Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 01, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39627 | |
Entity Registrant Name | Paya Holdings Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 85-2199433 | |
Entity Address, Address Line One | 303 Perimeter Center North | |
Entity Address, Address Line Two | Suite 600 | |
Entity Address, City or Town | Atlanta | |
Entity Address, State or Province | GA | |
Entity Address, Postal Zip Code | 30346 | |
City Area Code | 800 | |
Local Phone Number | 261-0240 | |
Title of 12(b) Security | Common stock, par value $0.001 per share | |
Trading Symbol | PAYA | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 132,214,528 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2022 | |
Amendment Flag | false | |
Entity Central Index Key | 0001819881 | |
Current Fiscal Year End Date | --12-31 |
Consolidated Statements of Inco
Consolidated Statements of Income and Other Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Statement [Abstract] | ||||
Revenue | $ 71,366 | $ 63,058 | $ 209,851 | $ 182,297 |
Cost of services exclusive of depreciation and amortization | (35,486) | (30,504) | (102,470) | (86,840) |
Selling, general & administrative expenses | (21,067) | (18,718) | (66,414) | (56,478) |
Depreciation and amortization | (8,353) | (7,891) | (24,041) | (22,442) |
Income from operations | 6,460 | 5,945 | 16,926 | 16,537 |
Interest expense | (3,487) | (3,137) | (9,664) | (11,002) |
Other income (expense) | (189) | (67) | 1,422 | (8,042) |
Total other expense | (3,676) | (3,204) | (8,242) | (19,044) |
Income (loss) before income taxes | 2,784 | 2,741 | 8,684 | (2,507) |
Income tax expense | (1,434) | (5,702) | (3,476) | (2,563) |
Net income (loss) | $ 1,350 | $ (2,961) | $ 5,208 | $ (5,070) |
Weighted average shares outstanding of common stock (in shares) | 126,417,577 | 128,429,090 | 126,397,360 | 124,523,217 |
Basic net income (loss) per share (in dollars per share) | $ 0.01 | $ (0.02) | $ 0.04 | $ (0.04) |
Weighted average diluted shares outstanding of common stock (in shares) | 127,023,562 | 128,429,090 | 126,697,871 | 124,523,217 |
Diluted net income (loss) per share (in dollars per share) | $ 0.01 | $ (0.02) | $ 0.04 | $ (0.04) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 155,958 | $ 146,799 |
Trade receivables, net | 26,965 | 23,163 |
Prepaid expenses | 3,042 | 2,407 |
Income taxes receivable | 1,580 | 460 |
Other current assets | 3,761 | 922 |
Total current assets before funds held for clients | 191,306 | 173,751 |
Funds held for clients | 105,570 | 99,815 |
Total current assets | 296,876 | 273,566 |
Non-current assets: | ||
Property and equipment, net | 14,432 | 14,011 |
Goodwill | 223,181 | 221,117 |
Intangible assets, net | 126,769 | 136,708 |
Operating lease ROU assets, net of amortization | 3,099 | 4,495 |
Other non-current assets | 928 | 1,149 |
Total Assets | 665,285 | 651,046 |
Current liabilities: | ||
Trade payables | 1,474 | 3,127 |
Accrued liabilities | 16,355 | 13,686 |
Accrued revenue share | 12,797 | 11,002 |
Current operating lease liabilities | 1,236 | 1,302 |
Other current liabilities | 4,090 | 3,422 |
Total current liabilities before client funds obligations | 35,952 | 32,539 |
Client funds obligations | 104,569 | 99,125 |
Total current liabilities | 140,521 | 131,664 |
Non-current liabilities: | ||
Deferred tax liability, net | 9,222 | 11,723 |
Long-term debt | 240,562 | 241,872 |
Tax receivable agreement liability | 19,166 | 19,502 |
Non-current lease liabilities | 2,830 | 3,941 |
Other non-current liabilities | 418 | 419 |
Total liabilities | 412,719 | 409,121 |
Stockholders’ Equity: | ||
Common stock, $0.001 par value; 500,000,000 authorized; 132,113,603 and 132,059,879 issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 132 | 132 |
Additional Paid-in-Capital | 261,419 | 255,986 |
Accumulated deficit | (8,985) | (14,193) |
Total stockholders’ equity | 252,566 | 241,925 |
Total liabilities and stockholders’ equity | $ 665,285 | $ 651,046 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, issued (in share) | 132,113,603 | 132,059,879 |
Common stock, outstanding (in shares) | 132,113,603 | 132,059,879 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Revision of Prior Period, Reclassification, Adjustment | Cumulative Effect, Period of Adoption, Adjustment | Warrant Exercise | Warrant Exchange | Class C incentive units | Common stock | Common Class A | Common stock | Common stock Revision of Prior Period, Reclassification, Adjustment | Common stock Warrant Exercise | Common stock Warrant Exchange | Additional paid-in-capital | Additional paid-in-capital Revision of Prior Period, Reclassification, Adjustment | Additional paid-in-capital Warrant Exercise | Additional paid-in-capital Warrant Exchange | Additional paid-in-capital Class C incentive units | Additional paid-in-capital Common stock | Additional paid-in-capital Common Class A | Accumulated deficit | Accumulated deficit Cumulative Effect, Period of Adoption, Adjustment |
Beginning balance (in shares) at Dec. 31, 2020 | 116,697,441 | ||||||||||||||||||||
Beginning balance at Dec. 31, 2020 | $ 116,032 | $ 51 | $ 12 | $ 129,453 | $ (13,433) | $ 51 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | 1,045 | 1,045 | |||||||||||||||||||
Stock based compensation | $ 259 | $ 451 | $ 259 | $ 451 | |||||||||||||||||
Equity offering (in shares) | 10,000,000 | ||||||||||||||||||||
Equity offering | 116,971 | $ 1 | 116,970 | ||||||||||||||||||
Warrant exercise (in shares) | 51 | ||||||||||||||||||||
Warrant exercise | $ 1 | $ 1 | |||||||||||||||||||
Ending balance (in shares) at Mar. 31, 2021 | 126,697,492 | ||||||||||||||||||||
Ending balance at Mar. 31, 2021 | 234,810 | $ 0 | $ 13 | $ 113 | 247,134 | $ (113) | (12,337) | ||||||||||||||
Beginning balance (in shares) at Dec. 31, 2020 | 116,697,441 | ||||||||||||||||||||
Beginning balance at Dec. 31, 2020 | 116,032 | $ 51 | $ 12 | 129,453 | (13,433) | $ 51 | |||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | (5,070) | ||||||||||||||||||||
Stock based compensation | 580 | ||||||||||||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 132,009,818 | ||||||||||||||||||||
Ending balance at Sep. 30, 2021 | 236,592 | $ 132 | 254,912 | (18,452) | |||||||||||||||||
Beginning balance (in shares) at Mar. 31, 2021 | 126,697,492 | ||||||||||||||||||||
Beginning balance at Mar. 31, 2021 | 234,810 | $ 0 | $ 13 | $ 113 | 247,134 | $ (113) | (12,337) | ||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | (3,154) | (3,154) | |||||||||||||||||||
Stock based compensation | 74 | 790 | 74 | 790 | |||||||||||||||||
Equity offering | (206) | (206) | |||||||||||||||||||
Shares issued for acquisition (in shares) | 682,892 | ||||||||||||||||||||
Shares issued for acquisition | 7,500 | $ 1 | 7,499 | ||||||||||||||||||
Ending balance (in shares) at Jun. 30, 2021 | 127,380,384 | ||||||||||||||||||||
Ending balance at Jun. 30, 2021 | 239,814 | $ 127 | 255,178 | (15,491) | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | (2,961) | (2,961) | |||||||||||||||||||
Stock based compensation | 247 | $ 675 | 247 | $ 675 | |||||||||||||||||
Warrant exercise (in shares) | 2,450 | 2,450 | 4,597,848 | ||||||||||||||||||
Warrant exercise | $ 0 | $ (1,727) | $ 5 | $ (1,732) | |||||||||||||||||
Recapitalization transaction | 743 | 743 | |||||||||||||||||||
Shares issued under equity compensation plan (in shares) | 29,136 | ||||||||||||||||||||
Shares issued under equity compensation plan | (199) | (199) | |||||||||||||||||||
Ending balance (in shares) at Sep. 30, 2021 | 132,009,818 | ||||||||||||||||||||
Ending balance at Sep. 30, 2021 | $ 236,592 | $ 132 | 254,912 | (18,452) | |||||||||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 132,059,879 | 132,059,879 | |||||||||||||||||||
Beginning balance at Dec. 31, 2021 | $ 241,925 | $ 132 | 255,986 | (14,193) | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | 2,212 | 2,212 | |||||||||||||||||||
Stock based compensation | 231 | 1,271 | 231 | $ 1,271 | |||||||||||||||||
Shares issued under equity compensation plan (in shares) | 7,234 | ||||||||||||||||||||
Ending balance (in shares) at Mar. 31, 2022 | 132,067,113 | ||||||||||||||||||||
Ending balance at Mar. 31, 2022 | $ 245,639 | $ 132 | 257,488 | (11,981) | |||||||||||||||||
Beginning balance (in shares) at Dec. 31, 2021 | 132,059,879 | 132,059,879 | |||||||||||||||||||
Beginning balance at Dec. 31, 2021 | $ 241,925 | $ 132 | 255,986 | (14,193) | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | $ 5,208 | ||||||||||||||||||||
Stock-based compensation - Common stock (in shares) | 0 | ||||||||||||||||||||
Stock based compensation | 610 | ||||||||||||||||||||
Ending balance (in shares) at Sep. 30, 2022 | 132,113,603 | 132,113,603 | |||||||||||||||||||
Ending balance at Sep. 30, 2022 | $ 252,566 | $ 132 | 261,419 | (8,985) | |||||||||||||||||
Beginning balance (in shares) at Mar. 31, 2022 | 132,067,113 | ||||||||||||||||||||
Beginning balance at Mar. 31, 2022 | 245,639 | $ 132 | 257,488 | (11,981) | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | 1,646 | 1,646 | |||||||||||||||||||
Stock-based compensation - Common stock (in shares) | 4,812 | ||||||||||||||||||||
Stock based compensation | 193 | 1,786 | 193 | $ 1,786 | |||||||||||||||||
Shares issued under equity compensation plan (in shares) | 0 | ||||||||||||||||||||
Shares issued under equity compensation plan | (14) | (14) | |||||||||||||||||||
Ending balance (in shares) at Jun. 30, 2022 | 132,071,925 | ||||||||||||||||||||
Ending balance at Jun. 30, 2022 | 249,250 | $ 132 | 259,453 | (10,335) | |||||||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | 1,350 | 1,350 | |||||||||||||||||||
Stock-based compensation - Common stock (in shares) | 0 | ||||||||||||||||||||
Stock based compensation | $ 186 | $ 1,957 | $ 186 | $ 1,957 | |||||||||||||||||
Shares issued under equity compensation plan (in shares) | 41,678 | ||||||||||||||||||||
Shares issued under equity compensation plan | $ (177) | (177) | |||||||||||||||||||
Ending balance (in shares) at Sep. 30, 2022 | 132,113,603 | 132,113,603 | |||||||||||||||||||
Ending balance at Sep. 30, 2022 | $ 252,566 | $ 132 | $ 261,419 | $ (8,985) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 5,208 | $ (5,070) |
Depreciation & amortization expense | 24,041 | 22,442 |
Deferred taxes | (2,501) | (500) |
Bad debt expense | 1,325 | 899 |
Stock-based compensation | 5,624 | 2,496 |
Non-cash change in tax receivable agreement liability | 257 | (286) |
Change in fair value of derivative | (2,543) | 0 |
Non-cash lease expense | 1,332 | 1,091 |
Gain on contingent consideration | 0 | (180) |
Amortization of debt issuance costs | 726 | 687 |
Loss on debt extinguishment | 0 | 6,187 |
Changes in assets and liabilities, net of impact of business acquisitions: | ||
Trade receivables | (5,042) | (5,881) |
Prepaid expenses | (607) | 165 |
Other current assets | (294) | 29 |
Other non-current assets | 76 | (76) |
Trade payables | (1,654) | (4,104) |
Accrued liabilities | 1,647 | 720 |
Accrued revenue share | 1,774 | 2,638 |
Income tax payable/receivable, net | (1,121) | (455) |
Other current liabilities | 658 | 1,124 |
Lease liabilities | (1,120) | (1,084) |
Other non-current liabilities | (2) | 9 |
Net cash provided by operating activities | 27,784 | 20,851 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (4,236) | (4,955) |
Purchases of customer lists | (5,387) | (15,951) |
Acquisition of business, net of cash received | (6,034) | (18,309) |
Net cash (used in) investing activities | (15,657) | (39,215) |
Cash flows from financing activities: | ||
Payments on non-current debt | (1,875) | (228,677) |
Borrowings under non-current debt | 0 | 250,000 |
Payment of debt issuance costs | 0 | (6,390) |
Proceeds from equity offering | 0 | 116,764 |
Repurchase of restricted stock to satisfy tax withholding obligations | (191) | (199) |
Warrant exchange | 0 | (1,431) |
Payment on tax receivable agreement liability | (592) | 0 |
Movements in cash held on behalf of customers, net | 4,657 | 4,949 |
Net cash provided by financing activities | 1,999 | 135,016 |
Effect of foreign currency exchange rates on cash and cash equivalents | 1 | 0 |
Net change in cash and cash equivalents | 14,126 | 116,652 |
Cash and cash equivalents, beginning of period | 198,391 | 63,408 |
Cash and cash equivalents, end of period | 212,518 | 180,060 |
Reconciliation of cash, cash equivalents, and restricted cash | ||
Cash and cash equivalents | 155,958 | 133,144 |
Restricted cash included in funds held for clients | 56,560 | 46,916 |
Total cash, cash equivalents, and restricted cash | 212,518 | 180,060 |
Supplemental disclosures: | ||
Cash interest paid | 9,342 | 10,105 |
Cash taxes paid, including estimated payments | 7,102 | 3,242 |
Non-cash investing activity: | ||
Non-cash primary stock issuance related to Paragon acquisition | $ 0 | $ 7,500 |
Organization, basis of presenta
Organization, basis of presentation and summary of accounting policies | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, basis of presentation and summary of accounting policies | Organization, basis of presentation and summary of accounting policies Organization Paya Holdings Inc. (“we,” “us,” “Paya” or the “Company”), a Delaware corporation, conducts operations through its wholly-owned subsidiaries. These operating subsidiaries are comprised of Paya, Inc., Paya EFT, Inc., Stewardship Technology, Inc., First Mobile Trust, LLC, The Payment Group, LLC, Blue Parasol Group, LLC (Paragon Payment Solutions), and JS Innovations LLC (VelocIT). The Company is an independent integrated payments platform providing card, ACH, and check payment processing solutions via software to middle-market businesses in the United States. Paya’s solutions integrate with customers’ core business software to enable payments acceptance, reconcile invoice detail, and post payment information to their core accounting system. The Company is headquartered in Atlanta, Georgia and also has operations in Reston, VA, Fort Walton Beach, FL, Mount Vernon, OH, and Dallas, TX. Basis of presentation The Company’s unaudited consolidated financial statements have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. As permitted under accounting principles generally accepted in the United States of America (“U.S. GAAP”), certain notes and other information have been omitted from the interim unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC. In management’s opinion, the consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows. The results of operations for any interim period are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2022 or any future period. Use of estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. The more significant estimates made by management relate to the determination of the fair value of intangible assets acquired in a business combination, allowance for credit losses, income taxes, tax receivable agreement liability, and impairment of intangibles and long-lived assets. Principles of Consolidation These consolidated financial statements include the accounts of the Company and its subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation. Upon acquisition of a company, we determine if the transaction is a business combination defined by ASC 805, which is accounted for using the acquisition method of accounting. Under the acquisition method, once control is obtained of a business, the assets acquired, and liabilities assumed, including amounts attributed to noncontrolling interests, are recorded at fair value. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. One of the most significant estimates relates to the determination of the fair value of these assets and liabilities, specifically intangible assets such as internal use software, tradenames and trademarks, and customer relationships. The determination of the fair values is based on estimates and judgments made by management with the assistance of a third-party valuation firm. Significant assumptions for intangible assets include the discount rate, projected revenue growth rates and margin, customer retention factors, obsolescence rates and royalty rate used to calculate the expected future cash flows. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable. Measurement period adjustments are reflected at the time identified, up through the conclusion of the measurement period, which is the time at which all information for determination of the values of assets acquired and liabilities assumed is received and is not to exceed one year from the acquisition date. We may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets. Additionally, uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. We continue to collect information and reevaluate these estimates and assumptions periodically and record any adjustments to preliminary estimates to goodwill, provided we are within the measurement period. If outside of the measurement period, any subsequent adjustments are recorded to the consolidated statement of income and other comprehensive income. Cash and cash equivalents Cash and cash equivalents are short-term, highly liquid investments with a maturity of ninety days or less at the time of purchase. The fair value of our cash and cash equivalents approximates carrying value. At times, cash and cash equivalents exceed the amount insured by the Federal Deposit Insurance Corporation. Concentration of credit risk Our cash, cash equivalents, trade receivables, funds receivable and customer accounts are potentially subject to concentration of credit risk. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers. No individual customers represented more than 10% of the Company’s revenue. Generally, these deposits may be redeemed upon demand, and therefore, bear minimal default risk. Trade receivables, net Trade receivables are recorded at net realizable value, which includes allowances for credit losses. The Company estimates an allowance for credit losses related to balances that it estimates it cannot collect from merchants. These uncollectible amounts relate to chargebacks, uncollectible merchant fees, and ACH transactions that have been rejected subsequent to the payout date. The Company uses a loss-rate method, which utilizes historical write-off data, to estimate expected credit losses relating to uncollectible accounts. The allowance for credit losses was $1,470 and $1,449 at September 30, 2022 and December 31, 2021, respectively. Prepaid expenses Prepaid expenses primarily consist of insurance, software licenses and other prepaid supplier invoices. Other current assets Other current assets primarily consist of current deferred debt issuance costs related to the line of credit, other receivables, and equipment inventory. Funds held for clients and client funds obligation Funds held for clients and client funds obligations result from the Company’s processing services and associated settlement activities, including settlement of payment transactions. Funds held for clients represent assets that are restricted for use solely for the purposes of satisfying the obligations to remit funds relating to the Company’s processing services, which are classified as client funds obligations on our consolidated balance sheets. Funds held for clients are generated principally from merchant services transactions and are comprised of both settlements’ receivable and cash as of period end. Certain merchant settlement assets that relate to settlement obligations accrued by the Company are held by partner banks. The Company classified funds held for clients as a current asset since these funds are held solely for the purpose of satisfying the client funds obligations. The Company records corresponding settlement obligations for amounts payable to merchants and for payment instruments not yet presented for settlement as client funds obligations. Client funds obligations represent the Company's contractual obligations to remit funds to satisfy clients' settlement obligations. The client funds obligations represent liabilities that will be repaid within one year of the balance sheet date. Differences in the funds held for clients and client funds obligation are due to timing differences between when transactions are settled and when payment instruments are presented for settlement and are considered to be immaterial. The changes in settlement assets and obligations are presented on a net basis within financing activities in the consolidated statements of cash flows. The composition of funds held for clients was as follows: September 30, December 31, 2022 2021 Funds held for clients Cash held to satisfy client funds obligations $ 56,560 $ 51,592 Receivables held to satisfy client funds obligations 49,010 48,223 Total $ 105,570 $ 99,815 Property and equipment, net Property and equipment, is stated at cost less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. These lives are 3 years for computers and equipment, 5 years for furniture, fixtures, and office equipment, and the lesser of the asset useful life or remaining lease term for leasehold improvements. Also, the Company capitalizes software development costs and website development costs incurred in accordance with ASC 350-40, Internal Use Software. The useful lives are 3 to 5 years for internal-use software. Repair and maintenance costs are expensed as incurred and included in selling, general and administrative expenses on the consolidated statements of income and other comprehensive income. Leases On January 1, 2021, the Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) using the modified retrospective transition approach. We applied the new standard to all material leases existing at the date of initial application. Refer to the discussion under Note 11 Commitments and Contingencies. We determine if a contract is a leasing arrangement at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Right-of-use (ROU) assets and lease liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. The Company calculates the present value of future payments by using an estimated incremental borrowing rate, which approximates the rate at which the Company would borrow, on a secured basis and over a similar term. ROU assets represent our right to control the use of an identified asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We use the incremental borrowing rate on the commencement date in determining the present value of our lease payments. We recognize operating lease expense for our operating leases on a straight-line basis over the lease term. The Company’s lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes, or other costs. Variable lease costs are expensed as incurred on the consolidated statements of income and other comprehensive income. Impairment of long-lived assets The Company evaluates the recoverability of its long-lived assets in accordance with the provisions of ASC 360, Property, Plant and Equipment (“ASC 360”). ASC 360 requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. There was no impairment of long-lived assets recognized in any period presented in the consolidated financial statements. Goodwill and other intangible assets, net Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s business combinations. The Company evaluates goodwill and intangible assets in accordance with ASC 350, Goodwill and Other Intangible Assets (“ASC 350”). ASC 350 requires goodwill to be either qualitatively or quantitatively assessed for impairment annually (or more frequently if impairment indicators arise) for each reporting unit. The Company tests goodwill and intangible assets annually for impairment, and at interim periods, using a qualitative approach. Our annual evaluation assesses qualitative factors to determine whether it is more likely than not the fair value is less than the carrying value of the asset. If the Company is unable to conclude that goodwill and intangible assets, net are not impaired during its qualitative assessment, the Company will perform a quantitative assessment by estimating the fair value of the assets and comparing the fair value to the carrying value. As of September 30, 2022 and 2021, it was more likely than not that the fair value of goodwill and intangible assets, net exceeded their carrying value and as such, there was no goodwill impairment recognized in either period presented in the consolidated financial statements. Intangible assets with finite lives consist of internal use software, trade names, customer lists and customer relationships and are amortized on a straight-line basis over their estimated useful lives. From time to time, the Company acquires customer lists from sales agents in exchange for an upfront cash payment. The purchase of customer lists are treated as asset acquisitions, resulting in recording an intangible asset at cost on the date of acquisition. The acquired customer lists intangible assets have a useful life of 5 years. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of our use of the acquired assets or the strategy for our overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net book value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the asset over the remaining amortization period, the Company reduces the net book value of the related intangible asset to fair value and may adjust the remaining amortization period. The Company evaluates its intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the net book value may not be recoverable. There were no indicators of impairment identified nor was impairment recognized in intangible assets in any period presented in the consolidated financial statements. Long-term debt and issuance costs Eligible debt issuance costs associated with the Company's credit facilities are deferred and amortized to interest expense over the term of the related debt using the effective interest method. Debt issuance costs associated with Company's term debt are presented on the Company's consolidated balance sheets as a direct reduction in the carrying value of the associated debt liability. Revenue The Company’s business model provides payment services, card processing, and ACH, to merchants through enterprise or vertically focused software partners, direct sales, reseller partners, other referral partners, and a limited number of financial institutions. The Company recognizes processing revenues on bankcard merchant accounts and ACH merchant accounts at the time merchant transactions are processed, and periodic fees over the period the service is performed. See Note 2, Revenue recognition for more information on the Company's revenue recognition policy. Cost of services exclusive of depreciation and amortization Cost of services includes card processing costs, ACH costs, and other fees paid to card networks, and equipment expenses directly attributable to payment processing and related services to merchants. These costs are recognized as incurred. Cost of services also includes revenue share amounts paid to reseller and referral partners. These expenses are recognized as transactions are processed. Accrued revenue share represent amounts earned during the period but not yet paid at the end of the period. Selling, general and administrative expenses Selling, general and administrative expenses consist primarily of salaries, wages, commissions, marketing costs, professional services costs, technology costs, occupancy costs of leased space, and bad debt expense. Stock-based compensation expense is also included in this category. Depreciation & Amortization Depreciation and amortization consist primarily of amortization of intangible assets, mainly including customer relationships, internal-use software, customer lists, trade names and to a lesser extent depreciation on our investments in property, equipment, and software. We depreciate and amortize our assets on a straight-line basis in accordance with our accounting policies. These lives are 3 years for computers and equipment and acquired internal-use software, 5 years for furniture, fixtures, and office equipment, and the lesser of the asset useful life or remaining lease term for leasehold improvements. Repair and maintenance costs are expensed as incurred and included in selling, general and administrative expenses on the consolidated statements of income and other comprehensive income. Customer lists and customer relationships are amortized over a period of 5-15 years, developed technology 5-10 years, and trade names 5-25 years. Derivative financial instruments The Company accounts for its derivative instruments in accordance with ASC 815, Derivatives and Hedging. ASC 815 establishes accounting and reporting standards for derivative instruments requiring the recognition of all derivative instruments as assets or liabilities in the Company’s consolidated balance sheets at fair value. The Company records its derivative instruments as assets or liabilities, depending on its rights or obligations under the applicable derivative contract. Changes in fair value are recognized in earnings in the affected period. The Company uses an interest rate cap contract to manage risk from fluctuations in interest rates on its Term Loan. Interest rate caps involve the receipt of variable-rate amounts beyond a specified strike price over the life of the agreement without exchange of the underlying principal amount. The interest rate cap is not designated as a hedging instrument. Changes in the fair value of the interest rate cap are recorded through other income (expense) in the consolidated statement of income and other comprehensive income, other current assets and other current liabilities on the consolidated balance sheets, and in changes in other current assets in the consolidated statement of cash flows. Income taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized principally for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts, using currently enacted tax rates. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company recognizes a tax benefit for uncertain tax positions if the Company believes it is more likely than not that the position will be upheld on audit based solely on the technical merits of the tax position. The Company evaluates uncertain tax positions after the consideration of all available information. Such tax positions must initially and subsequently be estimated as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authorities, assuming full knowledge of the position and relevant facts. The Company's policy is to recognize any interest and penalties related to income taxes as income tax expense in the relevant period. Fair-Value Measurements The Company follows ASC 820, Fair Value Measurements, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The determination of fair value is based on the principal or most advantageous market in which the Company could participate and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Also, determination of fair value assumes that market participants will consider the highest and best use of the asset. The Company uses the hierarchy prescribed in ASC 820 for fair value measurements, based on the available inputs to the valuation and the degree to which they are observable or not observable in the market. The three levels of the hierarchy are as follows: Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date; Level 2 Inputs—Inputs are quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; inputs other than quoted prices, but that are observable for the asset or liability (e.g., interest rates; yield curves); and inputs that are derived principally from or corroborated by observable market data by correlation or by other means (i.e., market corroborated inputs); and Level 3 Inputs—Unobservable inputs for the asset or liability used to measure fair value. These inputs reflect the Company’s own assumptions about what other market participants would use in pricing the asset or liability. These are based on the best information available and can include the Company's own data. Recently Issued Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning an interim period that includes or is subsequent to March 12, 2020, or prospectively from the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company may apply ASU 2020-04 as its contracts referenced in London Interbank Offered Rate (“LIBOR”) are impacted by |
Revenue recognition
