | 2 years 2 months 12 days |
ESPP | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unearned Compensation | $ 251 |
Weighted-Average Remaining Period (in years) | 3 months 18 days |
Employee Stock Option | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Unearned Compensation | $ 2,993 |
Weighted-Average Remaining Period (in years) | 1 year 8 months 12 days |
Stock-Based Compensation - Su_2
Stock-Based Compensation - Summary of RSU Activity (Details) - RSUs shares in Thousands | 12 Months Ended | |
Dec. 31, 2022 $ / shares shares | ||
Number of Share Units | ||
Share Units, Outstanding as of December 31,2021 | shares | 3,683 | |
Share Units, Granted | shares | 2,526 | |
Share Units, Vested and delivered | shares | (1,598) | |
Share Units, Forfeited | shares | (840) | |
Share Units, Outstanding as of December 31,2022 | shares | 3,771 | [1] |
Weighted- Average Grant Date Fair Value | ||
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2021 | $ / shares | $ 10.95 | |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | 14.21 | |
Weighted-Average Grant Date Fair Value, Vested and delivered | $ / shares | 10.65 | |
Weighted-Average Grant Date Fair Value, Forfeited | $ / shares | 12.68 | |
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2022 | $ / shares | $ 12.88 | [1] |
[1] Includes 63 RSUs that were vested, but not yet delivered. |
Stock-Based Compensation - Su_3
Stock-Based Compensation - Summary of RSU Activity (Parenthetical) (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2022 shares | |
RSUs | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
RSUs vested but not yet delivered | 63 |
Stock-Based Compensation - Su_4
Stock-Based Compensation - Summary of PSU Activity (Details) - PSUs shares in Thousands | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of Share Units | |
Share Units, Outstanding as of December 31,2021 | shares | 142 |
Share Units, Granted | shares | 305 |
Share Units, Vested and delivered | shares | (142) |
Share Units, Forfeited | shares | (60) |
Share Units, Outstanding as of December 31,2022 | shares | 245 |
Weighted- Average Grant Date Fair Value | |
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2021 | $ / shares | $ 23.98 |
Weighted-Average Grant Date Fair Value, Granted | $ / shares | 14.84 |
Weighted-Average Grant Date Fair Value, Vested and delivered | $ / shares | 23.98 |
Weighted-Average Grant Date Fair Value, Forfeited | $ / shares | 15.07 |
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2022 | $ / shares | $ 14.78 |
Stock-Based Compensation - Su_5
Stock-Based Compensation - Summary of Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of Share Units | ||
Share Units, Outstanding as of December 31,2021 | 804 | |
Share Units, Granted | 263 | |
Share Units, Exercised | 0 | |
Share Units, Forfeited | 0 | |
Share Units, Outstanding as of December 31,2022 | 1,067 | 804 |
Share Units, Exercisable as of December 31, 2022 | 0 | |
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2021 | $ 5.27 | |
Weighted- Average Grant Date Fair Value, Granted | 9.39 | |
Weighted Average Grant Date Fair Value, Exercised | 0 | |
Weighted- Average Grant Date Fair Value, Forfeited | 0 | |
Weighted- Average Grant Date Fair Value, Outstanding as of December 31, 2022 | $ 6.28 | $ 5.27 |
Weighted-Average Remaining Contractual Term, Outstanding | 7 years 11 months 23 days | 8 years 6 months 29 days |
Aggregate Intrinsic Value, Outstanding | $ 4,296 | $ 5,754 |
Stock-Based Compensation - Su_6
Stock-Based Compensation - Summary of Fair Value of Stock Options Granted are Estimated Using Black Scholes Option Pricing Model (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Fair Value Assumptions and Methodology [Abstract] | |||
