Cover
Cover - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 02, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Transition Report | false | ||
Entity File Number | 001-40982 | ||
Entity Registrant Name | HireRight Holdings Corporation | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 83-1092072 | ||
Entity Address, Address Line One | 100 Centerview Drive, Suite 300 | ||
Entity Address, City or Town | Nashville | ||
Entity Incorporation, State or Country Code | TN | ||
Entity Address, Postal Zip Code | 37214 | ||
City Area Code | (615) | ||
Local Phone Number | 320-9800 | ||
Title of 12(b) Security | Common stock, par value $0.001 per share | ||
Trading Symbol | HRT | ||
Security Exchange Name | NYSE | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | true | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 77,046,086 | ||
Entity Public Float | $ 444.9 | ||
Documents Incorporated by Reference | Information required in response to Part III of Form 10-K (Items 10, 11, 12, 13 and 14) is hereby incorporated by reference to portions of the Registrant’s Proxy Statement for the Annual Meeting of Stockholders to be held in 2023. The Proxy Statement will be filed by the Registrant with the Securities and Exchange Commission no later than 120 days after the end of the Registrant’s fiscal year ended December 31, 2022. | ||
Entity Central Index Key | 0001859285 | ||
Amendment Flag | false | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2022 |
Audit Information
Audit Information | 12 Months Ended |
Dec. 31, 2022 | |
Audit Information [Abstract] | |
Auditor Name | PricewaterhouseCoopers LLP |
Auditor Location | Irvine, California |
Auditor Firm ID | 238 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets | ||
Cash and cash equivalents | $ 162,092 | $ 111,032 |
Restricted cash | 1,310 | 5,182 |
Accounts receivable, net of allowance for doubtful accounts of $5,812 and $4,284 at December 31, 2022 and 2021, respectively | 136,656 | 142,473 |
Prepaid expenses and other current assets | 18,745 | 18,583 |
Total current assets | 318,803 | 277,270 |
Property and equipment, net | 9,045 | 11,127 |
Right-of-use assets, net | 8,423 | 0 |
Intangible assets, net | 331,598 | 389,483 |
Goodwill | 809,463 | 819,538 |
Cloud computing software, net | 35,230 | 8,133 |
Deferred tax assets | 74,236 | 0 |
Other non-current assets | 18,949 | 18,211 |
Total assets | 1,605,747 | 1,523,762 |
Current liabilities | ||
Accounts payable | 11,571 | 13,688 |
Accrued expenses and other current liabilities | 75,208 | 75,294 |
Accrued salaries and payroll | 31,075 | 29,280 |
Derivative instruments, short-term | 0 | 16,662 |
Debt, current portion | 8,350 | 8,350 |
Total current liabilities | 126,204 | 143,274 |
Debt, long-term portion | 683,206 | 688,683 |
Derivative instruments, long-term | 0 | 11,444 |
Tax receivable agreement liability | 210,543 | 210,639 |
Deferred taxes liabilities | 5,748 | 14,765 |
Operating lease liabilities, long- term | 10,055 | 0 |
Other non-current liabilities | 1,673 | 9,240 |
Total liabilities | 1,037,429 | 1,078,045 |
Commitments and contingent liabilities (Note 14) | ||
Preferred stock, $0.001 par value, authorized 100,000,000 shares; none issued and outstanding as of December 31, 2022 and 2021 | 0 | 0 |
Common stock, $0.001 par value, authorized 1,000,000,000 shares; 79,660,397 and 79,392,937 shares issued, and 78,131,568 and 79,392,937 shares outstanding as of December 31, 2022 and 2021, respectively | 80 | 79 |
Additional paid-in capital | 805,799 | 793,382 |
Treasury stock, at cost; 1,528,829 shares and no shares repurchased at December 31, 2022 and 2021, respectively | (16,827) | 0 |
Accumulated deficit | (215,790) | (360,364) |
Accumulated other comprehensive income (loss) | (4,944) | 12,620 |
Total stockholders’ equity | 568,318 | 445,717 |
Total liabilities and stockholders’ equity | $ 1,605,747 | $ 1,523,762 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 5,812 | $ 4,284 |
Preferred stock, par (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 100,000,000 | 100,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, issued (in shares) | 79,660,397 | 79,392,937 |
Common stock outstanding (in shares) | 78,131,568 | 79,392,937 |
Treasury stock (in shares) | 1,528,829 | 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Statement [Abstract] | |||
Revenues | $ 806,668 | $ 730,056 | $ 540,224 |
Expenses | |||
Cost of services (exclusive of depreciation and amortization below) | 435,740 | 406,671 | 301,845 |
