Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 01, 2022 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39799 | |
Entity Registrant Name | Certara, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 82-2180925 | |
Entity Address, Address Line One | 100 Overlook Center | |
Entity Address, Address Line Two | Suite 101 | |
Entity Address, City or Town | Princeton | |
Entity Address State Or Province | NJ | |
Entity Address, Postal Zip Code | 08540 | |
City Area Code | 609 | |
Local Phone Number | 716-7900 | |
Title of 12(b) Security | Common stock, par value $0.01 per share | |
Trading Symbol | CERT | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 159,672,997 | |
Entity Central Index Key | 0001827090 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 210,509 | $ 185,797 |
Accounts receivable, net of allowance for credit losses of $692 and $262, respectively | 74,806 | 69,555 |
Restricted cash | 3,274 | 827 |
Prepaid expenses and other current assets | 16,503 | 18,548 |
Total current assets | 305,092 | 274,727 |
Other assets: | ||
Property and equipment, net | 2,609 | 2,935 |
Operating lease right-of-use assets | 11,481 | 12,634 |
Goodwill | 696,921 | 703,371 |
Intangible assets, net of accumulated amortization of $202,901 and $169,329, respectively | 481,536 | 511,823 |
Deferred income taxes | 4,158 | 4,073 |
Other long-term assets | 6,896 | 2,167 |
Total assets | 1,508,693 | 1,511,730 |
Current liabilities: | ||
Accounts payable | 3,002 | 7,458 |
Accrued expenses | 26,552 | 29,830 |
Current portion of deferred revenue | 40,434 | 45,496 |
Current portion of long-term debt | 3,020 | 3,020 |
Current operating lease liabilities | 3,422 | 5,040 |
Other current liabilities | 100 | 1,381 |
Total current liabilities | 76,530 | 92,225 |
Long-term liabilities: | ||
Deferred revenue, net of current portion | 1,884 | 1,531 |
Deferred income taxes | 75,522 | 76,098 |
Operating lease liabilities, net of current portion | 8,509 | 8,256 |
Long-term debt, net of current portion and debt discount | 290,428 | 291,746 |
Other long-term liabilities | 1,422 | 25 |
Total liabilities | 454,295 | 469,881 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Preferred shares, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | ||
Common shares, $0.01 par value, 600,000,000 shares authorized, 159,921,814 and 159,660,048 shares issued as of September 30, 2022 and December 31, 2021, respectively, 159,781,270 and 159,658,948 shares outstanding as of September 30, 2022 and December 31, 2021, respectively | 1,599 | 1,596 |
Additional paid-in capital | 1,143,638 | 1,119,821 |
Accumulated deficit | (70,047) | (75,604) |
Accumulated other comprehensive loss | (17,928) | (3,926) |
Treasury stock at cost, 140,544 and 1,100 shares at September 30, 2022 and December 31, 2021, respectively | (2,864) | (38) |
Total stockholders' equity | 1,054,398 | 1,041,849 |
Total liabilities and stockholders' equity | $ 1,508,693 | $ 1,511,730 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Allowance for credit losses | $ 692 | $ 262 |
Accumulated amortization | $ 202,901 | $ 169,329 |
Preferred share, par value | $ 0.01 | $ 0.01 |
Preferred share, shares authorized | 50,000,000 | 50,000,000 |
Preferred share, shares issued | 0 | 0 |
Preferred share, shares outstanding | 0 | 0 |
Common share, par value | $ 0.01 | $ 0.01 |
Common share, shares authorized | 600,000,000 | 600,000,000 |
Common share, shares issued | 159,921,814 | 159,660,048 |
Common share, shares outstanding | 159,781,270 | 159,658,948 |
Treasury stock, shares | 140,544 | 1,100 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
Revenues | $ 84,700 | $ 73,944 | $ 249,011 | $ 210,758 |
Cost of revenues | 32,812 | 28,769 | 100,795 | 82,327 |
Operating expenses: | ||||
Sales and marketing | 6,376 | 5,082 | 19,608 | 13,423 |
Research and development | 6,318 | 4,530 | 21,607 | 13,862 |
General and administrative | 17,327 | 26,199 | 53,444 | 60,795 |
Intangible asset amortization | 10,591 | 9,592 | 31,095 | 28,527 |
Depreciation and amortization expense | 417 | 533 | 1,321 | 1,687 |
Total operating expenses | 41,029 | 45,936 | 127,075 | 118,294 |
Income (loss) from operations | 10,859 | (761) | 21,141 | 10,137 |
Other income (expenses): | ||||
Interest expense | (5,221) | (3,289) | (12,328) | (13,549) |
Other, net | 2,855 | 657 | 6,217 | 194 |
Total other expenses | (2,366) | (2,632) | (6,111) | (13,355) |
Income (loss) before income taxes | 8,493 | (3,393) | 15,030 | (3,218) |
Provision for (benefit from) income taxes | 4,557 | (1,631) | 9,473 | 349 |
Net income (loss) | 3,936 | (1,762) | 5,557 | (3,567) |
Other comprehensive loss: | ||||
Foreign currency translation adjustment | (9,489) | (2,798) | (20,193) | (4,041) |
Change in fair value from interest rate swap, net of tax of $1,716, $(16), $2,137, $145, respectively | 5,279 | (47) | 6,191 | 430 |
Reclassification of fair value of interest rate swap, net of tax of $0, $0, $0, $(765) | 2,268 | |||
Total other comprehensive loss | (4,210) | (2,845) | (14,002) | (1,343) |
Comprehensive loss | $ (274) | $ (4,607) | $ (8,445) | $ (4,910) |
Net income (loss) per share attributable to common stockholders: | ||||
Basic (in dollar per share) | $ 0.03 | $ (0.01) | $ 0.04 | $ (0.02) |
Diluted (in dollar per share) | $ 0.02 | $ (0.01) | $ 0.03 | $ (0.02) |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 157,140,166 | 149,016,609 | 156,523,022 | 147,894,227 |
Diluted (in shares) | 159,587,645 | 149,016,609 | 159,392,534 | 147,894,227 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS | ||||
Change in fair value from interest rate swap, tax expense (benefit) | $ 1,716 | $ (16) | $ 2,137 | $ 145 |
Reclassification of fair value of interest rate swap, tax expense (benefit) | $ 0 | $ 0 | $ 0 | $ (765) |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands | COMMON STOCK | ADDITIONAL PAID-IN CAPITAL | ACCUMULATED DEFICIT | ACCUMULATED OTHER COMPREHENSIVE LOSS | TREASURY STOCK | Total |
Beginning balance at Dec. 31, 2020 | $ 1,529 | $ 884,528 | $ (62,338) | $ (1,587) | $ 822,132 | |
Beginning balance (in shares) at Dec. 31, 2020 | 152,979,479 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Common stock offerings | $ 45 | 133,306 | 133,351 | |||
Common stock offerings (in shares) | 4,500,000 | |||||
Equity-based compensation expense | 20,846 | 20,846 | ||||
Restricted stock withheld for tax liability | (99) | (99) | ||||
Common shares issued for employee share-based compensation (in shares) | 14,769 | |||||
Restricted stock forfeiture (in shares) | (141,057) | |||||
Change in fair value from interest rate swap, net of tax | 430 | 430 | ||||
Reclassification of fair value of interest rate swap, net of tax | 2,268 | 2,268 | ||||
Net income (loss) | (3,567) | (3,567) | ||||
Foreign currency translation adjustment, net of tax | (4,041) | (4,041) | ||||
Ending balance at Sep. 30, 2021 | $ 1,574 | 1,038,581 | (65,905) | (2,930) | 971,320 | |
Ending balance (in shares) at Sep. 30, 2021 | 157,353,191 | |||||
Beginning balance at Jun. 30, 2021 | $ 1,529 | 897,209 | (64,143) | (85) | 834,510 | |
Beginning balance (in shares) at Jun. 30, 2021 | 152,864,921 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Common stock offerings | $ 45 | 133,306 | 133,351 | |||
Common stock offerings (in shares) | 4,500,000 | |||||
Equity-based compensation expense | 8,165 | 8,165 | ||||
Restricted stock withheld for tax liability | (99) | (99) | ||||
Restricted stock forfeiture (in shares) | (11,730) | |||||
Change in fair value from interest rate swap, net of tax | (47) | (47) | ||||
Net income (loss) | (1,762) | (1,762) | ||||
Foreign currency translation adjustment, net of tax | (2,798) | (2,798) | ||||
Ending balance at Sep. 30, 2021 | $ 1,574 | 1,038,581 | (65,905) | (2,930) | 971,320 | |
Ending balance (in shares) at Sep. 30, 2021 | 157,353,191 | |||||
Beginning balance at Dec. 31, 2021 | $ 1,596 | 1,119,821 | (75,604) | (3,926) | $ (38) | $ 1,041,849 |
Beginning balance (in shares) at Dec. 31, 2021 | 159,660,048 | |||||
Treasury Shares Beginning balance (in shares) at Dec. 31, 2021 | 1,100 | 1,100 | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Equity-based compensation expense | 23,818 | $ 23,818 | ||||
Restricted stock withheld for tax liability | 1 | $ (2,710) | (2,709) | |||
Restricted stock withheld for tax liability (in shares) | 134,262 | |||||
Common shares issued for employee share-based compensation | $ 4 | (4) | ||||
Common shares issued for employee share-based compensation (in shares) | 425,400 | |||||
Restricted stock forfeiture | $ (1) | 2 | 1 | |||
Restricted stock forfeiture (in shares) | (163,634) | |||||
Restricted stock withheld for tax liability and in treasury | $ (116) | (116) | ||||
Restricted stock withheld for tax liability and in treasury (in shares) | 5,182 | |||||
Change in fair value from interest rate swap, net of tax | 6,191 | 6,191 | ||||
Net income (loss) | 5,557 | 5,557 | ||||
Foreign currency translation adjustment, net of tax | (20,193) | (20,193) | ||||
Ending balance at Sep. 30, 2022 | $ 1,599 | 1,143,638 | (70,047) | (17,928) | $ (2,864) | $ 1,054,398 |
Treasury Shares Ending balance (in shares) at Sep. 30, 2022 | 140,544 | 140,544 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 159,921,814 | |||||
Beginning balance at Jun. 30, 2022 | $ 1,600 | 1,136,831 | (73,983) | (13,718) | $ (2,349) | $ 1,048,381 |
Beginning balance (in shares) at Jun. 30, 2022 | 159,991,357 | |||||
Treasury Shares Beginning balance (in shares) at Jun. 30, 2022 | 108,995 | |||||
Increase (Decrease) in Stockholders' Equity | ||||||
Equity-based compensation expense | 6,804 | 6,804 | ||||
Restricted stock withheld for tax liability | 1 | $ (481) | (480) | |||
Restricted stock withheld for tax liability (in shares) | 29,845 | |||||
Common shares issued for employee share-based compensation (in shares) | 94,091 | |||||
Restricted stock forfeiture | $ (1) | 2 | 1 | |||
Restricted stock forfeiture (in shares) | (163,634) | |||||
Restricted stock withheld for tax liability and in treasury | $ (34) | (34) | ||||
Restricted stock withheld for tax liability and in treasury (in shares) | 1,704 | |||||
Change in fair value from interest rate swap, net of tax | 5,279 | 5,279 | ||||
Net income (loss) | 3,936 | 3,936 | ||||
Foreign currency translation adjustment, net of tax | (9,489) | (9,489) | ||||
Ending balance at Sep. 30, 2022 | $ 1,599 | $ 1,143,638 | $ (70,047) | $ (17,928) | $ (2,864) | $ 1,054,398 |
Treasury Shares Ending balance (in shares) at Sep. 30, 2022 | 140,544 | 140,544 | ||||
Ending balance (in shares) at Sep. 30, 2022 | 159,921,814 |
CONDENSED CONSOLIDATED STATEM_4
CONDENSED 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) | $ 5,557 | $ (3,567) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||
Depreciation and amortization of property and equipment | 1,321 | 1,687 |
Amortization of intangible assets | 38,007 | 30,435 |
Amortization of debt issuance costs | 1,156 | 1,144 |
Provision for credit losses | 468 | 39 |
Loss on retirement of assets | 56 | 304 |
Equity-based compensation expense | 23,818 | 20,846 |
Unrealized loss on interest rate swap | 1,750 | |
Deferred income taxes | (3,209) | 1,796 |
Changes in assets and liabilities | ||
Accounts receivable | (7,895) | (6,148) |
Prepaid expenses and other assets | 4,209 | (5,504) |
Accounts payable and other liabilities | (3,404) | (1,650) |
Deferred revenue | (1,727) | (1,575) |
Other current liabilities | (1,088) | 216 |
Changes in operating lease assets and liabilities, net | (211) | (216) |
Net cash provided by operating activities | 57,058 | 39,557 |
Cash flows from investing activities: | ||
Capital expenditures | (1,249) | (995) |
Capitalized development costs | (8,106) | (5,490) |
Business acquisitions, net of cash acquired | (5,883) | (14,114) |
Net cash used in investing activities | (15,238) | (20,599) |
Cash flows from financing activities: | ||
Net proceeds from public offering of common stock | 133,351 | |
Proceeds from borrowings on long-term debt | 89 | |
Payments on long-term debt and finance lease obligations | (2,483) | (3,147) |
Payment of debt issuance costs | (2,942) | |
Payments on financing component of interest rate swap | (1,085) | (216) |
Payment of taxes on shares withheld for employee taxes | (2,827) | (100) |
Net cash (used) provided by financing activities | (6,395) | 127,035 |
Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash | (8,266) | (1,326) |
Net increase in cash and cash equivalents, and restricted cash | 27,159 | 144,667 |