Revenue recognition | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue recognition | Revenue recognition The Company follows ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASC 606”) and performs a five-step analysis of transactions to determine when and how revenue is recognized, based upon the core principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. At contract inception, the Company assesses the goods and services promised in its contracts with customers and identifies performance obligations for each promise to transfer to the customer a good or service that is distinct. The Company’s performance obligation relating to its payment processing services revenue is to provide continuous access to the Company’s system to process as much as its customers require. Since the number or volume of transactions to be processed is not determinable at contract inception, the Company’s payment processing services consist of variable consideration under a stand-ready service of distinct days of service that are substantially the same with the same pattern of transfer to the customer. As such, the stand-ready obligation is accounted for as a single-series performance obligation whereby the variability of the transaction value is satisfied daily as the performance obligation is performed. In addition, the Company applies the right to invoice practical expedient to payment processing services as each performance obligation is recognized over time and the amounts invoiced are reflective of the value transferred to the customer. The Company uses each day as a time-based measure of progress toward satisfaction of the single performance obligation of each contract. This method most accurately depicts the pattern by which services are transferred to the merchant, as performance depends on the extent of transactions processed for that merchant on a given day. Likewise, consideration to which the Company expects to be entitled is determined according to our efforts to provide service each day. ASC 606 requires disclosure of the aggregate amount of the transaction price allocated to unsatisfied performance obligations; however, as permitted by the standard, the Company has elected to exclude from this disclosure any contracts with an original duration of one year or less and any variable consideration that meets specified criteria. As discussed above, the Company’s core performance obligation is a stand-ready obligation comprised of a series of distinct days of service, and revenue related to this performance obligation is generally billed and recognized as the services are performed. The variable consideration allocated to this performance obligation meets the specified criteria for disclosure exclusion. The aggregate fixed consideration portion of customer contracts with an initial contract duration greater than one year is not material. We do not have any material contract assets or liabilities for any period presented and we did not recognize any impairments of any contract assets or liabilities for the three and nine months ended September 30, 2022 and 2021, respectively. The Company generates its revenue from three revenue sources which include Transaction based revenue, Service based fee revenue and Equipment revenue and are defined below: Transaction based revenue Transaction based revenue represents revenue generated from transaction fees based on volume, including interchange fees and convenience based fees. The Company generates transaction based revenue from fees charged to merchants for card-based processing volume and ACH transactions. Transaction based revenues are recognized on a net basis equal to the full amount billed to the bankcard merchant, net of interchange fees and assessments. Interchange fees are fees paid to card-issuing banks and assessments paid to payment card networks. Interchange fees are set, and collected, by credit card networks based on various factors, including the type of bank card, card brand, merchant transaction processing volume, the merchant’s industry and the merchant’s risk profile and are recognized at the time merchant transactions are processed. Transaction based revenue was recorded net of interchange fees and assessments of $133,308 and $391,256 for the three and nine months ended September 30, 2022, respectively. Transaction based revenue was recorded net of interchange fees and assessments of $124,157 and $351,920 for the three and nine months ended September 30, 2021 respectively. Service based fee revenue Service based fee revenue represents revenue generated from recurring and periodic service fees. The Company generates service based fee revenue from charging a service fee, a fee charged to the client for facilitating bankcard processing, which is recognized on a gross basis. The Company also generates service based fees related to ACH inclusive of monthly support fees and monthly statement fees. Equipment revenue Equipment revenue comprises sales of equipment which primarily consists of payment terminals. The Company generates its revenue from two segments which are Integrated Solutions and Payment Services and are defined below: Integrated Solutions Our Integrated Solutions segment represents the delivery of our credit and debit card payment solutions, and to a lesser extent, ACH processing solutions to customers via integrations with software partners across our strategic vertical markets. Our Integrated Solutions partners include vertical focused front-end Customer Relationship Management software providers as well as back-end Enterprise Resource Planning and accounting solutions. Payment Services Our Payment Services segment represents the delivery of card payment processing solutions to our customers through resellers, as well as ACH, check, and gift card processing. Card payment processing solutions in this segment do not originate via a software integration but still utilize Paya’s core technology infrastructure. ACH, check, and gift card processing may or may not be integrated with third-party software. The following table presents the Company's revenue disaggregated by segment and by source as follows: Integrated Solutions Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue from contracts with customers Transaction based revenue $ 42,698 $ 36,955 $ 124,863 $ 104,180 Service based fee revenue 2,966 2,568 8,672 7,684 Equipment revenue 54 117 245 232 Total revenue $ 45,718 $ 39,640 $ 133,780 $ 112,096 Payment Services Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue from contracts with customers Transaction based revenue $ 21,124 $ 19,061 $ 62,411 $ 57,270 Service based fee revenue 4,506 4,306 13,561 12,830 Equipment revenue 18 51 99 101 Total revenue $ 25,648 $ 23,418 $ 76,071 $ 70,201 |
Business combinations
Business combinations | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Business combinations | Business combinations JS Innovations LLC transaction overview On January 19, 2022, the Company closed on the acquisition of JS Innovations LLC (VelocIT) which provides fully integrated, omnichannel payment solutions to accounting and ERP partners. The acquisition was accounted for as a business combination as defined by ASC 805, and the aggregate purchase price was $7,079 consisting of $6,079 cash paid at closing and $1,000 cash to be paid in January 2023, which is recorded in accrued liabilities on the consolidated balance sheets. Transaction costs related to the acquisition of VelocIT totaled $397 and are recorded in selling, general and administrative expenses on the consolidated statement of income and other comprehensive income for 2022. Goodwill of $2,064 resulted from the acquisition and is deductible for tax purposes. The measurement period remains open as of September 30, 2022. The following table summarizes the fair value of the assets acquired and liabilities assumed by the Company and resulting goodwill as of September 30, 2022: Assets Current Assets: Cash and cash equivalents $ 45 Trade receivables, net 85 Prepaid expenses 28 Total current assets $ 158 Other assets: Goodwill 2,064 Intangible assets, net 4,900 Total assets $ 7,122 Liabilities Current liabilities: Accrued liabilities 21 Accrued revenue share 22 Total current liabilities $ 43 Total liabilities $ 43 Net assets $ 7,079 Paragon Payment Solutions transaction overview On April 23, 2021, the Company closed the acquisition of Paragon Payment Solutions (“Paragon”), which was accounted for as a business combination as defined by ASC 805. The aggregate purchase price was $26,624, consisting of $19,124 in cash and $7,500 of common stock. Goodwill of $14,780 resulted from the acquisition and is partially deductible for tax purposes. Intangible assets not recognized apart from goodwill consist primarily of the expected revenue synergies. The measurement period was closed as of March 31, 2022. The following table summarizes the acquisition date fair value of the assets acquired and liabilities assumed by the Company and resulting goodwill as of September 30, 2022: Assets Current Assets: Cash and cash equivalents $ 816 Trade receivables, net 2,653 Prepaid expenses 174 Other current assets 199 Funds held for clients 3,846 Total current assets $ 7,688 Other assets: Property and equipment, net $ 52 Goodwill 14,780 Intangible assets 12,510 Other non-current assets 60 Total assets $ 35,090 Liabilities Current liabilities: Trade payables 1,407 Accrued liabilities 2,118 Accrued revenue share 80 Other current liabilities 58 Client funds obligations 4,266 Total current liabilities $ 7,929 Non-current liabilities: Deferred tax liability, net 390 Other non-current liabilities 147 Total liabilities $ 8,466 Net assets $ 26,624 |
Property and equipment, net
Property and equipment, net | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and equipment, net | Property and equipment, net Property and equipment, net consists of the following: September 30, 2022 December 31, 2021 Computers and equipment $ 8,896 $ 8,528 Internal-use software 18,927 14,949 Office equipment 141 141 Furniture and fixtures 1,165 1,357 Leasehold improvements 1,135 1,396 Other equipment 26 26 Total property and equipment 30,290 26,397 Less: accumulated depreciation (15,858) (12,386) Total property and equipment, net $ 14,432 $ 14,011 Depreciation and amortization expense, including internal-use software, totaled $1,312 and $3,815 for the three and nine months ended September 30, 2022, respectively. Depreciation and amortization expense, including internal-use software, totaled $1,282 and $3,395 for the three and nine months ended September 30, 2021, respectively. |
Goodwill and other intangible a
Goodwill and other intangible assets, net | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and other intangible assets, net | Goodwill and other intangible assets, net Goodwill recorded in the consolidated financial statements was $223,181 and $221,117 as of September 30, 2022 and December 31, 2021, respectively. There were no indicators of impairment noted in the periods presented. The following table presents changes to goodwill for the nine months ended September 30, 2022: Integrated Solutions Payments Services Total Balance at December 31, 2021 $ 162,783 $ 58,334 $ 221,117 Acquisition - VelocIT (Note 3) 2,064 — 2,064 Balance at September 30, 2022 $ 164,847 $ 58,334 $ 223,181 Intangible assets other than goodwill at September 30, 2022 included the following: Weighted Average Useful Life (Years) Useful Lives Gross Carrying Amount at September 30, 2022 Accumulated Amortization Net Carrying Value as of September 30, 2022 Customer Relationships 8.8 5-15 years $ 189,931 $ (86,359) $ 103,572 Developed Technology 5.8 5-10 years 41,520 (22,646) 18,874 Trade name 13.8 5-25 years 5,260 (937) 4,323 8.3 $ 236,711 $ (109,942) $ 126,769 Intangible assets other than goodwill at December 31, 2021 included the following: Weighted Average Useful Life (Years) Useful Lives Gross Carrying Amount at December 31, 2021 Accumulated Amortization Net Carrying Value as of December 31, 2021 Customer Relationships 10.4 5-16 years $ 184,544 $ (70,222) $ 114,322 Developed Technology 5.1 3-7 years 36,620 (18,843) 17,777 Trade name 15.8 5-25 years 5,260 (651) 4,609 8.4 $ 226,424 $ (89,716) $ 136,708 Amortization expense totaled $7,040 and $20,226 for the three and nine months ended September 30, 2022, respectively, and $6,609 and $19,047 for the three and nine months ended September 30, 2021, respectively. The following table shows the expected future amortization expense for intangible assets at September 30, 2022: Expected Future Amortization Expense 2022 - remaining $ 6,780 2023 26,924 2024 25,304 2025 24,341 2026 19,534 Thereafter 23,886 Total expected future amortization expense $ 126,769 |
Long-term debt
Long-term debt | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Long-term debt | Long-term debt As disclosed in Note 7 under Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, on June 25, 2021, the Company entered into a new credit agreement which governs new senior secured credit facilities, consisting of a $250 million senior secured term loan facility (the “Term Loan”). The Company repaid its prior credit agreement (the “Prior Credit Agreement”) with Antares Capital LP, as administrative agent, in full. The Company’s long-term debt consisted of the following for the nine months ended September 30, 2022 and year ended December 31, 2021: September 30, 2022 December 31, 2021 Term loan $ 247,500 $ 249,375 Debt issuance costs, net (4,438) (5,018) Total debt 243,062 244,357 Less: current portion of debt (2,500) (2,485) Total long-term debt $ 240,562 $ 241,872 There were no borrowings outstanding under the senior secured revolving credit facility (the “Revolver”) as of September 30, 2022 and December 31, 2021, respectively. The current portion of debt was included within other current liabilities on the consolidated balance sheets. The Company had $4,438 and $5,018 of unamortized Term Loan debt issuance costs that were netted against the outstanding loan balance and $728 and $875 of unamortized costs associated with the Revolver as of September 30, 2022 and December 31, 2021, respectively. The Revolver debt issuance costs are recorded in other current and other long term assets and are amortized over the life of the Revolver. Amortization of the debt issuance costs are included in interest expense in the consolidated statement of income and other comprehensive income. Borrowings under the Senior Secured Credit Facilities bear interest, equal to (i) an alternative base rate equal to the greater of (a) the prime rate announced by the Agent or the highest interest rate published by the Federal Reserve Board as the “bank prime loan” rate, (b) the Federal Reserve Bank of New York rate plus 0.5% per annum, and (c) the Eurodollar rate for an interest period of one-month beginning on such day plus 100 basis points, plus 2.25% (provided that the Eurodollar rate applicable to the Term Loan shall not be less than 0.75% per annum); or (ii) the Eurodollar rate (provided that the Eurodollar rate applicable to the Term Loan shall not be less than 0.75% per annum), plus 3.25% . Interest expense on the long-term debt was $2,905 and $8,074 for the three and nine months ended September 30, 2022, respectively, and $3,137 and $11,002 for the three and nine months ended September 30, 2021, respectively. Amortization of debt issuance costs were $242 and $726 for the three and nine months ended September 30, 2022, respectively, and $242 and $687 for the three and nine months ended September 30, 2021, respectively. Annual principal payments on the Term Loan for the remainder of 2022 and the following years is as follows: Future Principal Payments 2022 - remaining $ 625 2023 2,500 2024 2,500 2025 2,500 2026 2,500 Thereafter 236,875 Total future principal payments $ 247,500 |
Derivatives
Derivatives | 9 Months Ended |
Sep. 30, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | Derivatives The Company has historically utilized derivative instruments to manage risk from fluctuations in interest rates on its Term Loan. On February 3, 2021, the Company entered into an interest rate cap agreement with a notional amount of $171,525. The effective date is March 31, 2021 and terminates on March 31, 2023. The Company paid a premium of $67 for the right to receive payments if LIBOR rises above the cap rate of 1.00%. The premium is recorded in other current assets on the consolidated balance sheets. The interest rate cap agreement was a derivative not designated as a hedging instrument for accounting purposes. There were no changes to the interest rate cap in connection with the entry into the new Term Loan. The fair value of the interest rate cap agreement was $2,737 at September 30, 2022. The Company recognized $60 and $2,543 in other income (expense) for the three and nine months ended September 30, 2022, respectively, and $22 and $48 for the three and nine months ended September 30, 2021, respectively, from the interest rate cap agreement. The Company received cash payments of $548 for the three and nine months ended September 30, 2022 and $0 for the three and nine months ended September 30, 2021 from the interest rate cap agreement. |
Equity