Selling, general and administrative | 200,853 | 188,298 | 173,579 |
Depreciation and amortization | 71,959 | 78,357 | 76,932 |
Total expenses | 708,552 | 673,326 | 552,356 |
Operating income (loss) | 98,116 | 56,730 | (12,132) |
Other expenses | |||
Interest expense | 32,122 | 74,815 | 75,118 |
Other expense, net | 472 | 532 | 889 |
Total other expenses | 32,594 | 75,347 | 76,007 |
Income (loss) before income taxes | 65,522 | (18,617) | (88,139) |
Income tax (benefit) expense | (79,052) | 2,686 | 3,938 |
Net income (loss) | $ 144,574 | $ (21,303) | $ (92,077) |
Net income (loss) per share: | |||
Basic (in dollars per share) | $ 1.82 | $ (0.35) | $ (1.61) |
Diluted (in dollars per share) | $ 1.82 | $ (0.35) | $ (1.61) |
Weighted average shares outstanding: | |||
Basic (in shares) | 79,344,547 | 60,821,472 | 57,168,291 |
Diluted (in shares) | 79,443,263 | 60,821,472 | 57,168,291 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Statement of Other Comprehensive Income [Abstract] | ||||
Net income (loss) | $ 144,574 | $ (21,303) | $ (92,077) | |
Other comprehensive income (loss), net of tax | ||||
Unrealized gain (loss) on interest rate swaps | 7,981 | 5,746 | (36,609) | |
Reclassification adjustment included in earnings | [1] | (10,955) | 19,723 | 16,017 |
Total unrealized gain (loss) | (2,974) | 25,469 | (20,592) | |
Currency translation adjustment, net of tax benefit (expense) of $(175), $(2) and $90 for the years ended December 31, 2022, 2021 and 2020, respectively | (14,590) | (2,726) | 5,230 | |
Other comprehensive income (loss) | (17,564) | 22,743 | (15,362) | |
Comprehensive income (loss) | $ 127,010 | $ 1,440 | $ (107,439) | |
[1]Represents the reclassification of the effective portion of the gain or loss on the Company’s interest rate swap into interest expense. Includes reclassification to earnings as a reduction to interest expense of unrealized gains included in accumulated other comprehensive income (loss) on the consolidated balance sheet related to the interest rate swap agreements terminated on February 18, 2022. See Note 11 for additional information. |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statement of Other Comprehensive Income [Abstract] | |||
Currency translation adjustment, tax portion | $ (175) | $ (2) | $ 90 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Class A Member Units | Common Stock | Treasury Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive (Loss) Income |
Beginning balance (in shares) at Dec. 31, 2019 | 57,168,291 | 0 | |||||
Beginning balance at Dec. 31, 2019 | $ 361,108 | $ 590,711 | $ 0 | $ 0 | $ 12,142 | $ (246,984) | $ 5,239 |
Beginning balance, treasury stock (in shares) at Dec. 31, 2019 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | (92,077) | (92,077) | |||||
Stock-based compensation | 3,218 | 3,218 | |||||
Other comprehensive income (loss) | (15,362) | (15,362) | |||||
Ending balance (in shares) at Dec. 31, 2020 | 57,168,291 | 0 | |||||
Ending balance at Dec. 31, 2020 | 256,887 | $ 590,711 | $ 0 | $ 0 | 15,360 | (339,061) | (10,123) |
Ending balance, treasury stock (in shares) at Dec. 31, 2020 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Conversion of units (in shares) | (57,168,291) | (57,168,291) | |||||
Corporate Conversion of Class A member Units to common stock | 0 | $ (590,711) | $ 57 | 590,654 | |||
Issuance of common stock in connection with initial public offering, net of offering costs, underwriting discounts and commissions (in shares) | 22,224,646 | ||||||
Issuance of common stock in connection with initial public offering, net of offering costs, underwriting discounts and commissions | 393,501 | $ 22 | 393,479 | ||||
Net income (loss) | (21,303) | (21,303) | |||||
Stock-based compensation | 4,528 | 4,528 | |||||
Tax receivable agreement | (210,639) | (210,639) | |||||
Other comprehensive income (loss) | 22,743 | 22,743 | |||||
Ending balance (in shares) at Dec. 31, 2021 | 0 | 79,392,937 | |||||
Ending balance at Dec. 31, 2021 | 445,717 | $ 0 | $ 79 | $ 0 | 793,382 | (360,364) | 12,620 |
Ending balance, treasury stock (in shares) at Dec. 31, 2021 | 0 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income (loss) | 144,574 | 144,574 | |||||
Stock-based compensation | 11,474 | 11,474 | |||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes (in shares) | 267,460 | ||||||
Issuance of common stock under stock-based compensation plans, net of shares withheld for employee taxes | 944 | $ 1 | 943 | ||||
Repurchases of common stock (in shares) | (1,528,829) | (1,528,829) | |||||