Cash and cash equivalents, and restricted cash, at beginning of period | 186,624 | 273,291 |
Cash and cash equivalents, and restricted cash, at end of period | 213,783 | 417,958 |
Supplemental disclosures of cash flow information | ||
Cash paid for interest | 12,310 | 10,671 |
Cash paid for taxes | $ 7,784 | 6,744 |
Supplemental schedule of non-cash investing and financing activities | ||
Liabilities assumed in connection with business acquisition | $ 1,912 |
Description of Business
Description of Business | 9 Months Ended |
Sep. 30, 2022 | |
Description of Business | |
Description of Business | 1. Description of Business Certara, Inc. and its wholly-owned subsidiaries (together, the “Company”) deliver software products and technology-driven services to customers to efficiently carry out and realize the full benefits of biosimulation in drug discovery, preclinical and clinical research, regulatory submissions and market access. The Company is a global leader in biosimulation. The Company’s biosimulation software and technology-driven services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success. The Company’s regulatory science and market access software and services are underpinned by technologies such as regulatory submissions software, natural language processing, and Bayesian analytics. When combined, these solutions allow the Company to offer customers end-to-end support across the entire product life cycle. The Company has operations in the United States, Canada, Spain, Luxembourg, Portugal, United Kingdom, Germany, France, Netherlands, Denmark, Switzerland, Italy, Poland, Japan, Philippines, India, Australia and China. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies There have been no changes other than what is discussed herein to the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2 to the Company’s audited consolidated financial statements included in our 2021 Annual Report. These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes as of and for the year ended December 31, 2021. (a) Basis of Presentation and Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, value of interest rate swaps, determination of fair value of equity-based awards and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Certain amounts reported in prior periods have been reclassified to conform with the current presentation. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2021 audited consolidated financial statements and notes thereto. The information as of December 31, 2021 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the Company’s 2021 Annual Report. (c) Accounting Pronouncements Not Yet Adopted In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance”. The ASU requires that entities increase disclosures about government assistance received relating to accounting policy, nature of the assistance, and the effect of the assistance on the financial statements. The ASU is effective for annual periods beginning after December 15, 2021. Early application of the ASU is permitted. The Company is currently evaluating the impact of these amendments on its condensed consolidated financial statements. (d) Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. (e) Cash and Cash Equivalents, and Restricted Cash Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. Restricted cash represents cash that is reserved to provide for a Company credit card program and unexpended restricted grant funds. The restricted cash balance was $3,274 and $827 at September 30, 2022 and December 31, 2021, respectively. The following table provides a reconciliation of cash and cash equivalents and restricted cash to the amounts presented in the condensed consolidated statements of cash flows: SEPTEMBER 30, DECEMBER 31, 2022 2021 Cash and cash equivalents $ 210,509 $ 185,797 Restricted cash, current 3,274 827 Total cash and cash equivalents and restricted cash $ 213,783 $ 186,624 (f) Derivative Instruments Effective May 31, 2022, the Company has a pay-fixed, receive-variable interest rate swap agreement to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. The swap agreement has a notional amount of $230,000, a fixed rate of 2.8% and a termination date of August 31, 2025. At September 30, 2022, the interest swap had a fair value of $8,385 and the fair value recognized in accumulated other comprehensive income was $8,385. During the three and nine months ended September 30, 2022, the amounts recognized as interest expense on the condensed consolidated statements of operations and comprehensive loss on the derivative were $355 and $700. The Company also had an interest rate swap agreement for a notional amount of $230,000 that fixed the interest rate at 2.1%, non-inclusive of the fixed credit spread through May 31, 2022. On August 31, 2021, the Company entered into an amendment to the interest rate swap agreement. The amended interest rate swap agreement does not in its entirety meet the definition of a derivative instrument because of its off market fixed rate at inception and is deemed to be a hybrid instrument with a financing component and an embedded at-the-market derivative. Such embedded derivative is bifurcated and accounted for separately. At inception, the financing component of $1,966 was recorded at amortized cost. The embedded at-the-market derivative was designated and qualified as a cash flow hedge of interest rate risk for a notional amount of $230,000 that fixed the interest rate at 1.2757%, non-inclusive of the fixed credit spread. Due to an other-than-insignificant financing element on a portion of such hybrid instrument, the cash flows associated with this hybrid instrument were classified as financing activities in the condensed consolidated statements of cash flows. The interest rate swap matured on May 31, 2022. At September 30, 2022, the Company did not record any amounts for the financing component and fair value of the interest rate swap in the condensed consolidated balance sheets. The Company reclassified $3,033 of accumulated comprehensive loss to interest expense in the condensed consolidated statements of comprehensive loss in the second quarter of 2021 due to hedge ineffectiveness. Excluding the amount reclassified, the interest expense recognized on the derivative was $0, $29, $(179), $690 for the three and nine months ended September 30, 2022 and 2021, respectively. The Company uses derivatives to manage certain interest exposures and designated all the derivatives as cash flow hedges. The Company records derivatives at fair value on its condensed consolidated balance sheets. Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss). Those amounts are reclassified into interest expenses in the same period during which the hedged transactions impact earnings. The following table sets forth the assets that are measured at fair value on a recurring basis by the levels in the fair value hierarchy at September 30, 2022: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Asset Interest rate swap asset $ — $ 8,385 $ — $ 8,385 Total $ — $ 8,385 $ — $ 8,385 The following table sets forth the assets that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2021: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Asset Interest rate swap asset $ — $ 57 $ — $ 57 Total $ — $ 57 $ — $ 57 The net amount of deferred gains related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive gains into earnings over the next twelve months is $3,448. For more information regarding fair value measurement and fair value hierarchy, see Note 2. “Summary of Significant Accounting Policies” in the notes to the condensed consolidated Financial Statements in the Company’s 2021 Annual Report. (g) Revenue Recognition In accordance with Accounting Standards Codification Topic 606 ("ASC Topic 606"), “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps: i. ii. iii. iv. v. The Company’s revenue consists of fees for perpetual and term licenses for its software products, post- contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Arrangements with Multiple Performance Obligations For contracts with multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the Company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis (“SSP”). When products and services are not distinct, the Company determines an appropriate measure of progress based on the nature of its overall promise for the single performance obligation. The delivery of a particular type of software and each of the user licenses would be one performance obligation. However, any training, implementation, or support and maintenance promises as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are less than one year such that there is no significant financing component to the transaction. Software Licenses License revenue includes perpetual license fees and term license fees, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the use of software. Both revenues from perpetual license and term license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. Software Services Maintenance services agreements consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year. While transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. The Company’s software contracts do not typically include discounts, variable consideration, or options for future purchases that would not be similar to the original goods. Software as a Service SaaS Revenues SaaS revenues consists of subscription fees for access to, and related support for, the Company’s cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments and recognizes subscription revenue ratably over the term of the applicable agreement, usually one to three years which is initially deferred and recognized ratably over the life of the contract. Services and Other Revenues The Company’s primary professional services offering includes consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. Strategic consulting services consists of consulting, training, and process redesign that enables customers to identify which uncertainties are greatest and matter most and then to design development programs, trial sequences, and individual trials in such a way that those trials systematically reduce the identified uncertainties in the most rapid and cost-effective manner possible. The Company’s professional services contracts are either time-and-materials or fixed fee. Services revenues are generally recognized over time as the services are performed. Generally, these services are delivered to customers electronically. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenues for fixed price services are generally recognized over time applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and varying lengths of time they are being paid for, determine the measure of progress. Training revenues are recognized as the services are performed over time. However, due to the short period over which the transfer of control occurs for a classroom or on-site training course, the revenue related to these performance obligations is recognized at the completion of the course for administrative feasibility purposes. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue, contract liabilities) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the condensed consolidated balance sheets). Contract assets are billed and transferred to customer accounts receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one to three years . The Company records the amounts collected in advance of the satisfaction of performance obligations, usually over time, as a contract liability or deferred revenue. Invoiced amounts for non-cancelable services starting in future periods are included in contract assets and deferred revenue. The portion of deferred revenue that will be recognized within 12 months is recorded as current deferred revenue, and the remaining portion is recorded as non-current deferred revenue in the condensed consolidated balance sheets. The unsatisfied performance obligations as of September 30, 2022 were approximately $119,255. Deferred Contract Acquisition Costs The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions for our sales force personnel. Capitalized costs to obtain a contract are amortized on a straight line basis over the expected period of benefit. Amortization of capitalized costs are included in sales and marketing expense in our condensed consolidated statements of operations and comprehensive loss. Capitalized contract acquisition cost was $631 as of September 30, 2022 and was included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Grant Revenue The Company receives grant funding for certain specific projects from time to time. These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements. In these agreements, both involved parties receive and sacrifice approximately commensurate value so these are accounted for as exchange transactions and revenue is recognized according to ASC Topic 606. The grant funding is generally provided near contract inception so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time. Sources and Timing of Revenue The Company’s performance obligations are satisfied either over time or at a point in time. The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2022 2021 2022 2021 Software licenses transferred at a point in time $ 10,851 $ 8,665 $ 36,434 $ 30,719 Software licenses transferred over time 17,541 10,603 49,875 30,565 Service revenues earned over time 56,308 54,676 162,702 149,474 Total $ 84,700 $ 73,944 $ 249,011 $ 210,758 (h) Earnings per Share Basic earnings per common share is computed by dividing the net income that is attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period, without consideration for potentially dilutive securities. The dilutive effect of potentially dilutive securities is excluded from basic earnings per share and is included in the calculation of diluted earnings per share. Restricted stock and restricted stock units granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted earnings per share is computed by dividing the earnings attributable to stockholders by the weighted-average number of shares and potentially dilutive securities outstanding during the period. (i) COVID-19 Since the first quarter of 2020, the COVID-19 pandemic has posed a significant threat to public health as well as the global and U.S. economies. The continued spread of variants of COVID-19 may adversely impact our business, financial condition or results of operations as a result of increased costs, negative impacts to the Company’s workforce, delay or cancellation of projects due to disruption of clinical trials, or a sustained economic downturn. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the global and US economy and the Company’s business. |
Public Offerings
Public Offerings | 9 Months Ended |
Sep. 30, 2022 | |
Public Offerings | |
Public Offerings | 3. Public Offerings The Company is party to a registration rights agreement with EQT AB and its affiliates (“EQT”), Arsenal Capital Partners, and certain other stockholders (collectively, the “Institutional Investors”). It contains provisions that entitle EQT and the other Institutional Investors thereto to certain rights to have their securities registered by the Company under the Securities Act. EQT is entitled to an unlimited number of “demand” registrations, subject to certain limitations. Every Institutional Investor that holds registration rights is also entitled to customary “piggyback” registration rights. In addition, the amended and restated registration rights agreement provides that the Company will pay certain expenses of the Institutional Investors relating to such registrations and indemnify them against certain liabilities that may arise under the Securities Act of 1933. The registration rights agreement will terminate (i) with the prior written consent of the Institutional Investors in connection with a change of control; (ii) for those holders (other than the Institutional Investors) that beneficially own less than 5% of the Company’s outstanding shares, if all of the registrable securities then owned by such holder could be sold in any 90-day period pursuant to Rule 144; (iii) as to any holder, if all of the registrable securities held by such holder have been sold or otherwise transferred in a registration pursuant to the Securities Act or pursuant to an exemption therefrom; or (iv) with respect to any holder that is an officer, director, employee or consultant of the Company on the date that is 90 days after the date on which such holder ceases to be an employee, director or consultant (as applicable) of the Company. The rights and obligations do not transfer without the written consent of the Company and the Institutional Investors. On March 29, 2021, the Company completed an underwritten secondary public offering in which certain selling stockholders, including EQT, sold 11,500,000 shares of the Company’s common stock, including 1,500,000 shares of common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares. The Company did not offer any common stock in this transaction and did not receive any proceeds from the sale of the shares of common stock by the selling stockholders. The Company incurred costs of $1,100, recorded in general and administrative expenses, in relation to the secondary public offering. On September 13, 2021, the Company completed another public offering, at a public offering price of $31.00 per share, pursuant to which the Company sold 4,500,000 shares of its common stock, and certain selling stockholders sold 18,500,000 shares of the Company’s common stock, including 3,000,000 shares of common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares. The Company received net proceeds of $134,096, after deducting underwriters' discounts and commissions. In addition, $745 of legal, accounting and other offering costs incurred in connection with the sale of the Company's common stock in the public offering, were capitalized and offset against the proceeds received. On November 22, 2021, the Company completed another secondary public offering in which certain selling stockholders, including EQT, sold 10,000,000 shares of the Company’s common stock. The Company did not offer any common stock in this transaction and did not receive any proceeds from the sale of the shares of common stock by the selling stockholders. The Company incurred costs of $644, recorded in general and administrative expenses, in relation to the secondary public offering. On August 11, 2022, the Company completed another secondary public offering in which certain selling stockholders, including EQT, sold 7,000,000 shares of the Company’s common stock. The Company did not offer any common stock in this transaction and did not receive any proceeds form the sale of the shares of common stock by the selling stockholders. The Company incurred costs of $596, recorded in general and administrative expenses, in relation to the secondary public offering. |
Concentrations of Credit Risk
Concentrations of Credit Risk | 9 Months Ended |
Sep. 30, 2022 | |
Concentrations of Credit Risk | |
Concentrations of Credit Risk | 4. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk have consisted principally of cash and cash equivalent investments and trade receivables. The Company invests available cash in bank deposits, investment-grade securities, and short-term interest-producing investments, including government obligations and other money market instruments. At September 30, 2022 and December 31, 2021, the investments were bank deposits and overnight sweep accounts. The Company has adopted credit policies and standards to evaluate the risk associated with sales that require collateral, such as letters of credit or bank guarantees, whenever deemed necessary. Management believes that any risk of loss is significantly reduced due to the nature of the customers with which the Company does business. As of September 30, 2022 and December 31, 2021, no single customer accounted for more than 10% of the Company’s accounts receivable. No single customers accounted for more than 10% of the Company’s revenues during the nine months ended September 30, 2022 and 2021. |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2022 | |
Acquisitions | |
Acquisitions | 5. Acquisitions Acquisitions have been accounted for using the acquisition method of accounting pursuant to FASB ASC 805, “Business Combinations.” Amounts allocated to the purchased assets and liabilities are based upon the total purchase price and the estimated fair values of such assets and liabilities on the effective date of the purchase as determined by an independent third party. The results of operations have been included in the Company’s results of operations prospectively from the date of acquisition. Author! B.V. On March 2, 2021, the Company completed a transaction that qualified as a business combination for a total consideration of $2,667. The business combination was not significant to our condensed consolidated financial statements. Based on the Company’s purchase price allocation, approximately $1,200, $100 and $1,200 of the purchase price was assigned to customer relationships, non-compete agreements and goodwill, respectively. Insight Medical Writing Limited On June 7, 2021, the Company completed a transaction that qualified as a business combination for a total consideration of $15,197. The business combination was not significant to our condensed consolidated financial statements. Based on the Company’s purchase price allocation, approximately $7,400 and $4,700 of the purchase price was assigned to customer relationships and goodwill, respectively. Pinnacle 21, LLC On October 1, 2021, the Company acquired 100% of the equity of Pinnacle 21, LLC (“Pinnacle”). Pinnacle provides software and services for preparing clinical trial data for regulatory submission. The acquisition executed on the Company’s strategy to invest in innovation to increase the use cases of biosimulation and grow adoption of Certara’s end-to-end platform. The acquisition of Pinnacle was treated as a purchase in accordance with ASC 805, “Business Combinations”, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction. The following table summarizes the fair value of the consideration paid as well as the fair values of the assets acquired and liabilities assumed as of the date of the acquisition: Fair value of consideration: Pinnacle Cash paid to sellers $ 249,115 Cash paid to others and escrow 17,200 Unregistered shares of Certara, Inc. (2,239,717 shares) 72,760 Total consideration $ 339,075 Assets acquired and liabilities assumed: Cash and cash equivalents $ 19,409 Accounts receivable 2,925 Other current assets 619 Property and equipment 258 Deferred tax assets 2,907 Identifiable intangible assets: Trademark 15,800 Acquired software 103,000 Customer relationships 24,600 Goodwill 180,947 Long-term deposits 34 Current liabilities (794) Current portion of deferred revenue (10,630) Net assets acquired $ 339,075 The fair value of the unregistered shares given as part of the purchase consideration was determined based on the market price of Certara common stock on the closing date less a 7% discount for lack of marketability. The acquisition was structured as an asset acquisition for income tax purposes; therefore, the Company’s tax basis in Pinnacle’s identifiable assets reflects the fair value of consideration paid. However, the Company did not recognize tax basis in certain liabilities assumed on the acquisition date; resulting in deferred income taxes being recorded in purchase accounting. The fair value of the intangible assets is based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements within the fair value measurement hierarchy. The fair value of the customer relationships (Distributor method), trademarks (Relief from Royalty method) and developed technology (Multi-Period Excess Earnings Method) was determined under the income approach. Goodwill of $180,947 was recorded to reflect the excess of the purchase price over the estimated fair value of the net identifiable assets acquired, which is generally deductible for income tax purposes. The excess of the purchase prices over the fair values of the acquired business's net assets represent cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill. Integrated Nonclinical Development Solutions, Inc. On January 3, 2022, the Company completed the acquisition of Integrated Nonclinical Development Solutions, Inc. (“INDS”), a company that provides the SEND Explorer software and drug development consulting for a total consideration of $8,048 . The business combination was not significant to the Company’s condensed consolidated financial statements. Based on the Company’s purchase price allocation, approximately $2,380 , $1,040 , $100 , and $2,910 of the purchase price was assigned to customer relationships, developed technology, non-compete agreements, and goodwill, respectively. The condensed consolidated financial statements include the operating results of each acquisition from the date of acquisition. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | 9 Months Ended |
