| Organization and Significant Accounting Policies (Policies) | 8 Months Ended | 9 Months Ended | 12 Months Ended |
| Dec. 31, 2019 | Sep. 30, 2020 | Dec. 31, 2020 |
| Basis of Presentation | | | Basis of Presentation and Principles of
Consolidation
The consolidated financial statements include the accounts of the
Company and its controlled subsidiaries and have been prepared in
accordance with accounting principles generally accepted in the
United States (“U.S. GAAP”). The financial information
set forth herein reflects: (a) the consolidated statements of
operations and comprehensive loss, stockholders’ equity, and
cash flows for the years ended December 31, 2020, 2019, and
2018 and (b) the consolidated balance sheets as of
December 31, 2020 and 2019. The consolidated financial
statements for the years ended December 31, 2020, 2019, and
2018 reflect Topco’s basis in the assets and liabilities of
the Company, as a result of the 2014 Topco Acquisition. The
Company’s share in the earnings or losses for its joint
ventures is reflected in “Investments in unconsolidated
affiliates” and “Cost of revenues” in the
Consolidated Balance Sheets and Consolidated Statements of
Operations and Comprehensive Loss, respectively. All intercompany
balances and transactions have been eliminated upon
consolidation. |
| Use of Estimates | | | Use of Estimates
The preparation of the Company’s consolidated financial
statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the balance sheet date and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from such estimates. The most significant estimates
include revenues, workers’ compensation and employee medical
claim reserves, fair value of contingent consideration, leases,
income taxes, equity-based compensation, derivative instruments and
fair value considerations in applying purchase accounting and
assessing goodwill and other asset impairments. |
| Concentration of Credit Risk | | | Concentration of Credit Risk
Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of
accounts receivable and cash balances at various financial
institutions. The Company maintains cash balances in accounts at
various financial institutions. At times such cash balances may
exceed federally insured limits. The Company has not experienced
any losses in such accounts. |
| Cash and Cash Equivalents | | | Cash and Cash Equivalents
Cash and cash equivalents include cash on hand and highly liquid
investments having an original maturity of three months or less.
The Company’s investments consist primarily of institutional
money market funds and U.S. Treasury securities. The
Company’s investments are carried at cost, which approximates
fair value. The Company has restricted cash related to funds
received from clients that will be disbursed at the direction of
those clients. Corresponding liabilities have been recorded in
“Other accrued expenses” in the Consolidated Balance
Sheets.
The following table provides a reconciliation of cash, cash
equivalents, and restricted cash reported within the
Company’s consolidated balance sheets that sum to the total
of the same such amounts shown in the Company’s Consolidated
Statements of Cash Flows:
December 31,
2020 2019 2018
(in thousands)
Cash and cash equivalents $ 204,301 $ 184,224 $ 141,590
Restricted cash 15,665 14,801 2,929
Total cash, cash equivalents and restricted cash $ 219,966 $ 199,025 $ 144,519 |
| Fair Value Measurements | | | Fair Value Measurements
The Company defines fair value as the price that would be received
from selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
When determining the fair value measurements for assets and
liabilities, which are required to be recorded at fair value, the
Company considers the principal or most advantageous market in
which the Company would transact and the market-based risk
measurements or assumptions that market participants would use in
pricing the asset or liability, such as risks inherent in valuation
techniques, transfer restrictions and credit risk. Fair value is
estimated by applying the following hierarchy, which prioritizes
the inputs used to measure fair value into three levels and bases
the categorization within the hierarchy upon the lowest level of
input that is available and significant to the fair value
measurement:
Level 1 — Quoted prices in active markets for identical
assets or liabilities.
Level 2 — Observable inputs other than quoted prices in
active markets for identical assets and liabilities, quoted prices
for identical or similar assets or liabilities in inactive markets,
or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the
assets or liabilities.
Level 3 — Inputs that are generally unobservable and
typically reflect management’s estimate of assumptions that
market participants would use in pricing the asset or
liability.
The valuation techniques used to measure the fair value of all
other financial instruments, all of which have counterparties with
high credit ratings, were valued based on quoted market prices or
model driven valuations using significant inputs derived from or
corroborated by observable market data. |
| Earnings Per Share | | | Earnings Per Share
The Company calculates earnings per share (“EPS”) using
a dual presentation of basic and diluted earnings per share. Basic
earnings per share is calculated by dividing net income by the
weighted-average shares of common stock outstanding without the
consideration for potential dilutive shares of common stock.
Diluted earnings per share represents basic earnings per share
adjusted to include the potentially dilutive effect of outstanding
share option awards, non-vested if-converted
The following is a reconciliation of basic and diluted net loss per
common share:
Year Ended
December 31,
(in thousands, except share and earnings per
share data) 2020 2019 2018
Basic and diluted:
Net loss attributable to stockholders of Advantage Solutions
Inc. $ (162,443 ) $ (21,172 ) $ (1,157,332 )
Weighted-average number of common shares 223,227,833 203,750,000 203,750,000
Basic and diluted net loss per common share $ (0.73 ) $ (0.10 ) $ (5.68 )
As part of the Transactions, 5,000,000 Performance Shares were
issued to Topco at Closing, which were subject to vesting upon
satisfaction of a market performance condition for any period of 20
trading days out of 30 consecutive trading days during the
five-year period after the Closing, and Topco was not able to vote
or sell such shares until vesting. These Performance Shares were
considered contingently issuable shares and remained unvested as of
December 31, 2020. Therefore, these Performance Shares are
excluded from shares outstanding for basic and diluted EPS until
the contingency is resolved. The 5,000,000 Performance Shares
vested on January 15, 2021, when the closing price for the
Class A common stock exceeded $12.00 per share for 20 trading
days out of 30 consecutive trading days.