Repurchase of common stock | (16,827) | $ (16,827) | |||||
Other comprehensive income (loss) | (17,564) | (17,564) | |||||
Ending balance (in shares) at Dec. 31, 2022 | 0 | 78,131,568 | |||||
Ending balance at Dec. 31, 2022 | $ 568,318 | $ 0 | $ 80 | $ (16,827) | $ 805,799 | $ (215,790) | $ (4,944) |
Ending balance, treasury stock (in shares) at Dec. 31, 2022 | 1,528,829 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | |||
Net income (loss) | $ 144,574 | $ (21,303) | $ (92,077) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||
Depreciation and amortization | 71,959 | 78,357 | 76,932 |
Deferred income taxes | (82,658) | 1,485 | 2,903 |
Amortization of debt issuance costs | 3,345 | 4,080 | 4,036 |
Amortization of contract assets | 4,505 | 3,796 | 2,984 |
Amortization of right-of-use assets | 2,973 | 0 | 0 |
Amortization of unrealized gains on terminated interest rate swap agreements | (12,634) | 0 | 0 |
Amortization of cloud computing software costs | 2,690 | 21 | 0 |
Stock-based compensation | 11,474 | 4,528 | 3,218 |
Change in tax receivable agreement liability | (96) | 0 | 0 |
Loss on extinguishment of debt | 0 | 5,006 | 0 |
Other non-cash charges, net | 2,927 | (311) | 1,731 |
Changes in operating assets and liabilities: | |||
Accounts receivable | 3,887 | (35,745) | (10,245) |
Prepaid expenses and other current assets | (160) | 240 | 1,408 |
Cloud computing software | (29,788) | (8,154) | 0 |
Other non-current assets | (5,309) | (5,242) | (4,181) |
Accounts payable | (4,953) | (10,994) | 7,767 |
Accrued expenses and other current liabilities | (567) | 18,487 | 12,020 |
Accrued salaries and payroll | 1,678 | 6,156 | 9,518 |
Operating lease liabilities, net | (4,659) | 0 | 0 |
Other non-current liabilities | (1,460) | 7,067 | 412 |
Net cash provided by operating activities | 107,728 | 47,474 | 16,426 |
Cash flows from investing activities | |||
Purchases of property and equipment | (4,456) | (6,228) | (5,707) |
Capitalized software development | (12,475) | (7,809) | (6,403) |
Cash paid for acquisitions, net of cash acquired | 0 | 0 | (96) |
Net cash used in investing activities | (16,931) | (14,037) | (12,206) |
Cash flows from financing activities | |||
Proceeds from issuance of common stock in initial public offering, net of underwriting discounts and commissions | 0 | 399,044 | 0 |
Payment of initial public offering issuance costs | 0 | (5,543) | 0 |
Repayments of debt | (8,350) | (323,350) | (8,350) |
Borrowings on line of credit | 0 | 30,000 | 50,000 |
Repayments on line of credit | 0 | (40,000) | (40,000) |
Payment of contingent consideration and holdbacks | 0 | 0 | (2,188) |
Payments for termination of interest rate swap agreements | (18,445) | 0 | 0 |
Repurchase of common stock | (15,671) | 0 | 0 |
Proceeds from issuance of common stock in connection with stock-based compensation plans | 1,506 | 0 | 0 |
Taxes paid related to net share settlement of equity awards | (562) | 0 | 0 |
Other financing | (399) | (164) | (446) |
Net cash provided by (used in) financing activities | (41,921) | 59,987 | (984) |
Net increase in cash, cash equivalents and restricted cash | 48,876 | 93,424 | 3,236 |
Effect of exchange rates | (1,688) | (1,269) | (357) |
Cash, cash equivalents and restricted cash | |||
Beginning of period | 116,214 | 24,059 | 21,180 |
End of period | 163,402 | 116,214 | 24,059 |
Cash paid for | |||
Interest | 41,142 | 65,530 | 71,043 |
Income taxes | 4,395 | 1,019 | 1,131 |
Supplemental schedule of non-cash activities | |||
Recognition of liability under tax receivable agreement | 0 | 210,639 | 0 |
Unpaid property and equipment and capitalized software purchases | $ 740 | $ 1,526 | $ 1,216 |
Organization, Basis of Presenta
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies | Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies Organization Description of Business HireRight GIS Group Holdings LLC (“HGGH”) was formed in July 2018 in connection with the combination of two groups of companies: the HireRight Group and the General Information Services (“GIS”) Group, each of which includes a number of wholly-owned subsidiaries that conduct the Company’s business in the United States, as well as other countries. Since July 2018, the combined group of companies and their subsidiaries have operated as a unified operating company providing screening and compliance services, predominantly under the HireRight brand. Corporate Conversion and Stock Split On October 15, 2021, HGGH converted into a Delaware corporation and changed its