Equity | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Equity | Equity Common Stock The holders of the Company's common stock are entitled to one vote for each share of common stock held. Of the 132,113,603 shares of common stock outstanding at September 30, 2022, a total of 5,681,812 are considered contingently issuable in two equal tranches if the closing price of our common stock exceeds certain price thresholds ($15.00 and $17.50, respectively) for 20 out of any 30 consecutive trading days through October 16, 2025. In addition, 14,018,188 shares are contingently issuable in two equal tranches if the closing price of our common stock exceeds certain price thresholds ($15.00 and $17.50, respectively) for 20 out of any 30 consecutive trading days through October 16, 2025. Total contingently issuable shares are 19,700,000. Paya Holdings Inc. Omnibus Incentive Plan On October 16, 2020, the Company adopted the Paya Holdings Inc. Omnibus Incentive Plan, which, as amended on May 31, 2022, allows for issuance of up to 18,800,000 shares of its common stock. The purpose of the plan is to enhance the profitability and value of the Company for the benefit of its stockholders by enabling the Company to offer eligible individual stock and cash-based incentives in order to attract, retain, and reward such individuals and strengthen the mutuality of interest between such individuals and the stockholders. Under the Omnibus Incentive Plan, the Company may grant stock options, stock appreciation rights, restricted shares, performance awards, and other stock-based and cash-based awards to eligible employees, consultants or non-employee directors of the Company. The Company recognized $1,957 and $5,014 of share-based compensation for the three and nine months ended September 30, 2022 and $675 and $1,916 for the three and nine months ended September 30, 2021, respectively, in selling, general & administrative expenses on the consolidated statement of income and other comprehensive income on a straight-line basis over the vesting periods. As of September 30, 2022, the Company had two stock-based compensation award types granted and outstanding: restricted stock units (RSUs) and stock options. RSUs represent the right to receive shares of the Company's common stock at a specified date in the future. RSUs issued under the Omnibus Incentive Plan vest over 3 or 5 year periods. RSUs granted under the Omnibus Incentive Plan were as follows: Nine Months Ended September 30, 2022 RSUs granted 2,119,608 Fair value of common stock $5.12 - $7.25 The fair value of each stock option award is estimated on the date of the grant, using the Black-Scholes option-pricing model and the assumptions in the following table: Nine Months Ended September 30, 2022 Stock options granted 1,466,921 Fair value of stock options $2.76 - $3.88 Expected volatility 51.14% - 53.47% Dividend yield — Expected term 6.5 Risk-free interest rate 2.20% - 2.95% The risk-free interest rate is based on the yield of a zero coupon United States Treasury Security with a maturity equal to the expected life of the stock option from the date of the grant. The assumption for expected volatility is based on the historical volatility of a peer group of market participants as the Company has limited historical volatility. It is the Company's intent to retain all profits for the operations of the business for the foreseeable future, as such the dividend yield assumption is zero. The Company applied the simplified method (as described in Staff Accounting Bulletin 110), which is the mid-point between the vesting date and the end of the contract term in determining the expected term of the stock options as the Company has limited historical basis upon which to determine historical exercise periods. All stock options exercised will be settled in common stock. The following table summarizes stock option activity: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Weighted-Average Fair Value Outstanding, December 31, 2021 682,000 $ 10.87 9.49 $ 4.74 Granted 1,466,921 5.22 2.79 Exercised — — Forfeited (140,618) 10.74 3.81 Outstanding, September 30, 2022 2,008,303 $ 6.75 9.29 $ 3.38 As of December 31, 2021 Vested and expected to vest 682,000 $ 10.87 9.49 $ 4.74 Exercisable 37,000 $ 13.73 8.87 $ 4.25 As of September 30, 2022 Vested and expected to vest 2,008,303 $ 6.75 9.29 $ 3.38 Exercisable 51,400 $ 13.15 8.30 $ 4.51 The following tables summarize RSU activity for the three and nine months ended September 30, 2022: Three Months Ended September 30, 2022 Number of Shares Weighted-Average Fair Value Outstanding, June 30, 2022 2,652,022 $ 6.72 Granted 32,415 7.25 Vested (67,570) 13.12 Forfeited (24,412) 5.12 Outstanding September 30, 2022 2,592,455 $ 6.58 Nine Months Ended September 30, 2022 Number of Shares Weighted-Average Fair Value Outstanding, December 31, 2021 763,645 $ 10.89 Granted 2,119,608 5.51 Vested (79,349) 12.91 Forfeited (211,449) 9.12 Outstanding September 30, 2022 2,592,455 $ 6.58 Class C Incentive Units GTCR-Ultra Holdings, LLC (“Ultra”) provided Class C Incentive Units as part of their incentive plan. As certain employees of the Company were recipients of the Class C Incentive Units, the related share-based compensation was recorded by the Company. The total number of units associated with share-based compensation granted and forfeited during the period from December 31, 2020 to September 30, 2022 is as follows: Time Vesting December 31, 2020 balance 42,881,437 Granted — Forfeited (3,274,827) September 30, 2021 balance 39,606,610 December 31, 2021 balance 39,074,593 Granted — Forfeited (40,982) Exercised (654,976) September 30, 2022 balance 38,378,635 As of September 30, 2022, 29,099,211 of the units had vested. The units vest on a straight-line basis over the terms of the agreement as described below. Outstanding as of September 30, 2022 2021 Time vesting units 5 year vesting period 38,080,635 39,308,610 1 year vesting period 298,000 298,000 Outstanding Incentive Units 38,378,635 39,606,610 The Company recognized $186 and $610 of share-based compensation related to the Class C Incentive Units, for the three and nine months ended September 30, 2022, respectively, and $247 and $580 for the three and nine months ended September 30, 2021, respectively, in selling, general & administrative expenses on the consolidated statement of income and other comprehensive income. The Company used the fair value of the awards on the grant date to determine the share-based compensation expense. Warrants The Company did not have warrants outstanding as of September 30, 2022 and 2021. During 2021, the Company completed a registered exchange offer relating to the Company's 17,714,945 outstanding warrants. In connection therewith, the Company exchanged an aggregate 17,428,489 warrants tendered for shares of the Company’s common stock at an exchange ratio of 0.26 shares for each warrant. As a result, at closing in the third quarter of 2021, the Company issued an aggregate of 4,531,407 shares of common stock and separate from the exchange, 2,450 warrants were exercised. Additionally, on the closing date of the exchange offer in the third quarter of 2021, the Company and Continental Stock Transfer & Trust Company, entered into Amendment No. 1 (the “Warrant Amendment”) to the Warrant Agreement, dated as of November 15, 2018, by and between FinTech Acquisition Corp. III and the warrant agent, governing the warrants. The Warrant Amendment provided the Company with the right to mandatorily exchange the Company’s remaining outstanding warrants for shares of the Company’s common stock, at an exchange ratio of 0.234 shares for each warrant. Simultaneously with the closing of the warrant exchange offer, the Company notified holders of the remaining warrants that it would exercise its right to exchange the warrants for shares of common stock and, consequently, the 284,006 outstanding warrants that were not tendered in the exchange were converted into an aggregate 66,457 shares of common stock. As a result of these transactions, there were no warrants outstanding as of December 31, 2021 or September 30, 2022. Earnings per Share Earnings per share has been computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the respective period. Potentially dilutive securities consist of shares issuable upon the exercise of stock options, issuance of earnout shares, exercise of warrants, and vesting of restricted stock unit awards. The following tables provide the computation of basic and diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2022 2022 Numerator: Net income $ 1,350 $ 5,208 Denominator: Weighted average common shares - basic 126,417,577 126,397,360 Add effect of dilutive securities: Stock-based awards 605,985 300,511 Weighted average common shares assuming dilution 127,023,562 126,697,871 Earnings per share: Basic $ 0.01 $ 0.04 Diluted $ 0.01 $ 0.04 Anti-dilutive shares excluded from calculation of diluted EPS: Restricted stock units - granted 595,105 602,605 Stock options - granted 2,008,303 2,008,303 Earnout shares 19,700,000 19,700,000 Total anti-dilutive shares 22,303,408 22,310,908 Three Months Ended September 30, Nine Months Ended September 30, 2021 2021 Numerator: Net loss $ (2,961) $ (5,070) Denominator: Weighted average common shares - basic 128,429,090 124,523,217 Add effect of dilutive securities: Stock-based awards — — Warrants — — Weighted average common shares assuming dilution 128,429,090 124,523,217 Earnings per share: Basic $ (0.02) $ (0.04) Diluted $ (0.02) $ (0.04) Anti-dilutive shares excluded from calculation of diluted EPS: Restricted stock units - granted 6,279 9,406 Earnout shares 19,700,000 19,700,000 Total anti-dilutive shares 19,706,279 19,709,406 |
Income taxes
Income taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes The Company’s effective tax rate for the three months ended September 30, 2022 and 2021 was 51.5% and 208.0%, respectively. The Company’s effective tax rate for the nine months ended September 30, 2022 and 2021 was 40.0% and (102.2)%, respectively. The Company recorded income tax expense of $1,434 and $3,476 for the three and nine months ended September 30, 2022 and $5,702 and $2,563 for the three and nine months ended September 30, 2021, respectively. The increase in income tax expense was primarily attributable to an increase in pre-tax income. The difference in the Company’s effective income tax rate for the nine months ended September 30, 2022 and its federal statutory tax rate of 21% is primarily driven by state and local income taxes, stock compensation, and an increase in the valuation allowance. ASC 740, Income Tax requires deferred tax assets to be reduced by a valuation allowance, if, based on the weight of available positive and negative evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. In accordance with this requirement, the Company regularly reviews the recoverability of its deferred tax assets and establishes a valuation allowance if appropriate. In determining the amount of any required valuation allowance, the Company considers the history of profitability, projections of future profitability, the reversal of future taxable temporary differences, the overall amount of deferred tax assets, and the timeframe necessary to utilize the deferred tax assets prior to their expiration. Based on the weight of all positive and negative quantitative and qualitative evidence available as outlined above, management has concluded that it is more likely than not that the Company will not be able to realize a portion of its federal and state deferred tax assets in the foreseeable future and has recorded a valuation allowance of $10,146 and $9,740 against these assets as of September 30, 2022, and December 31, 2021, respectively. The change in the valuation allowance is predominantly a result of the timing differences between the book and tax amortization of intangible assets acquired during the |
Fair Value
Fair Value | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value | Fair Value The Company made recurring fair value measurements of contingent liabilities arising from the Paragon acquisition using Level 3 unobservable inputs. These liabilities were related to potential earnout payments in connection with certain growth metrics related to the financial performance of Paragon in the 12 months from April 23, 2021 through April 22, 2022 as laid out in the acquisition agreement. The contingent liability no longer exists as of September 30, 2022. There were no transfers into or out of Level 3 during the nine months ended September 30, 2022 or the year ended December 31, 2021. The Company has determined that the significant inputs used to value the interest rate cap fall within Level 2 of the fair value hierarchy. As a result, the Company has determined that its interest rate cap valuation is classified in Level 2 of the fair value hierarchy as shown in the table below. Level 1 Level 2 Level 3 December 31, 2021 Interest rate cap agreement (a) $ — $ 194 $ — Total $ — $ 194 $ — September 30, 2022 Interest rate cap agreement (a) $ — $ 2,737 $ — Total $ — $ 2,737 $ — (a) Interest rate cap asset value is included in other current assets on the consolidated balance sheets. Other financial instruments not measured at fair value on the Company’s consolidated balance sheets at September 30, 2022 and December 31, 2021 include cash, trade receivable, prepaid expenses and other current assets, accounts payable, and accrued expenses and other current liabilities as their estimated fair values reasonably approximate their carrying value as reported on the consolidated balance sheets. The Company’s debt obligations are carried at amortized cost less debt issuance costs. Amortized cost approximates fair value. Fair value has been estimated based on actual trading information, and quoted prices, provided by bond traders and is classified as Level 2. |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies As disclosed in Note 12 under Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company adopted ASC Topic 842, Leases, using a modified retrospective transition approach as of January 1, 2021. The Company monitors for events or changes in circumstances that require a reassessment of a lease. During the nine months ended September 30, 2022, the Company terminated one of its lease agreements and recorded an immaterial impairment charge, of approximately $149, in selling, general, and administrative expenses, to derecognize the corresponding ROU asset. The Company's total lease cost for the three months ended September 30, 2022 and 2021 was $403 and $498, respectively, which consisted of $290 and $400 in operating lease cost and $113 and $98 in variable lease cost, respectively. The Company’s total lease cost for the nine months ended September 30, 2022 and 2021 was $1,236 and $1,378, respectively, which consisted of $926 and $1,093 in operating lease cost and $310 and $285 in variable lease cost, respectively. As of September 30, 2022, amounts reported in the consolidated balance sheets were as follows: Operating Leases: September 30, 2022 December 31, 2021 Right-of-use assets $ 3,099 $ 4,495 Lease liability, current 1,236 1,302 Lease liability, noncurrent 2,830 3,941 Total lease liabilities $ 4,066 $ 5,243 Weighted-average remaining lease term (in years) 3.40 4.73 Weighted-average discount rate (annual) 4.0 % 4.0 % Other information related to leases are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 367 423 1,120 1,084 Right-of-use assets obtained in exchange for lease liabilities Operating leases — — — 5,571 The following table presents a maturity analysis of the Company's operating lease liabilities as of September 30, 2022: Future Minimum Lease Payments 2022 - remaining $ 344 2023 1,314 2024 1,018 2025 990 2026 587 Thereafter 114 Total Lease payments $ 4,367 Less Imputed Interest 301 Total lease obligations $ 4,066 Liabilities under Tax Receivable Agreement The Company is party to the Tax Receivable Agreement (the “TRA”) under which we are contractually committed to pay Ultra 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of certain transactions. The Company is not obligated to make any payments under the TRA until the tax benefits associated with the transaction that gave rise to the payment are realized. Amounts payable under the TRA are contingent upon, among other things, generation of future taxable income over the term of the TRA. If the Company does not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then the Company would not be required to make the related TRA payments. The Company paid $592 for TRA related payments in the nine months ended September 30, 2022. The Company recognized $19,166 of liabilities relating to our obligations under the TRA, based on our estimate of the probable amount of future benefit, as of September 30, 2022. The total future potential payments to be made under the TRA, assuming sufficient future taxable income to realize 100% of the tax benefits is $31,984. Any changes in the value of the TRA liability are recorded in other income (expense) on the consolidated statements of income and other comprehensive income. Legal matters |
