Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 28, 2023 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
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 $0.01 per share | |
Trading Symbol | CERT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 159,831,701 | |
Entity Central Index Key | 0001827090 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 244,135 | $ 236,586 |
Accounts receivable, net of allowances for credit losses of $736 and $1,250, respectively | 82,404 | 82,584 |
Restricted cash | 3,103 | 3,102 |
Prepaid expenses and other current assets | 18,612 | 19,980 |
Total current assets | 348,254 | 342,252 |
Other assets: | ||
Property and equipment, net | 2,317 | 2,400 |
Operating lease right-of-use assets | 13,405 | 14,427 |
Goodwill | 718,841 | 717,743 |
Intangible assets, net of $231,384 and $217,705, respectively | 476,554 | 486,782 |
Deferred income taxes | 3,703 | 3,703 |
Other long-term assets | 3,683 | 5,615 |
Total assets | 1,566,757 | 1,572,922 |
Current liabilities: | ||
Accounts payable | 4,326 | 7,533 |
Accrued expenses | 30,008 | 35,403 |
Current portion of deferred revenue | 51,654 | 52,209 |
Current portion of long-term debt | 3,020 | 3,020 |
Current operating lease liabilities | 4,808 | 4,968 |
Other current liabilities | 25 | |
Total current liabilities | 93,816 | 103,158 |
Long-term liabilities: | ||
Deferred revenue, net of current portion | 2,780 | 2,815 |
Deferred income taxes | 62,920 | 65,046 |
Operating lease liabilities, net of current portion | 9,244 | 10,133 |
Long-term debt, net of current portion and debt discount | 289,546 | 289,988 |
Other long-term liabilities | 23,396 | 22,121 |
Total liabilities | 481,702 | 493,261 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred shares, $0.01 par value, 50,000,000 authorized as of March 31, 2023 and December 31, 2022, respectively, no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | ||
Common shares, $0.01 par value, 600,000,000 shares authorized, 160,218,109 and 159,676,150 shares issued as of March 31 ,2023 and December 31, 2022, respectively; 159,839,743 and 159,525,943 shares outstanding as of March 31, 2023 and December 31, 2022, respectively | 1,601 | 1,596 |
Additional paid-in capital | 1,158,708 | 1,150,168 |
Accumulated deficit | (59,515) | (60,873) |
Accumulated other comprehensive loss | (7,320) | (8,230) |
Treasury stock at cost, 378,366 and 150,207 shares at March 31, 2023 and December 31, 2022, respectively | (8,419) | (3,000) |
Total stockholders' equity | 1,085,055 | 1,079,661 |
Total liabilities and stockholders' equity | $ 1,566,757 | $ 1,572,922 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for credit losses | $ 736 | $ 1,250 |
Accumulated amortization | $ 231,384 | $ 217,705 |
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 | 160,218,109 | 159,676,150 |
Common share, shares outstanding | 159,839,743 | 159,525,943 |
Treasury stock, shares | 378,366 | 150,207 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS) | ||
Revenues | $ 90,301 | $ 81,551 |
Cost of revenues | 34,856 | 32,789 |
Operating expenses: | ||
Sales and marketing | 8,002 | 6,111 |
Research and development | 9,287 | 7,548 |
General and administrative | 19,772 | 18,339 |
Intangible asset amortization | 10,535 | 10,149 |
Depreciation and amortization expense | 411 | 482 |
Total operating expenses | 48,007 | 42,629 |
Income from operations | 7,438 | 6,133 |
Other expenses: | ||
Interest expense | (5,475) | (3,228) |
Net other income | 506 | 841 |
Total other expenses | (4,969) | (2,387) |
Income before income taxes | 2,469 | 3,746 |
Provision for income taxes | 1,111 | 1,536 |
Net income | 1,358 | 2,210 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustment | 2,601 | (3,184) |
Change in fair value from interest rate swap, net of tax of $(588) and $60, respectively | (1,691) | 64 |
Total other comprehensive income (loss) | 910 | (3,120) |
Comprehensive income (loss) | $ 2,268 | $ (910) |
Net income per share attributable to common stockholders: | ||
Basic (in dollar per share) | $ 0.01 | $ 0.01 |
Diluted (in dollar per share) | $ 0.01 | $ 0.01 |
Weighted average common shares outstanding: | ||
Basic (in shares) | 158,177,025 | 155,936,953 |
Diluted (in shares) | 159,727,412 | 159,160,321 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME(LOSS) | ||
Change in fair value from interest rate swap, tax expense (benefit) | $ (588) | $ 60 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | ACCUMULATED OTHER COMPREHENSIVE LOSS | TREASURY STOCK | Total |
Beginning balance at Dec. 31, 2021 | $ 1,596 | $ 1,119,821 | $ (75,604) | $ (3,926) | $ (38) | $ 1,041,849 |
Beginning balance (in shares) at Dec. 31, 2021 | 159,660,048 | |||||
Treasury Shares Beginning balance (in shares) at Dec. 31, 2021 | (1,100) | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Equity-based compensation expense | 7,513 | 7,513 | ||||
Restricted stock withheld for tax liability | $ (47) | (47) | ||||
Restricted stock withheld for tax liability (in shares) | (1,774) | |||||
Change in fair value from interest rate swap, net of tax | 64 | 64 | ||||
Net income | 2,210 | 2,210 | ||||
Foreign currency translation adjustment | (3,184) | (3,184) | ||||
Ending balance at Mar. 31, 2022 | $ 1,596 | 1,127,334 | (73,394) | (7,046) | $ (85) | 1,048,405 |
Ending balance (in shares) at Mar. 31, 2022 | 159,660,048 | |||||
Treasury Shares Ending balance (in shares) at Mar. 31, 2022 | (2,874) | |||||
Beginning balance at Dec. 31, 2022 | $ 1,596 | 1,150,168 | (60,873) | (8,230) | $ (3,000) | $ 1,079,661 |
Beginning balance (in shares) at Dec. 31, 2022 | 159,676,150 | |||||
Treasury Shares Beginning balance (in shares) at Dec. 31, 2022 | (150,207) | 150,207 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Equity-based compensation expense | 8,543 | $ 8,543 | ||||
Common shares issued for employee share-based compensation awards and shares withheld for tax | $ 6 | |||||
Common shares issued for employee share-based compensation awards and shares withheld for tax (in shares) | 608,179 | |||||
Common shares issued for employee share-based compensation awards and shares withheld for tax | (4) | $ (5,419) | (5,417) | |||
Common shares issued for employee share-based compensation awards and shares withheld for tax (in shares) | (228,159) | |||||
Restricted stock forfeiture | $ (1) | 1 | ||||
Restricted stock forfeiture (in shares) | (66,220) | |||||
Change in fair value from interest rate swap, net of tax | (1,691) | (1,691) | ||||
Net income | 1,358 | 1,358 | ||||
Foreign currency translation adjustment | 2,601 | 2,601 | ||||
Ending balance at Mar. 31, 2023 | $ 1,601 | $ 1,158,708 | $ (59,515) | $ (7,320) | $ (8,419) | $ 1,085,055 |
Ending balance (in shares) at Mar. 31, 2023 | 160,218,109 | |||||
Treasury Shares Ending balance (in shares) at Mar. 31, 2023 | (378,366) | 378,366 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 1,358 | $ 2,210 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment | 411 | 482 |
Amortization of intangible assets | 13,113 | 12,450 |
Amortization of debt issuance costs | 383 | 386 |
(Recovery of) provision for credit losses | (168) | 34 |
Loss on retirement of assets | 4 | 5 |
Change in fair value of contingent consideration | 1,261 | |
Equity-based compensation expense | 8,543 | 7,513 |
Deferred income taxes | (1,524) | (715) |
Changes in assets and liabilities | ||
Accounts receivable | 647 | (3,244) |
Prepaid and other assets | 559 | 653 |
Accounts payable and accrued expenses | (14,196) | (11,830) |
Deferred revenue | (1,034) | 2,556 |
Change in other liabilities | 600 | (697) |
Net cash provided by operating activities | 9,957 | 9,803 |
Cash flows from investing activities: | ||
Capital expenditures | (317) | (506) |
Capitalized development costs | (2,360) | (2,187) |
Investment in intangible assets | (54) | |
Business acquisitions, net of cash acquired | (5,983) | |
Net cash used in investing activities | (2,731) | (8,676) |
Cash flows from financing activities: | ||
Payments on long-term debt and finance lease obligations | (780) | (826) |
Payments on financing component of interest rate swap | (646) | |
Payment of taxes on shares and units withheld for employee taxes | (70) | (48) |
Net cash used by financing activities | (850) | (1,520) |
Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash | 1,174 | (1,171) |
Net increase (decrease) in cash and cash equivalents, and restricted cash | 7,550 | (1,564) |
Cash and cash equivalents, and restricted cash, at beginning of period | 239,688 | 186,624 |
Cash and cash equivalents, and restricted cash, at end of period | 247,238 | 185,060 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 5,196 | 3,547 |
Cash paid for taxes | $ 517 | $ 2,769 |
Description of Business
Description of Business | 3 Months Ended |
Mar. 31, 2023 | |
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-driven 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-driven services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success. The Company’s regulatory science and market access software and services are underpinned by technologies such as regulatory submissions software, 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. The Company has operations in the United States, Australia, Canada, China, France, Germany, India, Italy, Japan, Luxembourg, Netherlands, Philippines, Poland, Portugal, Spain, Switzerland and the United Kingdom. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
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 our 2022 Annual Report. 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, 2022. (a) Basis of Presentation and Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, valuation of interest rate swaps, determination of fair value of equity-based awards, measurement of fair value of contingent consideration, 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 consolidated financial statements. (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of March 31, 2023, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These unaudited condensed consolidated financial statements include all adjustments necessary 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. Certain amounts reported in prior periods have been reclassified to conform with the current presentation. 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 2022 audited consolidated financial statements and notes thereto. The information as of December 31, 2022 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the Company’s 2022 Annual Report. (c) Recently Issued Accounting Pronouncements In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, “Common Control Arrangements (Topic 842),” which provide private companies and not-for-profit organizations that are not conduit bond obligors with a practical expedient to use the written terms and conditions of a common control arrangement to determine whether a lease exists and, if so, the classification of and accounting for that lease. In addition, the ASU requires all entities including public companies to amortize leasehold improvements associated with common control leases over the useful life to the common control group. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements. (d) 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. (e) Fair Value Measurements The Company follows FASB Accounting Standards Codification (“ASC”) 820 10, “Fair Value Measurements” (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and requires certain disclosures about fair value measurements. ASC 820 10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the most advantageous market for the asset or liability in an orderly transaction. Fair value measurement is based on a hierarchy of observable or unobservable inputs. The standard describes three levels of inputs that may be used to measure fair value. Level 1 — Inputs to the valuation methodology are quoted prices available in active markets for identical securities as of the reporting date; Level 2 — Inputs to the valuation methodology are other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk etc. as of the reporting date, and the fair value can be determined through the use of models or other valuation methodologies; and Level 3 — Inputs to the valuation methodology are unobservable inputs in situations where there is little, or no market activity of the securities and the reporting entity makes estimates and assumptions relating to the pricing of the securities including assumptions regarding risk. If the inputs used to measure fair value fall at different levels of the fair value hierarchy, the hierarchy is based on the lowest level of input that is significant to the fair value measurement. For the acquisitions noted in Note 5, the fair value measurement methods used to estimate the fair value of the assets acquired and liabilities assumed at the acquisition dates utilized a number of significant unobservable inputs of Level 3 assumptions. These assumptions included, among other things, projections of future operating results, implied fair value of assets using an income approach by preparing a discounted cash flow analysis, and other subjective assumptions. Interest rate swaps are valued in the market using discounted cash flows techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative instrument valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. Contingent liabilities related to acquisitions are measured at fair value using Level 3 unobservable inputs. The Company's estimates of fair value are based upon assumptions believed to be reasonable, but that are uncertain and involve significant judgments by management. Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss). To estimate the fair value of the contingent consideration liability, management utilized a Monte Carlo simulation model to value the earn-out based on the likelihood of reaching certain eligible revenue thresholds. Significant inputs used in the fair value measurement of contingent consideration are the amount and timing of the acquired entity’s eligible revenue over a three-year period subsequent to the acquisition date. At the acquisition date, the fair value of the contingent consideration liabilities was $19.8 million. The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at March 31, 2023: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 102,076 $ — $ — $ 102,076 Interest rate swap assets — 6,096 — 6,096 Total assets $ 102,076 $ 6,096 $ — $ 108,172 Liabilities Contingent liabilities $ — $ — $ 21,074 $ 21,074 Total liabilities $ — $ — $ 21,074 $ 21,074 The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2022: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 100,999 $ — $ — $ 100,999 Interest rate swap assets — 8,374 — 8,374 Total assets $ 100,999 $ 8,374 $ — $ 109,373 Liabilities Contingent liabilities $ — $ — $ 19,813 $ 19,813 Total liabilities $ — $ — $ 19,813 $ 19,813 For the period ended March 31, 2023, there were no transfers between levels fair value The following table summarizes the Level 3 activity of the changes in the contingent consideration liability. MARCH 31, 2023 (In thousands) Beginning balance at December 31, 2022 $ 19,813 Payments — Change in fair value 1,261 Ending balance at March 31, 2023 $ 21,074 For more information regarding fair value measurements and the fair value hierarchy, see Note 2. “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements in the Company’s 2022 Annual Report. (f) Cash and Cash Equivalents, and Restricted Cash Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. Restricted cash represents cash that is reserved to provide for a Company credit card program and unexpended restricted grant funds. The restricted cash balance was $3,103 and $3,102 at March 31, 2023 and December 31, 2022, 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: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Cash and cash equivalents $ 244,135 $ 236,586 Restricted cash, current 3,103 3,102 Total cash and cash equivalents and restricted cash $ 247,238 $ 239,688 (g) Accounts Receivable Accounts receivable includes current outstanding invoices billed to customers. Invoices are typically issued with net 30 days to net 90 days terms upon delivery of the product or upon achievement of billable events for service-based contracts. Unbilled receivables relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts. Unbilled receivables are billed and transferred to customer accounts receivable when the rights become unconditional. The carrying amount of accounts receivable is reduced by a valuation allowance. The Company estimates the expected credit losses for accounts receivables using historical loss data adjusted for current economic conditions, including reasonable and supportable forecasts to estimate the relative size of credit losses to be expected. The Company generally writes off a receivable or records a specific allowance for credit losses if the Company determines that the receivable is not collectible. Allowances for credit losses of $736 and $1,250 were provided in the accompanying condensed consolidated financial statements as of March 31, 2023 and December 31, 2022, respectively. Accounts receivable consists of the following: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Trade receivables $ 69,832 $ 72,238 Unbilled receivables 12,979 11,309 Other receivables 329 287 Allowances for credit losses (736) (1,250) Accounts receivable, net $ 82,404 $ 82,584 The following table presents the information regarding the allowance of accounts receivable: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Beginning balance $ 1,250 $ 262 Provision for credit losses (164) 1,009 Charge-offs, net of recoveries (350) (21) Ending balance $ 736 $ 1,250 (h) Derivative Instruments In the normal course of business, the Company is subject to risk from adverse fluctuations in interest rates. The Company has chosen to manage this risk through the use of derivative financial instruments that consist of interest rate swap contracts. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes. The objective in managing exposure to market risk is to limit the impact on cash flows. To qualify for hedge accounting, the interest rate swaps must effectively reduce the risk exposure that they are designed to hedge. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions must be, and be expected to remain, probable of occurring in accordance with the related assertions. FASB ASC 815, “Derivatives and Hedging,” requires the Company to recognize all derivatives on the balance sheet at fair value. The Company may enter into derivative contracts such as interest rate swap contracts that effectively convert portions of the Company’s floating rate debt to a fixed rate, which serves to mitigate interest rate risk. The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company had entered into an interest rate swap agreement in May 2022 that pays a fixed interest rate and receives a variable interest rate to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. The swap agreement has a notional amount of $230,000, a fixed rate of 2.8% and a termination date of August 31, 2025. At March 31, 2023 and December 31, 2022, the interest swap had a fair value of $6,096 and $8,374, respectively; The fair value recognized in accumulated other comprehensive income was $6,096 and $8,374, respectively, at March 31, 2023 and December 31, 2022. The interest income on derivative instruments recognized in the Company’s condensed consolidated statements of operations and comprehensive income (loss) was $986 for the three months ended March 31, 2023 and there was no changes in the fair value of the interest rate swap in interest expense for the three month ended March 31 2022. The Company uses derivatives to manage certain interest exposures and designated all the derivatives as cash flow hedges. The Company records derivatives at fair value on its condensed consolidated balance sheets. Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss). Those amounts are reclassified into interest expense in the same period during which the hedged transactions impact earnings. The notional amounts and fair values, locations of derivative instruments in the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022 were as follows: Interest rate swap derivative designated as cash flow hedging instruments: March 31, 2023 December 31, 2022 (In thousands) Notional amounts $ 230,000 $ 230,000 Prepaid expenses and other current assets $ 4,261 $ 4,638 Other long-term assets $ 1,835 $ 3,736 The net amount of deferred gains related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive gains into earnings over the next twelve months is $4,272. (i) Revenue Recognition In accordance with Accounting Standards Codification Topic 606 ("ASC Topic 606"), “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps: i. ii. iii. iv. v. The Company’s revenue consists of fees for perpetual and term licenses for its software products, post- contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue. 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 following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Software Licenses Revenues Software license revenue consists primarily of sales of software licenses downloaded and installed by our customers on their own hardware. The license period is generally one year or less and includes an insignificant amount of customer support to assist the customer with the software. Software license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. Software as a Service (SaaS) Revenues SaaS revenues consist of subscription fees for access to, and related support for, the Company’s cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments. The invoice is initially deferred and revenue is recognized ratably over the life of the contract. The Company’s software contracts do not typically include, variable consideration, or options for future purchases that would not be similar to the original goods. Software Service Revenues Maintenance services agreements on perpetual software consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year . While the transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. Consulting Service Revenues The Company’s primary professional services offering includes consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. The Company’s professional services contracts are either time-and-materials or fixed fee. Service revenues are generally recognized over time as the services are performed. Generally, these services are delivered to customers electronically. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenues for fixed-price services are generally recognized over time by applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and the varying lengths of time they are being paid for determine the measure of progress. Arrangements with Multiple Performance Obligations For contracts with multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the Company determines if the products or services are distinct and allocates the consideration to each distinct 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. Additionally, any training, implementation, or support and maintenance promises sold 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 less than one year such that there is no significant financing component. 