Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2021 | Aug. 02, 2021 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-39799 | |
Entity Registrant Name | Certara, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-2180925 | |
Entity Address, Address Line One | 100 Overlook Center | |
Entity Address, Address Line Two | Suite 101 | |
Entity Address, City or Town | Princeton | |
Entity Address State Or Province | NJ | |
Entity Address, Postal Zip Code | 08540 | |
City Area Code | 609 | |
Local Phone Number | 716-7900 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | CERT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 152,864,921 | |
Entity Central Index Key | 0001827090 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 267,757 | $ 271,382 |
Accounts receivable, net of allowance for doubtful accounts of $70 and $132, respectively | 56,586 | 54,091 |
Restricted cash | 1,838 | 1,909 |
Prepaid expenses and other current assets | 18,627 | 19,202 |
Total current assets | 344,808 | 346,584 |
Other assets: | ||
Property and equipment, net | 3,069 | 3,872 |
Long-term deposits | 1,167 | 1,163 |
Goodwill | 524,265 | 518,592 |
Intangible assets, net of accumulated amortization of $147,343 and $127,172, respectively | 387,942 | 396,445 |
Other long-term assets | 1,145 | |
Deferred income taxes | 2,939 | 2,744 |
Total assets | 1,265,335 | 1,269,400 |
Current liabilities: | ||
Accounts payable | 5,549 | 6,394 |
Accrued expenses | 18,886 | 30,729 |
Current portion of deferred revenue | 29,120 | 30,662 |
Current portion of interest rate swap liability | 2,390 | 2,605 |
Current portion of long-term debt | 3,020 | 4,680 |
Current portion of capital lease obligations | 284 | 275 |
Total current liabilities | 59,249 | 75,345 |
Long-term liabilities: | ||
Capital lease obligations, net of current portion | 174 | 318 |
Deferred revenue, net of current portion | 1,157 | 545 |
Deferred income taxes | 76,933 | 75,894 |
Long-term portion of interest rate swap liability | 1,066 | |
Long-term debt, net of current portion and debt discount | 292,622 | 294,100 |
Other long-term liabilities | 690 | |
Total liabilities | 430,825 | 447,268 |
Stockholders' equity | ||
Preferred shares, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | ||
Common shares, $0.01 par value, 600,000,000 shares authorized, 152,864,921 and 152,979,479 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively | 1,529 | 1,529 |
Additional paid-in capital | 897,209 | 884,528 |
Accumulated deficit | (64,143) | (62,338) |
Accumulated other comprehensive income (loss) | (85) | (1,587) |
Total stockholders' equity | 834,510 | 822,132 |
Total liabilities and stockholders' equity | $ 1,265,335 | $ 1,269,400 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for doubtful accounts | $ 70 | $ 132 |
Accumulated amortization | $ 147,343 | $ 127,172 |
Preferred share, par value | $ 0.01 | $ 0.01 |
Preferred share, shares authorized | 50,000,000 | 50,000,000 |
Preferred share, shares issued | 0 | 0 |
Preferred share, shares outstanding | 0 | 0 |
Common share, par value | $ 0.01 | $ 0.01 |
Common share, shares authorized | 600,000,000 | 600,000,000 |
Common share, shares issued | 152,864,921 | 152,979,479 |
Common share, shares outstanding | 152,864,921 | 152,979,479 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME | ||||
Revenues | $ 70,096 | $ 61,123 | $ 136,814 | $ 118,572 |
Cost of revenues | 27,542 | 20,647 | 53,558 | 42,830 |
Operating expenses: | ||||
Sales and marketing | 4,589 | 2,729 | 8,341 | 5,667 |
Research and development | 4,626 | 2,969 | 9,332 | 5,844 |
General and administrative | 18,034 | 11,181 | 34,596 | 22,722 |
Intangible asset amortization | 9,479 | 9,323 | 18,935 | 18,682 |
Depreciation and amortization expense | 552 | 669 | 1,154 | 1,222 |
Total operating expenses | 37,280 | 26,871 | 72,358 | 54,137 |
Income from operations | 5,274 | 13,605 | 10,898 | 21,605 |
Other income (expenses): | ||||
Interest expense | (6,332) | (7,023) | (10,260) | (13,881) |
Miscellaneous, net | (346) | (80) | (463) | 445 |
Total other (expenses) | (6,678) | (7,103) | (10,723) | (13,436) |
(Loss) income before income taxes | (1,404) | 6,502 | 175 | 8,169 |
Provision for income taxes | 1,453 | 3,725 | 1,980 | 4,346 |
Net (loss) income | (2,857) | 2,777 | (1,805) | 3,823 |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustment | 302 | 442 | (1,243) | (2,890) |
Change in fair value from interest rate swap, net of tax $0, $94, $161 and $(585) | 291 | 477 | (1,841) | |
Reclassification of fair value of interest rate swap, net of tax of $(765), 0, $(765), and 0 | 2,268 | 2,268 | ||
Total other comprehensive income (loss) | 2,570 | 733 | 1,502 | (4,731) |
Comprehensive (loss) income | $ (287) | $ 3,510 | $ (303) | $ (908) |
Net (loss) income per share attributable to common stockholders: | ||||
Basic (in dollar per share) | $ (0.02) | $ 0.02 | $ (0.01) | $ 0.03 |
Diluted (in dollar per share) | $ (0.02) | $ 0.02 | $ (0.01) | $ 0.03 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 147,485,566 | 132,407,786 | 147,323,724 | 132,407,786 |
Diluted (in shares) | 147,485,566 | 132,407,786 | 147,323,724 | 132,407,786 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE (LOSS) INCOME | ||||
Change in fair value from interest rate swap, tax expense (benefit) | $ 0 | $ 94 | $ 161 | $ (585) |
Reclassification of fair value of interest rate swap, tax expense (benefit) | $ (765) | $ 0 | $ (765) | $ 0 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | RETAINED EARNINGS (ACCUMULATED DEFICITS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | Total |
Beginning balance at Dec. 31, 2019 | $ 1,324 | $ 509,162 | $ (12,941) | $ (5,497) | $ 492,048 |
Beginning balance (in shares) at Dec. 31, 2019 | 132,407,786 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity compensation | 1,105 | 1,105 | |||
Repurchase of Parent Class B units | (55) | (55) | |||
Change in fair value from interest rate swap, net of tax | (1,841) | (1,841) | |||
Net income (loss) | 3,823 | 3,823 | |||
Foreign currency translation adjustment | (2,890) | (2,890) | |||
Ending balance at Jun. 30, 2020 | $ 1,324 | 510,212 | (9,118) | (10,228) | 492,190 |
Ending balance (in shares) at Jun. 30, 2020 | 132,407,786 | ||||
Beginning balance at Mar. 31, 2020 | $ 1,324 | 509,700 | (11,895) | (10,961) | 488,168 |
Beginning balance (in shares) at Mar. 31, 2020 | 132,407,786 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity compensation | 567 | 567 | |||
Repurchase of Parent Class B units | (55) | (55) | |||
Change in fair value from interest rate swap, net of tax | 291 | 291 | |||
Net income (loss) | 2,777 | 2,777 | |||
Foreign currency translation adjustment | 442 | 442 | |||
Ending balance at Jun. 30, 2020 | $ 1,324 | 510,212 | (9,118) | (10,228) | 492,190 |
Ending balance (in shares) at Jun. 30, 2020 | 132,407,786 | ||||
Beginning balance at Dec. 31, 2020 | $ 1,529 | 884,528 | (62,338) | (1,587) | 822,132 |
Beginning balance (in shares) at Dec. 31, 2020 | 152,979,479 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity compensation | 12,681 | 12,681 | |||
Shares issued for employee share-based compensation awards (in shares) | 14,769 | ||||
Restricted stock forfeiture (in shares) | (129,327) | ||||
Change in fair value from interest rate swap, net of tax | 477 | 477 | |||
Reclassification of fair value of interest rate swap, net of tax | 2,268 | 2,268 | |||
Net income (loss) | (1,805) | (1,805) | |||
Foreign currency translation adjustment | (1,243) | (1,243) | |||
Ending balance at Jun. 30, 2021 | $ 1,529 | 897,209 | (64,143) | (85) | 834,510 |
Ending balance (in shares) at Jun. 30, 2021 | 152,864,921 | ||||
Beginning balance at Mar. 31, 2021 | $ 1,529 | 889,679 | (61,286) | (2,655) | 827,267 |
Beginning balance (in shares) at Mar. 31, 2021 | 152,979,479 | ||||
Increase (Decrease) in Stockholders' Equity | |||||
Equity compensation | 7,530 | 7,530 | |||
Shares issued for employee share-based compensation awards (in shares) | 14,769 | ||||
Restricted stock forfeiture (in shares) | (129,327) | ||||
Reclassification of fair value of interest rate swap, net of tax | 2,268 | 2,268 | |||
Net income (loss) | (2,857) | (2,857) | |||
Foreign currency translation adjustment | 302 | 302 | |||
Ending balance at Jun. 30, 2021 | $ 1,529 | $ 897,209 | $ (64,143) | $ (85) | $ 834,510 |
Ending balance (in shares) at Jun. 30, 2021 | 152,864,921 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2021 | Jun. 30, 2020 | |
Cash flows from operating activities: | ||
Net (loss) income | $ (1,805) | $ 3,823 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment | 1,154 | 1,222 |
Amortization of intangible assets | 20,227 | 19,848 |
Amortization of debt issuance costs | 747 | 762 |
Recovery of doubtful accounts | (61) | |
Loss on retirement of assets | 282 | |
Equity-based compensation expense | 12,681 | 1,105 |
Unrealized loss on interest rate swap | 2,390 | |
Deferred income taxes | (1,971) | 1,871 |
Changes in assets and liabilities, net of acquisitions: | ||
Accounts receivable | 620 | (1,299) |
Prepaid expenses and other assets | 197 | (2,608) |
Accounts payable and accrued expenses | (13,848) | (3,645) |
Deferred revenue | (1,057) | (4,438) |
Net cash provided by operating activities | 19,556 | 16,641 |
Cash flows from investing activities: | ||
Capital expenditures | (511) | (638) |
Capitalized development costs | (3,374) | (3,928) |
Business acquisitions, net of cash acquired | (14,114) | (675) |
Net cash used in investing activities | (17,999) | (5,241) |
Cash flows from financing activities: | ||
Unit repurchase | (55) | |
Proceeds from borrowings on long-term debt | 89 | |
Payments on long-term debt and capital lease obligations | (2,323) | (2,639) |
Proceeds from line of credit | 19,880 | |
Payment of debt issuance costs | (2,931) | |