Commitments and contingencies | Commitments and contingencies As disclosed in Note 12 under Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company adopted ASC Topic 842, Leases, using a modified retrospective transition approach as of January 1, 2021. The Company monitors for events or changes in circumstances that require a reassessment of a lease. During the nine months ended September 30, 2022, the Company terminated one of its lease agreements and recorded an immaterial impairment charge, of approximately $149, in selling, general, and administrative expenses, to derecognize the corresponding ROU asset. The Company's total lease cost for the three months ended September 30, 2022 and 2021 was $403 and $498, respectively, which consisted of $290 and $400 in operating lease cost and $113 and $98 in variable lease cost, respectively. The Company’s total lease cost for the nine months ended September 30, 2022 and 2021 was $1,236 and $1,378, respectively, which consisted of $926 and $1,093 in operating lease cost and $310 and $285 in variable lease cost, respectively. As of September 30, 2022, amounts reported in the consolidated balance sheets were as follows: Operating Leases: September 30, 2022 December 31, 2021 Right-of-use assets $ 3,099 $ 4,495 Lease liability, current 1,236 1,302 Lease liability, noncurrent 2,830 3,941 Total lease liabilities $ 4,066 $ 5,243 Weighted-average remaining lease term (in years) 3.40 4.73 Weighted-average discount rate (annual) 4.0 % 4.0 % Other information related to leases are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 367 423 1,120 1,084 Right-of-use assets obtained in exchange for lease liabilities Operating leases — — — 5,571 The following table presents a maturity analysis of the Company's operating lease liabilities as of September 30, 2022: Future Minimum Lease Payments 2022 - remaining $ 344 2023 1,314 2024 1,018 2025 990 2026 587 Thereafter 114 Total Lease payments $ 4,367 Less Imputed Interest 301 Total lease obligations $ 4,066 Liabilities under Tax Receivable Agreement The Company is party to the Tax Receivable Agreement (the “TRA”) under which we are contractually committed to pay Ultra 85% of the amount of any tax benefits that we actually realize, or in some cases are deemed to realize, as a result of certain transactions. The Company is not obligated to make any payments under the TRA until the tax benefits associated with the transaction that gave rise to the payment are realized. Amounts payable under the TRA are contingent upon, among other things, generation of future taxable income over the term of the TRA. If the Company does not generate sufficient taxable income in the aggregate over the term of the TRA to utilize the tax benefits, then the Company would not be required to make the related TRA payments. The Company paid $592 for TRA related payments in the nine months ended September 30, 2022. The Company recognized $19,166 of liabilities relating to our obligations under the TRA, based on our estimate of the probable amount of future benefit, as of September 30, 2022. The total future potential payments to be made under the TRA, assuming sufficient future taxable income to realize 100% of the tax benefits is $31,984. Any changes in the value of the TRA liability are recorded in other income (expense) on the consolidated statements of income and other comprehensive income. Legal matters |
Related party transactions
Related party transactions | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions Related party transactions – Antares Antares Capital LP is an investor in GTCR, LLC and was the administrative agent and a lender under the Prior Credit Agreement that was repaid in full during 2021. As such, Antares is considered a related party. The Company recorded interest expense related to the Prior Credit Agreement of $0 in expense on the consolidated statement of income and other comprehensive income for the three months ended September 30, 2022 and 2021, respectively, and $0 and $6,841 for the nine months ended September 30, 2022 and 2021, respectively. As disclosed in Note 7 under Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, the Company repaid the remaining principal and interest on the Prior Credit Agreement on June 25, 2021 and as such, Antares is no longer the administrative agent or a lender under the Company's current Credit Agreement. |
Defined contribution plan
Defined contribution plan | 9 Months Ended |
Sep. 30, 2022 | |
Retirement Benefits [Abstract] | |
Defined contribution plan | Defined contribution plan The Company maintains a 401(k) Plan as a defined contribution retirement plan for all eligible employees. The 401(k) Plan provides for tax-deferred contributions of employees’ salaries, limited to a maximum annual amount as established by the IRS. The plan enrolls employees immediately with no age or service requirement. The Company matches 50% of employees’ contributions up to the first 7% contributed. Matching contributions made to an employee’s account are 100% vested as of the date of contribution. The 401(k) Plan employer match was $199 and $178 for the three months ended September 30, 2022 and 2021, respectively, and $735 and $625 for the nine months ended September 30, 2022 and 2021. |
Segments
Segments | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segments | Segments The Company determines its operating segments based on ASC 280, Segment Reporting . Based on the manner in which the chief operating decision making group (“CODM”) manages and monitors the performance of the business, the Company currently has two operating and reportable segments: Integrated Solutions and Payment Services. More information about our two reportable segments: • Integrated Solutions - Our Integrated Solutions segment represents the delivery of our credit and debit card payment solutions, and to a lesser extent, ACH processing solutions to customers via integrations with software partners across our strategic vertical markets. Our Integrated Solutions partners include vertical focused front-end Customer Relationship Management software providers as well as back-end Enterprise Resource Planning and accounting solutions. • Payment Services - Our Payment Services segment represents the delivery of card payment processing solutions to our customers through resellers, as well as ACH, check, and gift card processing. Card payment processing solutions in this segment do not originate via a software integration but still utilize Paya’s core technology infrastructure. ACH, check, and gift card processing may or may not be integrated with third-party software. All segment revenue is from external customers. The following table presents total revenues and segment gross profit, excluding depreciation and amortization, for each reportable segment and includes a reconciliation of segment gross profit to total U.S. GAAP operating profit, excluding depreciation and amortization, by including certain corporate-level expenses. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Integrated Solutions $ 45,718 $ 39,640 $ 133,780 $ 112,096 Payment Services 25,648 23,418 76,071 70,201 Total Revenue 71,366 63,058 209,851 182,297 Integrated Solutions gross profit 21,894 20,133 66,513 59,485 Payment Services gross profit 13,986 12,421 40,868 35,972 Total segment gross profit 35,880 32,554 107,381 95,457 Selling, general & administrative expenses (21,067) (18,718) (66,414) (56,478) Depreciation and amortization (8,353) (7,891) (24,041) (22,442) Interest expense (3,487) (3,137) (9,664) (11,002) Other income (expense) (189) (67) 1,422 (8,042) Income (loss) before income taxes $ 2,784 $ 2,741 $ 8,684 $ (2,507) |
Organization, basis of presen_2
Organization, basis of presentation and summary of accounting policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of presentation The Company’s unaudited consolidated financial statements have been prepared in accordance with the requirements of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. As permitted under accounting principles generally accepted in the United States of America (“U.S. GAAP”), certain notes and other information have been omitted from the interim unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q. Therefore, these financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC. In management’s opinion, the consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows. The results of operations for any interim period are not necessarily indicative of the operating results that may be expected for the full fiscal year ending December 31, 2022 or any future period. |
Use of estimates | Use of estimates The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. These estimates are based on management’s best knowledge of current events and actions that the Company may undertake in the future. The more significant estimates made by management relate to the determination of the fair value of intangible assets acquired in a business combination, allowance for credit losses, income taxes, tax receivable agreement liability, and impairment of intangibles and long-lived assets. |
Principles of Consolidation | Principles of Consolidation These consolidated financial statements include the accounts of the Company and its subsidiary companies. All significant intercompany accounts and transactions have been eliminated in consolidation. Upon acquisition of a company, we determine if the transaction is a business combination defined by ASC 805, which is accounted for using the acquisition method of accounting. Under the acquisition method, once control is obtained of a business, the assets acquired, and liabilities assumed, including amounts attributed to noncontrolling interests, are recorded at fair value. We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. One of the most significant estimates relates to the determination of the fair value of these assets and liabilities, specifically intangible assets such as internal use software, tradenames and trademarks, and customer relationships. The determination of the fair values is based on estimates and judgments made by management with the assistance of a third-party valuation firm. Significant assumptions for intangible assets include the discount rate, projected revenue growth rates and margin, customer retention factors, obsolescence rates and royalty rate used to calculate the expected future cash flows. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable. Measurement period adjustments are reflected at the time identified, up through the conclusion of the measurement period, which is the time at which all information for determination of the values of assets acquired and liabilities assumed is received and is not to exceed one year from the acquisition date. We may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not recognized as separate identifiable intangible assets. Additionally, uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. We continue to collect information and reevaluate these estimates and assumptions periodically and record any adjustments to preliminary estimates to goodwill, provided we are within the measurement period. If outside of the measurement period, any subsequent adjustments are recorded to the consolidated statement of income and other comprehensive income. |
Cash and cash equivalents | Cash and cash equivalents Cash and cash equivalents are short-term, highly liquid investments with a maturity of ninety days or less at the time of purchase. The fair value of our cash and cash equivalents approximates carrying value. At times, cash and cash equivalents exceed the amount insured by the Federal Deposit Insurance Corporation. |
Concentration of credit risk | Concentration of credit risk Our cash, cash equivalents, trade receivables, funds receivable and customer accounts are potentially subject to concentration of credit risk. The Company performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral from its customers. No individual customers represented more than 10% of the Company’s revenue. Generally, these deposits may be redeemed upon demand, and therefore, bear minimal default risk. |
Trade receivables, net | Trade receivables, netTrade receivables are recorded at net realizable value, which includes allowances for credit losses. The Company estimates an allowance for credit losses related to balances that it estimates it cannot collect from merchants. These uncollectible amounts relate to chargebacks, uncollectible merchant fees, and ACH transactions that have been rejected subsequent to the payout date. The Company uses a loss-rate method, which utilizes historical write-off data, to estimate expected credit losses relating to uncollectible accounts. |
Prepaid expenses | Prepaid expenses Prepaid expenses primarily consist of insurance, software licenses and other prepaid supplier invoices. |
Other current assets | Other current assets Other current assets primarily consist of current deferred debt issuance costs related to the line of credit, other receivables, and equipment inventory. |
Funds held for clients and client funds obligation | Funds held for clients and client funds obligation Funds held for clients and client funds obligations result from the Company’s processing services and associated settlement activities, including settlement of payment transactions. Funds held for clients represent assets that are restricted for use solely for the purposes of satisfying the obligations to remit funds relating to the Company’s processing services, which are classified as client funds obligations on our consolidated balance sheets. Funds held for clients are generated principally from merchant services transactions and are comprised of both settlements’ receivable and cash as of period end. Certain merchant settlement assets that relate to settlement obligations accrued by the Company are held by partner banks. The Company classified funds held for clients as a current asset since these funds are held solely for the purpose of satisfying the client funds obligations. The Company records corresponding settlement obligations for amounts payable to merchants and for payment instruments not yet presented for settlement as client funds obligations. Client funds obligations represent the Company's contractual obligations to remit funds to satisfy clients' settlement obligations. The client funds obligations represent liabilities that will be repaid within one year of the balance sheet date. Differences in the funds held for clients and client funds obligation are due to timing differences between when transactions are settled and when payment instruments are presented for settlement and are considered to be immaterial. The changes in settlement assets and obligations are presented on a net basis within financing activities in the consolidated statements of cash flows. |
Property and equipment, net | Property and equipment, net Property and equipment, is stated at cost less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the assets. These lives are 3 years for computers and equipment, 5 years for furniture, fixtures, and office equipment, and the lesser of the asset useful life or remaining lease term for leasehold improvements. Also, the Company capitalizes software development costs and website development costs incurred in accordance with ASC 350-40, Internal Use Software. The useful lives are 3 to 5 years for internal-use software. Repair and maintenance costs are expensed as incurred and included in selling, general and administrative expenses on the consolidated statements of income and other comprehensive income. |
Leases | Leases On January 1, 2021, the Company adopted Accounting Standards Update (ASU) No. 2016-02, Leases (Topic 842) using the modified retrospective transition approach. We applied the new standard to all material leases existing at the date of initial application. Refer to the discussion under Note 11 Commitments and Contingencies. We determine if a contract is a leasing arrangement at inception. Leases with an initial term of 12 months or less are not recorded on the balance sheet. Right-of-use (ROU) assets and lease liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. The Company calculates the present value of future payments by using an estimated incremental borrowing rate, which approximates the rate at which the Company would borrow, on a secured basis and over a similar term. ROU assets represent our right to control the use of an identified asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. We use the incremental borrowing rate on the commencement date in determining the present value of our lease payments. We recognize operating lease expense for our operating leases on a straight-line basis over the lease term. The Company’s lease agreements may contain variable costs such as common area maintenance, insurance, real estate taxes, or other costs. Variable lease costs are expensed as incurred on the consolidated statements of income and other comprehensive income. |
Impairment of long-lived assets | Impairment of long-lived assets The Company evaluates the recoverability of its long-lived assets in accordance with the provisions of ASC 360, Property, Plant and Equipment (“ASC 360”). ASC 360 requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets is measured by comparing the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. There was no impairment of long-lived assets recognized in any period presented in the consolidated financial statements. |