The Company had 18,583,333 warrants, including 7,333,333 private
placement warrants held by the CP Sponsor, to purchase Class A
common stock at $11.50 per share at the Closing, and no such
warrants were exercised during the years ended December 31,
2020, 2019 and 2018. For the years ended December 31, 2020,
2019 and 2018, the Company has excluded the potential effect of
warrants to purchase shares of Class A common stock and
Performance Shares in the calculation of diluted net loss per
common share, as the effect would be anti-dilutive due to losses
incurred.
See Note 11 — Equity Based
Compensation and Equity |
| Income Taxes | | | Income Taxes
The Company accounts for income taxes using the asset and liability
method, under which deferred tax assets and liabilities are
recognized for the expected future tax consequences of temporary
differences between the financial reporting and tax bases of assets
and liabilities, and for operating losses and tax credit
carry-forwards. Deferred tax assets and liabilities are measured
using the currently enacted tax rates that apply to taxable income
in effect for the years in which those tax assets are expected to
be realized or settled. The income tax provision (benefit) is
computed on the pre-tax
Realization of the Company’s deferred tax assets is
principally dependent upon its achievement of future taxable
income, the estimation of which requires significant management
judgment. These judgments regarding future profitability may change
due to many factors, including future market conditions and the
Company’s ability to successfully execute its business plans.
These changes, if any, may require adjustments to deferred tax
asset balances and deferred income tax expense. |
| Recent Accounting Pronouncements | | | Recent Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”)
Accounting Standards Codification (“ASC”) is the sole
source of authoritative U.S. GAAP literature recognized by the FASB
and applicable to the Company. The Company has reviewed the FASB
issued Accounting Standards Update (“ASU”) accounting
pronouncements and interpretations thereof that have effectiveness
dates during the periods reported and in future periods. For any
new pronouncements announced, management considers whether the new
pronouncements could alter previous U.S. GAAP and determine whether
any new or modified principles will have a material impact on the
Company’s reported financial position or operations in the
near term. The applicability of any standard is subject to the
formal review of the Company’s financial management and
certain standards are under consideration.
Recent Accounting Standards Adopted by the Company
In June 2016, the Financial Accounting Standards Board
(“FASB”) issued Accounting Standards Update
(“ASU”) 2016-13, Financial
Instruments—Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments 2016-13
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement
(Topic 820): Disclosure Framework-Changes to the Disclosure
Requirements for Fair Value Measurement
Accounting Standards Recently Issued but Not Yet Adopted by the
Company
In March 2020 and January 2021, the FASB issued ASU 2020-04, Reference Rate Reform
(Topic 848): Facilitation of the Effects of Reference Rate
Reform on Financial Reporting 2021-01, Reference Rate Reform
(Topic 848): Scope 2020-04 2021-01 2020-04 2021-01 2020-04 2021-01
In December 2019, the FASB issued ASU No. 2019-12, Simplifying
the Accounting for Income Taxes (“ASU 2019-12”), Income Taxes ASU 2019-12 is
All other new accounting pronouncements issued, but not yet
effective or adopted have been deemed to be not relevant to the
Company and, accordingly, are not expected to have a material
impact once adopted. |
| Take 5 Matter | | | Take 5 Matter
On April 1, 2018, the Company acquired certain assets and
assumed liabilities of Take 5 Media Group (“Take 5”)
for total consideration of $81.6 million, including the fair
value of contingent consideration of $4.6 million and holdback
liabilities of $0.8 million. In June 2019, as a result of a
review of internal allegations related to inconsistency of data
provided by Take 5 to its clients, the Company commenced an
investigation into Take 5’s operations. In July 2019, as a
result of the Company’s investigation, the Company determined
that revenue during the fiscal year ended December 31, 2018
attributable to the Take 5 business had been recognized for
services that were not performed on behalf of clients of Take 5 and
that inaccurate reports were made to Take 5 clients about those
services (referred to as the “Take 5 Matter”). As a
result of these findings, in July 2019, the Company terminated all
operations of Take 5, including the use of its associated trade
names and the offering of its services to its clients and offered
refunds to Take 5 clients of collected revenues attributable to
Take 5 since the Company’s acquisition of Take 5. The
Company also determined that the amounts assigned to the assets of
Take 5 acquired on the acquisition date had been improperly
established based on inaccurate assumptions as to the fair value of
the assets acquired and recorded a loss on Take 5 charge of
$79.2 million in the Consolidated Statements of Operations and
Comprehensive Loss for the year ended December 31, 2018.
In May 2020, the Company received $7.7 million from its
representation warranty and indemnity policy related to the
Take 5 acquisition for claims related to the Take 5
Matter, the maximum aggregate recovery under the policy. |
| Foreign Currency | | | Foreign Currency
The Company’s reporting currency is U.S. dollars as that is
the currency of the primary economic environment in which the
Company operates. The Company translates the assets and liabilities
of its non-U.S. |
| Accounts Receivable and Expected Credit Losses | | | Accounts Receivable and Expected Credit Losses
Accounts receivable consist of amounts due from clients for
services provided in normal business activities and are recorded at
invoiced amounts. The Company measures expected credit losses
against certain billed receivables based upon the latest
information regarding whether invoices are ultimately collectible.
Assessing the collectability of client receivables requires
management judgment. The Company determines its expected credit
losses by specifically analyzing individual accounts receivable,
historical bad debts, client credit-worthiness, current economic
conditions, and accounts receivable aging trends. Valuation
reserves are periodically re-evaluated |
| Derivatives | | | Derivatives
The Company uses derivative financial instruments to hedge interest
rate and foreign exchange risk. Derivative instruments, used to
hedge interest rates, consist of interest rate swaps and interest
rate caps. Interest rate swap contracts involve the exchange of
floating rate interest payment obligations for fixed interest rate
payments without the exchange of the underlying principal amounts.