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, contract liabilities) 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 Contract balances at March 31, 2023 and December 31, 2022 were as follows: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Contract assets $ 12,979 $ 11,309 Contract liabilities 54,434 55,024 During the first quarter of 2023, the Company recognized revenue of $24,488 related to contract liabilities at December 31, 2022. The unsatisfied performance obligations as of March 31, 2023, were approximately $130,237. We expect to recognize approximately $114,658 or 88.0% of this revenue over the next 12 months and the remainder thereafter. Deferred Contract Acquisition Costs Under ASC Topic 606, sales commissions paid to the sales force and the related employer payroll taxes, collectively deferred contract acquisition costs, are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions for our sales force personnel. Capitalized costs to obtain a contract are amortized on a straight-line basis over the expected period of benefit. Amortization of capitalized costs is included in sales and marketing expenses in our condensed consolidated statements of operations and comprehensive income (loss). Capitalized contract acquisition costs were $814 and $981 as of March 31, 2023, and December 31, 2022, respectively, and were included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Grant Revenue The Company receives grant funding for certain specific projects from time to time. These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements. In these agreements, both involved parties receive and sacrifice approximately commensurate value so these are accounted for as exchange transactions and revenue is recognized according to ASC Topic 606. Grant funding is generally provided near contract inception, so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time. 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 MARCH 31, 2023 2022 (In thousands) Software licenses transferred at a point in time $ 14,498 $ 13,452 Software licenses transferred over time 18,507 15,741 Service revenues earned over time 57,296 52,358 Total $ 90,301 $ 81,551 (j) Earnings per Share Basic earnings per common share is computed by dividing the net earnings by the weighted-average number of shares outstanding during the reporting period, without consideration for potentially dilutive securities. Diluted earnings per share is computed by dividing the net earnings attributable to stockholders by the weighted-average number of shares and dilutive securities outstanding during the period. |
Public Offerings and Other Sign
Public Offerings and Other Significant Shareholder Transactions | 3 Months Ended |
Mar. 31, 2023 | |
Public Offerings and Other Significant Shareholders Transactions | |
Public Offerings and Other Significant Shareholder Transactions | 3. Public Offerings and Other significant Shareholder Transactions On December 11, 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 former controlling shareholder, 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, were 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 was party to a registration rights agreement with EQT and its affiliates, Arsenal Capital Partners (“Arsenal”), and certain other stockholders, dated December 8, 2020. That agreement was terminated following the sale of all of EQT’s 29,954,521 common shares in the Company to Arsenal on December 8, 2022 (the “Arsenal Transaction”). Arsenal and the Company entered into a new registration rights agreement, dated November 3, 2022 (the “Registration Rights Agreement”), which contains provisions that entitle Arsenal to certain rights to have their securities registered by the Company under the Securities Act. While the Registration Rights Agreement is in effect, Arsenal is entitled to (i) four “demand” registrations, (ii) one underwritten offering in any consecutive 90-day period, and (iii) two underwritten offerings in any consecutive 360-day period, subject in each case to certain limitations. In addition, the Registration Rights Agreement provides that the Company will share certain expenses of Arsenal relating to such registrations and indemnify Arsenal against certain liabilities that may arise under the Securities Act. In connection with the Arsenal Transaction, the Company also entered into a letter agreement, effective December 8, 2022, with Arsenal providing that, subject to certain exceptions, Arsenal is prohibited from transferring the shares from EQT until December 8, 2024. Also in connection with the Arsenal Transaction, the Company entered into a stockholders agreement with Arsenal, effective December 8, 2022, which, among other things, grants certain conditional rights to Arsenal to nominate up to two directors to our Board. On August 11, 2022, the Company completed a secondary public offering in which certain selling stockholders, including EQT, sold 7,000,000 shares of the Company’s common stock. 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 $596, recorded in general and administrative expenses, in relation to the secondary public offering. |
Concentrations of Credit Risk
Concentrations of Credit Risk | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 and December 31, 2022, the investments were bank deposits, overnight sweep accounts, and money market funds. 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 March 31, 2023 and December 31, 2022, no single customer accounted for more than 10% of the Company’s accounts receivable. |
Business Combinations
Business Combinations | 3 Months Ended |
Mar. 31, 2023 | |
Business Combinations | |
Business Combinations | 5. Business Combinations Acquisitions have been accounted for by using the acquisition method of accounting pursuant to FASB ASC 805, “Business Combinations.” Amounts allocated to the purchased assets and liabilities assumed are based upon the total purchase price and the estimated fair values of such assets and liabilities on the effective date of the purchase as determined by an independent third party. The results of operations have been included in the Company’s results of operations prospectively from the date of acquisition. Since its inception, and as of March 31, 2023, the Company has completed 17 acquisitions, of which 12 have included software or technology. Details of acquisitions that have closed since the beginning of fiscal year 2022 are provided below. Integrated Nonclinical Development Solutions, Inc. On January 3, 2022, the Company completed the acquisition of Integrated Nonclinical Development Solutions, Inc. (“INDS”), a company that provides the SEND Explorer software and drug development consulting for a total consideration of $8,048 . The business combination was not significant to the Company’s condensed consolidated financial statements. Based on the Company’s purchase price allocation, approximately $2,380 , $1,040 , $100 , and $2,910 of the purchase price were assigned to customer relationships, developed technology, non-compete agreements, and goodwill, respectively. Vyasa Analytics, LLC On December 28, 2022, the Company completed the acquisition of Vyasa Analytics, LLC (“Vyasa”), a company that provides an AI powered, scalable deep learning software and analytics platform for organizations within healthcare and life sciences for a total estimated consideration of $29,276. The business combination was not significant to the Company’s condensed consolidated financial statements. Based on the Company’s purchase price allocation, approximately $11,400, $1,500, $120, $80 and $16,589 of the purchase price were assigned to developed technology, customer relationships, trademarks, non-compete agreements and goodwill, respectively. The total estimated consideration includes a portion of contingent consideration that is payable over the next three years in a combination of 70% cash and 30% common stock of the Company. Future payments of contingent consideration are based on achieving certain eligible revenue thresholds for each of the twelve-month periods ended at December 31, 2023, 2024, and 2025. Potential payments range from $0 to $60,000 over the three-years period. The fair value of the contingent consideration was estimated to be $19,813 as of the acquisition date. The contingent consideration was classified as a liability and included in other long term liabilities on the Company’s condensed consolidated balance sheet, which is remeasured on a recurring basis at fair value for each reporting period. Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss). At March 31, 2023, contingent consideration was remeasured to $21,074, resulting in a fair value adjustment of $1,261 and recorded in general and administrative (“G&A”) on the accompanying condensed consolidated statement of operations and comprehensive income (loss). The condensed consolidated financial statements include the operating results of each acquisition from the date of acquisition. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | 3 Months Ended |
Mar. 31, 2023 | |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | 6. Prepaid Expenses and Other Current Assets and Other Long-Term Assets MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Prepaid expenses $ 8,472 $ 8,389 Income tax receivable 1,589 2,014 Research and development tax credit receivable 3,410 4,207 Current portion of interest rate swap asset 4,261 4,638 Other current assets 880 732 Prepaid expenses and other current assets $ 18,612 $ 19,980 Other long-term assets consisted of the following: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Long-term deposits $ 1,189 $ 1,150 Interest rate swap asset - long-term 1,835 3,736 Deferred financing cost 659 729 Total other long-term assets $ 3,683 $ 5,615 |
Long-Term Debt and Revolving Li
Long-Term Debt and Revolving Line of Credit | 3 Months Ended |
Mar. 31, 2023 | |
Long-Term Debt and Revolving Line of Credit | |