Sep. 30, 2022 | |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | 6. Prepaid Expenses and Other Current Assets and Other Long-Term Assets SEPTEMBER 30, DECEMBER 31, 2022 2021 Prepaid expenses $ 6,313 $ 8,973 Income tax receivable 2,446 4,800 Research and development tax credit receivable 3,295 3,951 Current portion of interest rate swap asset 3,429 57 Other current assets 1,020 767 Prepaid expenses and other current assets $ 16,503 $ 18,548 Other long-term assets consisted of the following: SEPTEMBER 30, DECEMBER 31, 2022 2021 Long-term deposits $ 1,143 $ 1,160 Interest rate swap asset - long-term 4,956 — Deferred financing cost 797 1,007 Total other long-term assets $ 6,896 $ 2,167 |
Long-Term Debt and Revolving Li
Long-Term Debt and Revolving Line of Credit | 9 Months Ended |
Sep. 30, 2022 | |
Long-Term Debt and Revolving Line of Credit | |
Long-Term Debt and Revolving Line of Credit | 7. Long-Term Debt and Revolving Line of Credit Effective August 14, 2017, the Company entered into a credit agreement with lenders for a $250,000 term loan (“Credit Agreement”). The Credit Agreement is a syndicated arrangement with various lenders providing the financing. The $250,000 term loan is due to mature on August 14, 2024. The Company also entered into a $20,000 revolving line of credit with lenders with a sub-commitment for issuance of letters of credit of $10,000. The Company and lenders entered into Amendment No. 1 to the Credit Agreement on January 25, 2018, where an additional tranche of $25,000 was added to the term loan. The amortization schedule of the new tranche was made coterminous with the rest of the term loan. There were no other changes to the terms of the Credit Agreement. The Company and lenders entered into Amendment No. 2 to the Credit Agreement on April 3, 2018, where an additional tranche of $40,000 was added to the term loan. The amortization schedule of the new tranche was made coterminous with the rest of the term loan. There were no other changes to the terms of the Credit Agreement. The Company and lenders entered into a third amended and restated loan agreement on June 17, 2021 (“Third Amendment”), which provides for, among other things, (i) the extension of the termination date applicable to the revolving credit commitments under the Credit Agreement to August 2025, (ii) the extension of the maturity date applicable to the term loans under the Credit Agreement to August 2026, and (iii) an increase of approximately $80,000 in commitments available under the revolving line of credit (resulting in an aggregate amount of commitments of $100,000). The term loan under the Third Amendment has substantially the same terms as the existing term loans and revolving credit commitments. The Credit Agreement (as amended) is collateralized by substantially all U.S. assets and stock pledges for the non-U.S. subsidiaries and contain various financial and nonfinancial covenants. As of September 30, 2022 and December 31, 2021, available borrowings under the revolving lines of credits were $100,000. Available borrowings under the revolving lines of credits as of September 30, 2022 and December 31, 2021 were reduced by $120 and $239 standby letters of credit issued to a landlord in lieu of a security deposit in addition to any outstanding borrowings. Borrowings under the Credit Agreement are subject to a variable interest rate at LIBOR plus a margin. The applicable margins are based on achieving certain levels of compliance with financial covenants. The effective interest rate was 4.60% and 3.68% for the nine months ended September 30, 2022 and 2021 for the term loan debt, respectively. As discussed previously, the Company entered into interest rate swap agreements to mitigate the interest risk. Interest incurred on the Credit Agreement with respect to the term loan amounted to $4,366, $2,773, $10,344, and $8,444 for the three and nine months ended September 30, 2022 and 2021, respectively. Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $55 and $30 at September 30, 2022 and December 31, 2021, respectively, and is included in accrued expenses. Interest incurred on the Credit Agreement with respect to the revolving line of credit was $65, $65, $193 and $98 for the three and nine months ended September 30, 2022 and 2021, respectively. There was $2 and $66 accrued interest payable on the revolving line of credit at September 30, 2022 and December 31, 2021, respectively. Long-term debt consists of the following: SEPTEMBER 30, DECEMBER 31, 2022 2021 Term loans $ 298,225 $ 300,490 Revolving line of credit — — Less: debt issuance costs (4,777) (5,724) Total 293,448 294,766 Current portion of long-term debt (3,020) (3,020) Long-term debt, net of current portion and debt issuance costs $ 290,428 $ 291,746 The principal amount of long-term debt outstanding as of September 30, 2022 matures in the following years: Remainder of 2022 2023 2024 2025 2026 TOTAL Maturities $ 755 $ 3,020 $ 3,020 $ 3,020 $ 288,410 $ 298,225 The Credit Agreement requires the Company to make an annual mandatory prepayment as it relates to the Company’s Excess Cash Flow calculation. For the year ended December 31, 2021, the Company was not required to make a mandatory prepayment on the term loan. For the Credit Agreement, the Company is required to make a quarterly principal payment of $755 on the term loan each quarter starting from September 30, 2021. The fair values of the Company’s variable interest term loan and revolving line of credit are not significantly different than their carrying value because the interest rates on these instruments are subject to change with market interest rates. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Leases | 8. Leases The Company leases certain office facilities and equipment under non-cancelable operating and finance leases with remaining terms from one Operating lease right of use assets are included in the “other assets” section while finance lease right of use assets are included in "property and equipment, net" in the condensed consolidated balance sheets. With respect to operating lease liabilities, current lease liabilities and non-current operating lease liabilities are included in “current operating lease liabilities” and "operating lease liabilities, net of current portion”. Current finance lease liabilities and non-current finance lease liabilities are included in "other current liabilities" and "non-current finance lease liabilities" in the condensed consolidated balance sheets. At September 30, 2022, the weighted average remaining lease terms were 3.33 years and 0.33 year for operating and finance leases, respectively; the weighted average discount rate was 4.11% and 6.19% for operating and finance leases, respectively. For additional information on the Company's leases, see Note 14 to the condensed consolidated financial statements included the Company’s 2021Annual Report. The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021: Lease Position Balance Sheet Classification SEPTEMBER 30, 2022 DECEMBER 31, 2021 Assets Operating lease assets Operating lease right-of-use assets $ 11,481 $ 12,634 Finance lease assets Property and equipment, net 63 271 Total lease assets $ 11,544 $ 12,905 Liabilities Current Operating Current operating lease liabilities $ 3,422 $ 5,040 Finance Other current liabilities 100 293 Noncurrent Operating Operating lease liabilities, net of current portion 8,509 8,256 Finance Non-current finance lease liabilities — 25 Total lease liabilities $ 12,031 $ 13,614 The following table summarizes by year the maturities of our minimum lease payments as of September 30, 2022. OPERATING FINANCE LEASES LEASES Remainder of 2022 $ 1,265 $ 76 2023 4,110 25 2024 3,212 — 2025 2,466 — 2026 1,344 — Thereafter 130 — Total future lease payments 12,527 101 Less: imputed interest (596) (1) Total $ 11,931 $ 100 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 9. Accrued Expenses and Other Current Liabilities Accrued expenses consist of the following: SEPTEMBER 30, DECEMBER 31, 2022 2021 Accrued compensation $ 22,497 $ 24,848 Legal and professional accruals 865 2,477 Local sales and VAT taxes 44 — Interest payable 55 96 Income taxes payable 1,797 1,398 Accrued business acquisition liabilities 700 — Other 594 1,011 Total accrued expenses $ 26,552 $ 29,830 |
Equity-Based Compensation
Equity-Based Compensation | 9 Months Ended |
Sep. 30, 2022 | |
Equity-Based Compensation | |
Equity-Based Compensation | 10. Equity-Based Compensation Restricted Stock The majority of the Company’s restricted stock awarded to its employees was originally issued in December 2020 to exchange the Class B Profits Interest Unit (the “Class B Units”) of EQT. Modification accounting was not required for the time-based vesting Class B Units for which the vesting conditions, classification and fair market value did not change as a result of the shares of restricted common stock that replaced them. The original grant date fair value will continue to be recognized on a straight-line basis. Modification accounting was required for the performance-based vesting Class B Units that were exchanged for time-based vesting restricted common stock, given the vesting conditions were changed. Share-based compensation for the restricted stock exchanged for the time-based Class B Units is recognized on a straight-line basis over the requisite service period of the award, which is generally five years. Share-based compensation for the restricted stock exchanged for the performance-based Class B Units is recognized using the accelerated attribution approach. In 2021, the Company granted 87,127 replacement shares of restricted stock in connection with the Pinnacle acquisition under which equity-based awards are outstanding. The fair value of the restricted stock awarded was initially based on the fair value of our common stock on the date of grant, then adjusted for time restrictions due to unregistered shares and lack of marketability. Total grant date fair value was $2,762. The restricted stock issued in 2021 generally has a three-year vesting period except for one holder whose shares vests equally on a monthly basis for two years. WEIGHTED- AVERAGE GRANT DATE SHARES FAIR VALUE Non-vested restricted stock as of December 31, 2021 3,910,722 $ 23.18 Granted 66,220 17.07 Vested (1,772,239) 22.87 Forfeited (229,854) 23.00 Cancelled (66,220) 23.00 Non-vested restricted stock as of September 30, 2022 1,908,629 $ 23.28 The Company did not legally authorize or issue any restricted stock during the nine-month period ended September 30, 2022. During the third quarter of 2022, the Company modified an award for a recipient that resulted in 66,220 shares each assumed cancelled, granted, and forfeited. The shares of restricted stock vested includes 5,182 shares of common stock that were withheld on behalf of employees to satisfy the statutory tax withholding requirements. Equity-based compensation expenses (income) related to the restricted stock exchanged for performance-based Class B Units were $(319) and $3,758 for the three and nine months ended September 30, 2022, respectively. At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $5,039, which is expected to be recognized over a weighted-average period of 22.5 months. Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $1,174 and $2,705 for the three and nine months ended September 30, 2022, respectively. At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $3,821, which is expected to be recognized over a weighted-average period of 28.0 months. Equity-based employee compensation expense related to the time-based restricted stock for the Pinnacle acquisition was $292 and $877 for the three and nine months ended September 30, 2022. At September 30, 2022, the total unrecognized equity-based compensation expenses related to outstanding restricted stock recognized using the straight-line attribution approach was $1,593, which is expected to be recognized over a weighted-average period of 18.4 months. 