Interest rate cap contracts limit the floating interest rate
exposure to the indicative rate in the agreement. Derivatives are
initially recognized at fair value on the date a contract is
entered into and are subsequently re-measured |
| Property and Equipment | | | Property and Equipment
Property and equipment are stated at cost, and the balances are
presented net of accumulated depreciation. Depreciation expense is
calculated using the straight-line method over the estimated useful
lives of the assets. The following table provides the range of
estimated useful lives used for each asset type:
Leasehold improvements 3—10 years
Furniture and fixtures 3—7 years
Computer hardware and other equipment 3—5 years
Software 3—5 years
The Company capitalizes certain direct costs associated with the
development and purchase of internal-use
Leasehold improvements are amortized on a straight-line basis over
the shorter of their respective lease terms or their respective
estimated useful lives. The cost and accumulated depreciation of
assets sold or otherwise disposed of are removed from the
Consolidated Balance Sheets and the resulting gain or loss is
reflected in the “Cost of revenues” and “Selling,
general, administrative expenses” within the Consolidated
Statements of Operations and Comprehensive Loss, depending on the
nature of the assets. Expenditures for maintenance and repairs are
expensed as incurred, whereas expenditures for improvements and
replacements are capitalized. |
| Equity Method Investments | | | Equity Method Investments
Investments in companies in which the Company exercises significant
influence over the operating and financial policies of the investee
and are not required to be consolidated are accounted for using the
equity method. The Company’s proportionate share of the net
income or loss of equity method investments is included in results
of operations and any dividends received reduce the carrying value
of the investment. The excess of the cost of the Company’s
investment over its proportionate share of the fair value of the
net assets of the investee at the acquisition date is recognized as
goodwill and included in the carrying amount of the investment.
Goodwill in the equity method investments is not amortized. Gains
and losses from changes in the Company’s ownership interests
are recorded in results of operations until control is achieved. In
instances in which a change in the Company’s ownership
interest results in obtaining control, the existing carrying value
of the investment is remeasured to the acquisition date fair value
and any gain or loss is recognized in the Consolidated Statements
of Operations and Comprehensive Loss.
Distributions received from unconsolidated entities that represent
returns on the investor’s investment are reported as cash
flows from operating activities in the Company’s statement of
cash flows. Cash distributions from unconsolidated entities that
represent returns of the Company’s investment are reported as
cash flows from investing activities. |
| Business Combinations | | | Business Combinations
The Company accounts for business combinations using the
acquisition method. Under this method, the purchase price of an
acquisition is allocated to the underlying assets acquired and
liabilities assumed based upon their estimated fair values at the
date of acquisition. To the extent the purchase price exceeds the
fair value of the net identifiable tangible and intangible assets
acquired and liabilities assumed, such excess is allocated to
goodwill. Factors giving rise to goodwill generally include
assembled workforce, geographic presence, expertise, and synergies
that are anticipated as a result of the business combination,
including enhanced product and service offerings. The Company
determines the estimated fair values after review and consideration
of relevant information, including discounted cash flows, quoted
market prices and estimates made by management. The Company adjusts
the preliminary purchase price allocation, as necessary, during the
measurement period of up to one year after the acquisition closing
date as the Company obtains more information as to facts and
circumstances existing at the acquisition date impacting asset
valuations and liabilities assumed. Goodwill acquired in business
combinations is assigned to the reporting unit expected to benefit
from the combination as of the acquisition date.
Acquisition-related costs are recognized separately from the
acquisition and are expensed as incurred. |
| Goodwill and Indefinite Lived Intangible Assets | | | Goodwill and Indefinite Lived Intangible Assets
Goodwill represents the excess of the purchase price over the fair
value of the net identifiable tangible and intangible assets
acquired in an acquisition. The Company tests for impairment of
goodwill at the reporting unit level. The Company generally
combines reporting units, which are a component of an operating
segment when they have similar economic characteristics, nature of
services, types of client, distribution methods and regulatory
environment. The Company has two reporting units, sales and
marketing, which are also the Company’s operating
segments.
The Company tests its goodwill for impairment at the beginning of
the fourth quarter of a given fiscal year and whenever events or
changes in circumstances indicate that the carrying value of a
reporting unit may exceed its fair value. The Company has the
option to perform a qualitative assessment of whether it is more
likely than not that a reporting unit’s fair value is less
than its carrying value before performing a quantitative impairment
test. If the qualitative assessment indicates it is not more likely
than not that the fair value of a reporting unit, as determined
applying the quantitative impairment test described below, is less
than the carrying amount, then there is no need to perform the
quantitative impairment test. Upon performing the quantitative
impairment test, if the fair value of the reporting unit is less
than its carrying amount, goodwill is impaired and the excess of
the reporting unit’s carrying value over the fair value is
recognized as an impairment loss; however, the loss recognized
would not exceed the total amount of goodwill allocated to that
reporting unit.
The Company’s annual goodwill impairment assessment for the
year ended December 31, 2020 was performed as of
October 1, 2020. The Company utilizes a combination of income
and market approaches to estimate the fair value of its reporting
units. The income approach utilizes estimates of discounted cash
flows of the reporting units, which requires assumptions for the
reporting units’ revenue growth rates, operating margins,
terminal growth rates, and discount rates all of which require
significant management judgment. The market approach applies market
multiples derived from the historical earnings data of selected
guideline publicly-traded companies to the Company’s
reporting units’ businesses to yield a second assumed value
of each reporting unit, which requires significant management
judgment. The guideline companies are first screened by industry
group and then further narrowed based on the reporting units’
business descriptions, markets served, competitors, operating
margins, and revenue size. Market multiples are then selected from
within the range of these guideline companies multiples based on
the subject reporting unit. These assumptions are based on
significant inputs not observable in the market and thus represent
Level 3 measurements within the fair value hierarchy
(described in “Fair Value Measurements,” below). The
Company based its fair value estimates on assumptions it believes
to be reasonable but which are unpredictable and inherently
uncertain. A change in these underlying assumptions would cause a
change in the results of the tests and, as such, could cause fair
value to be less than the carrying amounts and result in an
impairment of goodwill in the future. Additionally, if actual
results are not consistent with the estimates and assumptions or if
there are significant changes to the Company’s planned
strategy, it may cause fair value to be less than the carrying
amounts and result in an impairment of goodwill in the future.