Long-Term Debt and Revolving Line of Credit | 7. Long-Term Debt and Revolving Line of Credit The Company has been a party to a Credit Agreement since August 2017 that provides for a senior secured term loan and commitments under a revolving credit facility. The agreement was modified several times. The Company and the lenders modified the Credit Agreement on June 17, 2021, which provides for, among other things, (i) the extension of the termination date applicable to the revolving credit commitments 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 this 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 March 31, 2023 and December 31, 2022, available borrowings under the revolving lines of credit were $100,000. Available borrowings under the revolving lines of credit as of March 31, 2023 and December 31, 2022 were reduced by $120 and $120, respectively, of standby letters of credit issued to a landlord in lieu of a security deposit in addition to any outstanding borrowings. 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 8.03% and 3.64% for the three months ended March 31, 2023 and 2022 for the term loan debt, respectively. As discussed previously, the Company has interest rate swap agreements to mitigate the interest rate risk. Interest incurred on the Credit Agreement with respect to the term loan amounted to $5,974 and $2,737 for the three months ended March 31, 2023 and 2022, respectively. Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $69 and $130 at March 31, 2023 and December 31, 2022, respectively, and is included in accrued expenses. Interest incurred on the Credit Agreement with respect to the revolving line of credit was $63 and $63 Long-term debt consists of the following: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Term loans $ 296,715 $ 297,470 Revolving line of credit — — Less: debt issuance costs (4,149) (4,462) Total 292,566 293,008 Current portion of long-term debt (3,020) (3,020) Long-term debt, net of current portion and debt issuance costs $ 289,546 $ 289,988 The principal amount of long-term debt outstanding as of March 31, 2023 matures in the following years: Remainder of 2023 2024 2025 2026 TOTAL (In thousands) Maturities $ 2,265 $ 3,020 $ 3,020 $ 288,410 $ 296,715 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, 2022, the Company was not required to make a mandatory prepayment on the term loan. For the Credit Agreement, the Company is required to make a quarterly principal payment of $755 on the term loan each quarter starting from September 30, 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. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Leases | 8. Leases The Company leases certain office facilities and equipment under non-cancelable operating and finance leases with remaining terms from one Operating lease right-of-use (“ROU”) assets are included in other assets while finance lease ROU assets are included in property and equipment, net in the condensed consolidated balance sheets. With respect to operating lease liabilities, current operating lease liabilities are included in current liabilities and non-current operating lease liabilities are included in long-term liabilities in the condensed consolidated balance sheets. Current finance lease liabilities are included in other current liabilities in the condensed consolidated balance sheets. At March 31, 2023, the weighted average remaining lease terms were 3.77 years for operating leases, respectively; the weighted average discount rate was 3.43% for operating leases, respectively. For additional information on the Company's leases, see Note 14 to the condensed consolidated financial statements included the Company’s 2022 Annual Report. The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at March 31, 2023 and December 31, 2022: MARCH 31, DECEMBER 31, Lease Position Balance Sheet Classification 2023 2022 (In thousands) Assets Operating lease assets Operating lease ROU assets $ 13,405 $ 14,427 Finance lease assets Property and equipment, net — 24 Total lease assets $ 13,405 $ 14,451 Liabilities Current Operating Current operating lease liabilities $ 4,808 $ 4,968 Finance Other current liabilities — 25 Noncurrent Operating Operating lease liabilities, net of current portion 9,244 10,133 Finance Non-current finance lease liabilities — — Total lease liabilities $ 14,052 $ 15,126 The following table summarizes by year the maturities of our minimum lease payments as of March 31, 2023. OPERATING LEASES (In thousands) Remainder of 2023 $ 3,635 2024 4,124 2025 3,348 2026 2,125 2027 911 Thereafter 697 Total future lease payments 14,840 Less: imputed interest (788) Total $ 14,052 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 9. Accrued Expenses and Other Current Liabilities Accrued expenses consist of the following: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Accrued compensation $ 23,642 $ 29,518 Legal and professional accruals 781 1,297 Interest payable 57 176 Income taxes payable 3,697 2,223 Accrued business acquisition liabilities 700 700 Other 1,131 1,489 Total accrued expenses $ 30,008 $ 35,403 Other long-term liabilities consist of the following: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Uncertain tax position liability $ 2,322 $ 2,308 Contingent consideration 21,074 19,813 Total other long-term liabilities $ 23,396 $ 22,121 |
Equity-Based Compensation
Equity-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Equity-Based Compensation | |
Equity-Based Compensation | 10. Equity-Based Compensation The Company’s equity-based compensation programs are intended to attract, retain and provide incentives for employees, officers and directors. The Company has the following stock-based compensation plans and programs. Restricted Stock The majority of the Company’s restricted stock awarded to its employees was originally issued in December 10, 2020 in exchange for the Class B Profits Interest Unit (the “Class B Units”) of EQT Avatar Parent, L.P, which was the former parent of the Company. 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. In 2021, the Company granted 87,127 replacement shares of restricted stock in connection with the Pinnacle acquisition under which equity-based awards are outstanding. The fair value of the restricted stock awarded was initially based on the fair value of our common stock on the date of grant, then adjusted for time restrictions due to unregistered shares and lack of marketability. Total grant date fair value was $2,762. The restricted stock issued in 2021 generally has a three-year vesting period except for one holder whose shares vests equally on a monthly basis for two years. WEIGHTED- AVERAGE GRANT DATE SHARES FAIR VALUE Non-vested restricted stock as of December 31, 2022 1,402,813 $ 23.27 Granted — — Vested (209,360) 23.27 Forfeited — — Cancelled — — Non-vested restricted stock as of March 31, 2023 1,193,453 $ 23.27 The Company did not legally authorize or issue any restricted stock during the three-month period ended March 31, 2023. The shares of restricted stock that vested include 2,022 shares of common stock that were withheld on behalf of employees to satisfy the statutory tax withholding requirements. Equity-based compensation expenses related to the restricted stock exchanged for performance-based Class B Units were $655 and $2,120 for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $2,640, which is expected to be recognized over a weighted-average period of 19.4 months. Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $498 and $766 for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $2,389, which is expected to be recognized over a weighted-average period of 24.3 months. Equity-based employee compensation expense related to the time-based restricted stock for the Pinnacle acquisition was $292 for both three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, the total unrecognized equity-based compensation expenses related to outstanding restricted stock recognized using the straight-line attribution approach was $1,009, which is expected to be recognized over a weighted-average period of 13.6 months. 2020 Incentive Plan In order to align the Company’s equity compensation program with public company practices, the Company’s Board of Directors adopted and stockholders approved the 2020 Incentive Plan. The 2020 Incentive Plan allows for grants of non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to employees, directors, officers, and consultants or advisors of the Company. The 2020 Incentive Plan allows for 20,000,000 shares (the “plan share reserve”) of common stock to be issued. No more than the number of shares of common stock equal to the plan share reserve may be issued in the aggregate pursuant to the exercise of incentive stock options. The maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1,000,000 in total value, except for certain awards made to a non-executive chair of our Board of Directors. Restricted Stock Units (“RSU”) 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, 2022 2,005,095 $ 24.71 Granted — — Vested* (608,179) 24.11 Forfeited (17,196) 23.72 Non-vested RSUs as of March 31, 2023 1,379,720 $ 24.98 * The number of the RSUs vested includes 226,137 shares that were withheld on behalf of employees to satisfy the statutory tax withholding requirements. Equity-based compensation expenses related to the RSUs were $4,798 and $3,388 for three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, the total unrecognized equity-based compensation expense related to outstanding RSUs was $29,925, which is expected to be recognized over a weighted-average period of 20.4 months. Performance Stock Units (“PSU”) PSUs granted in April 2021 and 2022 were 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 for individual PSU plans 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. 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, 2022 654,308 $ 23.99 Granted — — Vested — — Forfeited — — Non-vested PSUs as of March 31, 2023 654,308 $ 23.99 Equity-based compensation expenses related to the PSUs were $2,287 and $947 for the three months ended March 31, 2023 and 2022, respectively. At March 31, 2023, the total unrecognized equity-based compensation expense related to outstanding PSUs was $4,499, which is expected to be recognized over a weighted-average period of 14.3 months. The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive income (loss) for each period presented: THREE MONTHS ENDED MARCH 31, 2023 2022 (In thousands) Cost of revenues $ 2,042 $ 1,723 Sales and marketing 381 660 Research and development 1,650 1,373 General and administrative 4,470 3,757 Total $ 8,543 $ 7,513 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 11. Commitments and Contingencies Contingent consideration In connection with the 2022 Vyasa acquisition, the Company is required to pay additional consideration if the acquired business achieves certain eligible revenue thresholds for each of the twelve-month periods ended December 31, 2023, 2024, and 2025, respectively. The maximum contingent consideration to be earned is $60,000 . The fair value of the contingent consideration was $21,074 and $19,813 at March 31, 2023 and December 31, 2022, respectively. Legal proceedings The Company does not have any pending or threatened litigation which, individually or in the aggregate, would have a material adverse effect on the condensed consolidated financial statements as of March 31, 2023. Assurance-type warranty The Company includes an assurance commitment warranting that the application software products will perform in accordance with written user documentation and the agreements negotiated with customers. Since the Company does not customize its applications software, warranty costs have historically been insignificant and expensed as incurred. For information related to commitments for future minimum lease payments, please see Note 8 – Leases. |
Segment Data
Segment Data | 3 Months Ended |
Mar. 31, 2023 | |
Segment Data | |
Segment Data | 12. 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 months ended March 31, 2023 and 2022: THREE MONTHS ENDED MARCH 31, 2023 2022 (In thousands) Revenue (1) Americas $ 67,023 $ 59,784 EMEA 16,915 15,934 Asia Pacific 6,363 5,833 Total $ 90,301 $ 81,551 (1) Revenue is attributable to the countries based on the location of the customer. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Taxes | |
Income Taxes | 13. 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 provision 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 months ended March 31, 2023 and 2022 were 45% and 41%, respectively, including discrete tax items. The current year increase in the ETR was principally due to the combined effect of the increase in certain foreign income tax rates and adjustments to the valuation allowance. |
Earnings per Share
Earnings per Share | 3 Months Ended |