Net cash provided by (used in) financing activities | (5,165) | 17,186 |
Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash | (88) | 1,005 |
Net (decrease) increase in cash and cash equivalents, and restricted cash | (3,696) | 29,591 |
Cash and cash equivalents, and restricted cash, at beginning of period | 273,291 | 29,762 |
Cash and cash equivalents, and restricted cash, at end of period | 269,595 | 59,353 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 7,114 | 13,160 |
Cash paid for taxes | 4,420 | 5,081 |
Supplemental schedule of non-cash investing and financing activities | ||
Liabilities assumed in connection with business acquisition | $ 1,912 | |
Property and equipment controlled through new capital leases | $ 831 |
Description of Business
Description of Business | 6 Months Ended |
Jun. 30, 2021 | |
Description of Business | |
Description of Business | 1. Description of Business Certara, Inc. and its wholly owned subsidiaries (together, the “Company”) deliver software products and technology-enabled services to customers to efficiently carry out and realize the full benefits of biosimulation in drug discovery, preclinical and clinical research, regulatory submissions and market access. The Company is a global leader in biosimulation, and the Company’s biosimulation software and technology-enabled services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success. The Company’s software and services for regulatory science and submissions and market access are underpinned by technologies such as natural language processing and Bayesian analytics. When combined, these solutions allow the Company to offer customers end-to-end support across the entire product life cycle. On October 1, 2020, the Company amended the certificate of incorporation of EQT Avatar Topco, Inc. to change the name of the Company to Certara, Inc. The Company has operations in the United States, Canada, Spain, Luxembourg, Portugal, United Kingdom, Germany, France, Netherlands, Denmark, Switzerland, Italy, Poland, Japan, Philippines, India, Australia, and China. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies There have been no changes other than what is discussed herein to the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes as of and for the year ended December 31, 2020. (a) Basis of Presentation and Use of Estimates We prepared our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We have eliminated intercompany accounts and transactions. We have also reclassified certain prior year amounts to conform to the current period presentation, which did not have a material impact on our consolidated financial condition or results of operations. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for doubtful accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue (including at the date of business combinations), value of interest rate swap agreements, determination of fair value of equity-based awards and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. The Company is an Emerging Growth Company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, Emerging Growth Companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an Emerging Growth Company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The adoption dates discussed below reflect this election. (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those guidance. These unaudited condensed consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2020 and 2019 audited consolidated financial statements and notes thereto. The information as of December 31, 2020 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the 2020 Annual Report on Form 10-K. (c) Recently Adopted Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848),” which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. In January 2021, FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which clarifies that certain optional expedients and exceptions in Accounting Standards Codification ("ASC") Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Guidance in these ASUs is optional and is effective as of March 12, 2020 through December 31, 2022. The Company adopted the ASUs upon issuance and elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The adoption of the ASUs did not have a material impact to the Company’s condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”, which included updated guidance on ASC 350-40, “Intangibles — Goodwill and Other — Internal-Use Software”. The new guidance requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. ASU 2018-15 is effective for calendar-year public business entities in 2020. For all other calendar-year entities, it is effective for annual periods beginning in 2021 and interim periods in 2022. Early adoption is permitted. The Company has adopted ASU 2018-15 during the year beginning January 1, 2020. The adoption of ASU 2018-15 did not materially impact the condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements (Topic 820)”, which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company has adopted ASU 2018-13 during the year beginning January 1, 2020. The adoption of ASU 2018-13 did not materially impact the condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”, which removes certain exceptions related to the approach for calculating income taxes in an interim period and to the recognition of deferred tax liabilities for outside basis differences for certain investments. The Company adopted this guidance on January 1, 2021 on a prospective basis. The adoption of this guidance did not have an impact on the Company's consolidated financial statements. (d) Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, “Leases”. ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In its April 2020 meeting, the FASB deferred the effective date for ASC 842 for private companies to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company will adopt ASU 2016-02 during the year beginning January 1, 2022 and is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. Per ASU 2019-10 issued in November 2019, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for private companies. Early adoption is permitted. The Company will adopt ASU 2016-13 during the year beginning January 1, 2023 and is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment”. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. This standard will be effective for a private company (and thus, for those adopting exemption for Emerging Growth Companies) beginning in the first quarter of fiscal year 2022 and is required to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will adopt ASU 2017-04 during the year beginning January 1, 2022 and is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements. (e) Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. (f) Cash and Cash Equivalents, and Restricted Cash Cash equivalents include highly liquid investments with maturities of six months or less from the date purchased. Restricted cash represents cash that is used as collateral to support an unsecured Company credit card program through a major bank and a grant funding. The restricted cash balance was $1,838, $1,909, and $3,684 at June 30, 2021, December 31, 2020, and June 30, 2020, respectively. The following table provides a reconciliation of cash and cash equivalents and restricted cash to the amounts presented in the condensed consolidated statements of cash flows: JUNE 30, DECEMBER 31, JUNE 30, 2021 2020 2020 Cash and cash equivalents $ 267,757 $ 271,382 $ 55,669 Restricted cash, current 1,838 1,909 3,684 Total cash and cash equivalents, and restricted cash $ 269,595 $ 273,291 $ 59,353 (g) Derivative Instruments The Company has an interest rate swap agreement that was designated as a cash flow hedge of interest rate risk for a notional amount of $230,000 that fixed the interest rate at 2.1284%, non-inclusive of the fixed credit spread through May 31, 2022. The Company recorded the fair value of its interest rate swap in the amount of $2,390 and $3,671, as a derivative liability as of June 30, 2021 and December 31, 2020, respectively, in its condensed consolidated balance sheets. During the second quarter, the Company determined that the hedge has not been highly effective from April 2018 and does not qualify for hedge accounting. As a result, The Company performed an analysis of the materiality of the out of period error correction in accordance with ASC 250, both quantitively and qualitatively, and concluded that the error correction was immaterial to all periods. The Company reclassified a $3,033 of accumulated comprehensive loss to interest expense The following table sets forth the liability that is measured at fair value on a recurring basis by the levels in the fair value hierarchy at June 30, 2021: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability Interest rate swap liability $ — $ 2,390 $ — $ 2,390 Total $ — $ 2,390 $ — $ 2,390 The following table sets forth the liability that is measured at fair value on a recurring basis by the levels in the fair value hierarchy at December 31, 2020: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability Interest rate swap liability $ — $ 3,671 $ — $ 3,671 Total $ — $ 3,671 $ — $ 3,671 (h) Revenue Recognition ASC 606 Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s revenue consists of fees for perpetual and term licenses for the Company’s software products, post-contract customer support (referred to as maintenance), software as a service (“SaaS”) and professional services including training and other revenue. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis. The delivery of a particular type of software and each of the user licenses would be one performance obligation. However, any training, implementation, or support and maintenance promises as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are sufficiently short such that there is no significant financing component to the transaction. The Company typically recognizes license revenue at a point in time upon delivering the applicable license. The revenue related to the support and maintenance performance obligation will be recognized on an over time basis using time elapsed methodology. The revenue related to software training and software implementation performance will be recognized at the completion of the service. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the condensed consolidated balance sheets). Contract assets are billed and transferred to customer accounts receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one The unsatisfied performance obligations as of June 30, 2021 were approximately $90,826. Sources and Timing of Revenue The Company’s performance obligations are satisfied either over time or at a point in time. The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2021 2020 2021 2020 Software licenses transferred at a point in time $ 9,629 $ 9,013 $ 22,054 $ 20,378 Software licenses transferred over time 10,483 8,934 19,962 17,830 Service revenues earned over time 49,984 43,176 94,798 80,364 Total $ 70,096 $ 61,123 $ 136,814 $ 118,572 (i) Earnings per Share Basic earnings per common share is computed by dividing the net income that is attributable to common stockholders by the weighted-average number of common shares or common share equivalents outstanding during the reporting period, without consideration for potentially dilutive securities. The dilutive effect of potentially dilutive securities is excluded from basic earnings per share and is included in the calculation of diluted earnings per share. Restricted stock and restricted stock units granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted earnings per share is computed by dividing the net income attributable to stockholders by the weighted-average number of shares and potentially dilutive securities outstanding during the period. (j) COVID-19 Since the first quarter of 2020, the COVID-19 pandemic has posed a significant threat to public health as well as the global and U.S. economies. The continued spread of variants of COVID-19 may adversely impact our business, financial condition or results of operations as a result of increased costs, negative impacts to our workforce, or a sustained economic downturn. Although the economy has rebounded in many areas, the outlook for containing the outbreak is still highly uncertain. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the global and US economy and our business. |
Initial Public Offering
Initial Public Offering | 6 Months Ended |
Jun. 30, 2021 | |
Initial Public Offering | |
Initial Public Offering | 3. Initial Public Offering On December 15, 2020, the Company completed its initial public offering (“IPO”), pursuant to which the Company issued and sold 14,630,000 shares of common stock and certain selling stockholders, including our former controlling shareholders, an affiliate of EQT AB (“EQT”), sold 18,783,250 shares of our common stock (representing the full exercise of the underwriters’ option to purchase additional shares), at a public offering price of $23.00 per share. The Company received net proceeds of $316,301, after deducting underwriters' discounts and commissions. In addition, $4,408 of legal, accounting and other offering costs, net of the tax effect of $259, incurred in connection with the sale of the Company's common stock in the IPO, were capitalized and offset against the proceeds received in the IPO. The Company is party to a registration rights agreement with EQT and certain other stockholders (“Institutional Investors”). The registration rights agreement was amended and restated in connection with the IPO. It contains provisions that entitle EQT and the other Institutional Investors thereto to certain rights to have their securities registered by the Company under the Securities Act. EQT will be entitled to an unlimited number of “demand” registrations, subject to certain limitations. Every Institutional Investor that holds registration rights will also be entitled to customary “piggyback” registration rights. In addition, the amended and restated registration rights agreement provides that the Company will pay certain expenses of the Institutional Investors relating to such registrations and indemnify them against certain liabilities which may arise under the Securities Act. The registration rights agreement will terminate (i) with the prior written consent of the Institutional Investors in connection with a change of control; (ii) for those holders (other than the Institutional Investors) that beneficially own less than 5% of the Company’s outstanding shares, if all of the registrable securities then owned by such holder could be sold in any 90-day period pursuant to Rule 144; (iii) as to any holder, if all of the registrable securities held by such holder have been sold or otherwise transferred in a registration pursuant to the Securities Act or pursuant to an exemption therefrom; or (iv) with respect to any holder that is an officer, director, employee or consultant of the Company on the date that is 90 days after the date on which such holder ceases to be an employee, director or consultant (as applicable) of the Company. The rights and obligations do not transfer without the written consent of the Company and the Institutional Investors. On March 29, 2021, the Company completed an underwritten secondary public offering in which certain selling stockholders, including EQT, sold 10,000,000 shares of the Company’s common stock, including an additional 1,500,000 shares of common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares. The Company did not offer any common stock in this transaction and did not receive any proceeds from the sale of the shares of common stock by the selling stockholders. The Company incurred costs of $1,100, recorded in general and administrative expenses, in relation to the secondary public offering for the six months ended June 30, 2021. |
Concentrations of Credit Risk
Concentrations of Credit Risk | 6 Months Ended |
Jun. 30, 2021 | |
Concentrations of Credit Risk | |
Concentrations of Credit Risk | 4. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk have consisted principally of cash and cash equivalent investments and trade receivables. The Company invests available cash in bank deposits, investment-grade securities, and short-term interest-producing investments, including government obligations and other money market instruments. At June 30, 2021 and December 31, 2020, the investments were bank deposits and overnight sweep accounts. The Company has adopted credit policies and standards to evaluate the risk associated with sales that require collateral, such as letters of credit or bank guarantees, whenever deemed necessary. Management believes that any risk of loss is significantly reduced due to the nature of the customers and distributors with which the Company does business. As of June 30, 2021 and December 31, 2020, no customer accounted for more than 10% of the Company’s accounts receivable or revenues during the periods presented. |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2021 | |
Acquisitions | |
Acquisitions | 5. Acquisitions On March 2, 2021, the Company completed a transaction which qualified as a business combination. The business combination was not material to our condensed consolidated financial statements. Based on the Company’s preliminary purchase price allocation, approximately $1,200 , $100 and $1,100 of the purchase price was assigned to customer relationships, non-compete agreements and goodwill, respectively. On June 7, 2021, the Company completed a transaction which qualified as a business combination. The business combination was not material to our condensed consolidated financial statements. Based on the Company’s preliminary purchase price allocation, approximately $7,400 and $4,700 of the purchase price was assigned to customer relationships and goodwill, respectively. |
Long-Term Debt and Revolving Li
Long-Term Debt and Revolving Line of Credit | 6 Months Ended |
Jun. 30, 2021 | |
Long-Term Debt and Revolving Line of Credit | |