The Company compares a weighted average of the output from the
income and market approaches to the carrying value of each
reporting unit. The Company also compares the aggregate estimated
fair value of its reporting units to the estimated value of its
total invested capital on a marketable basis.
Based on the results of the Company’s quantitative impairment
test performed for its reporting units, the Company determined that
its goodwill is not impaired for the year ended December 31,
2020. The fair value of the sales reporting unit exceeded its
carrying value by 8.3%. The fair value of the marketing reporting
unit significantly exceeded its carrying value, which the Company
defines as greater than 20%. The Company determined that no
additional triggering events occurred that required the Company to
perform an interim goodwill impairment test as of December 31,
2020.
In performing the quantitative impairment test for the year ended
December 31, 2019, the Company had also determined that its
goodwill was not impaired. The fair value of the sales reporting
unit exceeded its carrying value by 3.5%. The fair value of the
marketing reporting unit significantly exceeded its carrying value.
The Company determined that no additional triggering events
occurred that required the Company to perform an interim goodwill
impairment test as of December 31, 2019. Accordingly, no
impairment related to the Company’s goodwill was recorded for
the year ended December 31, 2019.
During the year ended December 31, 2018, based on the results
of the Company’s quantitative impairment test performed for
the sales reporting unit, the Company recognized a
$652.0 million non-cash in-store non-cash
Based on the results of the quantitative impairment test performed
for the marketing reporting unit for 2018, the Company determined
that the Company’s goodwill was not impaired for the
marketing reporting unit for the year ended December 31, 2018.
The fair value of the marketing reporting unit significantly
exceeded its carrying value.
The Company’s indefinite-lived intangible assets are its
sales and marketing trade names. Intangible assets with indefinite
useful lives are not amortized but tested annually, at the
beginning of the fourth quarter, for impairment or more often if
events occur or circumstances change that would create a triggering
event. The Company has the option to perform a qualitative
assessment of whether it is more likely than not that the
indefinite-lived intangible asset’s fair value is less than
its carrying value before performing a quantitative impairment
test. The Company tests its indefinite-lived intangible assets for
impairment using a relief from royalty method by comparing the
estimated fair values of the indefinite-lived intangible assets
with the carrying values. The estimates used in the determination
of fair value are subjective in nature and involve the use of
significant assumptions. These estimates and assumptions include
revenue growth rates, terminal growth rates, discount rates and
royalty rates, all of which require significant management
judgment. The assumptions are based on significant inputs not
observable in the market and thus represent Level 3
measurements within the fair value hierarchy. The Company based its
fair value estimates on assumptions it believes to be reasonable,
but which are unpredictable and inherently uncertain. Actual future
results may differ from the estimates.
In connection with the Company’s annual quantitative
impairment test as of October 1, 2020 and 2019, the Company
concluded that its indefinite-lived intangible assets were not
impaired for the years ended December 31, 2020 and 2019. The
fair value of the indefinite-lived intangible assets related to
sales trade names exceeded its carrying value by 13.3% and 8.3% for
the years ended December 31, 2020 and 2019, respectively. The
fair value of the indefinite-lived intangible assets related to
marketing trade names exceeded its carrying value by 8.4% and 10.0%
for the years ended December 31, 2020 and 2019, respectively.
The Company determined that no additional triggering events
occurred that required the Company to perform an interim impairment
test of indefinite-lived intangible assets as of December 31,
2020 and 2019. Accordingly, no impairment related to the
Company’s intangible assets was recorded for the years ended
December 31, 2020 and 2019.
During the year ended December 31, 2018, the Company concluded
the carrying value of the indefinite-lived trade name in the sales
reporting unit exceeded its estimated fair value. While there was
no single determinative event or factor, the factors that led to
the impairment were the same circumstances outlined in the goodwill
impairment discussion above. As a result, the Company recognized a
non-cash |
| Long-Lived Assets | | | Long-Lived Assets
Long-lived assets to be held and used, including finite-lived
intangible assets, are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an
asset may not be fully recoverable. These events or changes in
circumstances may include a significant deterioration of operating
results, changes in business plans, or changes in anticipated
future cash flows. If an impairment indicator is present, the
Company evaluates recoverability by a comparison of the carrying
amount of the assets to future undiscounted net cash flows expected
to be generated by the assets. If the assets are impaired, the
impairment recognized is measured as the amount by which the
carrying amount exceeds the fair value of the assets. Fair value is
generally determined by estimates of discounted cash flows. The
discount rate used in any estimate of discounted cash flows would
be the rate required for a similar investment of like risk. No
impairment related to the Company’s long-lived assets was
recorded during the years ended December 31, 2020, 2019, and
2018.
As the Company assesses impairment of long-lived assets at the
lowest level for which identifiable cash flows are largely
independent of the cash flows of other assets and liabilities, the
Company has determined that the asset group for impairment testing
is comprised of the assets and liabilities of the Company’s
operating segments. The Company has identified client relationships
as the primary asset because it is the principal asset from which
the components derive their cash flow generating capacity. |
| Contingent Consideration | | | Contingent Consideration
Certain of the Company’s acquisition and sale agreements
include contingent consideration arrangements, which are generally
based on the achievement of future financial performance. If it is
determined the contingent consideration arrangements are not
compensatory, the fair values of these contingent consideration
arrangements are included as part of the purchase price of the
acquisitions or divestitures on their respective transaction dates.
For each transaction, the Company estimates the fair value of
contingent consideration payments as part of the initial purchase
price and records the estimated fair value of contingent
consideration related to proceeds from divestitures as an asset in
“Other Assets” or related to purchases of businesses as
a liability in “Other accrued expenses” or “Other
long-term liabilities” in the Consolidated Balance
Sheets.