Mar. 31, 2023 | |
Earnings per Share | |
Earnings per Share | 14. Earnings per Share Basic earnings per share is computed by dividing net income (loss) attributable to common stockholders by the weighted-average common shares outstanding for the period. Diluted net income (loss) per share is computed by dividing the net income (loss) attributable to stockholders by the weighted-average number of shares and dilutive potential common shares during the period. THREE MONTHS ENDED MARCH 31, 2023 2022 (In thousands, except per share and share data) Basic earnings per share Net income available to common shareholders $ 1,358 $ 2,210 Basic weighted-average common shares outstanding 158,177,025 155,936,953 Basic earnings per common share $ 0.01 $ 0.01 Diluted earnings per share Net income available to common shares $ 1,358 $ 2,210 Basic weighted-average common shares outstanding 158,177,025 155,936,953 Dilutive potential common shares 1,550,387 3,223,368 Diluted weighted-average common shares outstanding 159,727,412 159,160,321 Diluted earnings per common share $ 0.01 $ 0.01 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Use of Estimates | (a) Basis of Presentation and Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, valuation of interest rate swaps, determination of fair value of equity-based awards, measurement of fair value of contingent consideration, 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 consolidated financial statements. |
Unaudited Interim Financial Statements | (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of March 31, 2023, the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2023 and 2022, the condensed consolidated statements of cash flows for the three months ended March 31, 2023 and 2022, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These unaudited condensed consolidated financial statements include all adjustments necessary 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. Certain amounts reported in prior periods have been reclassified to conform with the current presentation. 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 2022 audited consolidated financial statements and notes thereto. The information as of December 31, 2022 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the Company’s 2022 Annual Report. |
Recently Adopted Accounting Pronouncements | (c) Recently Issued Accounting Pronouncements In March 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-01, “Common Control Arrangements (Topic 842),” which provide private companies and not-for-profit organizations that are not conduit bond obligors with a practical expedient to use the written terms and conditions of a common control arrangement to determine whether a lease exists and, if so, the classification of and accounting for that lease. In addition, the ASU requires all entities including public companies to amortize leasehold improvements associated with common control leases over the useful life to the common control group. This ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this guidance on its condensed consolidated financial statements. |
Principles of Consolidation | (d) 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. |
Fair Value Measurements | (e) Fair Value Measurements The Company follows FASB Accounting Standards Codification (“ASC”) 820 10, “Fair Value Measurements” (“ASC 820-10”), which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and requires certain disclosures about fair value measurements. ASC 820 10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the most advantageous market for the asset or liability in an orderly transaction. Fair value measurement is based on a hierarchy of observable or unobservable inputs. The standard describes three levels of inputs that may be used to measure fair value. Level 1 — Inputs to the valuation methodology are quoted prices available in active markets for identical securities as of the reporting date; Level 2 — Inputs to the valuation methodology are other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk etc. as of the reporting date, and the fair value can be determined through the use of models or other valuation methodologies; and Level 3 — Inputs to the valuation methodology are unobservable inputs in situations where there is little, or no market activity of the securities and the reporting entity makes estimates and assumptions relating to the pricing of the securities including assumptions regarding risk. If the inputs used to measure fair value fall at different levels of the fair value hierarchy, the hierarchy is based on the lowest level of input that is significant to the fair value measurement. For the acquisitions noted in Note 5, the fair value measurement methods used to estimate the fair value of the assets acquired and liabilities assumed at the acquisition dates utilized a number of significant unobservable inputs of Level 3 assumptions. These assumptions included, among other things, projections of future operating results, implied fair value of assets using an income approach by preparing a discounted cash flow analysis, and other subjective assumptions. Interest rate swaps are valued in the market using discounted cash flows techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative instrument valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. Contingent liabilities related to acquisitions are measured at fair value using Level 3 unobservable inputs. The Company's estimates of fair value are based upon assumptions believed to be reasonable, but that are uncertain and involve significant judgments by management. Any changes in the fair value of these contingent liabilities are included in the earnings in the condensed consolidated statements of operations and comprehensive income (loss). To estimate the fair value of the contingent consideration liability, management utilized a Monte Carlo simulation model to value the earn-out based on the likelihood of reaching certain eligible revenue thresholds. Significant inputs used in the fair value measurement of contingent consideration are the amount and timing of the acquired entity’s eligible revenue over a three-year period subsequent to the acquisition date. At the acquisition date, the fair value of the contingent consideration liabilities was $19.8 million. The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at March 31, 2023: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 102,076 $ — $ — $ 102,076 Interest rate swap assets — 6,096 — 6,096 Total assets $ 102,076 $ 6,096 $ — $ 108,172 Liabilities Contingent liabilities $ — $ — $ 21,074 $ 21,074 Total liabilities $ — $ — $ 21,074 $ 21,074 The following table sets forth the assets and liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2022: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 100,999 $ — $ — $ 100,999 Interest rate swap assets — 8,374 — 8,374 Total assets $ 100,999 $ 8,374 $ — $ 109,373 Liabilities Contingent liabilities $ — $ — $ 19,813 $ 19,813 Total liabilities $ — $ — $ 19,813 $ 19,813 For the period ended March 31, 2023, there were no transfers between levels fair value The following table summarizes the Level 3 activity of the changes in the contingent consideration liability. MARCH 31, 2023 (In thousands) Beginning balance at December 31, 2022 $ 19,813 Payments — Change in fair value 1,261 Ending balance at March 31, 2023 $ 21,074 For more information regarding fair value measurements and the fair value hierarchy, see Note 2. “Summary of Significant Accounting Policies” in the notes to the consolidated financial statements in the Company’s 2022 Annual Report. |
Cash and Cash Equivalents, and Restricted Cash | (f) Cash and Cash Equivalents, and Restricted Cash Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. Restricted cash represents cash that is reserved to provide for a Company credit card program and unexpended restricted grant funds. The restricted cash balance was $3,103 and $3,102 at March 31, 2023 and December 31, 2022, 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: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Cash and cash equivalents $ 244,135 $ 236,586 Restricted cash, current 3,103 3,102 Total cash and cash equivalents and restricted cash $ 247,238 $ 239,688 |
Accounts Receivable | (g) Accounts Receivable Accounts receivable includes current outstanding invoices billed to customers. Invoices are typically issued with net 30 days to net 90 days terms upon delivery of the product or upon achievement of billable events for service-based contracts. Unbilled receivables relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts. Unbilled receivables are billed and transferred to customer accounts receivable when the rights become unconditional. The carrying amount of accounts receivable is reduced by a valuation allowance. The Company estimates the expected credit losses for accounts receivables using historical loss data adjusted for current economic conditions, including reasonable and supportable forecasts to estimate the relative size of credit losses to be expected. The Company generally writes off a receivable or records a specific allowance for credit losses if the Company determines that the receivable is not collectible. Allowances for credit losses of $736 and $1,250 were provided in the accompanying condensed consolidated financial statements as of March 31, 2023 and December 31, 2022, respectively. Accounts receivable consists of the following: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Trade receivables $ 69,832 $ 72,238 Unbilled receivables 12,979 11,309 Other receivables 329 287 Allowances for credit losses (736) (1,250) Accounts receivable, net $ 82,404 $ 82,584 The following table presents the information regarding the allowance of accounts receivable: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Beginning balance $ 1,250 $ 262 Provision for credit losses (164) 1,009 Charge-offs, net of recoveries (350) (21) Ending balance $ 736 $ 1,250 |
Derivative Instruments | In the normal course of business, the Company is subject to risk from adverse fluctuations in interest rates. The Company has chosen to manage this risk through the use of derivative financial instruments that consist of interest rate swap contracts. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes. The objective in managing exposure to market risk is to limit the impact on cash flows. To qualify for hedge accounting, the interest rate swaps must effectively reduce the risk exposure that they are designed to hedge. In addition, at the inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions must be, and be expected to remain, probable of occurring in accordance with the related assertions. FASB ASC 815, “Derivatives and Hedging,” requires the Company to recognize all derivatives on the balance sheet at fair value. The Company may enter into derivative contracts such as interest rate swap contracts that effectively convert portions of the Company’s floating rate debt to a fixed rate, which serves to mitigate interest rate risk. The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company had entered into an interest rate swap agreement in May 2022 that pays a fixed interest rate and receives a variable interest rate to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. The swap agreement has a notional amount of $230,000, a fixed rate of 2.8% and a termination date of August 31, 2025. At March 31, 2023 and December 31, 2022, the interest swap had a fair value of $6,096 and $8,374, respectively; The fair value recognized in accumulated other comprehensive income was $6,096 and $8,374, respectively, at March 31, 2023 and December 31, 2022. The interest income on derivative instruments recognized in the Company’s condensed consolidated statements of operations and comprehensive income (loss) was $986 for the three months ended March 31, 2023 and there was no changes in the fair value of the interest rate swap in interest expense for the three month ended March 31 2022. The Company uses derivatives to manage certain interest exposures and designated all the derivatives as cash flow hedges. The Company records derivatives at fair value on its condensed consolidated balance sheets. Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss). Those amounts are reclassified into interest expense in the same period during which the hedged transactions impact earnings. The notional amounts and fair values, locations of derivative instruments in the condensed consolidated balance sheets as of March 31, 2023 and December 31, 2022 were as follows: Interest rate swap derivative designated as cash flow hedging instruments: March 31, 2023 December 31, 2022 (In thousands) Notional amounts $ 230,000 $ 230,000 Prepaid expenses and other current assets $ 4,261 $ 4,638 Other long-term assets $ 1,835 $ 3,736 The net amount of deferred gains related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive gains into earnings over the next twelve months is $4,272. |