2020 Incentive Plan In order to align the Company’s equity compensation program with public company practices, the Company’s Board of Directors adopted and stockholders approved the 2020 Incentive Plan. The 2020 Incentive Plan allows for grants of non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to employees, directors, officers, and consultants or advisors of the Company. The 2020 Incentive Plan allows for 20,000,000 shares (the “plan share reserve”) of common stock to be issued. No more than the number of shares of common stock equal to the plan share reserve may be issued in the aggregate pursuant to the exercise of incentive stock options. The maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1,000,000 in total value, except for certain awards made to a non-executive chair of our Board of Directors. Restricted Stock Units RSUs represent the right to receive shares of the Company’s common stock at a specified date in the future. The fair value of the RSUs is based on the fair value of the underlying shares on the date of grant. A summary of the Company’s RSU activity is as follows: WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested RSUs as of December 31, 2021 1,288,724 $ 29.28 Granted* 1,415,901 22.10 Vested** (420,168) 28.52 Forfeited (149,610) 24.87 Non-vested RSUs as of September 30, 2022 2,134,847 $ 24.98 * ** The number of the RSUs vested includes 134,262 shares that were withheld on behalf of employees to satisfy the statutory tax withholding requirements. The vested shares included 7,059 shares vested but deferred in connection with our director deferral plan. Equity-based compensation expenses related to the RSUs were $5,312 and $14,538 for three and nine months ended September 30, 2022, respectively. At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding RSUs was $42,927, which is expected to be recognized over a weighted-average period of 25.5 months. Performance Stock Units PSUs granted in April 2021 and 2022 were issued under the 2020 Incentive Plan and represent the right to receive shares of the Company’s common stock at a specified date in the future based on the satisfaction of various service conditions and the achievement of certain performance thresholds for individual PSU plans including year over year revenue growth and unlevered free cash flow growth. Share-based compensation for the PSUs is only recognized to the extent a threshold is probable of being achieved and is recognized using the accelerated attribution approach. The Company will continue to assess the probability of each condition being achieved at each reporting period to determine whether and when to recognize compensation cost. The following table presents a summary of activity on the PSUs for the period ended September 30, 2022. A summary of the Company’s PSU activity is as follows: WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested PSUs as of December 31, 2021 406,575 $ 27.35 Granted 361,147 22.25 Vested (12,291) 24.83 Forfeited (57,077) 35.47 Non-vested PSUs as of September 30, 2022 698,354 $ 24.10 Equity-based compensation expenses related to the PSUs were $345 and $1,940 for the three and nine months ended September 30, 2022. At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding PSUs was $3,467, which is expected to be recognized over a weighted-average period of 15.6 months. The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss for each period presented: THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2022 2021 2022 2021 Cost of revenues $ 2,454 $ 1,442 $ 6,834 $ 3,738 Sales and marketing 160 602 1,670 1,636 Research and development 957 514 4,115 1,528 General and administrative 3,233 5,607 11,199 13,944 Total $ 6,804 $ 8,165 $ 23,818 $ 20,846 2020 Employee Stock Purchase Plan On December 10, 2020, stockholders approved the 2020 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). Under the Employee Stock Purchase Plan, employees, and those of the Company’s subsidiaries, may purchase shares of common stock, during pre-specified offering periods. Named executive officers will be eligible to participate in the Employee Stock Purchase Plan on the same terms and conditions as all other participating employees. The maximum number of shares authorized for sale under the Employee Stock Purchase Plan is 1,700,000 shares. As of September 30, 2022, no shares of common stock have been purchased under the Employee Stock Purchase Plan and no offering has been made to eligible employees under the Plan. |
Segment Data
Segment Data | 9 Months Ended |
Sep. 30, 2022 | |
Segment Data | |
Segment Data | 11. Segment Data Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company has determined that its chief executive officer is its CODM. The Company manages its operations as a single segment for the purposes of assessing and making operating decisions. The Company’s CODM allocates resources and assesses performance based upon financial information at the consolidated level. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements. The following table summarizes revenue by geographic area for the three and nine months ended September 30, 2022 and 2021: THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2022 2021 2022 2021 Revenue (1) Americas $ 64,367 $ 54,911 $ 186,784 $ 150,594 EMEA 13,276 13,307 42,833 41,222 Asia Pacific 7,057 5,726 19,394 18,942 Total $ 84,700 $ 73,944 $ 249,011 $ 210,758 (1) Revenue is attributable to the countries based on the location of the customer. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2022 | |
Income Taxes | |
Income Taxes | 12. Income Taxes The Company generally records its interim tax provision based upon a projection of the Company's estimated annual effective tax rate ("EAETR"). This EAETR is applied to the year-to-date consolidated pre-tax income to determine the interim provisions for income taxes before discrete items. The effective tax rate ("ETR") each period is impacted by a number of factors, including the relative mix of domestic and international earnings, adjustments to the valuation allowances, and discrete items. The forecasted ETR may vary from the actual year-end due to the changes in these factors. The Company's global ETR for the three months ended September 30, 2022 and 2021 was 54% and 48%, respectively, including discrete tax items. The period-over-period increase in the ETR was principally due to the combined effect of the overall increase in pre-tax book income and the tax effect of certain discrete items. The Company's global ETR for the nine months ended September 30, 2022 and 2021 was 63%, and (11)%, respectively, including discrete tax items. The current year increase in the ETR was principally due to the combined effect of the overall increase in pre-tax book income and the tax effect of certain discrete items. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2022 | |
Earnings per Share | |
Earnings per Share | 13. Earnings per Share Earnings per share is computed by dividing net income (loss) by the weighted-average common shares outstanding. Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per common share considers potentially dilutive securities outstanding during the period. Basic and diluted earnings per share is computed by dividing net income (loss) by the weighted-average common shares outstanding: THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2022 2021 2022 2021 Numerator: Net income (loss) available to common shareholders $ 3,936 $ (1,762) $ 5,557 $ (3,567) Denominator: Basic weighted average common shares outstanding 157,140,166 149,016,609 156,523,022 147,894,227 Effects of dilutive securities 2,447,479 — 2,869,512 — Diluted weighted average common shares outstanding 159,587,645 149,016,609 159,392,534 147,894,227 Earnings per share: Basic $ 0.03 $ (0.01) $ 0.04 $ (0.02) Diluted $ 0.02 $ (0.01) $ 0.03 $ (0.02) |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Use of Estimates | (a) Basis of Presentation and Use of Estimates The preparation of condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, assumptions used in the allocation of the transaction price to separate performance obligations, estimates towards the measure of progress of completion on fixed-price service contracts, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for credit losses for accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue, value of interest rate swaps, determination of fair value of equity-based awards and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements. |
Unaudited Interim Financial Statements | (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. These unaudited condensed consolidated financial statements include all adjustments necessary to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Certain amounts reported in prior periods have been reclassified to conform with the current presentation. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2021 audited consolidated financial statements and notes thereto. The information as of December 31, 2021 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the Company’s 2021 Annual Report. |
Accounting Pronouncements Not Yet Adopted | (c) Accounting Pronouncements Not Yet Adopted In November 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-10, “Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance”. The ASU requires that entities increase disclosures about government assistance received relating to accounting policy, nature of the assistance, and the effect of the assistance on the financial statements. The ASU is effective for annual periods beginning after December 15, 2021. Early application of the ASU is permitted. The Company is currently evaluating the impact of these amendments on its condensed consolidated financial statements. |
Principles of Consolidation | (d) Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Cash and Cash Equivalents, and Restricted Cash | (e) Cash and Cash Equivalents, and Restricted Cash Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. Restricted cash represents cash that is reserved to provide for a Company credit card program and unexpended restricted grant funds. The restricted cash balance was $3,274 and $827 at September 30, 2022 and December 31, 2021, respectively. The following table provides a reconciliation of cash and cash equivalents and restricted cash to the amounts presented in the condensed consolidated statements of cash flows: SEPTEMBER 30, DECEMBER 31, 2022 2021 Cash and cash equivalents $ 210,509 $ 185,797 Restricted cash, current 3,274 827 Total cash and cash equivalents and restricted cash $ 213,783 $ 186,624 |
Derivative Instruments | (f) Derivative Instruments Effective May 31, 2022, the Company has a pay-fixed, receive-variable interest rate swap agreement to modify the interest rate characteristics of term loan debt from variable to fixed in order to reduce the impact of changes in future cash flows due to market interest rate changes. The swap agreement has a notional amount of $230,000, a fixed rate of 2.8% and a termination date of August 31, 2025. At September 30, 2022, the interest swap had a fair value of $8,385 and the fair value recognized in accumulated other comprehensive income was $8,385. During the three and nine months ended September 30, 2022, the amounts recognized as interest expense on the condensed consolidated statements of operations and comprehensive loss on the derivative were $355 and $700. The Company also had an interest rate swap agreement for a notional amount of $230,000 that fixed the interest rate at 2.1%, non-inclusive of the fixed credit spread through May 31, 2022. On August 31, 2021, the Company entered into an amendment to the interest rate swap agreement. The amended interest rate swap agreement does not in its entirety meet the definition of a derivative instrument because of its off market fixed rate at inception and is deemed to be a hybrid instrument with a financing component and an embedded at-the-market derivative. Such embedded derivative is bifurcated and accounted for separately. At inception, the financing component of $1,966 was recorded at amortized cost. The embedded at-the-market derivative was designated and qualified as a cash flow hedge of interest rate risk for a notional amount of $230,000 that fixed the interest rate at 1.2757%, non-inclusive of the fixed credit spread. Due to an other-than-insignificant financing element on a portion of such hybrid instrument, the cash flows associated with this hybrid instrument were classified as financing activities in the condensed consolidated statements of cash flows. The interest rate swap matured on May 31, 2022. At September 30, 2022, the Company did not record any amounts for the financing component and fair value of the interest rate swap in the condensed consolidated balance sheets. The Company reclassified $3,033 of accumulated comprehensive loss to interest expense in the condensed consolidated statements of comprehensive loss in the second quarter of 2021 due to hedge ineffectiveness. Excluding the amount reclassified, the interest expense recognized on the derivative was $0, $29, $(179), $690 for the three and nine months ended September 30, 2022 and 2021, respectively. The Company uses derivatives to manage certain interest exposures and designated all the derivatives as cash flow hedges. The Company records derivatives at fair value on its condensed consolidated balance sheets. Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss). Those amounts are reclassified into interest expenses in the same period during which the hedged transactions impact earnings. The following table sets forth the assets that are measured at fair value on a recurring basis by the levels in the fair value hierarchy at September 30, 2022: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Asset Interest rate swap asset $ — $ 8,385 $ — $ 8,385 Total $ — $ 8,385 $ — $ 8,385 The following table sets forth the assets that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2021: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Asset Interest rate swap asset $ — $ 57 $ — $ 57 Total $ — $ 57 $ — $ 57 The net amount of deferred gains related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive gains into earnings over the next twelve months is $3,448. For more information regarding fair value measurement and fair value hierarchy, see Note 2. “Summary of Significant Accounting Policies” in the notes to the condensed consolidated Financial Statements in the Company’s 2021 Annual Report. |