The Company reviews and assesses the estimated fair value of
contingent consideration on a quarterly basis, and the updated fair
value could differ materially from the initial estimates. Changes
in the estimated fair value of contingent consideration liabilities
related to the time component of the present value calculation are
reported in “Interest expense” in the Consolidated
Statements of Operations and Comprehensive Loss. Adjustments to the
estimated fair value related to changes in all other unobservable
inputs are reported in “Selling, general, and administrative
expenses” in the Consolidated Statements of Operations and
Comprehensive Loss.
The portion of the cash settlement up to the acquisition date fair
value of the contingent consideration are classified as
“Contingent consideration payments” in cash flows from
financing activities, and amounts paid in excess of the acquisition
date fair value are classified as “Other accrued expenses and
other liabilities” in cash flows from operating activities in
the Consolidated Statements of Cash Flows. |
| Leases | | | Leases
In the first quarter of 2019, the Company adopted ASC 842,
Leases
The Company has obligations under various real estate leases,
equipment leases, and software license agreements. The Company
assesses whether these arrangements are or contain leases at lease
inception. Classification of the leases between financing and
operating leases is determined by assessing whether the lease
transfers ownership of the asset to the Company, the lease grants
an option for the Company to purchase the underlying asset, the
lease term is for the majority of the remaining asset’s
economic life, or if the minimum lease payments equals or
substantially exceed all of the leased asset’s fair market
value. As of December 31, 2020, the Company did not have any
finance leases. See Note 8, Leases |
| Self-Insurance Liability | | | Self-Insurance Liability
The Company maintains a high deductible program for workers’
compensation claims. Losses and liabilities relating to
workers’ compensation claims are fully insured beyond the
Company’s deductible limits. The Company’s estimated
liabilities are not discounted and are based on information
provided by third party administrators, combined with
management’s judgment regarding a number of assumptions and
factors, including the frequency and severity of claims, claims
development history, case jurisdiction, applicable legislation and
claims settlement practices. |
| Revenue Recognition | | | Revenue Recognition
The Company recognizes revenue when control of promised goods or
services are transferred to the client in an amount that reflects
the consideration that the Company expects to be entitled to in
exchange for such goods or services. Substantially all of the
Company’s contracts with clients involve the transfer of a
service to the client, which represents a performance obligation
that is satisfied over time because the client simultaneously
receives and consumes the benefits of the services provided. In
most cases, the contracts consist of a performance obligation that
is comprised of a series of distinct services that are
substantially the same and that have the same pattern of transfer
(i.e., distinct days of service). For these contracts, the Company
allocates the ratable portion of the consideration based on the
services provided in each period of service to such period.
Revenues related to the sales segment are primarily recognized in
the form of commissions, fee-for-service, and in-store media solutions, e-commerce services,
Marketing segment revenues are primarily recognized in the form
of fee-for-service (including executing in-person consumer
The Company disaggregates revenues from contracts with clients by
reportable segment. Revenues within each segment are further
disaggregated between brand-centric services and retail-centric
services. Brand-centric services are centered on providing
solutions to support manufacturers’ sales and marketing
strategies. Retail-centric services are centered on providing
solutions to retailers. Disaggregated revenues were as follows:
Year Ended
December 31,
2020 2019 2018
(in thousands)
Sales brand-centric services $ 1,204,240 $ 1,209,480 $ 1,177,989
Sales retail-centric services 856,353 745,225 679,015
Total sales revenues 2,060,593 1,954,705 1,857,004
Marketing brand-centric services 429,200 474,928 424,373
Marketing retail-centric services 665,878 1,355,430 1,426,251
Total marketing revenues 1,095,078 1,830,358 1,850,624
Total revenues $ 3,155,671 $ 3,785,063 $ 3,707,628
The Company is party to certain client contracts that include
variable consideration, whereby the ultimate consideration is
contingent on future events such as the client’s sales to
retailers, hours worked, event count, costs incurred, and
performance incentive bonuses. For commission based service
contracts, the consideration received from the client is variable
because the Company earns an agreed upon percentage of the
client’s sales to retailers, which is agreed upon on a
manufacturer-by-manufacturer e-commerce, manufacturer-by-manufacturer
For service contracts whereby the client is charged a fee per hour
incurred or fee per event completed, revenues are recognized over
time as actual hours are incurred or as events are completed,
respectively. For service contracts with a cost-plus arrangement,
revenues are recognized on a gross basis over time for a given
period based on the actual costs incurred plus a fixed mark-up client-by-client
For certain contracts with clients, the Company is entitled to
additional fees upon meeting specific performance goals or
thresholds, which are referred to as bonus revenues. Bonus revenues
are estimated and are recognized as revenues as the related
services are performed for the client.
The variability of the consideration for the services transferred
during a reporting period is typically resolved by the end of the
reporting period. However, for certain client contracts, the
Company is required to estimate the variable consideration for the
services that have been transferred to the client during the
reporting period. The Company typically estimates the variable
consideration based on the expected value method. Estimates are
based on historical experience and current facts known during the
reporting period. The Company only recognizes revenues related to
variable consideration if it is probable that a significant
reversal of revenues recognized will not occur when the uncertainty
associated with the variable consideration is resolved. When such
probable threshold is not satisfied, the Company will constrain
some or all of the variable consideration and the constrained
variable consideration will not be recognized as revenues. The
Company records an adjustment to revenue for differences between
estimated revenues and the amounts ultimately invoiced to the
client. Adjustments to revenue during the current period related to
services transferred during prior periods were not material during
the year ended December 31, 2020.