Goodwill and other intangible assets, net | Goodwill and other intangible assets, net Goodwill represents the premium paid over the fair value of the net tangible and identifiable intangible assets acquired in the Company’s business combinations. The Company evaluates goodwill and intangible assets in accordance with ASC 350, Goodwill and Other Intangible Assets (“ASC 350”). ASC 350 requires goodwill to be either qualitatively or quantitatively assessed for impairment annually (or more frequently if impairment indicators arise) for each reporting unit. The Company tests goodwill and intangible assets annually for impairment, and at interim periods, using a qualitative approach. Our annual evaluation assesses qualitative factors to determine whether it is more likely than not the fair value is less than the carrying value of the asset. If the Company is unable to conclude that goodwill and intangible assets, net are not impaired during its qualitative assessment, the Company will perform a quantitative assessment by estimating the fair value of the assets and comparing the fair value to the carrying value. As of September 30, 2022 and 2021, it was more likely than not that the fair value of goodwill and intangible assets, net exceeded their carrying value and as such, there was no goodwill impairment recognized in either period presented in the consolidated financial statements. Intangible assets with finite lives consist of internal use software, trade names, customer lists and customer relationships and are amortized on a straight-line basis over their estimated useful lives. From time to time, the Company acquires customer lists from sales agents in exchange for an upfront cash payment. The purchase of customer lists are treated as asset acquisitions, resulting in recording an intangible asset at cost on the date of acquisition. The acquired customer lists intangible assets have a useful life of 5 years. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the manner of our use of the acquired assets or the strategy for our overall business or significant negative industry or economic trends. If this evaluation indicates that the value of the intangible asset may be impaired, the Company makes an assessment of the recoverability of the net book value of the asset over its remaining useful life. If this assessment indicates that the intangible asset is not recoverable, based on the estimated undiscounted future cash flows of the asset over the remaining amortization period, the Company reduces the net book value of the related intangible asset to fair value and may adjust the remaining amortization period. The Company evaluates its intangible assets with finite lives for indications of impairment whenever events or changes in circumstances indicate that the net book value may not be recoverable. There were no indicators of impairment identified nor was impairment recognized in intangible assets in any period presented in the consolidated financial statements. |
Long-term debt and issuance costs | Long-term debt and issuance costs Eligible debt issuance costs associated with the Company's credit facilities are deferred and amortized to interest expense over the term of the related debt using the effective interest method. Debt issuance costs associated with |
Revenue | RevenueThe Company’s business model provides payment services, card processing, and ACH, to merchants through enterprise or vertically focused software partners, direct sales, reseller partners, other referral partners, and a limited number of financial institutions. The Company recognizes processing revenues on bankcard merchant accounts and ACH merchant accounts at the time merchant transactions are processed, and periodic fees over the period the service is performed. |
Cost of services exclusive of depreciation and amortization | Cost of services exclusive of depreciation and amortization Cost of services includes card processing costs, ACH costs, and other fees paid to card networks, and equipment expenses directly attributable to payment processing and related services to merchants. These costs are recognized as incurred. Cost of services also includes revenue share amounts paid to reseller and referral partners. These expenses are recognized as transactions are processed. Accrued revenue share represent amounts earned during the period but not yet paid at the end of the period. |
Selling, general and administrative expenses | Selling, general and administrative expenses Selling, general and administrative expenses consist primarily of salaries, wages, commissions, marketing costs, professional services costs, technology costs, occupancy costs of leased space, and bad debt expense. Stock-based compensation expense is also included in this category. |
Depreciation & Amortization | Depreciation & Amortization Depreciation and amortization consist primarily of amortization of intangible assets, mainly including customer relationships, internal-use software, customer lists, trade names and to a lesser extent depreciation on our investments in property, equipment, and software. We depreciate and amortize our assets on a straight-line basis in accordance with our accounting policies. These lives are 3 years for computers and equipment and acquired internal-use software, 5 years for furniture, fixtures, and office equipment, and the lesser of the asset useful life or remaining lease term for leasehold improvements. Repair and maintenance costs are expensed as incurred and included in selling, general and administrative expenses on the consolidated statements of income and other comprehensive income. Customer lists and customer relationships are amortized over a period of 5-15 years, developed technology 5-10 years, and trade names 5-25 years. |
Derivative financial instruments | Derivative financial instruments The Company accounts for its derivative instruments in accordance with ASC 815, Derivatives and Hedging. ASC 815 establishes accounting and reporting standards for derivative instruments requiring the recognition of all derivative instruments as assets or liabilities in the Company’s consolidated balance sheets at fair value. The Company records its derivative instruments as assets or liabilities, depending on its rights or obligations under the applicable derivative contract. Changes in fair value are recognized in earnings in the affected period. The Company uses an interest rate cap contract to manage risk from fluctuations in interest rates on its Term Loan. Interest rate caps involve the receipt of variable-rate amounts beyond a specified strike price over the life of the agreement without exchange of the underlying principal amount. The interest rate cap is not designated as a hedging instrument. Changes in the fair value of the interest rate cap are recorded through other income (expense) in the consolidated statement of income and other comprehensive income, other current assets and other current liabilities on the consolidated balance sheets, and in changes in other current assets in the consolidated statement of cash flows. |
Income taxes | Income taxes The Company utilizes the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized principally for the expected tax consequences of temporary differences between the tax basis of assets and liabilities and their reported amounts, using currently enacted tax rates. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. The Company recognizes a tax benefit for uncertain tax positions if the Company believes it is more likely than not that the position will be upheld on audit based solely on the technical merits of the tax position. The Company evaluates uncertain tax positions after the consideration of all available information. Such tax positions must initially and subsequently be estimated as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authorities, assuming full knowledge of the position and relevant facts. The Company's policy is to recognize any interest and penalties related to income taxes as income tax expense in the relevant period. |
Fair-Value Measurements | Fair-Value Measurements The Company follows ASC 820, Fair Value Measurements, which defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The determination of fair value is based on the principal or most advantageous market in which the Company could participate and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance. Also, determination of fair value assumes that market participants will consider the highest and best use of the asset. The Company uses the hierarchy prescribed in ASC 820 for fair value measurements, based on the available inputs to the valuation and the degree to which they are observable or not observable in the market. The three levels of the hierarchy are as follows: Level 1 Inputs—Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date; Level 2 Inputs—Inputs are quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; inputs other than quoted prices, but that are observable for the asset or liability (e.g., interest rates; yield curves); and inputs that are derived principally from or corroborated by observable market data by correlation or by other means (i.e., market corroborated inputs); and Level 3 Inputs—Unobservable inputs for the asset or liability used to measure fair value. These inputs reflect the Company’s own assumptions about what other market participants would use in pricing the asset or liability. These are based on the best information available and can include the Company's own data. |
Recently Issued Pronouncements Not Yet Adopted | Recently Issued Pronouncements Not Yet Adopted In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this ASU are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply the amendments for contract modifications by Topic or Industry Subtopic as of any date from the beginning an interim period that includes or is subsequent to March 12, 2020, or prospectively from the date that the financial statements are available to be issued. Once elected for a Topic or an Industry Subtopic, the amendments must be applied prospectively for all eligible contract modifications for that Topic or Industry Subtopic. The Company may apply ASU 2020-04 as its contracts referenced in London Interbank Offered Rate (“LIBOR”) are impacted by |
Organization, basis of presen_3
Organization, basis of presentation and summary of accounting policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule Of Funds Held For Clients | The composition of funds held for clients was as follows: September 30, December 31, 2022 2021 Funds held for clients Cash held to satisfy client funds obligations $ 56,560 $ 51,592 Receivables held to satisfy client funds obligations 49,010 48,223 Total $ 105,570 $ 99,815 |
Revenue recognition (Tables)
Revenue recognition (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents the Company's revenue disaggregated by segment and by source as follows: Integrated Solutions Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue from contracts with customers Transaction based revenue $ 42,698 $ 36,955 $ 124,863 $ 104,180 Service based fee revenue 2,966 2,568 8,672 7,684 Equipment revenue 54 117 245 232 Total revenue $ 45,718 $ 39,640 $ 133,780 $ 112,096 Payment Services Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Revenue from contracts with customers Transaction based revenue $ 21,124 $ 19,061 $ 62,411 $ 57,270 Service based fee revenue 4,506 4,306 13,561 12,830 Equipment revenue 18 51 99 101 Total revenue $ 25,648 $ 23,418 $ 76,071 $ 70,201 |
Business combinations (Tables)
Business combinations (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the fair value of the assets acquired and liabilities assumed by the Company and resulting goodwill as of September 30, 2022: Assets Current Assets: Cash and cash equivalents $ 45 Trade receivables, net 85 Prepaid expenses 28 Total current assets $ 158 Other assets: Goodwill 2,064 Intangible assets, net 4,900 Total assets $ 7,122 Liabilities Current liabilities: Accrued liabilities 21 Accrued revenue share 22 Total current liabilities $ 43 Total liabilities $ 43 Net assets $ 7,079 The following table summarizes the acquisition date fair value of the assets acquired and liabilities assumed by the Company and resulting goodwill as of September 30, 2022: Assets Current Assets: Cash and cash equivalents $ 816 Trade receivables, net 2,653 Prepaid expenses 174 Other current assets 199 Funds held for clients 3,846 Total current assets $ 7,688 Other assets: Property and equipment, net $ 52 Goodwill 14,780 Intangible assets 12,510 Other non-current assets 60 Total assets $ 35,090 Liabilities Current liabilities: Trade payables 1,407 Accrued liabilities 2,118 Accrued revenue share 80 Other current liabilities 58 Client funds obligations 4,266 Total current liabilities $ 7,929 Non-current liabilities: Deferred tax liability, net 390 Other non-current liabilities 147 Total liabilities $ 8,466 Net assets $ 26,624 |
Property and equipment, net (Ta
Property and equipment, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment, Net | Property and equipment, net consists of the following: September 30, 2022 December 31, 2021 Computers and equipment $ 8,896 $ 8,528 Internal-use software 18,927 14,949 Office equipment 141 141 Furniture and fixtures 1,165 1,357 Leasehold improvements 1,135 1,396 Other equipment 26 26 Total property and equipment 30,290 26,397 Less: accumulated depreciation (15,858) (12,386) Total property and equipment, net $ 14,432 $ 14,011 |
Goodwill and other intangible_2
Goodwill and other intangible assets, net (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes Goodwill | The following table presents changes to goodwill for the nine months ended September 30, 2022: Integrated Solutions Payments Services Total Balance at December 31, 2021 $ 162,783 $ 58,334 $ 221,117 Acquisition - VelocIT (Note 3) 2,064 — 2,064 Balance at September 30, 2022 $ 164,847 $ 58,334 $ 223,181 |
Schedule of Intangibles Assets Other Than Goodwill | Intangible assets other than goodwill at September 30, 2022 included the following: Weighted Average Useful Life (Years) Useful Lives Gross Carrying Amount at September 30, 2022 Accumulated Amortization Net Carrying Value as of September 30, 2022 Customer Relationships 8.8 5-15 years $ 189,931 $ (86,359) $ 103,572 Developed Technology 5.8 5-10 years 41,520 (22,646) 18,874 Trade name 13.8 5-25 years 5,260 (937) 4,323 8.3 $ 236,711 $ (109,942) $ 126,769 Intangible assets other than goodwill at December 31, 2021 included the following: Weighted Average Useful Life (Years) Useful Lives Gross Carrying Amount at December 31, 2021 Accumulated Amortization Net Carrying Value as of December 31, 2021 Customer Relationships 10.4 5-16 years $ 184,544 $ (70,222) $ 114,322 Developed Technology 5.1 3-7 years 36,620 (18,843) 17,777 Trade name 15.8 5-25 years 5,260 (651) 4,609 8.4 $ 226,424 $ (89,716) $ 136,708 |
Summary of Expected Future Amortization Expense for Intangible Assets | The following table shows the expected future amortization expense for intangible assets at September 30, 2022: Expected Future Amortization Expense 2022 - remaining $ 6,780 2023 26,924 2024 25,304 2025 24,341 2026 19,534 Thereafter 23,886 Total expected future amortization expense $ 126,769 |
Long-term debt (Tables)
Long-term debt (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Summary of Long-term Debt | The Company’s long-term debt consisted of the following for the nine months ended September 30, 2022 and year ended December 31, 2021: September 30, 2022 December 31, 2021 Term loan $ 247,500 $ 249,375 Debt issuance costs, net (4,438) (5,018) Total debt 243,062 244,357 Less: current portion of debt (2,500) (2,485) Total long-term debt $ 240,562 $ 241,872 |
Schedule of Annual Principal Payments | Annual principal payments on the Term Loan for the remainder of 2022 and the following years is as follows: Future Principal Payments 2022 - remaining $ 625 2023 2,500 2024 2,500 2025 2,500 2026 2,500 Thereafter 236,875 Total future principal payments $ 247,500 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Unvested Restricted Stock Units Roll Forward | RSUs granted under the Omnibus Incentive Plan were as follows: Nine Months Ended September 30, 2022 RSUs granted 2,119,608 Fair value of common stock $5.12 - $7.25 |
Fair Value Measurement Inputs and Valuation Techniques | The fair value of each stock option award is estimated on the date of the grant, using the Black-Scholes option-pricing model and the assumptions in the following table: Nine Months Ended September 30, 2022 Stock options granted 1,466,921 Fair value of stock options $2.76 - $3.88 Expected volatility 51.14% - 53.47% Dividend yield — Expected term 6.5 Risk-free interest rate 2.20% - 2.95% |