Long-Term Debt and Revolving Line of Credit | 6. Long-Term Debt and Revolving Line of Credit Effective August 14, 2017, the Company entered into a credit agreement with lenders for a $250,000 term loan (“Credit Agreement”). The Credit Agreement is a syndicated arrangement with various lenders providing the financing. The $250,000 term loan is due to mature on August 14, 2024. The Company also entered into a $20,000 revolving line of credit with lenders with a sub-commitment for issuance of letters of credit of $10,000. The Company and lenders entered into Amendment No. 1 to the Credit Agreement on January 25, 2018 where an additional tranche of $25,000 was added to the term loan. The amortization schedule of the new tranche was made coterminous with the rest of the term loan. There were no other changes to the terms of the Credit Agreement. The Company and lenders entered into Amendment No. 2 to the Credit Agreement on April 3, 2018 where an additional tranche of $40,000 was added to the term loan. The amortization schedule of the new tranche was made coterminous with the rest of the term loan. There were no other changes to the terms of the Credit Agreement. The Company and lenders entered into a third restated and amended loan agreement on June 17, 2021 (“Third Amendment”), which provides for, among other things, (i) the extension of the termination date applicable to the revolving credit commitments under the Credit Agreement to August 2025, (ii) the extension of the maturity date applicable to the term loans under the Credit Agreement to August 2026, and (iii) an increase of approximately $80,000 in commitments available under the revolving line of credit (resulting in an aggregate amount of commitments of $100,000). The term loan under the Third Amendment has substantially the same terms as the existing term loans and revolving credit commitments. The Credit Agreement is collateralized by substantially all U.S. assets and stock pledges for the non-U.S. subsidiaries and contain various financial and nonfinancial covenants. As of June 30, 2021 and December 31, 2020, available borrowings under the modified and original revolving lines of credit of $100,000 and $20,000 are reduced by $120 standby letters of credit issued to a landlord in lieu of a security deposit in addition to any outstanding borrowings. The Company was in compliance with all financial covenants as of June 30, 2021 and December 31, 2020. Borrowings under the Credit Agreement are subject to a variable interest rate at LIBOR plus a margin. The applicable margins are based on achieving certain levels of compliance with financial covenants. The effective interest rate was 3.73% and 4.48% for the six months ended June 30, 2021 and the year ended December 31, 2020 for the Credit Agreement, respectively. As discussed previously, the Company entered into interest rate swap agreements to mitigate the interest risk. Interest incurred on the Credit Agreement with respect to the term loan amounted to $5,671 and $8,073 for the six months ended June 30, 2021 and 2020, respectively. Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $30 and $32 at June 30, 2021 and December 31, 2020, respectively, and is included in accrued expenses. Interest paid on the Credit Agreement with respect to the revolving line of credit was $0 and $232 for the six months ended June 30, 2021 and 2020, respectively. There was no accrued interest payable on the revolving line of credit as of June 30, 2021 and December 31, 2020. Effective August 14, 2017, the Company entered into an unsecured credit agreement with another lender for a $100,000 term loan (“Loan Agreement”). The loan bears interest at 8.25% which is payable in semi-annual installments on January 15 and July 15 through August 14, 2025, at which time all outstanding principal and interest are due. Under the Loan Agreement, the Company could voluntarily repay outstanding loans without premium or penalty. On July 15, 2020, the Company made a $20,000 prepayment on the loan, which reduced the amount outstanding to $80,000. On December 28, 2020, the Company repaid the $80,000 aggregate principal amount owed under the Loan Agreement, including $3,000 of accrued interest using a portion of the proceeds from the IPO. The Company's obligations under the Loan Agreement were discharged on that date. Interest paid on the loan amounted to $0 and $4,217 for the six months ended June 30, 2021 and 2020, respectively. Long-term debt consists of the following: JUNE 30, DECEMBER 31, 2021 2020 Term loans $ 302,000 $ 304,099 Less: debt issuance costs (6,358) (5,319) Total 295,642 298,780 Current portion of long-term debt (3,020) (4,680) Long-term debt, net of current portion and debt issuance costs $ 292,622 $ 294,100 The principal amount of long-term debt outstanding as of June 30, 2021 matures in the following years: 2021 2022 2023 2024 2025 2026 TOTAL Maturities $ 1,510 $ 3,020 $ 3,020 $ 3,020 3,020 $ 288,410 $ 302,000 The Credit Agreement requires the Company to make an annual mandatory prepayment as it relates to the Company’s Excess Cash Flow calculation. For the year ended December 31, 2020, the Company was required to make a mandatory prepayment on the term loan of approximately $1,527 on or before April 30, 2021. The prepayment was included in the current portion of long-term debt on the condensed consolidated balance sheets. For the amended credit agreement, the Company is required to make a quarterly principal payment of $755 on the term loan each quarter starting from the end of September 2021. The fair values of the Company’s variable interest term loan and revolving line of credit are not significantly different than their carrying value because the interest rates on these instruments are subject to change with market interest rates. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 7. Commitments and Contingencies Leases The Company leases certain office facilities and equipment under non-cancelable operating and capital leases with remaining terms from one Non-cancelable future minimum lease commitments as of June 30, 2021 are as follows: OPERATING CAPITAL LEASES LEASES Remainder of 2021 $ 3,042 $ 152 2022 5,123 304 2023 3,394 25 2024 2,668 — 2025 2,107 — Thereafter 2,395 — Non-cancelable future minimum lease payments 18,729 481 Less amount representing interest — (23) Net non-cancelable future minimum lease payments $ 18,729 $ 458 Current portion of net non-cancelable future minimum lease payments 284 Net long-term non-cancelable future minimum lease payments $ 174 |
Equity-Based Compensation
Equity-Based Compensation | 6 Months Ended |
Jun. 30, 2021 | |
Equity-Based Compensation | |
Equity-Based Compensation | 8. Equity-Based Compensation Class B Incentive Units The Company’s management, through the Company’s affiliation with its shareholder and former parent, EQT, participated in a 2017 Class B Profits Interest Unit Incentive Plan (the “Class B Plan”), whereby EQT was authorized to issue a total of 6,366,891 Profit Interest Units (“Class B Units”), representing the right to share a portion of the value appreciation in EQT. The majority of the employee grant agreements for the Class B Units were comprised of 50% time-based vesting units (“Time-based Units”) and 50% performance-based vesting units (“Performance-based Units”). The Time-based Units generally vest over a five-year period; the Performance-based Units would vest if EQT achieved specified levels of return on investment at the time of (i) a change in control, (ii) a reduction in holdings of the Company by EQT to 10% or less following an IPO or (iii) certain distributions to EQT. There were also certain grant agreements for the Class B Units that were entirely comprised of Time-based Units. Upon vesting, the holder of Class B Units received a right to a fractional portion of the profits and distributions of the parent in excess of a “participation threshold” determined in accordance with the EQT limited partnership agreement. In addition to the performance conditions above, the Chief Executive Officer’s performance-based Class B Units also vested if the aggregate value attributable to the IPO equaled or exceeded an amount equivalent to the return on investment performance targets. As of June 30, 2020, 5,508,785 Class B Units were issued and outstanding to Company employees. The Company granted 156,332 units and recorded actual forfeitures of 76,745 units during the six months ended June 30, 2020. The fair value of the Time-based Units that vested solely upon continued employment was measured at the grant date and was recognized as cost over the employee’s requisite service period, which was generally five years. The expense related to the vesting of the Time-based Units was recorded on the Company’s books because the Company directly benefited from the services provided by Class B Unit holders. The Company recorded compensation expense related to the Class B Units of $567 and $1,105 for the three and six months ended June 30, 2020. Restricted Stock Effective as of December 10, 2020, all vested Class B Units were exchanged by EQT for shares of common stock of the Company held by EQT, and unvested Class B Units were exchanged for shares of restricted common stock of the Company. Based on the IPO price of $23.00 per share, the Company issued 5,941,693 shares of restricted common stock to holders of unvested Class B Units in exchange for such unvested Class B Units. Share-based compensation for the restricted stock exchanged for the Time-based Class B Units is recognized on a straight-line basis over the requisite service period of the award, which is generally five years. Share-based compensation for the restricted stock exchanged for the Performance-based Class B Units is recognized using the accelerated attribution approach. A summary of the restricted stock is shown below: WEIGHTED- AVERAGE GRANT DATE SHARES FAIR VALUE Non-vested restricted stock as of December 31, 2020 5,941,693 $ 23.00 Granted — — Vested (548,008) 23.00 Forfeited (129,327) 23.00 Non-vested restricted stock as of June 30, 2021 5,264,358 $ 23.00 The Company did not authorize or issue any restricted stock during the six-month period ended June 30, 2021. Equity-based compensation expense related to the restricted stock exchanged for Performance-based Class B Units was $2,983 and $7,025 for the three and six months ended June 30, 2021, respectively. At June 30, 2021, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $18,116, which is expected to be recognized over a weighted-average period of 27 months. Equity-based compensation expense related to the restricted stock exchanged for Time-based Class B Units were $754 and $1,531 for the three and six months ended June 30, 2021, respectively. At June 30, 2021, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $7,936, which is expected to be recognized over a weighted-average period of 38 months. Restricted Stock Units Restricted stock units (“RSUs”) represent the right to receive shares of the Company’s common stock at a specified date in the future. The fair value of the RSUs is based on the fair value of the underlying shares on the date of grant. A