The Company has contracts that include fixed consideration such as
a fee per project or a fixed monthly fee. For contracts with a fee
per project, revenues are recognized over time using an input
method such as hours worked that reasonably depicts the
Company’s performance in transferring control of the services
to the client. The Company determined that the input method
represents a reasonable method to measure the satisfaction of the
performance obligation to the client. For contracts with a fixed
monthly fee, revenues are recognized using a time-based measure
resulting in a straight-line revenue recognition. A time-based
measure was determined to represent a reasonable method to measure
the satisfaction of the performance obligation to the client
because the Company has a stand ready obligation to make itself
available to provide services upon the client’s request or
the client receives the benefit from the Company’s services
evenly over the contract period.
The Company evaluates each client contract individually in
accordance with the applicable accounting guidance to determine
whether the Company acts as a principal (whereby the Company would
present revenues on a gross basis), or as an agent (whereby the
Company would present revenues on a net basis). While the Company
primarily acts as a principal in its arrangements and reports
revenues on a gross basis, the Company will occasionally act as an
agent and accordingly presents revenues on a net basis. For
example, for certain advertising arrangements, the Company’s
clients purchase media content in advance, and the Company does not
take on any risk of recovering its cost to acquire the media
content. As a result, the Company determined it acts as the agent
in these arrangements and records revenues and their related costs
on a net basis. However, in cases where media content is not
purchased in advance by its clients, the Company records such
revenues and its related costs on a gross basis, as it bears the
risk of recovering the costs to acquire the revenues related to
such media content and it is responsible for fulfillment of the
services thereunder.
Substantially all of the Company’s contracts with its clients
either have a contract term that is less than one year with options
for renewal and/or can be cancelled by either party upon 30 to 120
days’ notice. For the purpose of disclosing the transaction
price allocated to remaining unsatisfied performance obligations or
partially satisfied performance obligations, the Company elected
policies to: (1) exclude contracts with a contract term of one
year or less and (2) exclude contracts with variable
consideration that is allocated entirely to a wholly unsatisfied
performance obligation or to a wholly unsatisfied promise to
transfer a distinct service that forms part of a single performance
obligation when that performance obligation qualifies as a series
of remaining performance obligations. After applying these policy
elections, the Company determined that it does not have a
significant amount of fixed considerations allocated to remaining
performance obligations for contracts with a contract term that
exceeds one year.
When the Company satisfies its performance obligation and
recognizes revenues accordingly, the Company has a present and
unconditional right to payment and records the receivable from
clients in “Accounts receivable” in the Consolidated
Balance Sheet. The Company’s general payment terms are
short-term in duration and the Company does not adjust the promised
amount of consideration for the effects of a significant financing
component.
Contract liabilities represent deferred revenues which are cash
payments that are received in advance of the Company’s
satisfaction of the applicable obligation(s) and are included in
“Deferred revenues” in the Consolidated Balance Sheet.
Deferred revenues are recognized as revenues when the related
services are performed for the client. Revenues recognized during
the year ended December 31, 2020 included $33.2 million
of Deferred revenues as of December 31, 2019. |
| Uncertain Tax Positions | | | Uncertain Tax Positions
The Company accounts for uncertain tax positions when it is more
likely than not that the tax position will not be sustained on
examination by the taxing authorities, based on the technical
merits of the position. As of December 31, 2020, and 2019, the
Company’s unrecognized tax benefits were $0.6 million
and $0.6 million, respectively. All the unrecognized tax
benefits as of December 31, 2020 would be included in the
effective tax rate if recognized in future periods.
The Company is unaware of any positions for which it is reasonably
possible that the total amounts of unrecognized tax benefits will
significantly increase within the next twelve months. The Company
files tax returns in the United States, various states and foreign
jurisdictions. With few exceptions, as of December 31, 2020,
the Company is no longer subject to federal, state, or non-U.S.
The Company has elected to classify interest and penalties as
components of tax expense. These amounts were immaterial for the
years ended December 31, 2020, 2019 and 2018. |
| Equity-based Compensation | | | Equity-based Compensation
The Company measures the cost of non-employee Series C-2 |
| Other Comprehensive Income (Loss) | | | Other Comprehensive Income (Loss)
The Company’s comprehensive loss includes net loss as well as
foreign currency translation adjustments, net of tax. Unrealized
foreign currency exchange gains and losses on certain intercompany
transactions that are of a long-term investment nature (i.e.,
settlement is not planned or anticipated in the foreseeable future)
are also recorded in accumulated other comprehensive loss in
stockholder’s equity. |
| Variable Interest Entities and Investments | | | Variable Interest Entities and Investments
In accordance with the guidance for the consolidation of a variable
interest entity (“VIE”), the Company analyzes its
variable interests, including loans, leases, guarantees, and equity
investments, to determine if the entity in which it has a variable
interest is a VIE. The Company’s analysis includes both
quantitative and qualitative considerations. The Company bases its
quantitative analysis on the forecasted cash flows of the entity,
and its qualitative analysis on its review of the design of the
entity, its organizational structure including decision-making
ability and financial agreements. The Company also uses its
quantitative and qualitative analyses to determine if it is the
primary beneficiary of the VIE, and if such determination is made,
it includes the accounts of the VIE in its consolidated financial
statements. |
| Predecessor Company | | | |
| Basis of Presentation | Basis of Presentation
The accompanying financial statements are presented in U.S. dollars
in conformity with accounting principles generally accepted in the
United States of America (“ U.S. GAAP | | |
| Use of Estimates | Use of Estimates
The preparation of the financial statements in conformity with U.S.
GAAP requires the Company’s management to make estimates and
assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
expenses during the reporting period.