Risk-free interest rate | 2.21% | 1.15% | 1.01% |
Weighted-average volatility | 65.22% | 69% | 53.08% |
Dividend Yield | 0% | 0% | 0% |
Expected years until exercise | 6 years 6 months | 6 years 6 months | 6 years 6 months |
Earnings (Loss) Per Share - Add
Earnings (Loss) Per Share - Additional Information (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Accu-Trade Acquisition [Member] | |
Business Acquisition [Line Items] | |
Potentional contingent consideration to be paid in stock | $ 15 |
Earnings (Loss) Per Share - Com
Earnings (Loss) Per Share - Computation of Basic and Diluted (Loss) Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Earnings Per Share [Abstract] | ||||
Net income (loss) | $ 17,206 | $ 10,791 | $ (789,106) | |
Basic weighted-average common shares outstanding | 68,215 | 68,727 | 67,241 | |
Effect of dilutive stock-based compensation awards | [1] | 1,434 | 2,610 | 0 |
Diluted weighted-average common shares outstanding | 69,649 | 71,337 | 67,241 | |
Earnings (loss) per share, basic | $ 0.25 | $ 0.16 | $ (11.74) | |
Earnings (loss) per share, diluted | $ 0.25 | $ 0.15 | $ (11.74) | |
[1] There were 2,033, 1,304 and 2,727 potential common shares excluded from diluted weighted-average common shares outstanding for the years ended December 31, 2022, 2021 and 2020 respectively, as their inclusion would have had an anti-dilutive effect. |
Income Taxes - Significant Comp
Income Taxes - Significant Components of (Loss) Income Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
U.S. | $ 22,533 | $ 9,444 | $ (938,248) |
Non-U.S. | 43 | 39 | 1,839 |
Income (loss) before income taxes | $ 22,576 | $ 9,483 | $ (936,409) |
Income Taxes - Schedule of Sign
Income Taxes - Schedule of Significant Components of the Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Current: | |||
U.S. federal | $ 2,991 | $ 516 | $ (13,799) |
U.S. state and local | 1,122 | (1,267) | 715 |
Non-U.S. | (26) | (164) | 164 |
Total current income tax expense (benefit) | 4,087 | 1,619 | (12,920) |
Deferred: | |||
U.S. federal | 579 | (2,599) | (100,211) |
U.S. state and local | 671 | (332) | (34,181) |
Non-U.S. | 33 | 4 | 9 |
Total deferred income tax expense (benefit) | 1,283 | (2,927) | (134,383) |
Income tax expense (benefit) | $ 5,370 | $ (1,308) | $ (147,303) |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Tax Provision Differed from Amounts Computed at the Statutory Federal Income Tax Rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |||
Income tax provision (benefit)at statutory rate | $ 4,743 | $ 1,994 | $ (196,646) |
State income taxes, net of federal income tax expense (benefit) | 1,122 | 378 | (37,566) |
Nondeductible executive compensation | 1,974 | 1,365 | 625 |
Nondeductible transaction expenses | (2,608) | 2,638 | 0 |
Tax credits | (1,455) | (2,379) | (2,375) |
Goodwill impairment | 0 | 0 | 13,683 |
Effect of change in apportionment factors | 0 | 0 | (2,228) |
NOL carrybacks rate differential | 0 | 0 | (3,270) |
Stock-based compensation | (1,432) | (3,010) | 1,062 |
Return to provision adjustments | 4,627 | (453) | (289) |
Uncertain tax positions | (4,042) | 1,551 | 1,317 |
Valuation allowance | 1,194 | (3,943) | 106,042 |
Other, net | 1,247 | 551 | (292) |
Income tax expense (benefit) | $ 5,370 | $ (1,308) | $ (147,303) |
Income tax provision at statutory rate, percent | 21% | 21% | 21% |
State income taxes, net of federal income tax benefit, percent | 5% | 4% | 4% |
Nondeductible executive compensation, percent | 8.70% | 14.40% | (0.10%) |
Nondeductible transaction expenses percent | (11.60%) | 27.80% | 0% |
Tax credits, percent | (6.40%) | (25.10%) | 0.30% |
Goodwill impairment,percent | 0% | 0% | 1.50% |