summary of the Company’s RSU activity is as follows: WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested RSUs as of December 31, 2020 30,052 $ 23.00 Granted 939,863 27.39 Vested (24,728) 23.00 Forfeited (30,050) 26.53 Non-vested RSUs as of June 30, 2021 915,137 $ 27.39 The number of RSUs vested includes 10,003 shares of common stock that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements. Equity-based compensation expense related to the RSUs was $2,202 and $2,534 for three and six months ended June 30, 2021, respectively. At June 30, 2021, the total unrecognized equity-based compensation expense related to outstanding RSUs was $23,027, which is expected to be recognized over a weighted-average period of 32 months. Performance Stock Units Performance stock units (“PSUs”) are issued under the 2020 Incentive Plan and represent the right to receive shares of the Company’s common stock at a specified date in the future based on the satisfaction of various service conditions and the achievement of certain performance thresholds including year over year revenue growth and unlevered free cash flow growth. Share-based compensation for the PSUs is only recognized to the extent a threshold is probable of being achieved and is recognized using the accelerated attribution approach. The Company will continue to assess the probability of each condition being achieved at each reporting period to determine whether and when to recognize compensation cost. The following table presents a summary of activity on the PSUs for the period ended June 30, 2021. A summary of the Company’s PSU activity is as follows: WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested PSUs as of December 31, 2020 — $ — Granted 374,645 27.02 Vested — — Forfeited (11,905) 27.45 Non-vested PSUs as of June 30, 2021 362,740 $ 27.01 Equity-based compensation expense related to the PSUs was $1,591 for both the three and six months ended June 30, 2021. At June 30, 2021, the total unrecognized equity-based compensation expense related to outstanding PSUs was $8,206, which is expected to be recognized over a weighted-average period of 21 months. The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive (loss) income for each period presented: THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2021 2020 2021 2020 Cost of revenues $ 1,456 $ 59 $ 2,296 $ 98 Sales and marketing 636 33 1,034 65 Research and development 615 33 1,014 63 General and administrative expenses 4,823 442 8,337 879 Total $ 7,530 $ 567 $ 12,681 $ 1,105 |
Segment Data
Segment Data | 6 Months Ended |
Jun. 30, 2021 | |
Segment Data | |
Segment Data | 9. Segment Data Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company has determined that its chief executive officer is its CODM. The Company manages its operations as a single segment for the purposes of assessing and making operating decisions. The Company’s CODM allocates resources and assesses performance based upon financial information at the consolidated level. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements. The following table summarizes revenue by geographic area for the three and six months ended June 30, 2021 and 2020: THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2021 2020 2021 2020 Revenue (1) Americas $ 49,109 $ 47,183 $ 95,683 $ 90,277 EMEA 13,689 9,062 27,915 19,922 Asia Pac 7,298 4,878 13,216 8,373 Total $ 70,096 $ 61,123 $ 136,814 $ 118,572 (1) Revenue is attributable to the countries based on the location of the customer. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2021 | |
Income Taxes | |
Income Taxes | 10. Income Taxes The Company generally records its interim tax provision based upon a projection of the Company's estimated annual effective tax rate ("EAETR"). This EAETR is applied to the year-to-date consolidated pre-tax income to determine the interim provisions for income taxes before discrete items. The effective tax rate ("ETR") each period is impacted by a number of factors, including the relative mix of domestic and international earnings, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end due to the changes in these factors. The Company's global ETR for the three and six months ended June 30, 2021 and 2020 were (103)%, 1,131%, 57%, and 53%, respectively, including discrete tax items. The current year increase in the ETR was principally due to the combined effect of the discrete tax effect of certain prior period swap losses that are required to be excluded from the EAETR calculation and the near break-even operating results, which resulted in a significant variation in the customary relationship between income tax expense and pre-tax book income. |
Earnings (loss) per Share
Earnings (loss) per Share | 6 Months Ended |
Jun. 30, 2021 | |
Earnings (loss) per Share | |
Earnings (loss) per Share | 11. Earnings (loss) per Share Earnings per share is computed by dividing net income (loss) by the weighted-average common shares outstanding. Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted- average number of common shares outstanding during the period. Diluted earnings per common share considers potentially dilutive securities outstanding during the period. Basic and diluted earnings per share is computed by dividing net income by the weighted-average common shares outstanding: THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2021 2020 2021 2020 Numerator: Net income (loss) available to common shareholders $ (2,857) $ 2,777 $ (1,805) $ 3,823 Denominator: Basic weighted average common shares outstanding 147,485,566 132,407,786 147,323,724 132,407,786 Effects of dilutive securities — — — — Diluted weighted average common shares outstanding 147,485,566 132,407,786 147,323,724 132,407,786 Earnings (loss) per share: Basic $ (0.02) $ 0.02 $ (0.01) $ 0.03 Diluted $ (0.02) $ 0.02 $ (0.01) $ 0.03 |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2021 | |
Subsequent Events. | |
Subsequent Events | 1212. 12 12. Subsequent Events On August 2, 2021, Certara, Inc. entered into a merger agreement (the “Merger Agreement”) with Pinnacle 21, LLC (“Pinnacle”), a company that develops advanced software for standards-based data management for regulatory submissions. Pursuant to the Merger Agreement, a subsidiary of Certara will merge with Pinnacle, and the equity holders of Pinnacle will receive consideration of $250,000 cash and $60,000 worth of restricted common stock of Certara, Inc. We expect to close the transaction following receipt of all necessary regulatory approvals, which we anticipate will occur early in the fourth quarter. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Use of Estimates | (a) Basis of Presentation and Use of Estimates We prepared our condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). We have eliminated intercompany accounts and transactions. We have also reclassified certain prior year amounts to conform to the current period presentation, which did not have a material impact on our consolidated financial condition or results of operations. The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for doubtful accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue (including at the date of business combinations), value of interest rate swap agreements, determination of fair value of equity-based awards and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. The Company is an Emerging Growth Company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, Emerging Growth Companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an Emerging Growth Company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The adoption dates discussed below reflect this election. |
Unaudited Interim Financial Statements | (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to those guidance. These unaudited condensed consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2020 and 2019 audited consolidated financial statements and notes thereto. The information as of December 31, 2020 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the 2020 Annual Report on Form 10-K. |
Recently Adopted and Not Yet Adopted Accounting Pronouncements | (c) Recently Adopted Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848),” which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. In January 2021, FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which clarifies that certain optional expedients and exceptions in Accounting Standards Codification ("ASC") Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Guidance in these ASUs is optional and is effective as of March 12, 2020 through December 31, 2022. The Company adopted the ASUs upon issuance and elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The adoption of the ASUs did not have a material impact to the Company’s condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract”, which included updated guidance on ASC 350-40, “Intangibles — Goodwill and Other — Internal-Use Software”. The new guidance requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. ASU 2018-15 is effective for calendar-year public business entities in 2020. For all other calendar-year entities, it is effective for annual periods beginning in 2021 and interim periods in 2022. Early adoption is permitted. The Company has adopted ASU 2018-15 during the year beginning January 1, 2020. The adoption of ASU 2018-15 did not materially impact the condensed consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements (Topic 820)”, which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company has adopted ASU 2018-13 during the year beginning January 1, 2020. The adoption of ASU 2018-13 did not materially impact the condensed consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”, which removes certain exceptions related to the approach for calculating income taxes in an interim period and to the recognition of deferred tax liabilities for outside basis differences for certain investments. The Company adopted this guidance on January 1, 2021 on a prospective basis. The adoption of this guidance did not have an impact on the Company's consolidated financial statements. (d) Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU 2016-02, “Leases”. ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In its April 2020 meeting, the FASB deferred the effective date for ASC 842 for private companies to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company will adopt ASU 2016-02 during the year beginning January 1, 2022 and is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. Per ASU 2019-10 issued in November 2019, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for private companies. Early adoption is permitted. The Company will adopt ASU 2016-13 during the year beginning January 1, 2023 and is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment”. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value. This standard will be effective for a private company (and thus, for those adopting exemption for Emerging Growth Companies) beginning in the first quarter of fiscal year 2022 and is required to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will adopt ASU 2017-04 during the year beginning January 1, 2022 and is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements. |
Principles of Consolidation | (e) Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents, and Restricted Cash | (f) Cash and Cash Equivalents, and Restricted Cash Cash equivalents include highly liquid investments with maturities of six months or less from the date purchased. Restricted cash represents cash that is used as collateral to support an unsecured Company credit card program through a major bank and a grant funding. The restricted cash balance was $1,838, $1,909, and $3,684 at June 30, 2021, December 31, 2020, and June 30, 2020, respectively. The following table provides a reconciliation of cash and cash equivalents and restricted cash to the amounts presented in the condensed consolidated statements of cash flows: JUNE 30, DECEMBER 31, JUNE 30, 2021 2020 2020 Cash and cash equivalents $ 267,757 $ 271,382 $ 55,669 Restricted cash, current 1,838 1,909 3,684 Total cash and cash equivalents, and restricted cash $ 269,595 $ 273,291 $ 59,353 |
Derivative Instruments | (g) Derivative Instruments The Company has an interest rate swap agreement that was designated as a cash flow hedge of interest rate risk for a notional amount of $230,000 that fixed the interest rate at 2.1284%, non-inclusive of the fixed credit spread through May 31, 2022. The Company recorded the fair value of its interest rate swap in the amount of $2,390 and $3,671, as a derivative liability as of June 30, 2021 and December 31, 2020, respectively, in its condensed consolidated balance sheets. During the second quarter, the Company determined that the hedge has not been highly effective from April 2018 and does not qualify for hedge accounting. As a result, The Company performed an analysis of the materiality of the out of period error correction in accordance with ASC 250, both quantitively and qualitatively, and concluded that the error correction was immaterial to all periods. The Company reclassified a $3,033 of accumulated comprehensive loss to interest expense The following table sets forth the liability that is measured at fair value on a recurring basis by the levels in the fair value hierarchy at June 30, 2021: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability Interest rate swap liability $ — $ 2,390 $ — $ 2,390 Total $ — $ 2,390 $ — $ 2,390 The following table sets forth the liability that is measured at fair value on a recurring basis by the levels in the fair value hierarchy at December 31, 2020: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability Interest rate swap liability $ — $ 3,671 $ — $ 3,671 Total $ — $ 3,671 $ — $ 3,671 |
Revenue Recognition ASC 606 | (h) Revenue Recognition ASC 606 Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s revenue consists of fees for perpetual and term licenses for the Company’s software products, post-contract customer support (referred to as maintenance), software as a service (“SaaS”) and professional services including training and other revenue. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis. The delivery of a particular type of software and each of the user licenses would be one performance obligation. However, any training, implementation, or support and maintenance promises as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are sufficiently short such that there is no significant financing component to the transaction. The Company typically recognizes license revenue at a point in time upon delivering the applicable license. The revenue related to the support and maintenance performance obligation will be recognized on an over time basis using time elapsed methodology. The revenue related to software training and software implementation performance will be recognized at the completion of the service. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the condensed consolidated balance sheets). Contract assets are billed and transferred to customer accounts receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one The unsatisfied performance obligations as of June 30, 2021 were approximately $90,826. Sources and Timing of Revenue The Company’s performance obligations are satisfied either over time or at a point in time. The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2021 2020 2021 2020 Software licenses transferred at a point in time $ 9,629 $ 9,013 $ 22,054 $ 20,378 Software licenses transferred over time 10,483 8,934 19,962 17,830 Service revenues earned over time 49,984 43,176 94,798 80,364 Total $ 70,096 $ 61,123 $ 136,814 $ 118,572 |
Earnings per Share | (i) Earnings per Share Basic earnings per common share is computed by dividing the net income that is attributable to common stockholders by the weighted-average number of common shares or common share equivalents outstanding during the reporting period, without consideration for potentially dilutive securities. The dilutive effect of potentially dilutive securities is excluded from basic earnings per share and is included in the calculation of diluted earnings per share. Restricted stock and restricted stock units granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted earnings per share is computed by dividing the net income attributable to stockholders by the weighted-average number of shares and potentially dilutive securities outstanding during the period. |
COVID-19 | (j) COVID-19 Since the first quarter of 2020, the COVID-19 pandemic has posed a significant threat to public health as well as the global and U.S. economies. The continued spread of variants of COVID-19 may adversely impact our business, financial condition or results of operations as a result of increased costs, negative impacts to our workforce, or a sustained economic downturn. Although the economy has rebounded in many areas, the outlook for containing the outbreak is still highly uncertain. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the global and US economy and our business. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of cash and cash equivalents and restricted cash | JUNE 30, DECEMBER 31, JUNE 30, 2021 2020 2020 Cash and cash equivalents $ 267,757 $ 271,382 $ 55,669 Restricted cash, current 1,838 1,909 3,684 Total cash and cash equivalents, and restricted cash $ 269,595 $ 273,291 $ 59,353 |
Summary of liability that is measured at fair value on a recurring basis | The following table sets forth the liability that is measured at fair value on a recurring basis by the levels in the fair value hierarchy at June 30, 2021: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability Interest rate swap liability $ — $ 2,390 $ — $ 2,390 Total $ — $ 2,390 $ — $ 2,390 The following table sets forth the liability that is measured at fair value on a recurring basis by the levels in the fair value hierarchy at December 31, 2020: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability Interest rate swap liability $ — $ 3,671 $ — $ 3,671 Total $ — $ 3,671 $ — $ 3,671 |
Summary of revenue by timing of revenue recognition | THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2021 2020 2021 2020 Software licenses transferred at a point in time $ 9,629 $ 9,013 $ 22,054 $ 20,378 Software licenses transferred over time 10,483 8,934 19,962 17,830 Service revenues earned over time 49,984 43,176 94,798 80,364 Total $ 70,096 $ 61,123 $ 136,814 $ 118,572 |
Long-Term Debt and Revolving _2
Long-Term Debt and Revolving Line of Credit (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Long-Term Debt and Revolving Line of Credit | |
Schedule of Long-term debt | JUNE 30, DECEMBER 31, 2021 2020 Term loans $ 302,000 $ 304,099 Less: debt issuance costs (6,358) (5,319) Total 295,642 298,780 Current portion of long-term debt (3,020) (4,680) Long-term debt, net of current portion and debt issuance costs $ 292,622 $ 294,100 |
Schedule of maturity of long-term debt | The principal amount of long-term debt outstanding as of June 30, 2021 matures in the following years: 2021 2022 2023 2024 2025 2026 TOTAL Maturities $ 1,510 $ 3,020 $ 3,020 $ 3,020 3,020 $ 288,410 $ 302,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Commitments and Contingencies. | |