Making estimates requires management to exercise significant
judgment. It is at least reasonably possible that the estimate of
the effect of a condition, situation or set of circumstances that
existed at the date of the financial statements, which management
considered in formulating its estimate, could change in the near
term due to one or more future confirming events. Accordingly, the
actual results could differ from those estimates. | Use of Estimates
The preparation of the unaudited condensed financial statements in
conformity with GAAP requires the Company’s management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the unaudited condensed financial
statements and the reported amounts of revenues and expenses during
the reporting periods. Making estimates requires management to
exercise significant judgment. It is at least reasonably possible
that the estimate of the effect of a condition, situation or set of
circumstances that existed at the date of the financial statements,
which management considered in formulating its estimate, could
change in the near term due to one or more future conforming
events. Accordingly, the actual results could differ from those
estimates | |
| Emerging Growth Company | Emerging Growth Company
The Company is an “emerging growth company,” as defined
in Section 2(a) of the Securities Act, as modified by the
Jumpstart Our Business Startups Act of 2012 (the “ JOBS
Act
Further, Section 102(b)(1) of the JOBS Act exempts emerging
growth companies from being required to comply with new or revised
financial accounting standards until private companies (that is,
those that have not had a Securities Act registration statement
declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or
revised financial accounting standards. The JOBS Act provides that
an emerging growth company can elect to opt out of the extended
transition period and comply with the requirements that apply to
non-emerging
This may make comparison of the Company’s financial
statements with another public company that is neither an emerging
growth company nor an emerging growth company that has opted out of
using the extended transition period difficult or impossible
because of the potential differences in accounting standards
used. | | |
| Concentration of Credit Risk | Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash accounts in a
financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. At December 31,
2019, the Company has not experienced losses on these accounts and
management believes the Company is not exposed to significant risks
on such accounts. | Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist of cash accounts in a
financial institution, which, at times, may exceed the Federal
Depository Insurance Coverage of $250,000. The Company has not
experienced losses on these accounts and management believes the
Company is not exposed to significant risks on such accounts. | |
| Cash and Cash Equivalents | Cash and Cash Equivalents
The Company considers all short-term investments with an original
maturity of three months or less when purchased to be cash
equivalents. The Company had $951,060 in cash and cash equivalents
as of December 31, 2019. | Cash and Cash Equivalents
The Company considers all short-term investments with an original
maturity of three months or less when purchased to be cash
equivalents. The Company had $514,982 and $951,060 in cash and cash
equivalents as of September 30, 2020 and December 31,
2019, respectively. | |
| Marketable Securities Held in Trust Account | Marketable Securities Held in Trust Account
The Company’s portfolio of marketable securities is comprised
solely of U.S. government securities, within the meaning set forth
in Section 2(a)(16) of the Investment Company Act, with a
maturity of 185 days or less, classified as trading securities.
Trading securities are presented on the balance sheet at fair value
at the end of each reporting period. Gains and losses resulting
from the change in fair value of these securities is included in
gain on marketable securities (net), dividends and interest, held
in the Trust Account in the accompanying statement of operations.
The estimated fair values of marketable securities held in the
Trust Account are determined using available market
information. | Marketable Securities Held in Trust Account
The Company’s portfolio of marketable securities is comprised
solely of U.S. government securities, within the meaning set forth
in Section 2(a)(16) of the Investment Company Act, with a
maturity of 185 days or less, classified as trading securities.
Trading securities are presented on the balance sheets at fair
value at the end of each reporting period. Gains and losses
resulting from the change in fair value of these securities is
included in gain on marketable securities (net), dividends and
interest, held in the Trust Account in the accompanying unaudited
condensed statements of operations. The estimated fair values of
marketable securities held in the Trust Account are determined
using available market information. | |
| Fair Value Measurements | Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale
of an asset or paid for transfer of a liability, in an orderly
transaction between market participants at the measurement date.
GAAP establishes a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to unobservable inputs
(Level 3 measurements). These tiers include:
•
Level 1, defined as observable inputs such as
quoted prices for identical instruments in active markets;
•
Level 2, defined as inputs other than quoted
prices in active markets that are either directly or indirectly
observable such as quoted prices for similar instruments in active
markets or quoted prices for identical or similar instruments in
markets that are not active; and
•
Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to
develop its own assumptions, such as valuations derived from
valuation techniques in which one or more significant inputs or
significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might
be categorized within different levels of the fair value hierarchy.
In those instances, the fair value measurement is categorized in
its entirety in the fair value hierarchy based on the lowest level
input that is significant to the fair value measurement.
As of December 31, 2019, the carrying values of cash, accounts
payable, accrued expenses approximate their fair values due to the
short-term nature of the instruments. The Company’s portfolio
of marketable securities held in the Trust Account is comprised of
investments in U.S. Treasury securities with an original maturity
of 185 days or less. The fair value for trading securities is
determined using quoted market prices in active markets. | Fair Value of Financial Instruments
Fair value is defined as the price that would be received for sale
of an asset or paid for transfer of a liability, in an orderly
transaction between market participants at the measurement date.
GAAP establishes a three-tier fair value hierarchy, which
prioritizes the inputs used in measuring fair value.
The hierarchy gives the highest priority to unadjusted quoted
prices in active markets for identical assets or liabilities (Level
1 measurements) and the lowest priority to unobservable inputs
(Level 3 measurements). These tiers include:
•
Level 1, defined as observable inputs such as
quoted prices for identical instruments in active markets;
•
Level 2, defined as inputs other than quoted
prices in active markets that are either directly or indirectly
observable such as quoted prices for similar instruments in active
markets or quoted prices for identical or similar instruments in
markets that are not active; and
•
Level 3, defined as unobservable inputs in which
little or no market data exists, therefore requiring an entity to
develop its own assumptions, such as valuations derived from
valuation techniques in which one or more significant inputs or
significant value drivers are unobservable.
In some circumstances, the inputs used to measure fair value might
be categorized within different levels of the fair value hierarchy.
In those instances, the fair value measurement is categorized in
its entirety in the fair value hierarchy based on the lowest level
input that is significant to the fair value measurement.
The carrying values of cash, accounts payable, accrued expenses
approximate their fair values due to the short-term nature of the
instruments. The Company’s portfolio of marketable securities
held in the Trust Account is comprised of investments in U.S.
Treasury securities with an original maturity of 185 days or less.