Revenue Recognition | (g) Revenue Recognition In accordance with Accounting Standards Codification Topic 606 ("ASC Topic 606"), “Revenue from Contracts with Customers”, the Company determines revenue recognition through the following steps: i. ii. iii. iv. v. The Company’s revenue consists of fees for perpetual and term licenses for its software products, post- contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Arrangements with Multiple Performance Obligations For contracts with multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the Company determines if the products or services are distinct and allocates the consideration to each distinct performance obligation on a relative standalone selling price basis (“SSP”). When products and services are not distinct, the Company determines an appropriate measure of progress based on the nature of its overall promise for the single performance obligation. The delivery of a particular type of software and each of the user licenses would be one performance obligation. However, any training, implementation, or support and maintenance promises as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are less than one year such that there is no significant financing component to the transaction. Software Licenses License revenue includes perpetual license fees and term license fees, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the use of software. Both revenues from perpetual license and term license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. Software Services Maintenance services agreements consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year. While transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. The Company’s software contracts do not typically include discounts, variable consideration, or options for future purchases that would not be similar to the original goods. Software as a Service SaaS Revenues SaaS revenues consists of subscription fees for access to, and related support for, the Company’s cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments and recognizes subscription revenue ratably over the term of the applicable agreement, usually one to three years which is initially deferred and recognized ratably over the life of the contract. Services and Other Revenues The Company’s primary professional services offering includes consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. Strategic consulting services consists of consulting, training, and process redesign that enables customers to identify which uncertainties are greatest and matter most and then to design development programs, trial sequences, and individual trials in such a way that those trials systematically reduce the identified uncertainties in the most rapid and cost-effective manner possible. The Company’s professional services contracts are either time-and-materials or fixed fee. Services revenues are generally recognized over time as the services are performed. Generally, these services are delivered to customers electronically. Revenue from time-and-material contracts is recognized on an output basis as labor hours are delivered and/or direct expenses are incurred. Revenues for fixed price services are generally recognized over time applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and varying lengths of time they are being paid for, determine the measure of progress. Training revenues are recognized as the services are performed over time. However, due to the short period over which the transfer of control occurs for a classroom or on-site training course, the revenue related to these performance obligations is recognized at the completion of the course for administrative feasibility purposes. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue, contract liabilities) on the condensed consolidated balance sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the condensed consolidated balance sheets). Contract assets are billed and transferred to customer accounts receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one to three years . The Company records the amounts collected in advance of the satisfaction of performance obligations, usually over time, as a contract liability or deferred revenue. Invoiced amounts for non-cancelable services starting in future periods are included in contract assets and deferred revenue. The portion of deferred revenue that will be recognized within 12 months is recorded as current deferred revenue, and the remaining portion is recorded as non-current deferred revenue in the condensed consolidated balance sheets. The unsatisfied performance obligations as of September 30, 2022 were approximately $119,255. Deferred Contract Acquisition Costs The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year. The Company has determined that certain sales incentive programs meet the requirements to be capitalized. The costs capitalized are primarily sales commissions for our sales force personnel. Capitalized costs to obtain a contract are amortized on a straight line basis over the expected period of benefit. Amortization of capitalized costs are included in sales and marketing expense in our condensed consolidated statements of operations and comprehensive loss. Capitalized contract acquisition cost was $631 as of September 30, 2022 and was included in prepaid expenses and other current assets in the condensed consolidated balance sheets. Grant Revenue The Company receives grant funding for certain specific projects from time to time. These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements. In these agreements, both involved parties receive and sacrifice approximately commensurate value so these are accounted for as exchange transactions and revenue is recognized according to ASC Topic 606. The grant funding is generally provided near contract inception so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time. Sources and Timing of Revenue The Company’s performance obligations are satisfied either over time or at a point in time. The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2022 2021 2022 2021 Software licenses transferred at a point in time $ 10,851 $ 8,665 $ 36,434 $ 30,719 Software licenses transferred over time 17,541 10,603 49,875 30,565 Service revenues earned over time 56,308 54,676 162,702 149,474 Total $ 84,700 $ 73,944 $ 249,011 $ 210,758 |
Earnings per Share | (h) Earnings per Share Basic earnings per common share is computed by dividing the net income that is attributable to common stockholders by the weighted-average number of common shares outstanding during the reporting period, without consideration for potentially dilutive securities. The dilutive effect of potentially dilutive securities is excluded from basic earnings per share and is included in the calculation of diluted earnings per share. Restricted stock and restricted stock units granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted earnings per share is computed by dividing the earnings attributable to stockholders by the weighted-average number of shares and potentially dilutive securities outstanding during the period. |
COVID-19 | (i) COVID-19 Since the first quarter of 2020, the COVID-19 pandemic has posed a significant threat to public health as well as the global and U.S. economies. The continued spread of variants of COVID-19 may adversely impact our business, financial condition or results of operations as a result of increased costs, negative impacts to the Company’s workforce, delay or cancellation of projects due to disruption of clinical trials, or a sustained economic downturn. Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the global and US economy and the Company’s business. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of reconciliation of cash and cash equivalents and restricted cash | SEPTEMBER 30, DECEMBER 31, 2022 2021 Cash and cash equivalents $ 210,509 $ 185,797 Restricted cash, current 3,274 827 Total cash and cash equivalents and restricted cash $ 213,783 $ 186,624 |
Summary of assets that is measured at fair value on a recurring basis | The following table sets forth the assets that are measured at fair value on a recurring basis by the levels in the fair value hierarchy at September 30, 2022: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Asset Interest rate swap asset $ — $ 8,385 $ — $ 8,385 Total $ — $ 8,385 $ — $ 8,385 The following table sets forth the assets that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2021: LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Asset Interest rate swap asset $ — $ 57 $ — $ 57 Total $ — $ 57 $ — $ 57 |
Summary of revenue by timing of revenue recognition | THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2022 2021 2022 2021 Software licenses transferred at a point in time $ 10,851 $ 8,665 $ 36,434 $ 30,719 Software licenses transferred over time 17,541 10,603 49,875 30,565 Service revenues earned over time 56,308 54,676 162,702 149,474 Total $ 84,700 $ 73,944 $ 249,011 $ 210,758 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Pinnacle 21, LLC | |
Business Combinations | |
Schedule of fair values of the assets acquired and liabilities assumed | Fair value of consideration: Pinnacle Cash paid to sellers $ 249,115 Cash paid to others and escrow 17,200 Unregistered shares of Certara, Inc. (2,239,717 shares) 72,760 Total consideration $ 339,075 Assets acquired and liabilities assumed: Cash and cash equivalents $ 19,409 Accounts receivable 2,925 Other current assets 619 Property and equipment 258 Deferred tax assets 2,907 Identifiable intangible assets: Trademark 15,800 Acquired software 103,000 Customer relationships 24,600 Goodwill 180,947 Long-term deposits 34 Current liabilities (794) Current portion of deferred revenue (10,630) Net assets acquired $ 339,075 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets and Other Long-Term Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | |
Schedule of prepaid and other current assets | SEPTEMBER 30, DECEMBER 31, 2022 2021 Prepaid expenses $ 6,313 $ 8,973 Income tax receivable 2,446 4,800 Research and development tax credit receivable 3,295 3,951 Current portion of interest rate swap asset 3,429 57 Other current assets 1,020 767 Prepaid expenses and other current assets $ 16,503 $ 18,548 |
Schedule of other long-term assets | SEPTEMBER 30, DECEMBER 31, 2022 2021 Long-term deposits $ 1,143 $ 1,160 Interest rate swap asset - long-term 4,956 — Deferred financing cost 797 1,007 Total other long-term assets $ 6,896 $ 2,167 |
Long-Term Debt and Revolving _2
Long-Term Debt and Revolving Line of Credit (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Long-Term Debt and Revolving Line of Credit | |