Revenue Recognition | (i) Revenue Recognition In accordance with Accounting Standards Codification Topic 606 ("ASC Topic 606"), “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps: i. ii. iii. iv. v. The Company’s revenue consists of fees for perpetual and term licenses for its software products, post- contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue. 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 following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Software Licenses Revenues Software license revenue consists primarily of sales of software licenses downloaded and installed by our customers on their own hardware. The license period is generally one year or less and includes an insignificant amount of customer support to assist the customer with the software. Software license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. Software as a Service (SaaS) Revenues SaaS revenues consist of subscription fees for access to, and related support for, the Company’s cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments. The invoice is initially deferred and revenue is recognized ratably over the life of the contract. The Company’s software contracts do not typically include, variable consideration, or options for future purchases that would not be similar to the original goods. Software Service Revenues Maintenance services agreements on perpetual software consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year . While the transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. Consulting Service Revenues The Company’s primary professional services offering includes consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. The Company’s professional services contracts are either time-and-materials or fixed fee. Service revenues are generally recognized over time as the services are performed. Generally, these services are delivered to customers electronically. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenues for fixed-price services are generally recognized over time by applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and the varying lengths of time they are being paid for determine the measure of progress. Arrangements with Multiple Performance Obligations For contracts with multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the Company determines if the products or services are distinct and allocates the consideration to each distinct 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. Additionally, any training, implementation, or support and maintenance promises sold 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 less than one year such that there is no significant financing component. 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, contract liabilities) 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 Contract balances at March 31, 2023 and December 31, 2022 were as follows: MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Contract assets $ 12,979 $ 11,309 Contract liabilities 54,434 55,024 During the first quarter of 2023, the Company recognized revenue of $24,488 related to contract liabilities at December 31, 2022. The unsatisfied performance obligations as of March 31, 2023, were approximately $130,237. We expect to recognize approximately $114,658 or 88.0% of this revenue over the next 12 months and the remainder thereafter. Deferred Contract Acquisition Costs Under ASC Topic 606, sales commissions paid to the sales force and the related employer payroll taxes, collectively deferred contract acquisition costs, are considered incremental and recoverable costs of obtaining a contract with a customer. The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions for our sales force personnel. Capitalized costs to obtain a contract are amortized on a straight-line basis over the expected period of benefit. Amortization of capitalized costs is included in sales and marketing expenses in our condensed consolidated statements of operations and comprehensive income (loss). Capitalized contract acquisition costs were $814 and $981 as of March 31, 2023, and December 31, 2022, respectively, and were included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Grant Revenue The Company receives grant funding for certain specific projects from time to time. These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements. In these agreements, both involved parties receive and sacrifice approximately commensurate value so these are accounted for as exchange transactions and revenue is recognized according to ASC Topic 606. Grant funding is generally provided near contract inception, so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time. 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 MARCH 31, 2023 2022 (In thousands) Software licenses transferred at a point in time $ 14,498 $ 13,452 Software licenses transferred over time 18,507 15,741 Service revenues earned over time 57,296 52,358 Total $ 90,301 $ 81,551 |
Earnings per Share | (j) Earnings per Share Basic earnings per common share is computed by dividing the net earnings by the weighted-average number of shares outstanding during the reporting period, without consideration for potentially dilutive securities. Diluted earnings per share is computed by dividing the net earnings attributable to stockholders by the weighted-average number of shares and dilutive securities outstanding during the period. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of assets and liabilities that were measured at fair value on a recurring and non-recurring basis | LEVEL 1 LEVEL 2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 102,076 $ — $ — $ 102,076 Interest rate swap assets — 6,096 — 6,096 Total assets $ 102,076 $ 6,096 $ — $ 108,172 Liabilities Contingent liabilities $ — $ — $ 21,074 $ 21,074 Total liabilities $ — $ — $ 21,074 $ 21,074 LEVEL 1 LEVEL 2 LEVEL 3 TOTAL (In thousands) Assets Money market funds $ 100,999 $ — $ — $ 100,999 Interest rate swap assets — 8,374 — 8,374 Total assets $ 100,999 $ 8,374 $ — $ 109,373 Liabilities Contingent liabilities $ — $ — $ 19,813 $ 19,813 Total liabilities $ — $ — $ 19,813 $ 19,813 |
Schedule of Level 3 activity of the changes in the contingent consideration liability | MARCH 31, 2023 (In thousands) Beginning balance at December 31, 2022 $ 19,813 Payments — Change in fair value 1,261 Ending balance at March 31, 2023 $ 21,074 |
Schedule of reconciliation of cash and cash equivalents and restricted cash | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Cash and cash equivalents $ 244,135 $ 236,586 Restricted cash, current 3,103 3,102 Total cash and cash equivalents and restricted cash $ 247,238 $ 239,688 |
Schedule of accounts receivable | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Trade receivables $ 69,832 $ 72,238 Unbilled receivables 12,979 11,309 Other receivables 329 287 Allowances for credit losses (736) (1,250) Accounts receivable, net $ 82,404 $ 82,584 |
Schedule of allowance rollforward of credit losses | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Beginning balance $ 1,250 $ 262 Provision for credit losses (164) 1,009 Charge-offs, net of recoveries (350) (21) Ending balance $ 736 $ 1,250 |
Schedule of derivative instruments in the Consolidated Balance Sheets | Interest rate swap derivative designated as cash flow hedging instruments: March 31, 2023 December 31, 2022 (In thousands) Notional amounts $ 230,000 $ 230,000 Prepaid expenses and other current assets $ 4,261 $ 4,638 Other long-term assets $ 1,835 $ 3,736 |
Schedule of contract balances | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Contract assets $ 12,979 $ 11,309 Contract liabilities 54,434 55,024 |
Summary of revenue by timing of revenue recognition | THREE MONTHS ENDED MARCH 31, 2023 2022 (In thousands) Software licenses transferred at a point in time $ 14,498 $ 13,452 Software licenses transferred over time 18,507 15,741 Service revenues earned over time 57,296 52,358 Total $ 90,301 $ 81,551 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets and Other Long-Term Assets (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | |
Schedule of prepaid and other current assets | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Prepaid expenses $ 8,472 $ 8,389 Income tax receivable 1,589 2,014 Research and development tax credit receivable 3,410 4,207 Current portion of interest rate swap asset 4,261 4,638 Other current assets 880 732 Prepaid expenses and other current assets $ 18,612 $ 19,980 |
Schedule of other long-term assets | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Long-term deposits $ 1,189 $ 1,150 Interest rate swap asset - long-term 1,835 3,736 Deferred financing cost 659 729 Total other long-term assets $ 3,683 $ 5,615 |
Long-Term Debt and Revolving _2
Long-Term Debt and Revolving Line of Credit (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Long-Term Debt and Revolving Line of Credit | |
Schedule of Long-term debt | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Term loans $ 296,715 $ 297,470 Revolving line of credit — — Less: debt issuance costs (4,149) (4,462) Total 292,566 293,008 Current portion of long-term debt (3,020) (3,020) Long-term debt, net of current portion and debt issuance costs $ 289,546 $ 289,988 |
Schedule of maturity of long-term debt | The principal amount of long-term debt outstanding as of March 31, 2023 matures in the following years: Remainder of 2023 2024 2025 2026 TOTAL (In thousands) Maturities $ 2,265 $ 3,020 $ 3,020 $ 288,410 $ 296,715 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases | |
Schedule of operating and financing lease right of use assets and lease liabilities | MARCH 31, DECEMBER 31, Lease Position Balance Sheet Classification 2023 2022 (In thousands) Assets Operating lease assets Operating lease ROU assets $ 13,405 $ 14,427 Finance lease assets Property and equipment, net — 24 Total lease assets $ 13,405 $ 14,451 Liabilities Current Operating Current operating lease liabilities $ 4,808 $ 4,968 Finance Other current liabilities — 25 Noncurrent Operating Operating lease liabilities, net of current portion 9,244 10,133 Finance Non-current finance lease liabilities — — Total lease liabilities $ 14,052 $ 15,126 |