Schedule of Non-cancelable future minimum lease commitments of operating lease liability | Non-cancelable future minimum lease commitments as of June 30, 2021 are as follows: OPERATING CAPITAL LEASES LEASES Remainder of 2021 $ 3,042 $ 152 2022 5,123 304 2023 3,394 25 2024 2,668 — 2025 2,107 — Thereafter 2,395 — Non-cancelable future minimum lease payments 18,729 481 Less amount representing interest — (23) Net non-cancelable future minimum lease payments $ 18,729 $ 458 Current portion of net non-cancelable future minimum lease payments 284 Net long-term non-cancelable future minimum lease payments $ 174 |
Schedule of Non-cancelable future minimum lease commitments of finance lease liability | Non-cancelable future minimum lease commitments as of June 30, 2021 are as follows: OPERATING CAPITAL LEASES LEASES Remainder of 2021 $ 3,042 $ 152 2022 5,123 304 2023 3,394 25 2024 2,668 — 2025 2,107 — Thereafter 2,395 — Non-cancelable future minimum lease payments 18,729 481 Less amount representing interest — (23) Net non-cancelable future minimum lease payments $ 18,729 $ 458 Current portion of net non-cancelable future minimum lease payments 284 Net long-term non-cancelable future minimum lease payments $ 174 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Equity-Based Compensation | |
Summary of the restricted stock | WEIGHTED- AVERAGE GRANT DATE SHARES FAIR VALUE Non-vested restricted stock as of December 31, 2020 5,941,693 $ 23.00 Granted — — Vested (548,008) 23.00 Forfeited (129,327) 23.00 Non-vested restricted stock as of June 30, 2021 5,264,358 $ 23.00 |
Summary of the Company's RSU activity | WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested RSUs as of December 31, 2020 30,052 $ 23.00 Granted 939,863 27.39 Vested (24,728) 23.00 Forfeited (30,050) 26.53 Non-vested RSUs as of June 30, 2021 915,137 $ 27.39 |
Schedule of nonvested Performance-based Units activity | WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested PSUs as of December 31, 2020 — $ — Granted 374,645 27.02 Vested — — Forfeited (11,905) 27.45 Non-vested PSUs as of June 30, 2021 362,740 $ 27.01 |
Schedule of compensation expense | THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2021 2020 2021 2020 Cost of revenues $ 1,456 $ 59 $ 2,296 $ 98 Sales and marketing 636 33 1,034 65 Research and development 615 33 1,014 63 General and administrative expenses 4,823 442 8,337 879 Total $ 7,530 $ 567 $ 12,681 $ 1,105 |
Segment Data (Tables)
Segment Data (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Segment Data | |
Schedule of revenue by geographic area | THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2021 2020 2021 2020 Revenue (1) Americas $ 49,109 $ 47,183 $ 95,683 $ 90,277 EMEA 13,689 9,062 27,915 19,922 Asia Pac 7,298 4,878 13,216 8,373 Total $ 70,096 $ 61,123 $ 136,814 $ 118,572 (1) Revenue is attributable to the countries based on the location of the customer. |
Earnings (loss) per Share (Tabl
Earnings (loss) per Share (Tables) | 6 Months Ended |
Jun. 30, 2021 | |
Earnings (loss) per Share | |
Schedule of basic and diluted earnings per share | THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, 2021 2020 2021 2020 Numerator: Net income (loss) available to common shareholders $ (2,857) $ 2,777 $ (1,805) $ 3,823 Denominator: Basic weighted average common shares outstanding 147,485,566 132,407,786 147,323,724 132,407,786 Effects of dilutive securities — — — — Diluted weighted average common shares outstanding 147,485,566 132,407,786 147,323,724 132,407,786 Earnings (loss) per share: Basic $ (0.02) $ 0.02 $ (0.01) $ 0.03 Diluted $ (0.02) $ 0.02 $ (0.01) $ 0.03 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Cash and cash equivalents & Deferred offering costs (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Summary of Significant Accounting Policies | ||||
Cash and cash equivalents | $ 267,757 | $ 271,382 | $ 55,669 | |
Restricted cash, current | 1,838 | 1,909 | 3,684 | |
Total cash and cash equivalents, and restricted cash | $ 269,595 | $ 273,291 | $ 59,353 | $ 29,762 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Error Correction | |||||
Accumulated other comprehensive income (loss) | $ (85) | $ (85) | $ (1,587) | ||
Interest expense | 6,332 | $ 7,023 | 10,260 | $ 13,881 | |
Interest Income, Other | 643 | ||||
Recurring | |||||
Derivative | |||||
Liability measured at fair value | 2,390 | 2,390 | 3,671 | ||
Level 2 | Recurring | |||||
Derivative | |||||
Liability measured at fair value | 2,390 | 2,390 | 3,671 | ||
Interest rate swap | Recurring | |||||
Derivative | |||||
Liability measured at fair value | 2,390 | 2,390 | 3,671 | ||
Interest rate swap | Level 2 | Recurring | |||||
Derivative | |||||
Liability measured at fair value | 2,390 | 2,390 | $ 3,671 | ||
Interest rate swap, first agreement | Designated as Hedging Instrument | Cash Flow Hedging | |||||
Derivative | |||||
Notional amount | $ 230,000 | $ 230,000 | |||
Interest rate (as a percent) | 2.1284% | 2.1284% | |||
Adjustment for the ineffective hedging of interest rate swap agreement. | Prior period error correction adjustment | |||||
Error Correction | |||||
Accumulated other comprehensive income (loss) | $ 3,033 | $ 3,033 | |||
Interest expense | $ 3,033 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Revenue and Net income (loss) per share (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Summary of Significant Accounting Policies | ||||
Unsatisfied performance obligation | $ 90,826 | $ 90,826 | ||
Revenue | 70,096 | $ 61,123 | 136,814 | $ 118,572 |
Software licenses transferred at a point in time | ||||
Summary of Significant Accounting Policies | ||||
Revenue | 9,629 | 9,013 | 22,054 | 20,378 |
Software licenses transferred over time | ||||
Summary of Significant Accounting Policies | ||||
Revenue | 10,483 | 8,934 | 19,962 | 17,830 |
Service revenues earned over time | ||||
Summary of Significant Accounting Policies | ||||
Revenue | $ 49,984 | $ 43,176 | $ 94,798 | $ 80,364 |
Minimum | ||||
Contract Balances | ||||
Subscription term | 1 year | |||
Maximum | ||||
Contract Balances | ||||
Subscription term | 3 years |
Initial Public Offering (Detail
Initial Public Offering (Details) - USD ($) | Mar. 29, 2021 | Dec. 15, 2020 | Jun. 30, 2021 |
IPO | |||
Initial Public Offering | |||
Issuance of common stock (in shares) | 14,630,000 | ||
Share price (in dollar per share) | $ 23 | ||
Proceeds from issuance of common stock upon initial public offering, net of underwriters' discounts and commissions | $ 316,301,000 | ||
Stock issuance costs, net of tax impact | 4,408,000 | ||
Tax impact of stock issuance costs | $ 259,000 | ||
The maximum ownership percent by beneficial owners of the registration rights agreement that can have termination if all registered securities then owned can be sold in 90 days (as a percent) | 5.00% | ||
Duration for which beneficial owners of registration rights agreement can be sold resulting in termination of agreement | 90 days | ||
The duration from date on which the holder ceases to be an employee of the company | 90 days | ||
IPO | EQT | |||
Initial Public Offering | |||
Issuance of common stock (in shares) | 18,783,250 | ||
Secondary Public Offering | |||
Initial Public Offering | |||
Issuance of common stock (in shares) | 0 | ||
Proceeds from issuance of common stock upon initial public offering, net of underwriters' discounts and commissions | $ 0 | $ 1,100,000 | |
Secondary Public Offering | EQT | |||
Initial Public Offering | |||
Issuance of common stock (in shares) | 10,000,000 | ||
Underwriters' Option | EQT | |||
Initial Public Offering | |||
Issuance of common stock (in shares) | 1,500,000 |
Acquisitions (Details)
Acquisitions (Details) - USD ($) $ in Thousands | Jun. 07, 2021 | Mar. 02, 2021 | Jun. 30, 2021 | Dec. 31, 2020 |
Acquisitions | ||||
Goodwill arising in the acquisition | $ 524,265 | $ 518,592 | ||
Series of Individually Immaterial Business Acquisitions | ||||
Acquisitions | ||||
Goodwill arising in the acquisition | $ 4,700 | $ 1,100 | ||
Customer relationships | Series of Individually Immaterial Business Acquisitions | ||||
Acquisitions | ||||
Finite-lived intangible assets acquired | $ 7,400 | 1,200 | ||
Non-compete agreements | Series of Individually Immaterial Business Acquisitions | ||||
Acquisitions | ||||
Finite-lived intangible assets acquired | $ 100 |
Long-Term Debt and Revolving _3
Long-Term Debt and Revolving Line of Credit - Other Information (Details) - USD ($) $ in Thousands | Dec. 28, 2020 | Jul. 15, 2020 | Apr. 03, 2018 | Jan. 25, 2018 | Sep. 30, 2021 | Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | Jun. 17, 2021 | Aug. 14, 2017 |
Debt Instrument | ||||||||||
Outstanding Loan | $ 295,642 | $ 298,780 | ||||||||
Amount borrowed | $ 19,880 | |||||||||
Variable Interest Term Loan | ||||||||||
Debt Instrument | ||||||||||
Principal amount | $ 250,000 | |||||||||
Additional borrowings | $ 40,000 | $ 25,000 | ||||||||
Interest paid on loan | 5,671 | 8,073 | ||||||||
Accrued interest payable | 30 | 32 | ||||||||
Revolving Line of Credit | ||||||||||
Debt Instrument | ||||||||||
Maximum borrowing capacity of revolving line of credit | $ 100,000 | 20,000 | ||||||||
Available borrowings | $ 100,000 | $ 20,000 | $ 80,000 | |||||||
Effective interest rate (as a percent) | 3.73% | 4.48% | ||||||||
Interest paid on loan | $ 0 | 232 | ||||||||
Accrued interest payable | 0 | $ 0 | ||||||||
Prepayment on the loan | $ 755 | $ 1,527 | ||||||||
Standby letter of credit | ||||||||||
Debt Instrument | ||||||||||
Available borrowings | 10,000 | |||||||||
letters of credit outstanding | 120 | |||||||||
Fixed Rate Term Loan | ||||||||||
Debt Instrument | ||||||||||
Principal amount | $ 100,000 | |||||||||
Interest rate (as a percent) | 8.25% | |||||||||
Interest paid on loan | $ 0 | $ 4,217 | ||||||||
Accrued interest payable | $ 3,000 | |||||||||
Prepayment on the loan | $ 80,000 | $ 20,000 | ||||||||
Outstanding Loan | $ 80,000 |
Long-Term Debt and Revolving _4