Schedule of Long-term debt | SEPTEMBER 30, DECEMBER 31, 2022 2021 Term loans $ 298,225 $ 300,490 Revolving line of credit — — Less: debt issuance costs (4,777) (5,724) Total 293,448 294,766 Current portion of long-term debt (3,020) (3,020) Long-term debt, net of current portion and debt issuance costs $ 290,428 $ 291,746 |
Schedule of maturity of long-term debt | The principal amount of long-term debt outstanding as of September 30, 2022 matures in the following years: Remainder of 2022 2023 2024 2025 2026 TOTAL Maturities $ 755 $ 3,020 $ 3,020 $ 3,020 $ 288,410 $ 298,225 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases | |
Schedule of operating and financing lease right of use assets and lease liabilities | Lease Position Balance Sheet Classification SEPTEMBER 30, 2022 DECEMBER 31, 2021 Assets Operating lease assets Operating lease right-of-use assets $ 11,481 $ 12,634 Finance lease assets Property and equipment, net 63 271 Total lease assets $ 11,544 $ 12,905 Liabilities Current Operating Current operating lease liabilities $ 3,422 $ 5,040 Finance Other current liabilities 100 293 Noncurrent Operating Operating lease liabilities, net of current portion 8,509 8,256 Finance Non-current finance lease liabilities — 25 Total lease liabilities $ 12,031 $ 13,614 |
Schedule of minimum lease payments of operating leases | OPERATING FINANCE LEASES LEASES Remainder of 2022 $ 1,265 $ 76 2023 4,110 25 2024 3,212 — 2025 2,466 — 2026 1,344 — Thereafter 130 — Total future lease payments 12,527 101 Less: imputed interest (596) (1) Total $ 11,931 $ 100 |
Schedule of minimum lease payments of finance leases | OPERATING FINANCE LEASES LEASES Remainder of 2022 $ 1,265 $ 76 2023 4,110 25 2024 3,212 — 2025 2,466 — 2026 1,344 — Thereafter 130 — Total future lease payments 12,527 101 Less: imputed interest (596) (1) Total $ 11,931 $ 100 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses | SEPTEMBER 30, DECEMBER 31, 2022 2021 Accrued compensation $ 22,497 $ 24,848 Legal and professional accruals 865 2,477 Local sales and VAT taxes 44 — Interest payable 55 96 Income taxes payable 1,797 1,398 Accrued business acquisition liabilities 700 — Other 594 1,011 Total accrued expenses $ 26,552 $ 29,830 |
Equity-Based Compensation (Tabl
Equity-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity-Based Compensation | |
Summary of the restricted stock | WEIGHTED- AVERAGE GRANT DATE SHARES FAIR VALUE Non-vested restricted stock as of December 31, 2021 3,910,722 $ 23.18 Granted 66,220 17.07 Vested (1,772,239) 22.87 Forfeited (229,854) 23.00 Cancelled (66,220) 23.00 Non-vested restricted stock as of September 30, 2022 1,908,629 $ 23.28 |
Summary of the Company's RSU activity | WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested RSUs as of December 31, 2021 1,288,724 $ 29.28 Granted* 1,415,901 22.10 Vested** (420,168) 28.52 Forfeited (149,610) 24.87 Non-vested RSUs as of September 30, 2022 2,134,847 $ 24.98 |
Schedule of nonvested Performance-based Units activity | WEIGHTED- AVERAGE GRANT DATE UNITS FAIR VALUE Non-vested PSUs as of December 31, 2021 406,575 $ 27.35 Granted 361,147 22.25 Vested (12,291) 24.83 Forfeited (57,077) 35.47 Non-vested PSUs as of September 30, 2022 698,354 $ 24.10 |
Schedule of compensation expense | THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2022 2021 2022 2021 Cost of revenues $ 2,454 $ 1,442 $ 6,834 $ 3,738 Sales and marketing 160 602 1,670 1,636 Research and development 957 514 4,115 1,528 General and administrative 3,233 5,607 11,199 13,944 Total $ 6,804 $ 8,165 $ 23,818 $ 20,846 |
Segment Data (Tables)
Segment Data (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Data | |
Schedule of revenue by geographic area | THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2022 2021 2022 2021 Revenue (1) Americas $ 64,367 $ 54,911 $ 186,784 $ 150,594 EMEA 13,276 13,307 42,833 41,222 Asia Pacific 7,057 5,726 19,394 18,942 Total $ 84,700 $ 73,944 $ 249,011 $ 210,758 (1) Revenue is attributable to the countries based on the location of the customer. |
Earnings per Share (Tables)
Earnings per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings per Share | |
Schedule of basic and diluted earnings per share | THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30, 2022 2021 2022 2021 Numerator: Net income (loss) available to common shareholders $ 3,936 $ (1,762) $ 5,557 $ (3,567) Denominator: Basic weighted average common shares outstanding 157,140,166 149,016,609 156,523,022 147,894,227 Effects of dilutive securities 2,447,479 — 2,869,512 — Diluted weighted average common shares outstanding 159,587,645 149,016,609 159,392,534 147,894,227 Earnings per share: Basic $ 0.03 $ (0.01) $ 0.04 $ (0.02) Diluted $ 0.02 $ (0.01) $ 0.03 $ (0.02) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Cash and cash equivalents (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2020 |
Summary of Significant Accounting Policies | ||||
Cash and cash equivalents | $ 210,509 | $ 185,797 | ||
Restricted cash, current | 3,274 | 827 | ||
Total cash and cash equivalents, and restricted cash | $ 213,783 | $ 186,624 | $ 417,958 | $ 273,291 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Derivatives (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | May 31, 2022 | Dec. 31, 2021 | Aug. 31, 2021 | |
Recurring | |||||||
Derivative | |||||||
Assets measured at fair value | $ 8,385 | $ 8,385 | $ 57 | ||||
Level 2 | Recurring | |||||||
Derivative | |||||||
Assets measured at fair value | 8,385 | 8,385 | 57 | ||||
Interest rate swap | Designated as Hedging Instrument | Cash Flow Hedging | |||||||
Derivative | |||||||
Notional amount | $ 230,000 | $ 230,000 | |||||
Interest rate (as a percent) | 2.10% | 1.2757% | |||||
Interest expense | 355 | 700 | $ 8,385 | ||||
Recorded amortized cost | $ 1,966 | ||||||
Liability measured at fair value | 8,385 | 8,385 | |||||
Interest rate cash flow hedge accumulated comprehensive loss reclassified to interest expense | 3,033 | ||||||
Interest rate cash flow hedge gain to be reclassified during next 12 months | 3,448 | 3,448 | |||||
Error Correction | |||||||
Interest Income, Other | 0 | 29 | $ 690 | ||||
Interest Expense, Other | $ (179) | ||||||
Interest rate swap | Recurring | |||||||
Derivative | |||||||
Assets measured at fair value | 8,385 | 8,385 | 57 | ||||
Interest rate swap | Level 2 | Recurring | |||||||
Derivative | |||||||
Assets measured at fair value | $ 8,385 | $ 8,385 | $ 57 | ||||
Interest rate swap, first agreement | Designated as Hedging Instrument | Cash Flow Hedging | |||||||
Derivative | |||||||
Interest rate (as a percent) | 2.80% |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Summary of Significant Accounting Policies | ||||
Unsatisfied performance obligation | $ 119,255 | $ 119,255 | ||
Revenue | 84,700 | $ 73,944 | 249,011 | $ 210,758 |
Deferred contract acquisition costs | 631 | 631 | ||
Software licenses transferred at a point in time | ||||
Summary of Significant Accounting Policies | ||||
Revenue | 10,851 | 8,665 | 36,434 | 30,719 |
Software licenses transferred over time | ||||
Summary of Significant Accounting Policies | ||||
Revenue | 17,541 | 10,603 | 49,875 | 30,565 |
Service revenues earned over time | ||||
Summary of Significant Accounting Policies | ||||
Revenue | $ 56,308 | $ 54,676 | $ 162,702 | $ 149,474 |
Minimum | ||||
Summary of Significant Accounting Policies | ||||
Subscription Term | 1 year | |||
Contract Balances | ||||
Subscription term | 1 year | |||
Maximum | ||||
Summary of Significant Accounting Policies | ||||
Subscription Term | 3 years | |||
Contract Balances | ||||
Subscription term | 3 years |
Public Offerings (Details)
Public Offerings (Details) - USD ($) | 9 Months Ended | ||||
Aug. 11, 2022 | Nov. 22, 2021 | Sep. 13, 2021 | Mar. 29, 2021 | Sep. 30, 2022 | |
IPO | |||||
Initial Public Offering | |||||
The maximum ownership percent by beneficial owners of the registration rights agreement that can have termination if all registered securities then owned can be sold in 90 days (as a percent) | 5% | ||||
Duration for which beneficial owners of registration rights agreement can be sold resulting in termination of agreement | 90 days | ||||
The duration from date on which the holder ceases to be an employee of the company | 90 days | ||||
Secondary Public Offering | |||||
Initial Public Offering | |||||
Common stock offerings (in shares) | 0 | 0 | 4,500,000 | 0 | |
Share price (in dollar per share) | $ 31 | ||||
Net proceeds from public offering of common stock | $ 134,096,000 | $ 0 | |||
Legal, accounting and other offering costs | $ 745,000 | ||||
Stock issuance costs, net of tax impact | $ 596,000 | $ 644,000 | $ 1,100,000 | ||
Secondary Public Offering | EQT | |||||
Initial Public Offering | |||||
Common stock offerings (in shares) | 7,000,000 | 10,000,000 | 18,500,000 | 11,500,000 | |
Net proceeds from public offering of common stock | $ 0 | $ 0 | |||
Underwriters' Option | |||||
Initial Public Offering | |||||
Common stock offerings (in shares) | 3,000,000 | ||||
Underwriters' Option | EQT | |||||
Initial Public Offering | |||||
Common stock offerings (in shares) | 1,500,000 |
Acquisitions - Other Informatio
Acquisitions - Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Jan. 03, 2022 | Oct. 01, 2021 | Jun. 07, 2021 | Mar. 02, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Business Combinations | |||||||||
Goodwill arising in the acquisition | $ 696,921 | $ 696,921 | $ 703,371 | ||||||
Revenue | 84,700 | $ 73,944 | 249,011 | $ 210,758 | |||||
Net income | $ 3,936 | $ (1,762) | $ 5,557 | $ (3,567) | |||||
Author! B.V. | |||||||||
Business Combinations | |||||||||
Business consideration transferred | $ 2,667 | ||||||||
Goodwill arising in the acquisition | 1,200 | ||||||||
Insight Medical Writing Limited | |||||||||
Business Combinations | |||||||||
Business consideration transferred | $ 15,197 | ||||||||
Finite-lived intangible assets acquired | 7,400 | ||||||||
Goodwill arising in the acquisition | $ 4,700 | ||||||||
Pinnacle 21, LLC | |||||||||
Business Combinations | |||||||||
Business consideration transferred | $ 339,075 | ||||||||
Goodwill arising in the acquisition | $ 180,947 | ||||||||
Equity acquired (as percentage) | 100% | ||||||||
Discount for lack of mobility (as percentage) | 7% | ||||||||
Integrated Nonclinical Development Solutions, Inc. | |||||||||
Business Combinations | |||||||||
Business consideration transferred | $ 8,048 | ||||||||
Goodwill arising in the acquisition | 2,910 | ||||||||
Customer relationships | Author! B.V. | |||||||||
Business Combinations | |||||||||
Finite-lived intangible assets acquired | 1,200 | ||||||||
Customer relationships | Integrated Nonclinical Development Solutions, Inc. | |||||||||
Business Combinations | |||||||||
Finite-lived intangible assets acquired | 2,380 | ||||||||
Non-compete agreements | Author! B.V. | |||||||||
Business Combinations | |||||||||
Finite-lived intangible assets acquired | $ 100 | ||||||||
Non-compete agreements | Integrated Nonclinical Development Solutions, Inc. | |||||||||
Business Combinations | |||||||||
Finite-lived intangible assets acquired | 100 | ||||||||
Developed technology | Integrated Nonclinical Development Solutions, Inc. | |||||||||
Business Combinations | |||||||||
Finite-lived intangible assets acquired | $ 1,040 |
Acquisitions - Fair Value of As
Acquisitions - Fair Value of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Oct. 01, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
Assets acquired and liabilities assumed: | |||
Goodwill | $ 696,921 | $ 703,371 | |
Pinnacle 21, LLC | |||
Fair value of consideration: | |||
Cash paid to sellers | $ 249,115 | ||
Cash paid to others and escrow | 17,200 | ||
Unregistered shares of Certara, Inc. (2,239,717 shares) | 72,760 | ||
Total consideration | $ 339,075 | ||
Unregistered shares of Certara, Inc., issued | 2,239,717 | ||
Assets acquired and liabilities assumed: | |||
Cash and cash equivalents | $ 19,409 | ||
Accounts receivable | 2,925 | ||
Other current assets | 619 | ||
Property and equipment | 258 | ||
Deferred tax assets | 2,907 | ||
Goodwill | 180,947 | ||
Long-term deposits | 34 | ||
Current liabilities | (794) | ||
Current portion of deferred revenue | (10,630) | ||
Net assets acquired | 339,075 | ||
Pinnacle 21, LLC | Trademarks | |||
Assets acquired and liabilities assumed: | |||
Identifiable intangible assets | 15,800 | ||
Pinnacle 21, LLC | Customer relationships | |||
Assets acquired and liabilities assumed: | |||
Identifiable intangible assets | 24,600 | ||
Pinnacle 21, LLC | Acquired software | |||
Assets acquired and liabilities assumed: | |||