Schedule of minimum lease payments of operating leases | OPERATING LEASES (In thousands) Remainder of 2023 $ 3,635 2024 4,124 2025 3,348 2026 2,125 2027 911 Thereafter 697 Total future lease payments 14,840 Less: imputed interest (788) Total $ 14,052 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Accrued compensation $ 23,642 $ 29,518 Legal and professional accruals 781 1,297 Interest payable 57 176 Income taxes payable 3,697 2,223 Accrued business acquisition liabilities 700 700 Other 1,131 1,489 Total accrued expenses $ 30,008 $ 35,403 |
Schedule of other long-term liabilities | MARCH 31, DECEMBER 31, 2023 2022 (In thousands) Uncertain tax position liability $ 2,322 $ 2,308 Contingent consideration 21,074 19,813 Total other long-term liabilities $ 23,396 $ 22,121 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Equity-Based Compensation | |
Summary of the restricted stock | WEIGHTED- AVERAGE GRANT DATE SHARES FAIR VALUE Non-vested restricted stock as of December 31, 2022 1,402,813 $ 23.27 Granted — — Vested (209,360) 23.27 Forfeited — — Cancelled — — Non-vested restricted stock as of March 31, 2023 1,193,453 $ 23.27 |
Summary of the Company's RSU activity | WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested RSUs as of December 31, 2022 2,005,095 $ 24.71 Granted — — Vested* (608,179) 24.11 Forfeited (17,196) 23.72 Non-vested RSUs as of March 31, 2023 1,379,720 $ 24.98 |
Schedule of nonvested Performance-based Units activity | WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested PSUs as of December 31, 2022 654,308 $ 23.99 Granted — — Vested — — Forfeited — — Non-vested PSUs as of March 31, 2023 654,308 $ 23.99 |
Schedule of compensation expense | THREE MONTHS ENDED MARCH 31, 2023 2022 (In thousands) Cost of revenues $ 2,042 $ 1,723 Sales and marketing 381 660 Research and development 1,650 1,373 General and administrative 4,470 3,757 Total $ 8,543 $ 7,513 |
Segment Data (Tables)
Segment Data (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Data | |
Schedule of revenue by geographic area | THREE MONTHS ENDED MARCH 31, 2023 2022 (In thousands) Revenue (1) Americas $ 67,023 $ 59,784 EMEA 16,915 15,934 Asia Pacific 6,363 5,833 Total $ 90,301 $ 81,551 (1) Revenue is attributable to the countries based on the location of the customer. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Earnings per Share | |
Schedule of basic and diluted earnings per share | THREE MONTHS ENDED MARCH 31, 2023 2022 (In thousands, except per share and share data) Basic earnings per share Net income available to common shareholders $ 1,358 $ 2,210 Basic weighted-average common shares outstanding 158,177,025 155,936,953 Basic earnings per common share $ 0.01 $ 0.01 Diluted earnings per share Net income available to common shares $ 1,358 $ 2,210 Basic weighted-average common shares outstanding 158,177,025 155,936,953 Dilutive potential common shares 1,550,387 3,223,368 Diluted weighted-average common shares outstanding 159,727,412 159,160,321 Diluted earnings per common share $ 0.01 $ 0.01 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Dec. 31, 2022 | May 31, 2022 | Jan. 03, 2022 | |
Derivative | ||||
Interest income | $ 986 | |||
Fair value of contingent consideration liability | $ 19,800 | |||
Assets and Liabilities transfer between Level 1 and 2 | 0 | |||
Assets, transfers in to level 3 | 0 | |||
Assets, transfers out of level 3 | 0 | |||
Liabilities, transfers in to level 3 | 0 | |||
Liabilities, transfers out of level 3 | 0 | |||
Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative | ||||
Notional amount | 230,000 | $ 230,000 | ||
Interest rate cash flow hedge gain to be reclassified during next 12 months | 4,272 | |||
Recurring | ||||
Derivative | ||||
Liability measured at fair value | 21,074 | 19,813 | ||
Assets measured at fair value | 108,172 | 109,373 | ||
Level 1 | Recurring | ||||
Derivative | ||||
Assets measured at fair value | 102,076 | 100,999 | ||
Level 2 | Recurring | ||||
Derivative | ||||
Assets measured at fair value | 6,096 | 8,374 | ||
Level 3 | Recurring | ||||
Derivative | ||||
Liability measured at fair value | 21,074 | 19,813 | ||
Money Market Funds | Recurring | ||||
Derivative | ||||
Assets measured at fair value | 102,076 | 100,999 | ||
Money Market Funds | Level 1 | Recurring | ||||
Derivative | ||||
Assets measured at fair value | 102,076 | 100,999 | ||
Interest rate swap | Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative | ||||
Notional amount | $ 230,000 | |||
Interest rate (as a percent) | 2.80% | |||
Fair value of embedded derivative liability | 6,096 | 8,374 | ||
Liability measured at fair value | 6,096 | 8,374 | ||
Interest rate swap | Recurring | ||||
Derivative | ||||
Assets measured at fair value | 6,096 | 8,374 | ||
Interest rate swap | Level 2 | Recurring | ||||
Derivative | ||||
Assets measured at fair value | 6,096 | 8,374 | ||
Contingent Liability | Recurring | ||||
Derivative | ||||
Liability measured at fair value | 21,074 | 19,813 | ||
Contingent Liability | Level 3 | Recurring | ||||
Derivative | ||||
Liability measured at fair value | 21,074 | 19,813 | ||
Prepaid expenses and other current assets | Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative | ||||
Assets measured at fair value | 4,261 | 4,638 | ||
Other long-term assets | Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative | ||||
Assets measured at fair value | $ 1,835 | $ 3,736 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Level 3 activity (Details) - Contingent consideration liability $ in Thousands | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 19,813 |
Change in fair value | $ 1,261 |
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | General and Administrative Expense |
Ending balance | $ 21,074 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Cash and cash equivalents (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Summary of Significant Accounting Policies | ||||
Cash and cash equivalents | $ 244,135 | $ 236,586 | ||
Restricted cash, current | 3,103 | 3,102 | ||
Total cash and cash equivalents, and restricted cash | $ 247,238 | $ 239,688 | $ 185,060 | $ 186,624 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | ||
Accounts receivable invoices days outstanding due minimum | 30 days | |
Accounts receivable invoices days outstanding due maximum | 90 days | |
Trade receivables | $ 69,832 | $ 72,238 |
Unbilled receivables | 12,979 | 11,309 |
Other receivables | 329 | 287 |
Allowance for credit losses | (736) | (1,250) |
Accounts receivable, net | 82,404 | 82,584 |
Rollforward of credit losses | ||
Beginning Balance | 1,250 | 262 |
Provision for credit losses | (164) | 1,009 |
Charge-offs, net of recoveries | (350) | (21) |
Ending Balance | $ 736 | $ 1,250 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |||
Unsatisfied performance obligation | $ 130,237 | ||
Revenue recognition | 90,301 | $ 81,551 | |
Revenue | 90,301 | 81,551 | |
Deferred contract acquisition costs | 814 | $ 981 | |
Contract assets | 12,979 | 11,309 | |
Contract liabilities | 54,434 | $ 55,024 | |
Revenue recognized from contract liabilities | 24,488 | ||
Contract revenue to be recognized in next twelve months | $ 114,658 | ||
Contract revenue to be recognized in next twelve months (as a percent) | 88% | ||
Software licenses transferred at a point in time | |||
Summary of Significant Accounting Policies | |||
Revenue recognition | $ 14,498 | 13,452 | |
Software licenses transferred over time | |||
Summary of Significant Accounting Policies | |||
Revenue recognition | 18,507 | 15,741 | |
Service revenues earned over time | |||
Summary of Significant Accounting Policies | |||
Revenue recognition | $ 57,296 | $ 52,358 | |
Software Licenses | |||
Summary of Significant Accounting Policies | |||
The software license revenue term of recognition period | 1 year | ||
Maintenance Contracts | |||
Summary of Significant Accounting Policies | |||
The software license revenue term of recognition period | 1 year | ||
Multiple Performance Obligations | |||
Summary of Significant Accounting Policies | |||
The software license revenue term of recognition period | 1 year | ||
Minimum | |||
Summary of Significant Accounting Policies | |||
Subscription Term | 1 year | ||
Maximum | |||
Summary of Significant Accounting Policies | |||
Subscription Term | 3 years |
Public Offerings and Other Si_2
Public Offerings and Other Significant Shareholders Transactions (Details) $ / shares in Units, $ in Thousands | Dec. 08, 2022 director shares | Aug. 11, 2022 USD ($) shares | Dec. 11, 2020 USD ($) $ / shares shares | Dec. 08, 2020 item |
EQT | ||||
Initial Public Offering | ||||
Number of "demand" registrations under the Registration Rights Agreement | item | 4 | |||
Number of underwritten offering in any consecutive 90-day period Under Registration Rights Agreement | item | 1 | |||
Number of underwritten offering in any consecutive 360-day period under Registration Rights Agreement | item | 2 | |||
Arsenal | ||||
Initial Public Offering | ||||
Maximum number of directors to be nominated | director | 2 | |||
Arsenal | EQT | Termination of registration rights agreement | ||||
Initial Public Offering | ||||
Number of shares sold | shares | 29,954,521 | |||
IPO | ||||
Initial Public Offering | ||||
Common stock offerings (in shares) | shares | 14,630,000 | |||
Share price (in dollar per share) | $ / shares | $ 23 | |||
Net proceeds from public offering of common stock | $ | $ 316,301 | |||
Stock issuance costs, net of tax impact | $ | 4,408 | |||
Tax impact of stock issuance costs | $ | $ 259 | |||
IPO | EQT | ||||
Initial Public Offering | ||||
Common stock offerings (in shares) | shares | 18,783,250 | |||
Secondary Public Offering | EQT | ||||
Initial Public Offering | ||||
Stock issuance costs, net of tax impact | $ | $ 596 | |||
Number of shares sold | shares | 7,000,000 |
Business Combinations - Other I
Business Combinations - Other Information (Details) $ in Thousands | 3 Months Ended | |||
Dec. 28, 2022 USD ($) | Jan. 03, 2022 USD ($) | Mar. 31, 2023 USD ($) item | Dec. 31, 2022 USD ($) | |
Business Combinations | ||||
Number of acquisitions completed since inception | item | 17 | |||
Number of software or technology acquisitions completed since inception | item | 12 | |||
Goodwill arising in the acquisition | $ 718,841 | $ 717,743 | ||
Integrated Nonclinical Development Solutions, Inc. | ||||
Business Combinations | ||||
Business consideration transferred | $ 8,048 | |||
Goodwill arising in the acquisition | 2,910 | |||
Vyasa Analytics, LLC | ||||
Business Combinations | ||||
Business consideration transferred | $ 29,276 | |||
Goodwill arising in the acquisition | $ 16,589 | |||
Contingent consideration earn-out period | 3 years | |||
Contingent consideration percentage of consideration paid in cash (as a percent) | 70% | |||
Contingent consideration percentage of consideration paid in stock (as a percent) | 30% | |||
Contingent consideration | $ 19,813 | 21,074 | $ 19,813 | |
Vyasa Analytics, LLC | Minimum | ||||
Business Combinations | ||||
Contingent consideration payout based on revenue threshold achievement | 0 | |||
Vyasa Analytics, LLC | Maximum | ||||
Business Combinations | ||||
Contingent consideration payout based on revenue threshold achievement | 60,000 | |||
General and administrative | Vyasa Analytics, LLC | ||||
Business Combinations | ||||
Change in fair value of contingent consideration | $ 1,261 | |||