The fair value for trading securities is determined using quoted
market prices in active markets. | |
| Deferred Offering Costs Associated with the Initial Public Offering | Deferred Offering Costs Associated with the Initial Public
Offering
Deferred offering costs consist of legal, accounting, underwriting
fees and other costs incurred through the Initial Public Offering
that are directly related to the Initial Public Offering and were
charged to stockholders’ equity upon the completion of the
Initial Public Offering on July 22, 2019. | Offering Costs Associated with the Initial Public
Offering
Offering costs consist of legal, accounting, underwriting fees and
other costs incurred through the Initial Public Offering that are
directly related to the Initial Public Offering and were charged to
stockholders’ equity upon the completion of the Initial
Public Offering on July 22, 2019. | |
| Class A Common Stock Subject to Possible Redemption | Class A Common Stock Subject to Possible Redemption
Shares of Class A common stock subject to mandatory redemption
(if any) are classified as liability instruments and are measured
at fair value. Conditionally redeemable shares of Class A
common stock (including shares of Class A common stock that
feature redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) are
classified as temporary equity. At all other times, shares of
Class A common stock are classified as stockholders’
equity. The Company’s Class A common stock feature
certain redemption rights that are considered to be outside of the
Company’s control and subject to the occurrence of uncertain
future events. The Company recognizes changes in redemption value
immediately as they occur and will adjust the carrying value of the
security at the end of each reporting period. Increases or
decreases in the carrying amount of redeemable shares of
Class A common stock shall be affected by charges against
additional paid-in paid-in | Class A Common Stock Subject to Possible Redemption
Shares of Class A common stock subject to mandatory redemption
(if any) are classified as liability instruments and are measured
at fair value. Conditionally redeemable shares of Class A
common stock (including shares of Class A common stock that
feature redemption rights that are either within the control of the
holder or subject to redemption upon the occurrence of uncertain
events not solely within the Company’s control) are
classified as temporary equity. At all other times, shares of
Class A common stock are classified as stockholders’
equity. The Company’s Class A common stock feature
certain redemption rights that are considered to be outside of the
Company’s control and subject to the occurrence of uncertain
future events. Accordingly, at September 30, 2020 and
December 31, 2019, 42,907,031 and 43,313,166 shares of
Class A common stock are subject to possible redemption are
presented as temporary equity, outside of the stockholders’
equity section of the Company’s condensed balance sheets,
respectively. | |
| Earnings Per Share | Net Income Per Share
Net income per share is computed by dividing net income by the
weighted-average number of shares of common stock outstanding
during the periods. The Company has not considered the effect of
the warrants sold in the Initial Public Offering and the Private
Placement to purchase an aggregate of 18,583,333 shares of the
Company’s Class A common stock in the calculation of
diluted income per share, since their inclusion would be
anti-dilutive under the treasury stock method.
The Company’s statement of operations includes a presentation
of income per share for common stock subject to redemption in a
manner similar to the two-class
The Company’s statement of operations includes a presentation
of income per share for common stock subject to redemption in a
manner similar to the two-class | Net Income Per Share
Net income per share is computed by dividing net income by the
weighted-average number of shares of common stock outstanding
during the periods. The Company has not considered the effect of
the warrants sold in the Initial Public Offering and the Private
Placement to purchase an aggregate of 18,583,333 shares of the
Company’s Class A common stock in the calculation of
diluted income per share, since their inclusion would be
anti-dilutive under the treasury stock method.
The Company’s unaudited condensed statements of operations
include a presentation of income per share for common stock subject
to redemption in a manner similar to the two-class | |
| Income Taxes | Income Taxes
The Company follows the asset and liability method of accounting
for income taxes under FASB ASC Topic 740, “Income
Taxes.” Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to
differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
included the enactment date. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount
expected to be realized. Deferred tax assets were deemed immaterial
as of December 31, 2019.
FASB ASC Topic 740 prescribes a recognition threshold and a
measurement attribute for the financial statement recognition and
measurement of tax positions taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be
more likely than not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of
December 31, 2019. The Company recognizes accrued interest and
penalties related to unrecognized tax benefits as income tax
expense. No amounts were accrued for the payment of interest and
penalties as of December 31, 2019. The Company is currently
not aware of any issues under review that could result in
significant payments, accruals or material deviation from its
position. The Company is subject to income tax examinations by
major taxing authorities since inception. | Income Taxes
The Company follows the asset and liability method of accounting
for income taxes under FASB ASC Topic 740, “Income
Taxes.” Deferred tax assets and liabilities are recognized
for the estimated future tax consequences attributable to
differences between the financial statements carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
included the enactment date. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount
expected to be realized. As of September 30, 2020 and
December 31, 2019, the Company had a deferred tax asset of
approximately $1,170,000 and $59,000, respectively, which had a
full valuation allowance recorded against it of approximately
$1,170,000 and $59,000, respectively.
FASB ASC Topic 740 prescribes a recognition threshold and a
measurement attribute for the financial statement recognition and
measurement of tax positions taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be
more likely than not to be sustained upon examination by taxing
authorities. There were no unrecognized tax benefits as of
September 30, 2020 and December 31, 2019. The Company
recognizes accrued interest and penalties related to unrecognized
tax benefits as income tax expense. No amounts were accrued for the
payment of interest and penalties as of September 30, 2020 and
December 31, 2019. The Company is currently not aware of any
issues under review that could result in significant payments,
accruals or material deviation from its position.
The Company’s current taxable income primarily consists of
interest income on the Trust Account. The Company’s general
and administrative costs are generally considered start-up start-up | |
| Recent Accounting Pronouncements | Recent Accounting Pronouncements
The Company’s management does not believe that any recently
issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying financial
statements. | Recent Accounting Pronouncements
The Company’s management does not believe that any recently
issued, but not yet effective, accounting standards if currently
adopted would have a material effect on the accompanying unaudited
condensed financial statements. | |