Effect of change in apportionment factors, percent | 0% | 0% | 0.20% |
NOL carrybacks rate differential | 0% | 0% | 0.30% |
Stock-based compensation, percent | (6.30%) | (31.70%) | (0.10%) |
Return to provision adjustments, percent | 20.50% | (4.80%) | 0% |
Uncertain tax positions, percent | (17.90%) | 16.40% | (0.10%) |
Valuation allowance | 5.30% | (41.60%) | (11.30%) |
Other, net, percent | 5.50% | 5.80% | 0% |
Income tax (benefit) expense, percent | 23.80% | (13.80%) | 15.70% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Line Items] | |||
Deferred tax assets, net operating loss carryforwards, federal | $ 2.5 | $ 10.6 | |
Tax cuts and jobs act of 2017 accounting description | The Tax Cuts and Jobs Act enacted in December 2017, amended Internal Revenue Code Section 174 to require that specific research and experimental expenditures be capitalized and amortized over five years (15 years for non-U.S. R&D expenditures) beginning in the Company’s 2022 fiscal year. | ||
Decrease in uncertain tax positions | $ 0.4 | ||
Uncertain tax positions | 0.3 | 2.6 | $ 1.6 |
Federal | |||
Income Tax Disclosure [Line Items] | |||
Deferred tax assets, tax credit carryforwards research and development | $ 1.2 | $ 4.2 | |
Tax credit carryforward, expiration period | 20 years | 5 years |
Income Taxes - Significant Co_2
Income Taxes - Significant Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Deferred income tax liabilities: | |||
Definite lived intangibles | $ 0 | $ (16,973) | |
Depreciation | (5,787) | (8,428) | |
Indefinite lived intangibles | (4,237) | 0 | |
Right of use assets | (3,445) | (3,687) | |
Other | (2,833) | (1,708) | |
Total deferred tax liabilities | (16,302) | (30,796) | |
Deferred income tax assets: | |||
Accrued compensation | 8,748 | 10,613 | |
Definite lived intangibles | 239 | 0 | |
Capitalised Research And Development Costs | 15,242 | 0 | |
Goodwill | 79,994 | 91,756 | |
Indefinite lived intangibles | 0 | 5,734 | |
Lease obligations | 7,161 | 7,762 | |
NOL and tax credit carryforwards | 3,688 | 14,804 | |
Other | 3,171 | 2,286 | |
Total deferred tax assets | 118,243 | 132,955 | |
Less: Valuation allowance | (103,294) | $ (30,800) | (102,099) |
Net deferred tax liability | $ (1,353) | $ (60) |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities Recognized in the Company's Consolidated Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Income Tax Disclosure [Abstract] | ||
Investments and other assets,net | $ 48 | $ 60 |
Other noncurrent liabilities | (1,401) | 0 |
Net deferred tax liability | $ (1,353) | $ (60) |
Income Taxes - Summary of Uncer
Income Taxes - Summary of Uncertain Tax Positions (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Balance as of January 1 | $ 9,851 | $ 8,788 |
Additions based on tax positions related to the current year | 382 | 550 |
Additions for tax positions of prior years | 294 | 862 |
Reductions for tax positions of prior years | (7,974) | (349) |
Income before income taxes | $ 2,553 | $ 9,851 |
Segment Information - Additiona
Segment Information - Additional Information (Details) - Segment | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Segment Reporting [Abstract] | |||
Number of operating segment | 1 | 1 | 1 |
Number of reportable segment | 1 | 1 | 1 |
Schedule II Valuation and Qua_2
Schedule II Valuation and Qualifying Accounts - (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Allowance for doubtful accounts: | |||
Balance at Beginning of Period | $ 1,665 | $ 4,364 | $ 5,045 |
Additions Charged to Costs and Expenses | 1,888 | 164 | 4,380 |
Write-offs | (2,314) | (3,268) | (5,330) |
Recoveries | 651 | 405 | 269 |
Balance at End of Period | $ 1,890 | $ 1,665 | $ 4,364 |