Customer relationships | Integrated Nonclinical Development Solutions, Inc. | ||||
Business Combinations | ||||
Finite-lived intangible assets acquired | 2,380 | |||
Customer relationships | Vyasa Analytics, LLC | ||||
Business Combinations | ||||
Finite-lived intangible assets acquired | 1,500 | |||
Non-compete agreements | Integrated Nonclinical Development Solutions, Inc. | ||||
Business Combinations | ||||
Finite-lived intangible assets acquired | 100 | |||
Non-compete agreements | Vyasa Analytics, LLC | ||||
Business Combinations | ||||
Finite-lived intangible assets acquired | 80 | |||
Developed technology | Integrated Nonclinical Development Solutions, Inc. | ||||
Business Combinations | ||||
Finite-lived intangible assets acquired | $ 1,040 | |||
Developed technology | Vyasa Analytics, LLC | ||||
Business Combinations | ||||
Finite-lived intangible assets acquired | 11,400 | |||
Trademarks | Vyasa Analytics, LLC | ||||
Business Combinations | ||||
Finite-lived intangible assets acquired | $ 120 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets and Other Long-Term Assets - Prepaid and other current assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | ||
Prepaid expenses | $ 8,472 | $ 8,389 |
Income tax receivable | 1,589 | 2,014 |
Research and development tax credit receivable | 3,410 | 4,207 |
Current portion of interest rate swap asset | 4,261 | 4,638 |
Other current assets | 880 | 732 |
Prepaid expenses and other current assets | $ 18,612 | $ 19,980 |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets and Other Long-Term Assets - Other long-term assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | ||
Long-term deposits | $ 1,189 | $ 1,150 |
Interest rate swap asset - long term | 1,835 | 3,736 |
Deferred financing cost | 659 | 729 |
Total other long-term assets | $ 3,683 | $ 5,615 |
Long-Term Debt and Revolving _3
Long-Term Debt and Revolving Line of Credit - Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Jun. 17, 2021 | |
Variable Interest Term Loan | ||||
Debt Instrument | ||||
Interest incurred | $ 5,974 | $ 2,737 | ||
Accrued interest payable | 69 | $ 130 | ||
Revolving Line of Credit | ||||
Debt Instrument | ||||
Maximum borrowing capacity of revolving line of credit | $ 100,000 | |||
Available borrowings | 100,000 | 100,000 | $ 80,000 | |
Interest incurred | 63 | $ 63 | ||
Accrued interest payable | 1 | 66 | ||
Prepayment on the loan | 755 | |||
Standby letter of credit | ||||
Debt Instrument | ||||
letters of credit outstanding | $ 120 | $ 120 | ||
Term Loan | ||||
Debt Instrument | ||||
Effective interest rate (as a percent) | 8.03% | 3.64% |
Long-Term Debt and Revolving _4
Long-Term Debt and Revolving Line of Credit - Long-Term Debt (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instrument | ||
Long-term debt, Gross | $ 296,715 | |
Less: debt issuance costs | (4,149) | $ (4,462) |
Total | 292,566 | 293,008 |
Current portion of long-term debt | (3,020) | (3,020) |
Long-term debt, net of current portion and debt issuance costs | 289,546 | 289,988 |
Term Loan | ||
Debt Instrument | ||
Long-term debt, Gross | $ 296,715 | $ 297,470 |
Long-Term Debt and Revolving _5
Long-Term Debt and Revolving Line of Credit - Maturity of Long Term Debt (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Maturities | |
Remainder of 2023 | $ 2,265 |
2024 | 3,020 |
2025 | 3,020 |
2026 | 288,410 |
Total | $ 296,715 |
Leases - Other (Details)
Leases - Other (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Dec. 31, 2022 | |
Leases | ||
Operating leases - Weighted-average remaining lease term (years) | 3 years 9 months 7 days | |
Operating leases - Weighted-average discount rate | 3.43% | |
Operating lease right-of-use assets | $ 13,405 | $ 14,427 |
Finance lease, right of use assets | $ 24 | |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
Total lease assets | $ 13,405 | $ 14,451 |
Current operating lease liabilities | $ 4,808 | 4,968 |
Current portion of finance lease liabilities | $ 25 | |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Current | Other Liabilities, Current |
Operating lease liabilities, net of current portion | $ 9,244 | $ 10,133 |
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Total lease liabilities | $ 14,052 | $ 15,126 |
Minimum | ||
Leases | ||
Remaining operating and capital lease term | 1 year | |
Maximum | ||
Leases | ||
Remaining operating and capital lease term | 6 years |
Leases - Maturities of our mini
Leases - Maturities of our minimum lease payments (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
OPERATING LEASE | |
Remainder of 2023 | $ 3,635 |
2024 | 4,124 |
2025 | 3,348 |
2026 | 2,125 |
2027 | 911 |
Thereafter | 697 |
Total future lease payments | 14,840 |
Less: imputed interest | (788) |
Total operating lease liabilities | $ 14,052 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Accrued expenses (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accrued Expenses and Other Current Liabilities | ||
Accrued compensation | $ 23,642 | $ 29,518 |
Legal and professional accruals | 781 | 1,297 |
Interest payable | 57 | 176 |
Income taxes payable | 3,697 | 2,223 |
Accrued business acquisition liabilities | 700 | 700 |
Other | 1,131 | 1,489 |
Total accrued expenses | $ 30,008 | $ 35,403 |
Accrued Expenses and Other Cu_4
Accrued Expenses and Other Current Liabilities - Other long-term liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Accrued Expenses and Other Current Liabilities. | ||
Uncertain tax position liability | $ 2,322 | $ 2,308 |
Contingent consideration | 21,074 | 19,813 |
Total other long-term liabilities | $ 23,396 | $ 22,121 |
Equity-Based Compensation - Res
Equity-Based Compensation - Restricted Stock (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) shareholder shares | |
Weighted Average Grant Date Fair Value | |||
Compensation expense | $ 8,543 | $ 7,513 | |
Restricted Stock | |||
Equity-Based Compensation | |||
Vesting period | 3 years | ||
Shares | |||
Non-vested restricted stock beginning balance | shares | 1,402,813 | ||
Vested | shares | (209,360) | ||
Non-vested restricted stock Ending balance | shares | 1,193,453 | ||
Weighted Average Grant Date Fair Value | |||
Non-vested restricted stock of beginning balance (in dollars per share) | $ / shares | $ 23.27 | ||
Vested (in dollars per share) | $ / shares | 23.27 | ||
Non-vested restricted stock of ending balance (in dollars per share) | $ / shares | $ 23.27 | ||
Grant date fair value | $ 2,762 | ||
Number of shareholders with monthly vesting period | shareholder | 1 | ||
Vesting period of shareholders | 2 years | ||
Restricted Stock | Pinnacle 21, LLC | |||
Shares | |||
Granted | shares | 87,127 | ||
Restricted Stock | Employees | |||
Shares | |||
Granted | shares | 0 | ||
Weighted Average Grant Date Fair Value | |||
Vested | shares | 2,022 | ||
Time Based Class B Units | |||
Equity-Based Compensation | |||
Service period | 5 years | ||
Weighted Average Grant Date Fair Value | |||
Compensation expense | $ 498 | 766 | |
Unrecognized share-based compensation expense | $ 2,389 | ||
Unrecognized share-based compensation expense, recognition period | 24 months 9 days | ||
Performance Based Class B Units | |||
Weighted Average Grant Date Fair Value | |||
Compensation expense | $ 655 | 2,120 | |
Unrecognized share-based compensation expense | $ 2,640 | ||
Unrecognized share-based compensation expense, recognition period | 19 months 12 days | ||
Time Based Restricted Stock | Pinnacle 21, LLC | |||
Weighted Average Grant Date Fair Value | |||
Compensation expense | $ 292 | $ 292 | |
Unrecognized share-based compensation expense | $ 1,009 | ||
Unrecognized share-based compensation expense, recognition period | 13 months 18 days |
Equity-Based Compensation - 202
Equity-Based Compensation - 2020 Incentive Plans (Details) - 2020 Incentive Plan $ in Thousands | Mar. 31, 2023 USD ($) shares |
Equity-Based Compensation | |
Number of units authorized (in units) | shares | 20,000,000 |
Authorized amount | $ | $ 1,000,000 |
Equity-Based Compensation - R_2
Equity-Based Compensation - Restricted Stock Units and Performance Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Weighted Average Grant Date Fair Value | ||
Compensation expense | $ 8,543 | $ 7,513 |
Restricted Stock Units (RSUs) | ||
Shares | ||
Non-vested restricted stock beginning balance | 2,005,095 | |
Vested | (608,179) | |
Forfeited | (17,196) | |
Non-vested restricted stock Ending balance | 1,379,720 | |
Weighted Average Grant Date Fair Value | ||
Non-vested restricted stock of beginning balance (in dollars per share) | $ 24.71 | |
Vested (in dollars per share) | 24.11 | |
Forfeited (in dollars per share) | 23.72 | |
Non-vested restricted stock of ending balance (in dollars per share) | $ 24.98 | |
Vested shares withheld for minimum statutory tax withholding requirements | 226,137 | |
Compensation expense | $ 4,798 | 3,388 |
Unrecognized share-based compensation expense | $ 29,925 | |
Unrecognized share-based compensation expense, recognition period | 20 months 12 days | |
Performance Based Common Stock Units | ||
Shares | ||
Non-vested restricted stock beginning balance | 654,308 | |
Non-vested restricted stock Ending balance | 654,308 | |
Weighted Average Grant Date Fair Value | ||
Non-vested restricted stock of beginning balance (in dollars per share) | $ 23.99 | |
Non-vested restricted stock of ending balance (in dollars per share) | $ 23.99 | |
Compensation expense | $ 2,287 | $ 947 |
Unrecognized share-based compensation expense | $ 4,499 | |
Unrecognized share-based compensation expense, recognition period | 14 months 9 days |
Equity-Based Compensation - Com
Equity-Based Compensation - Compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Equity-Based Compensation | ||
Compensation expense | $ 8,543 | $ 7,513 |
Cost of revenues | ||
Equity-Based Compensation | ||
Compensation expense | 2,042 | 1,723 |
Sales and marketing | ||
Equity-Based Compensation | ||
Compensation expense | 381 | 660 |
Research and development | ||
Equity-Based Compensation | ||
Compensation expense | 1,650 | 1,373 |
General and administrative | ||
Equity-Based Compensation | ||
Compensation expense | $ 4,470 | $ 3,757 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Vyasa Analytics, LLC - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Dec. 28, 2022 |
Maximum contingent consideration to be earned | $ 60,000 | ||
Contingent consideration | $ 21,074 | $ 19,813 | $ 19,813 |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | |
Segments | ||
Number of operating segment | segment | 1 | |
Revenue | $ 90,301 | $ 81,551 |
Americas | ||
Segments | ||
Revenue | 67,023 | 59,784 |
EMEA | ||
Segments | ||
Revenue | 16,915 | 15,934 |
Asia Pacific | ||
Segments | ||
Revenue | $ 6,363 | $ 5,833 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Taxes | ||
Effective tax rate | 45% | 41% |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Basic earnings per share | ||
Net income available to common shareholders | $ 1,358 | $ 2,210 |
Basic weighted average common shares outstanding (in shares) | 158,177,025 | 155,936,953 |
Earnings per share, Basic (in dollars per share) | $ 0.01 | $ 0.01 |
Diluted earnings per share | ||
Net income available to common shareholders | $ 1,358 | $ 2,210 |
Basic weighted average common shares outstanding (in shares) | 158,177,025 | 155,936,953 |
Dilutive potential common shares | 1,550,387 | 3,223,368 |
Diluted weighted average common shares outstanding (in shares) | 159,727,412 | 159,160,321 |
Earnings per share, Diluted (in dollars per share) | $ 0.01 | $ 0.01 |