Schedule of Stock Options Roll Forward | The following table summarizes stock option activity: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (in years) Weighted-Average Fair Value Outstanding, December 31, 2021 682,000 $ 10.87 9.49 $ 4.74 Granted 1,466,921 5.22 2.79 Exercised — — Forfeited (140,618) 10.74 3.81 Outstanding, September 30, 2022 2,008,303 $ 6.75 9.29 $ 3.38 As of December 31, 2021 Vested and expected to vest 682,000 $ 10.87 9.49 $ 4.74 Exercisable 37,000 $ 13.73 8.87 $ 4.25 As of September 30, 2022 Vested and expected to vest 2,008,303 $ 6.75 9.29 $ 3.38 Exercisable 51,400 $ 13.15 8.30 $ 4.51 |
Summary of RSUs Activity | The following tables summarize RSU activity for the three and nine months ended September 30, 2022: Three Months Ended September 30, 2022 Number of Shares Weighted-Average Fair Value Outstanding, June 30, 2022 2,652,022 $ 6.72 Granted 32,415 7.25 Vested (67,570) 13.12 Forfeited (24,412) 5.12 Outstanding September 30, 2022 2,592,455 $ 6.58 Nine Months Ended September 30, 2022 Number of Shares Weighted-Average Fair Value Outstanding, December 31, 2021 763,645 $ 10.89 Granted 2,119,608 5.51 Vested (79,349) 12.91 Forfeited (211,449) 9.12 Outstanding September 30, 2022 2,592,455 $ 6.58 |
Schedule of Units Associated with Share-based Compensation | The total number of units associated with share-based compensation granted and forfeited during the period from December 31, 2020 to September 30, 2022 is as follows: Time Vesting December 31, 2020 balance 42,881,437 Granted — Forfeited (3,274,827) September 30, 2021 balance 39,606,610 December 31, 2021 balance 39,074,593 Granted — Forfeited (40,982) Exercised (654,976) September 30, 2022 balance 38,378,635 Outstanding as of September 30, 2022 2021 Time vesting units 5 year vesting period 38,080,635 39,308,610 1 year vesting period 298,000 298,000 Outstanding Incentive Units 38,378,635 39,606,610 |
Summary of Computation of Basic and Diluted Earnings Per Share | The following tables provide the computation of basic and diluted earnings per share: Three Months Ended September 30, Nine Months Ended September 30, 2022 2022 Numerator: Net income $ 1,350 $ 5,208 Denominator: Weighted average common shares - basic 126,417,577 126,397,360 Add effect of dilutive securities: Stock-based awards 605,985 300,511 Weighted average common shares assuming dilution 127,023,562 126,697,871 Earnings per share: Basic $ 0.01 $ 0.04 Diluted $ 0.01 $ 0.04 Anti-dilutive shares excluded from calculation of diluted EPS: Restricted stock units - granted 595,105 602,605 Stock options - granted 2,008,303 2,008,303 Earnout shares 19,700,000 19,700,000 Total anti-dilutive shares 22,303,408 22,310,908 Three Months Ended September 30, Nine Months Ended September 30, 2021 2021 Numerator: Net loss $ (2,961) $ (5,070) Denominator: Weighted average common shares - basic 128,429,090 124,523,217 Add effect of dilutive securities: Stock-based awards — — Warrants — — Weighted average common shares assuming dilution 128,429,090 124,523,217 Earnings per share: Basic $ (0.02) $ (0.04) Diluted $ (0.02) $ (0.04) Anti-dilutive shares excluded from calculation of diluted EPS: Restricted stock units - granted 6,279 9,406 Earnout shares 19,700,000 19,700,000 Total anti-dilutive shares 19,706,279 19,709,406 |
Fair Value Measures and Disclos
Fair Value Measures and Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of Interest Rate Cap Rate | As a result, the Company has determined that its interest rate cap valuation is classified in Level 2 of the fair value hierarchy as shown in the table below. Level 1 Level 2 Level 3 December 31, 2021 Interest rate cap agreement (a) $ — $ 194 $ — Total $ — $ 194 $ — September 30, 2022 Interest rate cap agreement (a) $ — $ 2,737 $ — Total $ — $ 2,737 $ — (a) Interest rate cap asset value is included in other current assets on the consolidated balance sheets. |
Commitments and contingencies (
Commitments and contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Lease, Cost | As of September 30, 2022, amounts reported in the consolidated balance sheets were as follows: Operating Leases: September 30, 2022 December 31, 2021 Right-of-use assets $ 3,099 $ 4,495 Lease liability, current 1,236 1,302 Lease liability, noncurrent 2,830 3,941 Total lease liabilities $ 4,066 $ 5,243 Weighted-average remaining lease term (in years) 3.40 4.73 Weighted-average discount rate (annual) 4.0 % 4.0 % Other information related to leases are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from operating leases 367 423 1,120 1,084 Right-of-use assets obtained in exchange for lease liabilities Operating leases — — — 5,571 |
Summary of Future Minimum Lease Payments | The following table presents a maturity analysis of the Company's operating lease liabilities as of September 30, 2022: Future Minimum Lease Payments 2022 - remaining $ 344 2023 1,314 2024 1,018 2025 990 2026 587 Thereafter 114 Total Lease payments $ 4,367 Less Imputed Interest 301 Total lease obligations $ 4,066 |
Segments (Tables)
Segments (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Reconciliation of Segment Gross Profit | The following table presents total revenues and segment gross profit, excluding depreciation and amortization, for each reportable segment and includes a reconciliation of segment gross profit to total U.S. GAAP operating profit, excluding depreciation and amortization, by including certain corporate-level expenses. Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Integrated Solutions $ 45,718 $ 39,640 $ 133,780 $ 112,096 Payment Services 25,648 23,418 76,071 70,201 Total Revenue 71,366 63,058 209,851 182,297 Integrated Solutions gross profit 21,894 20,133 66,513 59,485 Payment Services gross profit 13,986 12,421 40,868 35,972 Total segment gross profit 35,880 32,554 107,381 95,457 Selling, general & administrative expenses (21,067) (18,718) (66,414) (56,478) Depreciation and amortization (8,353) (7,891) (24,041) (22,442) Interest expense (3,487) (3,137) (9,664) (11,002) Other income (expense) (189) (67) 1,422 (8,042) Income (loss) before income taxes $ 2,784 $ 2,741 $ 8,684 $ (2,507) |
Organization, basis of presen_4
Organization, basis of presentation and summary of accounting policies (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Allowance for doubtful accounts | $ 1,470,000 | $ 1,449,000 | |
Long-lived assets impairment charges | 0 | $ 0 | |
Goodwill impairment loss | $ 0 | $ 0 | |
Customer Relationships | |||
Property, Plant and Equipment [Line Items] | |||
Intangible assets, useful life | 5 years | ||
Computers and equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 5 years | ||
Minimum | Customer Relationships | |||
Property, Plant and Equipment [Line Items] | |||
Intangible assets, useful life | 5 years | 5 years | |
Minimum | Trade name | |||
Property, Plant and Equipment [Line Items] | |||
Intangible assets, useful life | 5 years | 5 years | |
Minimum | Internal-use software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 3 years | ||
Maximum | Customer Relationships | |||
Property, Plant and Equipment [Line Items] | |||
Intangible assets, useful life | 15 years | 16 years | |
Maximum | Trade name | |||
Property, Plant and Equipment [Line Items] | |||
Intangible assets, useful life | 25 years | 25 years | |
Maximum | Internal-use software | |||
Property, Plant and Equipment [Line Items] | |||
Property and equipment, useful life | 5 years |
Organization, basis of presen_5
Organization, basis of presentation and summary of accounting policies - Schedule of Funds Held for Clients (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Cash and Cash Equivalents [Line Items] | ||
Funds held for clients | $ 105,570 | $ 99,815 |
Cash and Cash Equivalents | ||
Cash and Cash Equivalents [Line Items] | ||
Funds held for clients | 56,560 | 51,592 |
Accounts Receivable | ||
Cash and Cash Equivalents [Line Items] | ||
Funds held for clients | $ 49,010 | $ 48,223 |
Revenue recognition - Disaggreg
Revenue recognition - Disaggregation of Revenue (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 71,366 | $ 63,058 | $ 209,851 | $ 182,297 |
Number of operating segments | segment | 2 | |||
Number of reportable segments | segment | 2 | |||
Integrated Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 45,718 | 39,640 | $ 133,780 | 112,096 |
Payments Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 25,648 | 23,418 | 76,071 | 70,201 |
Transaction based revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 133,308 | 124,157 | 391,256 | 351,920 |
Transaction based revenue | Integrated Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 42,698 | 36,955 | 124,863 | 104,180 |
Transaction based revenue | Payments Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 21,124 | 19,061 | 62,411 | 57,270 |
Service based fee revenue | Integrated Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 2,966 | 2,568 | 8,672 | 7,684 |
Service based fee revenue | Payments Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 4,506 | 4,306 | 13,561 | 12,830 |
Equipment revenue | Integrated Solutions | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 54 | 117 | 245 | 232 |
Equipment revenue | Payments Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 18 | $ 51 | $ 99 | $ 101 |
Business combinations - Narrati
Business combinations - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | ||||
Jan. 19, 2022 | Apr. 23, 2021 | Jan. 31, 2023 | Sep. 30, 2022 | Dec. 31, 2021 | |
Business Acquisition [Line Items] | |||||
Goodwill | $ 223,181 | $ 221,117 | |||
Paragon Payment Solutions Acquisition | |||||
Business Acquisition [Line Items] | |||||
Aggregate purchase price | $ 26,624 | ||||
Purchase price | 19,124 | ||||
Goodwill | 14,780 | ||||
Common stock | $ 7,500 | ||||
JS Innovations LLC | |||||
Business Acquisition [Line Items] | |||||
Aggregate purchase price | $ 7,079 | ||||
Purchase price | 6,079 | ||||
Transactions costs | $ 397 | ||||
Goodwill | $ 2,064 | ||||
JS Innovations LLC | Forecast | |||||
Business Acquisition [Line Items] | |||||
Purchase price | $ 1,000 |
Business combinations - Fair Va
Business combinations - Fair Value of Assets and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Other assets: | ||
Goodwill | $ 223,181 | $ 221,117 |
Paragon Payment Solutions Acquisition | ||
Current Assets: | ||
Cash and cash equivalents | 816 | |
Trade receivables, net | 2,653 | |
Prepaid expenses | 174 | |
Other current assets | 199 | |
Funds held for clients | 3,846 | |
Total current assets | 7,688 | |
Other assets: | ||
Property and equipment, net | 52 | |
Goodwill | 14,780 | |
Intangible assets | 12,510 | |
Other non-current assets | 60 | |
Total assets | 35,090 | |
Current liabilities: | ||
Trade payables | 1,407 | |
Accrued liabilities | 2,118 | |
Accrued revenue share | 80 | |
Other current liabilities | 58 | |
Client funds obligations | 4,266 | |
Total current liabilities | 7,929 | |
Non-current liabilities: | ||
Deferred tax liability, net | 390 | |
Other non-current liabilities | 147 | |
Total liabilities | 8,466 | |
Net assets | 26,624 | |
JS Innovations LLC | ||
Current Assets: | ||
Cash and cash equivalents | 45 | |
Trade receivables, net | 85 | |
Prepaid expenses | 28 | |
Total current assets | 158 | |
Other assets: | ||
Goodwill | 2,064 | |
Intangible assets | 4,900 | |
Total assets | 7,122 | |
Current liabilities: | ||
Accrued liabilities | 21 | |
Accrued revenue share | 22 | |
Total current liabilities | 43 | |
Non-current liabilities: | ||
Total liabilities | 43 | |
Net assets | $ 7,079 |
Property and equipment, net - (
Property and equipment, net - (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 30,290 | $ 30,290 | $ 26,397 | ||
Less: accumulated depreciation | (15,858) | (15,858) | (12,386) | ||
Total property and equipment, net | 14,432 | 14,432 | 14,011 | ||
Depreciation | 1,312 | $ 1,282 | 3,815 | $ 3,395 | |
Computers and equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 8,896 | 8,896 | 8,528 | ||
Internal-use software | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 18,927 | 18,927 | 14,949 | ||
Office equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 141 | 141 | 141 | ||
Furniture and fixtures | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 1,165 | 1,165 | 1,357 | ||
Leasehold improvements | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | 1,135 | 1,135 | 1,396 | ||
Other equipment | |||||
Property, Plant and Equipment [Line Items] | |||||
Total property and equipment | $ 26 | $ 26 | $ 26 |
Goodwill and other intangible_3
Goodwill and other intangible assets, net - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Goodwill | $ 223,181 | $ 223,181 | $ 221,117 | ||
Amortization expense | $ 7,040 | $ 6,609 | $ 20,226 | $ 19,047 |
Goodwill and other intangible_4
Goodwill and other intangible assets, net - Schedule of Changes in Goodwill (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 221,117 |
Acquisition - VelocIT (Note 3) | 2,064 |
Ending balance | 223,181 |
Integrated Solutions | |
Goodwill [Roll Forward] | |
Beginning balance | 162,783 |
Acquisition - VelocIT (Note 3) | 2,064 |
Ending balance | 164,847 |
Payments Services | |
Goodwill [Roll Forward] | |
Beginning balance | 58,334 |
Acquisition - VelocIT (Note 3) | 0 |
Ending balance | $ 58,334 |
Goodwill and other intangible_5
Goodwill and other intangible assets, net - Schedule of Intangible Assets Other Than Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 236,711 | $ 226,424 |
Accumulated Amortization | (109,942) | (89,716) |
Total | $ 126,769 | $ 136,708 |
Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 8 years 3 months 18 days | 8 years 4 months 24 days |
Customer Relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 5 years | |
Gross Carrying Amount | $ 189,931 | $ 184,544 |
Accumulated Amortization | (86,359) | (70,222) |
Total | $ 103,572 | $ 114,322 |
Customer Relationships | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 8 years 9 months 18 days | 10 years 4 months 24 days |
Customer Relationships | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 5 years | 5 years |
Customer Relationships | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 15 years | 16 years |
Developed Technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 41,520 | $ 36,620 |
Accumulated Amortization | (22,646) | (18,843) |
Total | $ 18,874 | $ 17,777 |
Developed Technology | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 5 years 9 months 18 days | 5 years 1 month 6 days |
Developed Technology | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 5 years | 3 years |
Developed Technology | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 10 years | 7 years |
Trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 5,260 | $ 5,260 |
Accumulated Amortization | (937) | (651) |
Total | $ 4,323 | $ 4,609 |
Trade name | Weighted Average | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 13 years 9 months 18 days | 15 years 9 months 18 days |
Trade name | Minimum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 5 years | 5 years |
Trade name | Maximum | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 25 years | 25 years |
Goodwill and other intangible_6
Goodwill and other intangible assets, net - Summary of Expected Future Amortization Expense (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2022 - remaining | $ 6,780 | |
2023 | 26,924 | |
2024 | 25,304 | |
2025 | 24,341 | |
2026 | 19,534 | |
Thereafter | 23,886 | |
Total | $ 126,769 | $ 136,708 |
Long-term debt - Narrative (Det
Long-term debt - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||||
Jun. 25, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Line of Credit Facility [Line Items] | ||||||
Borrowings outstanding | $ 247,500,000 | $ 247,500,000 | $ 249,375,000 | |||
Debt issuance costs, net | 4,438,000 | 4,438,000 | 5,018,000 | |||
Interest expense, long-term debt | 2,905,000 | $ 3,137,000 | 8,074,000 | $ 11,002,000 | ||
Amortization of debt issuance costs | 242,000 | $ 242,000 | 726,000 | $ 687,000 | ||
Credit Agreement | Term Loan | ||||||
Line of Credit Facility [Line Items] | ||||||
Available under credit agreement | $ 250,000,000 | |||||
Credit Agreement | Term Loan | Eurodollar | Minimum | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate | 0.75% | |||||
Revolver | Credit Agreement | Line of Credit | ||||||
Line of Credit Facility [Line Items] | ||||||
Borrowings outstanding | 0 | 0 | 0 | |||
Unamortized debt issuance costs | $ 728,000 | $ 728,000 | $ 875,000 | |||
Basis percentage | 1% | |||||
Revolver | Credit Agreement | Line of Credit | Debt Instrument, Interest Rate Period One | Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate | 0.50% | |||||
Revolver | Credit Agreement | Line of Credit | Debt Instrument, Interest Rate Period Two | Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate | 2.25% | |||||
Revolver | Credit Agreement | Line of Credit | Debt Instrument, Interest Rate Period Three | Base Rate | ||||||
Line of Credit Facility [Line Items] | ||||||
Interest rate | 3.25% |
Long-term debt - Summary of Lon