Long-Term Debt and Revolving Line of Credit - Long-Term Debt (Details) - USD ($) $ in Thousands | Jun. 30, 2021 | Dec. 31, 2020 |
Debt Instrument | ||
Long-term debt, Gross | $ 302,000 | |
Less: debt issuance costs | (6,358) | $ (5,319) |
Total | 295,642 | 298,780 |
Current portion of long-term debt | (3,020) | (4,680) |
Long-term debt, net of current portion and debt issuance costs | 292,622 | 294,100 |
Term Loan | ||
Debt Instrument | ||
Long-term debt, Gross | $ 302,000 | $ 304,099 |
Long-Term Debt and Revolving _5
Long-Term Debt and Revolving Line of Credit - Maturity of Long Term Debt (Details) $ in Thousands | Jun. 30, 2021USD ($) |
Maturities | |
2021 | $ 1,510 |
2022 | 3,020 |
2023 | 3,020 |
2024 | 3,020 |
2025 | 3,020 |
2026 | 288,410 |
Total | $ 302,000 |
Commitments and Contingencies -
Commitments and Contingencies - Other Information (Details) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Dec. 31, 2020 | |
Commitments and Contingencies | |||
Gross amounts of assets under capital leases | $ 1,504 | $ 1,501 | |
Capital lease accumulated amortization | 1,094 | $ 946 | |
Operating lease rent expense | $ 3,221 | $ 3,281 | |
Minimum | |||
Commitments and Contingencies | |||
Remaining operating and capital lease term | 1 year | ||
Maximum | |||
Commitments and Contingencies | |||
Remaining operating and capital lease term | 8 years |
Commitments and Contingencies_2
Commitments and Contingencies - Maturities of Lease Liabilities (Details) $ in Thousands | Jun. 30, 2021USD ($) |
OPERATING LEASE | |
Remainder of 2021 | $ 3,042 |
2021 | 5,123 |
2022 | 3,394 |
2023 | 2,668 |
2024 | 2,107 |
Thereafter | 2,395 |
Non-cancelable future minimum lease payments | 18,729 |
CAPITAL LEASES | |
Remainder of 2021 | 152 |
2021 | 304 |
2022 | 25 |
Non-cancelable future minimum lease payments | 481 |
Less amount representing interest | (23) |
Net non-cancelable future minimum lease payments | $ 458 |
Equity-Based Compensation - Cla
Equity-Based Compensation - Class B Plans (Details) - USD ($) $ in Thousands | Dec. 10, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Class B Units | |||||
Equity-Based Compensation | |||||
Percentage of Time-Based Vesting Units | 50.00% | ||||
Percentage of Performance-Based Vesting Units | 50.00% | ||||
Compensation expense | $ 7,530 | $ 567 | $ 12,681 | $ 1,105 | |
Time Based Class B Units | |||||
Equity-Based Compensation | |||||
Vesting period | 5 years | ||||
Service period | 5 years | ||||
Compensation expense | 754 | $ 1,531 | |||
Unrecognized share-based compensation expense | 7,936 | 7,936 | |||
Performance Based Class B Units | |||||
Equity-Based Compensation | |||||
Compensation expense | 2,983 | 7,025 | |||
Unrecognized share-based compensation expense | $ 18,116 | $ 18,116 | |||
Performance Based Class B Units | Maximum | |||||
Equity-Based Compensation | |||||
Threshold Percentage of Holding by Former Parent Company for Vesting of Performance Based Units | 10.00% | ||||
Restricted Stock | |||||
Equity-Based Compensation | |||||
Issuance of restricted stock (in shares) | 5,941,693 | ||||
Vested | 548,008 | ||||
Class B Plan | Class B Units | |||||
Equity-Based Compensation | |||||
Number of units authorized (in units) | 6,366,891 | 6,366,891 |
Equity-Based Compensation - Res
Equity-Based Compensation - Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 10, 2020 | Jun. 30, 2021 | Mar. 31, 2021 | Jun. 30, 2020 | Mar. 31, 2020 | Jun. 30, 2021 | Jun. 30, 2020 |
Class B Units | |||||||
Shares | |||||||
Granted | 156,332 | ||||||
Forfeited | (76,745) | ||||||
Non-vested restricted stock Ending balance | 5,508,785 | 5,508,785 | |||||
Weighted Average Grant Date Fair Value | |||||||
Compensation expense | $ 7,530 | $ 567 | $ 12,681 | $ 1,105 | |||
Restricted Stock | |||||||
Shares | |||||||
Non-vested restricted stock beginning balance | 5,941,693 | 5,941,693 | |||||
Granted | 0 | 0 | |||||
Vested | (548,008) | ||||||
Forfeited | (129,327) | ||||||
Non-vested restricted stock Ending balance | 5,264,358 | 5,264,358 | |||||
Share price | $ 23 | ||||||
Issuance of restricted stock (in shares) | 5,941,693 | ||||||
Weighted Average Grant Date Fair Value | |||||||
Non-vested restricted stock of beginning balance (in dollars per share) | $ 23 | $ 23 | |||||
Vested (in dollars per share) | 23 | ||||||
Forfeited (in dollars per share) | 23 | ||||||
Non-vested restricted stock of ending balance (in dollars per share) | $ 23 | $ 23 | |||||
Time Based Class B Units | |||||||
Equity-Based Compensation | |||||||
Service period | 5 years | ||||||
Weighted Average Grant Date Fair Value | |||||||
Compensation expense | $ 754 | $ 1,531 | |||||
Unrecognized share-based compensation expense | 7,936 | $ 7,936 | |||||
Unrecognized share-based compensation expense, recognition period | 38 months | ||||||
Performance Based Class B Units | |||||||
Weighted Average Grant Date Fair Value | |||||||
Compensation expense | 2,983 | $ 7,025 | |||||
Unrecognized share-based compensation expense | $ 18,116 | $ 18,116 | |||||
Unrecognized share-based compensation expense, recognition period | 27 months |
Equity-Based Compensation - R_2
Equity-Based Compensation - Restricted Stock Units (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended |
Jun. 30, 2021USD ($)$ / sharesshares | Jun. 30, 2021USD ($)$ / sharesshares | |
Restricted Stock Units (RSUs) | ||
Shares | ||
Non-vested restricted stock beginning balance | 30,052 | |
Granted | 939,863 | |
Vested | 24,728 | |
Forfeited | (30,050) | |
Non-vested restricted stock Ending balance | 915,137 | 915,137 |
Weighted Average Grant Date Fair Value | ||
Non-vested restricted stock of beginning balance (in dollars per share) | $ / shares | $ 23 | |
Granted (in dollars per share) | $ / shares | 27.39 | |
Vested (in dollars per share) | $ / shares | 23 | |
Forfeited (in dollars per share) | $ / shares | 26.53 | |
Non-vested restricted stock of ending balance (in dollars per share) | $ / shares | $ 27.39 | $ 27.39 |
Vested shares withheld for minimum statutory tax withholding requirements | 10,003 | |
Compensation expense | $ | $ 2,202 | $ 2,534 |
Unrecognized share-based compensation expense | $ | 23,027 | $ 23,027 |
Unrecognized share-based compensation expense, recognition period | 32 months | |
Performance Based Class B Units | ||
Weighted Average Grant Date Fair Value | ||
Compensation expense | $ | 2,983 | $ 7,025 |
Unrecognized share-based compensation expense | $ | $ 18,116 | $ 18,116 |
Unrecognized share-based compensation expense, recognition period | 27 months | |
Performance Based Common Stock Units | ||
Shares | ||
Granted | 374,645 | |
Forfeited | (11,905) | |
Non-vested restricted stock Ending balance | 362,740 | 362,740 |
Weighted Average Grant Date Fair Value | ||
Granted (in dollars per share) | $ / shares | $ 27.02 | |
Forfeited (in dollars per share) | $ / shares | 27.45 | |
Non-vested restricted stock of ending balance (in dollars per share) | $ / shares | $ 27.01 | $ 27.01 |
Compensation expense | $ | $ 1,591 | $ 1,591 |
Unrecognized share-based compensation expense | $ | 8,206 | $ 8,206 |
Unrecognized share-based compensation expense, recognition period | 21 months | |
Time Based Class B Units | ||
Weighted Average Grant Date Fair Value | ||
Vesting period | 5 years | |
Compensation expense | $ | 754 | $ 1,531 |
Unrecognized share-based compensation expense | $ | $ 7,936 | $ 7,936 |
Unrecognized share-based compensation expense, recognition period | 38 months |
Equity-Based Compensation - Com
Equity-Based Compensation - Compensation expense (Details) - Class B Units - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Equity-Based Compensation | ||||
Compensation expense | $ 7,530 | $ 567 | $ 12,681 | $ 1,105 |
Cost of revenues | ||||
Equity-Based Compensation | ||||
Compensation expense | 1,456 | 59 | 2,296 | 98 |
Sales and marketing | ||||
Equity-Based Compensation | ||||
Compensation expense | 636 | 33 | 1,034 | 65 |
Research and development | ||||
Equity-Based Compensation | ||||
Compensation expense | 615 | 33 | 1,014 | 63 |
General and administrative expenses | ||||
Equity-Based Compensation | ||||
Compensation expense | $ 4,823 | $ 442 | $ 8,337 | $ 879 |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2021USD ($)segment | Jun. 30, 2020USD ($) | Dec. 31, 2020USD ($) | |
Segments | |||||
Number of operating segment | segment | 1 | ||||
Revenue | $ 70,096 | $ 61,123 | $ 136,814 | $ 118,572 | |
Property and equipment, net | 3,069 | 3,069 | $ 3,872 | ||
United States | |||||
Segments | |||||
Revenue | 49,109 | 47,183 | 95,683 | 90,277 | |
EMEA | |||||
Segments | |||||
Revenue | 13,689 | 9,062 | 27,915 | 19,922 | |
Asia Pac | |||||
Segments | |||||
Revenue | $ 7,298 | $ 4,878 | $ 13,216 | $ 8,373 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Income Taxes | ||||
Effective tax rate | (103.00%) | 57.00% | 1131.00% | 53.00% |
Earnings (loss) per Share (Deta
Earnings (loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2021 | Jun. 30, 2020 | Jun. 30, 2021 | Jun. 30, 2020 | |
Numerator: | ||||
Net income (loss) available to common shareholders | $ (2,857) | $ 2,777 | $ (1,805) | $ 3,823 |
Denominator: | ||||
Basic weighted average common shares outstanding (in shares) | 147,485,566 | 132,407,786 | 147,323,724 | 132,407,786 |
Diluted weighted average common shares outstanding (in shares) | 147,485,566 | 132,407,786 | 147,323,724 | 132,407,786 |
Earnings (loss) per share: | ||||
Basic (in dollar per share) | $ (0.02) | $ 0.02 | $ (0.01) | $ 0.03 |
Diluted (in dollar per share) | $ (0.02) | $ 0.02 | $ (0.01) | $ 0.03 |
Subsequent Events (Details)
Subsequent Events (Details) - Pinnacle 21, LLC - Forecast - Subsequent Events $ in Thousands | Aug. 02, 2021USD ($) |
Subsequent Events | |
Amount of cash consideration transferred in Merger Agreement | $ 250,000 |
Restricted common stock issued in Merger Agreement | $ 60,000 |