Identifiable intangible assets | $ 103,000 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets and Other Long-Term Assets - Prepaid and other current assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | ||
Prepaid expenses | $ 6,313 | $ 8,973 |
Income tax receivable | 2,446 | 4,800 |
Research and development tax credit receivable | 3,295 | 3,951 |
Current portion of interest rate swap asset | 3,429 | 57 |
Other current assets | 1,020 | 767 |
Prepaid expenses and other current assets | $ 16,503 | $ 18,548 |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets and Other Long-Term Assets - Other long-term assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Prepaid Expenses and Other Current Assets and Other Long-Term Assets | ||
Long-term deposits | $ 1,143 | $ 1,160 |
Interest rate swap asset - long-term | 4,956 | |
Deferred financing cost | 797 | 1,007 |
Total other long-term assets | $ 6,896 | $ 2,167 |
Long-Term Debt and Revolving _3
Long-Term Debt and Revolving Line of Credit - Other Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||||||
Apr. 03, 2018 | Jan. 25, 2018 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Jun. 17, 2021 | Aug. 14, 2017 | |
Debt Instrument | |||||||||
Accrued interest payable | $ 55 | $ 55 | $ 96 | ||||||
Variable Interest Term Loan | |||||||||
Debt Instrument | |||||||||
Principal amount | $ 250,000 | ||||||||
Additional borrowings | $ 40,000 | $ 25,000 | |||||||
Interest incurred | 4,366 | $ 2,773 | 10,344 | $ 8,444 | |||||
Accrued interest payable | 55 | 55 | 30 | ||||||
Revolving Line of Credit | |||||||||
Debt Instrument | |||||||||
Maximum borrowing capacity of revolving line of credit | $ 100,000 | 20,000 | |||||||
Available borrowings | 100,000 | 100,000 | 100,000 | $ 80,000 | |||||
Interest incurred | 65 | $ 65 | 193 | $ 98 | |||||
Accrued interest payable | 2 | 2 | 66 | ||||||
Prepayment on the loan | 755 | ||||||||
Standby letter of credit | |||||||||
Debt Instrument | |||||||||
Available borrowings | $ 10,000 | ||||||||
letters of credit outstanding | $ 120 | $ 120 | $ 239 | ||||||
Term Loan | |||||||||
Debt Instrument | |||||||||
Effective interest rate (as a percent) | 4.60% | 3.68% | 4.60% | 3.68% |
Long-Term Debt and Revolving _4
Long-Term Debt and Revolving Line of Credit - Long-Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Debt Instrument | ||
Long-term debt, Gross | $ 298,225 | |
Less: debt issuance costs | (4,777) | $ (5,724) |
Total | 293,448 | 294,766 |
Current portion of long-term debt | (3,020) | (3,020) |
Long-term debt, net of current portion and debt issuance costs | 290,428 | 291,746 |
Term Loan | ||
Debt Instrument | ||
Long-term debt, Gross | $ 298,225 | $ 300,490 |
Long-Term Debt and Revolving _5
Long-Term Debt and Revolving Line of Credit - Maturity of Long Term Debt (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Maturities | |
Remainder of 2022 | $ 755 |
2023 | 3,020 |
2024 | 3,020 |
2025 | 3,020 |
2026 | 288,410 |
Total | $ 298,225 |
Leases (Details)
Leases (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Leases | ||
Operating leases - Weighted-average remaining lease term (years) | 3 years 3 months 29 days | |
Financing leases - Weighted-average remaining lease term (years) | 3 months 29 days | |
Operating leases - Weighted-average discount rate | 4.11% | |
Financing leases - Weighted-average discount rate | 6.19% | |
Operating lease right-of-use assets | $ 11,481 | $ 12,634 |
Finance lease, right of use assets | $ 63 | $ 271 |
Finance Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property, Plant and Equipment, Net | Property, Plant and Equipment, Net |
Total lease assets | $ 11,544 | $ 12,905 |
Current operating lease liabilities | 3,422 | 5,040 |
Current portion of finance lease liabilities | $ 100 | $ 293 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Current | Other Liabilities, Current |
Operating lease liabilities, net of current portion | $ 8,509 | $ 8,256 |
Non-current finance lease liabilities | 25 | |
Total lease liabilities | $ 12,031 | $ 13,614 |
Minimum | ||
Leases | ||
Remaining operating and capital lease term | 1 year | |
Maximum | ||
Leases | ||
Remaining operating and capital lease term | 6 years |
Leases - Maturities of our mini
Leases - Maturities of our minimum lease payments (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
OPERATING LEASE | |
Remainder of 2022 | $ 1,265 |
2023 | 4,110 |
2024 | 3,212 |
2025 | 2,466 |
2026 | 1,344 |
Thereafter | 130 |
Total future lease payments | 12,527 |
Less: imputed interest | (596) |
Total operating lease liabilities | 11,931 |
FINANCE LEASE | |
Remainder of 2022 | 76 |
2023 | 25 |
Total future lease payments | 101 |
Less: imputed interest | (1) |
Total finance lease liabilities | $ 100 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities - Accrued expenses (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Current Liabilities | ||
Accrued compensation | $ 22,497 | $ 24,848 |
Legal and professional accruals | 865 | 2,477 |
Local sales and VAT taxes | 44 | |
Interest payable | 55 | 96 |
Income taxes payable | 1,797 | 1,398 |
Accrued business acquisition liabilities | 700 | |
Other | 594 | 1,011 |
Total accrued expenses | $ 26,552 | $ 29,830 |
Equity-Based Compensation - Res
Equity-Based Compensation - Restricted Stock (Details) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) $ / shares shares | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) shareholder $ / shares shares | |
Weighted Average Grant Date Fair Value | |||||
Compensation expense | $ | $ 6,804 | $ 8,165 | $ 23,818 | $ 20,846 | |
Restricted Stock | |||||
Equity-Based Compensation | |||||
Vesting period | 3 years | ||||
Cancelled | 66,220 | ||||
Shares | |||||
Non-vested restricted stock beginning balance | 3,910,722 | ||||
Granted | 66,220 | ||||
Vested | (1,772,239) | ||||
Forfeited | (229,854) | ||||
Cancelled | (66,220) | ||||
Non-vested restricted stock Ending balance | 1,908,629 | 1,908,629 | 3,910,722 | ||
Weighted Average Grant Date Fair Value | |||||
Non-vested restricted stock of beginning balance (in dollars per share) | $ / shares | $ 23.18 | ||||
Granted (in dollars per share) | $ / shares | 17.07 | ||||
Vested (in dollars per share) | $ / shares | 22.87 | ||||
Forfeited (in dollars per share) | $ / shares | 23 | ||||
Cancelled (in dollars per share) | $ / shares | 23 | ||||
Non-vested restricted stock of ending balance (in dollars per share) | $ / shares | $ 23.28 | $ 23.28 | $ 23.18 | ||
Grant date fair value | $ | $ 2,762 | ||||
Number of shareholders with monthly vesting period | shareholder | 1 | ||||
Vesting period of shareholders | 2 years | ||||
Restricted Stock | Pinnacle 21, LLC | |||||
Shares | |||||
Granted | 87,127 | ||||
Restricted Stock | Employees | |||||
Equity-Based Compensation | |||||
Cancelled | 66,220 | ||||
Shares | |||||
Cancelled | (66,220) | ||||
Weighted Average Grant Date Fair Value | |||||
Vested | 5,182 | ||||
Time Based Class B Units | |||||
Equity-Based Compensation | |||||
Service period | 5 years | ||||
Weighted Average Grant Date Fair Value | |||||
Compensation expense | $ | $ 1,174 | $ 2,705 | |||
Unrecognized share-based compensation expense | $ | 3,821 | $ 3,821 | |||
Unrecognized share-based compensation expense, recognition period | 28 months | ||||
Performance Based Class B Units | |||||
Weighted Average Grant Date Fair Value | |||||
Compensation expense | $ | (319) | $ 3,758 | |||
Unrecognized share-based compensation expense | $ | 5,039 | $ 5,039 | |||
Unrecognized share-based compensation expense, recognition period | 22 months 15 days | ||||
Time Based Restricted Stock | Pinnacle 21, LLC | |||||
Weighted Average Grant Date Fair Value | |||||
Compensation expense | $ | 292 | $ 877 | |||
Unrecognized share-based compensation expense | $ | $ 1,593 | $ 1,593 | |||
Unrecognized share-based compensation expense, recognition period | 18 months 12 days |
Equity-Based Compensation - 202
Equity-Based Compensation - 2020 Incentive Plans (Details) - 2020 Incentive Plan $ in Thousands | Sep. 30, 2022 USD ($) shares |
Equity-Based Compensation | |
Number of units authorized (in units) | shares | 20,000,000 |
Authorized amount | $ | $ 1,000,000 |
Equity-Based Compensation - R_2
Equity-Based Compensation - Restricted Stock Units and Performance Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Weighted Average Grant Date Fair Value | ||||
Compensation expense | $ 6,804 | $ 8,165 | $ 23,818 | $ 20,846 |
Restricted Stock Units (RSUs) | ||||
Shares | ||||
Non-vested restricted stock beginning balance | 1,288,724 | |||
Granted | 1,415,901 | |||
Vested | (420,168) | |||
Forfeited | (149,610) | |||
Non-vested restricted stock Ending balance | 2,134,847 | 2,134,847 | ||
Weighted Average Grant Date Fair Value | ||||
Non-vested restricted stock of beginning balance (in dollars per share) | $ 29.28 | |||
Granted (in dollars per share) | 22.10 | |||
Vested (in dollars per share) | 28.52 | |||
Forfeited (in dollars per share) | 24.87 | |||
Non-vested restricted stock of ending balance (in dollars per share) | $ 24.98 | $ 24.98 | ||
Vested shares withheld for minimum statutory tax withholding requirements | 134,262 | |||
Vested but not distributed shares | 7,059 | |||
Compensation expense | $ 5,312 | $ 14,538 | ||
Unrecognized share-based compensation expense | $ 42,927 | $ 42,927 | ||
Unrecognized share-based compensation expense, recognition period | 25 months 15 days | |||
Performance Based Common Stock Units | ||||
Shares | ||||
Non-vested restricted stock beginning balance | 406,575 | |||
Granted | 361,147 | |||
Vested | (12,291) | |||
Forfeited | (57,077) | |||
Non-vested restricted stock Ending balance | 698,354 | 698,354 | ||
Weighted Average Grant Date Fair Value | ||||
Non-vested restricted stock of beginning balance (in dollars per share) | $ 27.35 | |||
Granted (in dollars per share) | 22.25 | |||
Vested (in dollars per share) | 24.83 | |||
Forfeited (in dollars per share) | 35.47 | |||
Non-vested restricted stock of ending balance (in dollars per share) | $ 24.10 | $ 24.10 | ||
Compensation expense | $ 345 | $ 1,940 | ||
Unrecognized share-based compensation expense | $ 3,467 | $ 3,467 | ||
Unrecognized share-based compensation expense, recognition period | 15 months 18 days |
Equity-Based Compensation - Com
Equity-Based Compensation - Compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Equity-Based Compensation | ||||
Compensation expense | $ 6,804 | $ 8,165 | $ 23,818 | $ 20,846 |
Cost of revenues | ||||
Equity-Based Compensation | ||||
Compensation expense | 2,454 | 1,442 | 6,834 | 3,738 |
Sales and marketing | ||||
Equity-Based Compensation | ||||
Compensation expense | 160 | 602 | 1,670 | 1,636 |
Research and development | ||||
Equity-Based Compensation | ||||
Compensation expense | 957 | 514 | 4,115 | 1,528 |
General and administrative | ||||
Equity-Based Compensation | ||||
Compensation expense | $ 3,233 | $ 5,607 | $ 11,199 | $ 13,944 |
Equity-Based Compensation - 2_2
Equity-Based Compensation - 2020 Employee Stock Purchase Plan (Details) - 2020 Employee Stock Purchase Plan - shares | 9 Months Ended | |
Sep. 30, 2022 | Dec. 10, 2020 | |
Equity-Based Compensation | ||
Number of units authorized (in units) | 1,700,000 | |
Stock issued | 0 |
Segment Data (Details)
Segment Data (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) segment | Sep. 30, 2021 USD ($) | |
Segments | ||||
Number of operating segment | segment | 1 | |||
Revenue | $ 84,700 | $ 73,944 | $ 249,011 | $ 210,758 |
Americas | ||||
Segments | ||||
Revenue | 64,367 | 54,911 | 186,784 | 150,594 |
EMEA | ||||
Segments | ||||
Revenue | 13,276 | 13,307 | 42,833 | 41,222 |
Asia Pacific | ||||
Segments | ||||
Revenue | $ 7,057 | $ 5,726 | $ 19,394 | $ 18,942 |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Taxes | ||||
Effective tax rate | 54% | 48% | 63% | (11.00%) |
Earnings per Share (Details)
Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net income (loss) available to common shareholders | $ 3,936 | $ (1,762) | $ 5,557 | $ (3,567) |
Denominator: | ||||
Basic weighted average common shares outstanding (in shares) | 157,140,166 | 149,016,609 | 156,523,022 | 147,894,227 |
Effects of dilutive securities | 2,447,479 | 2,869,512 | ||
Diluted weighted average common shares outstanding (in shares) | 159,587,645 | 149,016,609 | 159,392,534 | 147,894,227 |
Earnings per share: | ||||
Earnings per share, Basic (in dollars per share) | $ 0.03 | $ (0.01) | $ 0.04 | $ (0.02) |
Earnings per share, Diluted (in dollars per share) | $ 0.02 | $ (0.01) | $ 0.03 | $ (0.02) |