Long-term debt - Summary of Long-term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
Term loan | $ 247,500 | $ 249,375 |
Debt issuance costs, net | (4,438) | (5,018) |
Total debt | 243,062 | 244,357 |
Less: current portion of debt | (2,500) | (2,485) |
Total long-term debt | $ 240,562 | $ 241,872 |
Long-term debt - Annual Princip
Long-term debt - Annual Principal Payments (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
2022 - remaining | $ 625 | |
2023 | 2,500 | |
2024 | 2,500 | |
2025 | 2,500 | |
2026 | 2,500 | |
Thereafter | 236,875 | |
Total future principal payments | $ 247,500 | $ 249,375 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Feb. 03, 2021 | |
Derivative [Line Items] | |||||
Cash payments received from derivatives | $ 548 | $ 0 | $ 548 | $ 0 | |
Interest Rate Cap | |||||
Derivative [Line Items] | |||||
Gain (loss) recognized in other income (expense) | 60 | $ 22 | 2,543 | $ 48 | |
Interest Rate Cap | Not Designated as Hedging Instrument | |||||
Derivative [Line Items] | |||||
Notional amount | $ 171,525 | ||||
Premium paid for right to receive payments | $ 67 | ||||
Cap rate | 1% | ||||
Fair value of derivative instrument | $ 2,737 | $ 2,737 |
Equity - Narrative (Details)
Equity - Narrative (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||
Sep. 15, 2021 shares | Sep. 30, 2022 USD ($) awardType tranche $ / shares shares | Jun. 30, 2022 USD ($) shares | Mar. 31, 2022 USD ($) shares | Sep. 30, 2021 USD ($) shares | Jun. 30, 2021 USD ($) shares | Mar. 31, 2021 USD ($) shares | Sep. 30, 2022 USD ($) tradingDay awardType tranche $ / shares shares | Sep. 30, 2021 USD ($) shares | Dec. 31, 2021 shares | May 31, 2022 shares | Dec. 31, 2020 shares | |
Class of Stock [Line Items] | ||||||||||||
Common stock outstanding (in shares) | 132,113,603 | 132,113,603 | 132,059,879 | |||||||||
Common stock, additional contingently issuable (in shares) | 19,700,000 | |||||||||||
Number of awards | awardType | 2 | 2 | ||||||||||
Warrants outstanding (in shares) | 0 | 0 | 0 | 0 | 17,714,945 | |||||||
Warrants exchanged (in shares) | 17,428,489 | |||||||||||
Warrant exchange ratio (in shares) | 0.26 | |||||||||||
Conversion of stock, shares converted (in shares) | 4,531,407 | |||||||||||
Warrant Exercise | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Warrant exercise (in shares) | 2,450 | |||||||||||
Warrant Amendment | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Warrants outstanding (in shares) | 284,006 | 0 | 0 | 0 | ||||||||
Warrant exchange ratio (in shares) | 0.234 | |||||||||||
Equity offering (in shares) | 66,457 | |||||||||||
Stock option | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Fair value assumption, dividend yield | 0% | |||||||||||
Class C incentive units | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Vested (in shares) | 29,099,211 | 29,099,211 | ||||||||||
Stock based compensation | $ | $ 186 | $ 193 | $ 231 | $ 247 | $ 74 | $ 259 | ||||||
Minimum | RSUs | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Vesting period | 3 years | |||||||||||
Maximum | RSUs | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Vesting period | 5 years | |||||||||||
Omnibus Incentive Plan | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Number of shares authorized (in shares) | 18,800,000 | |||||||||||
Share-based compensation expense | $ | $ 1,957 | $ 675 | $ 5,014 | $ 1,916 | ||||||||
Omnibus Incentive Plan | Stock option | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Fair value assumption, dividend yield | 0% | |||||||||||
Reverse Recapitalization, Period, One | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Common stock, contingently issuable (in shares) | 5,681,812 | |||||||||||
Number of tranches | tranche | 2 | 2 | ||||||||||
Common stock threshold trading days | tradingDay | 20 | |||||||||||
Common stock threshold consecutive trading days | tradingDay | 30 | |||||||||||
Reverse Recapitalization, Period, One | Reverse Recapitalization, Tranche One | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Stock price trigger (in dollars per share) | $ / shares | $ 15 | $ 15 | ||||||||||
Reverse Recapitalization, Period, One | Reverse Recapitalization, Tranche Two | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Stock price trigger (in dollars per share) | $ / shares | $ 17.50 | $ 17.50 | ||||||||||
Reverse Recapitalization, Period, Two | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Common stock, contingently issuable (in shares) | 14,018,188 | |||||||||||
Number of tranches | tranche | 2 | 2 | ||||||||||
Common stock threshold trading days | tradingDay | 20 | |||||||||||
Common stock threshold consecutive trading days | tradingDay | 30 | |||||||||||
Reverse Recapitalization, Period, Two | Reverse Recapitalization, Tranche One | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Stock price trigger (in dollars per share) | $ / shares | $ 15 | $ 15 | ||||||||||
Reverse Recapitalization, Period, Two | Reverse Recapitalization, Tranche Two | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Stock price trigger (in dollars per share) | $ / shares | $ 17.50 | $ 17.50 | ||||||||||
Common stock, par value $0.001 per share | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Common stock outstanding (in shares) | 132,113,603 | 132,071,925 | 132,067,113 | 132,009,818 | 127,380,384 | 126,697,492 | 132,113,603 | 132,009,818 | 132,059,879 | 116,697,441 | ||
Equity offering (in shares) | 10,000,000 | |||||||||||
Common stock, par value $0.001 per share | Warrant Exercise | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Warrant exercise (in shares) | 2,450 | 51 | ||||||||||
Additional paid-in-capital | Class C incentive units | ||||||||||||
Class of Stock [Line Items] | ||||||||||||
Stock based compensation | $ | $ 186 | $ 193 | $ 231 | $ 247 | $ 74 | $ 259 | $ 610 | $ 580 |
Equity - Summary of RSUs Grante
Equity - Summary of RSUs Granted under Omnibus Incentive Plan (Details) - RSUs - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted (in shares) | 32,415 | 2,119,608 |
Fair value of common stock (in dollars per share) | $ 7.25 | $ 5.51 |
Omnibus Incentive Plan | Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair value of common stock (in dollars per share) | 5.12 | |
Omnibus Incentive Plan | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Fair value of common stock (in dollars per share) | $ 7.25 |
Equity - Fair Value Assumptions
Equity - Fair Value Assumptions for Option Awards (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in shares) | shares | 1,466,921 |
Stock option | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in shares) | shares | 1,466,921 |
Fair value assumption, dividend yield | 0% |
Fair value assumption, expected term | 6 years 6 months |
Stock option | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of common stock (in dollars per share) | $ / shares | $ 2.76 |
Fair value assumption, expected volatility | 51.14% |
Fair value assumption, risk free interest rate | 2.20% |
Stock option | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Fair value of common stock (in dollars per share) | $ / shares | $ 3.88 |
Fair value assumption, expected volatility | 53.47% |
Fair value assumption, risk free interest rate | 2.95% |
Equity - Schedule of Stock Opti
Equity - Schedule of Stock Options (Details) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 $ / shares shares | Dec. 31, 2021 $ / shares shares | |
Number of Options | ||
Beginning balance (in shares) | shares | 682,000 | |
Granted (in shares) | shares | 1,466,921 | |
Exercised (in shares) | shares | 0 | |
Forfeited (in shares) | shares | (140,618) | |
Ending balance (in shares) | shares | 2,008,303 | 682,000 |
Weighted-Average Exercise Price | ||
Beginning balance (in dollars per share) | $ 10.87 | |
Granted (in dollars per share) | 5.22 | |
Exercised (in dollars per share) | 0 | |
Forfeited (in dollars per share) | 10.74 | |
Ending balance (in dollars per share) | $ 6.75 | $ 10.87 |
Stock Option Additional Disclosures | ||
Weighted-Average Remaining Contractual Term (in years) | 9 years 3 months 14 days | 9 years 5 months 26 days |
Weighted-Average Fair Value (in dollars per share) | $ 3.38 | $ 4.74 |
Weighted-Average Fair Value, Granted (in dollars per share) | 2.79 | |
Weighted-Average Fair Value, Forfeited (in dollars per share) | $ 3.81 | |
Options vested and expected to vest, Number of options (in shares) | shares | 2,008,303 | 682,000 |
Options vested and expected to vest, Weighted-average exercise price (in dollars per share) | $ 6.75 | $ 10.87 |
Options vested and expected to vest, Weighted-average remaining contractual term | 9 years 3 months 14 days | 9 years 5 months 26 days |
Options vested and expected to vest, Weighted-average fair value (in dollars per share) | $ 3.38 | $ 4.74 |
Options exercisable, Number of options (in shares) | shares | 51,400 | 37,000 |
Options exercisable, Weighted-average exercise price (in dollars per share) | $ 13.15 | $ 13.73 |
Options exercisable, Weighted-average remaining contractual term | 8 years 3 months 18 days | 8 years 10 months 13 days |
Options exercisable, Weighted-average fair value (in dollars per share) | $ 4.51 | $ 4.25 |
Equity - Summary of RSUs Activi
Equity - Summary of RSUs Activity (Details) - RSUs - $ / shares | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Number of Shares | ||
Beginning balance (in shares) | 2,652,022 | 763,645 |
Granted (in shares) | 32,415 | 2,119,608 |
Vested (in shares) | (67,570) | (79,349) |
Forfeited (in shares) | (24,412) | (211,449) |
Ending balance (in shares) | 2,592,455 | 2,592,455 |
Weighted-Average Fair Value | ||
Beginning balance (in dollars per share) | $ 6.72 | $ 10.89 |
Weighted-Average Fair Value, Granted (in dollars per share) | 7.25 | 5.51 |
Weighted-Average Fair Value, Vested (in dollars per share) | 13.12 | 12.91 |
Weighted-Average Fair Value, Forfeited (in dollars per share) | 5.12 | 9.12 |
Ending balance (in dollars per share) | $ 6.58 | $ 6.58 |
Equity - Schedule of Units Asso
Equity - Schedule of Units Associated with Share-based Compensation (Details) - Time Vesting Class C Incentive Units - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Beginning balance (in shares) | 39,074,593 | 42,881,437 |
Granted (in shares) | 0 | 0 |
Forfeited (in shares) | (40,982) | (3,274,827) |
Exercised (in shares) | (654,976) | |
Ending balance (in shares) | 38,378,635 | 39,606,610 |
Equity - Schedule of Incentive
Equity - Schedule of Incentive Units (Details) - Class C incentive units - shares | Sep. 30, 2022 | Sep. 30, 2021 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Class C incentive units issued (in shares) | 38,378,635 | 39,606,610 |
Five-year vesting period | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Class C incentive units issued (in shares) | 38,080,635 | 39,308,610 |
One-year vesting period | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Class C incentive units issued (in shares) | 298,000 | 298,000 |
Equity - Basic and Diluted Earn
Equity - Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||||||
Net income (loss) | $ 1,350 | $ 1,646 | $ 2,212 | $ (2,961) | $ (3,154) | $ 1,045 | $ 5,208 | $ (5,070) |
Weighted average common shares - basic (in shares) | 126,417,577 | 128,429,090 | 126,397,360 | 124,523,217 | ||||
Stock-based awards (in shares) | 605,985 | 0 | 300,511 | 0 | ||||
Warrants (in shares) | 0 | 0 | ||||||
Weighted average common shares assuming dilution (in shares) | 127,023,562 | 128,429,090 | 126,697,871 | 124,523,217 | ||||
Earnings per share: | ||||||||
Basic (in dollars per share) | $ 0.01 | $ (0.02) | $ 0.04 | $ (0.04) | ||||
Diluted (in dollars per share) | $ 0.01 | $ (0.02) | $ 0.04 | $ (0.04) | ||||
Anti-dilutive shares excluded from calculation of diluted EPS (in shares) | 22,303,408 | 19,706,279 | 22,310,908 | 19,709,406 | ||||
Restricted stock units - granted | ||||||||
Earnings per share: | ||||||||
Anti-dilutive shares excluded from calculation of diluted EPS (in shares) | 595,105 | 6,279 | 602,605 | 9,406 | ||||
Stock option | ||||||||
Earnings per share: | ||||||||
Anti-dilutive shares excluded from calculation of diluted EPS (in shares) | 2,008,303 | 2,008,303 | ||||||
Earnout shares | ||||||||
Earnings per share: | ||||||||
Anti-dilutive shares excluded from calculation of diluted EPS (in shares) | 19,700,000 | 19,700,000 | 19,700,000 | 19,700,000 |
Income taxes (Details)
Income taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | |||||
Effective tax rate | 51.50% | 208% | 40% | (102.20%) | |
Income tax expense | $ 1,434 | $ 5,702 | $ 3,476 | $ 2,563 | |
Valuation allowance | 10,146 | 10,146 | $ 9,740 | ||
Unrecognized tax benefits | $ 229 | $ 229 | $ 229 |
Fair Value - Interest Cap Rate
Fair Value - Interest Cap Rate Valuation (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Level 1 | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Interest rate cap agreement | $ 0 | $ 0 |
Level 2 | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Interest rate cap agreement | 2,737 | 194 |
Level 3 | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Interest rate cap agreement | 0 | 0 |
Interest Rate Cap | Level 1 | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Interest rate cap agreement | 0 | 0 |
Interest Rate Cap | Level 2 | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Interest rate cap agreement | 2,737 | 194 |
Interest Rate Cap | Level 3 | ||
Fair Value, Option, Quantitative Disclosures [Line Items] | ||
Interest rate cap agreement | $ 0 | $ 0 |
Commitments and contingencies -
Commitments and contingencies - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Impairment loss | $ 149 | ||||
Total lease cost | $ 403 | $ 498 | 1,236 | $ 1,378 | |
Operating lease cost | 290 | 400 | 926 | 1,093 | |
Variable lease cost | 113 | $ 98 | $ 310 | 285 | |
Tax receivable obligation, percent | 85% | ||||
Payment on tax receivable agreement liability | $ 592 | $ 0 | |||
Tax receivable agreement liability | $ 19,166 | $ 19,166 | $ 19,502 | ||
Tax receivable agreement, total potential payments percentage | 100% | ||||
Tax receivable agreement, total potential payments | $ 31,984 |
Commitment and contingencies -
Commitment and contingencies - Lease Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Right-of-use assets | $ 3,099 | $ 3,099 | $ 4,495 | ||
Lease liability, current | 1,236 | 1,236 | 1,302 | ||
Lease liability, noncurrent | 2,830 | 2,830 | 3,941 | ||
Total lease liabilities | $ 4,066 | $ 4,066 | $ 5,243 | ||
Weighted-average remaining lease term (in years) | 3 years 4 months 24 days | 3 years 4 months 24 days | 4 years 8 months 23 days | ||
Weighted-average discount rate (annual) | 4% | 4% | 4% | ||
Operating cash flows from operating leases | $ 367 | $ 423 | $ 1,120 | $ 1,084 | |
Operating leases | $ 0 | $ 0 | $ 0 | $ 5,571 |
Commitments and contingencies_2
Commitments and contingencies - Operating Leases Maturity Schedule (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | ||
2022 - remaining | $ 344 | |
2023 | 1,314 | |
2024 | 1,018 | |
2025 | 990 | |
2026 | 587 | |
Thereafter | 114 | |
Total Lease payments | 4,367 | |
Less Imputed Interest | 301 | |
Total lease obligations | $ 4,066 | $ 5,243 |
Related party transactions (Det
Related party transactions (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Investor | ||||
Related Party Transaction [Line Items] | ||||
Interest expense | $ 0 | $ 0 | $ 0 | $ 6,841 |
Defined contribution plan (Deta
Defined contribution plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Retirement Benefits [Abstract] | ||||
Employer matching contribution, percent of match | 50% | |||
Employer matching contribution, percent of employees' gross pay | 7% | |||
Vesting percentage of contributions | 100% | |||
Contributions | $ 199 | $ 178 | $ 735 | $ 625 |
Segments - Narrative (Details)
Segments - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
Number of reportable segments | 2 |
Segments - Total Revenues and S
Segments - Total Revenues and Segment Gross Profit (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue, Major Customer [Line Items] | ||||
Total revenue | $ 71,366 | $ 63,058 | $ 209,851 | $ 182,297 |
Total segment gross profit | 35,880 | 32,554 | 107,381 | 95,457 |
Selling, general & administrative expenses | (21,067) | (18,718) | (66,414) | (56,478) |
Depreciation and amortization | (8,353) | (7,891) | (24,041) | (22,442) |
Interest expense | (3,487) | (3,137) | (9,664) | (11,002) |
Other income (expense) | (189) | (67) | 1,422 | (8,042) |
Income (loss) before income taxes | 2,784 | 2,741 | 8,684 | (2,507) |
Integrated Solutions | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenue | 45,718 | 39,640 | 133,780 | 112,096 |
Total segment gross profit | 21,894 | 20,133 | 66,513 | 59,485 |
Payments Services | ||||
Revenue, Major Customer [Line Items] | ||||
Total revenue | 25,648 | 23,418 | 76,071 | 70,201 |
Total segment gross profit | $ 13,986 | $ 12,421 | $ 40,868 | $ 35,972 |