name to HireRight Holdings Corporation (“HireRight” or the “Company”). In conjunction with the conversion, all of HGGH’s outstanding equity interests were converted into shares of common stock of HireRight Holdings Corporation. The conversion and related transactions are referred to herein as the “Corporate Conversion.” The Corporate Conversion did not affect the assets and liabilities of HGGH, which became the assets and liabilities of HireRight Holdings Corporation. On October 18, 2021, HireRight Holdings Corporation effected a one-for-15.969236 reverse stock split (“Stock Split”). All shares of the Company’s common stock, stock-based instruments, and per-share data included in the consolidated financial statements give retroactive effect to the Stock Split. Initial Public Offering On November 2, 2021, the Company completed its initial public offering (“IPO”), in which the Company issued 22,222,222 shares of its common stock. The shares began trading on the New York Stock Exchange on October 29, 2021 under the symbol “HRT.” The shares were sold at an IPO price of $19.00 per share for net proceeds of $393.5 million, after deducting underwriting discounts and commissions of $23.2 million and other offering costs payable by the Company of $5.5 million. On November 30, 2021, the Company issued an additional 2,424 shares pursuant to the partial exercise of the underwriters’ option to purchase additional shares for net proceeds of an immaterial amount. Income Tax Receivable Agreement In connection with the Company’s IPO, the Company entered into an income tax receivable agreement (“TRA”), which provides for the payment by the Company over a period of approximately 12 years to pre-IPO equityholders or their permitted transferees of 85% of the benefits, if any, that the Company and its subsidiaries realize, or are deemed to realize (calculated using certain assumptions) in U.S. federal, state, and local income tax savings as a result of the utilization (or deemed utilization) of certain existing tax attributes. During the year ended December 31, 2022, the Company recognized a benefit of $0.1 million related to a decrease in the estimated liability pertaining to the TRA as a result of federal return filing adjustments. The benefit is included in Other expense, net in the Company’s consolidated statements of operations. As of December 31, 2022 and December 31, 2021, the Company had a total liability of $210.5 million and $210.6 million, respectively, in connection with the projected obligations under the TRA on its consolidated balance sheets. Basis of Presentation and Principles of Consolidation The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). All intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to prior year presentation to conform to current year presentation. Significant Accounting Policies Use of Estimates Preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates, judgments, and assumptions that affect the amounts reported and disclosed in the financial statements. The Company believes that the estimates, judgments, and assumptions used to determine certain amounts that affect the financial statements are reasonable based upon information available at the time they are made. The Company uses such estimates, judgments, and assumptions when accounting for items and matters such as, but not limited to, the allowance for doubtful accounts, customer rebates, impairment assessments and charges, recoverability of long-lived assets, deferred tax assets, lease accounting, uncertain tax positions, income tax expense, liabilities under the TRA, derivative instruments, fair value of debt, stock-based compensation expense, useful lives assigned to long-lived assets, and the stand-alone selling price of performance obligations for revenue recognition purposes. Results and outcomes could differ materially from these estimates, judgments, and assumptions due to risks and uncertainties. Segment Reporting The Company determines its operating segments based on how the chief operating decision maker (“CODM”) manages the business, allocates resources, makes operating decisions and evaluates operating performance. The Company’s Chief Executive Officer is the Company’s CODM. The Company’s operating segments may not be comparable to similar companies in similar industries. The Company operates in one reportable segment. Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Due to the short maturity of these investments, the carrying values on the consolidated balance sheets approximate fair value. Fair value for cash and cash equivalents are Level 1 on the fair value hierarchy discussed below. Cash is held in highly-rated financial institutions. Restricted Cash Restricted cash represents cash that is not immediately available for general use due to certain legal requirements. As of both December 31, 2022 and 2021, the Company had restricted cash of $1.1 million, held in escrow for the benefit of former investors in the Company pursuant to the terms of the divestiture by the Company of a former affiliate in April 2018. A total of $3.9 million was held in escrow as of December 31, 2021 related to prior restructurings from predecessor entities, such amount was paid during the year ended December 31, 2022. Accounts Receivable and Allowance for Doubtful Accounts The Company makes ongoing estimates related to the collectability of its accounts receivable. The Company maintains an allowance for estimated losses resulting from the assessment of uncollectible accounts and records accounts receivable at net realizable value. The Company’s estimates are based on a variety of factors, including the length of time receivables are past due, economic trends and conditions affecting its customer base, significant non-recurring events, and historical write-off experience. Deferred Offering Costs Prior to the IPO, the Company capitalized offering costs incurred in connection with the anticipated sale of common stock in the IPO. Deferred offering costs consist of certain legal, accounting, and other IPO-related costs. Upon completion of the IPO and the partial exercise of the underwriters’ option to purchase additional shares, $5.5 million of deferred offering costs were reclassified from prepaid expenses and other current assets to stockholders’ equity as a reduction of the proceeds received by the Company on the Company’s consolidated balance sheets. Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the assets’ estimated useful lives, which are periodically reviewed. Leasehold improvements are stated at cost and amortized on a straight-line basis over their estimated economic useful lives or the lease term, whichever is shorter. The Company’s lease terms range from 1 to 12 years. The estimated useful lives for significant components of property and equipment are as follows: Computer equipment and purchased software 3-5 years Equipment 3-7 years Furniture and fixtures 3-7 years The useful lives are estimated based on historical experience with similar assets and consider anticipated technological changes. The Company periodically reviews these lives relative to physical factors, economic factors, and industry trends. If there are changes in the planned use of property and equipment or technological changes occur more rapidly than anticipated, the useful lives assigned may be adjusted resulting in a change in depreciation and amortization expense recognition or write-offs in the period in which such changes occur. Expenditures for major renewals and betterments that extend the useful lives or capabilities of property and equipment are capitalized and depreciated over the estimated useful lives. Expenditures for maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and the related accumulated depreciation or amortization are removed from the consolidated balance sheets and any resulting gain or loss is recognized in the consolidated statements of operations. Leases The Company leases office facilities under operating lease agreements. All of the Company’s leases are operating leases. The Company made an accounting policy election not to recognize right-of-use (“ROU”) assets and lease liabilities for leases with a term of twelve months or less. For all other leases, the Company recognizes ROU assets and lease liabilities based on the present value of lease payments over the lease term at the commencement date of the lease (or January 1, 2022 for existing leases upon the adoption of Topic 842). Lease payments may include fixed rent escalation clauses or payments that depend on an index (such as the consumer price index). Subsequent changes to an index and any other periodic market-rate adjustments to base rent are recorded in variable lease expense in the period incurred. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by any lease incentives. The Company accounts for lease and non-lease components in its contracts as a single lease component. The non-lease components typically represent additional services transferred to the Company, such as common area maintenance for real estate, which are variable in nature and recorded in variable lease expense in the period incurred. The Company uses its incremental borrowing rate which is the rate of interest the Company would have to pay to borrow on a collateralized basis over a similar term and amount in a similar economic environment to determine the present value of lease payments as the Company’s leases do not have a readily determinable implicit discount rate. Judgment is applied in assessing factors such as Company specific credit risk, lease term, nature and quality of the underlying collateral, currency, and economic environment in determining the incremental borrowing rate to apply to each lease. Intangible Assets, Net Intangible assets are carried at amortized cost. Such assets primarily consist of acquired contractual relationships, trade names, customer relationships, databases, internally-developed software, and favorable lease contracts. Amortization is recorded using the straight-line method using estimated useful lives of the assets as shown below: Customer relationships 9 years Trade names 15 years Databases 5 years Developed software - for internal use 3 and 7 years Favorable contracts 5-6 years Intangible asset amortization expense is included in depreciation and amortization expense in the consolidated statements of operations. The Company periodically reassesses the remaining useful lives of its intangible assets. Developed Software-For Internal Use The Company’s technology platform comprises a set of software-based systems and databases that work together in support of the specific risk management and compliance objectives of the Company’s customers. The Company’s customers and applicants access the Company’s global platform through HireRight Screening Manager and HireRight Applicant Center. The Company’s platform integrates through the HireRight Connect application programming interface (“API”) with third-party human capital management (“HCM”) systems, including UKG, Workday, IBM, Oracle, and SAP. The Company’s capitalized software development costs relate primarily to development of enterprise resource and order management software, and also the Company’s self-service system for customers through backgroundchecks.com. Developed software costs, including employee costs and costs incurred by third-parties, are capitalized as intangible assets during the application development stage. Costs incurred during subsequent efforts to significantly upgrade or enhance the functionality of the software are also capitalized. Software costs, including training and maintenance costs, incurred during the preliminary project and post implementation stages are expensed as incurred. The useful lives noted in the table above are estimated based on historical experience and anticipated technological changes. If there are changes in the planned use of developed software or technological changes occur more rapidly than anticipated, the useful lives assigned may be adjusted resulting in a change in amortization expense recognition or write-offs in the period in which such changes occur. Amortization of software costs are recorded in depreciation and amortization in the consolidated statements of operations and begins once the project is substantially complete and the software is ready for its intended use. Implementation Costs Incurred in Cloud Computing Arrangements For cloud computing arrangements that are a service contract, the Company capitalizes certain implementation costs incurred, including employee costs and third-party costs, during the application development stage, and expenses costs as incurred during the preliminary project and post-implementation stages. Capitalized implementation costs are expensed on a straight-line basis over the estimated useful life. Capitalized amounts related to such arrangements are recorded within prepaid expenses and other current assets and within cloud computing software, net in the consolidated balance sheets and amortized to selling, general and administrative expenses in the consolidated statement of operations. Long-Lived Assets The carrying values of definite-lived long-lived assets, which include property and equipment and intangible assets subject to amortization, are evaluated for impairment when events or changes in circumstances indicate the carrying value of such assets may not be recoverable. If an indication of impairment is present, the Company compares the operating performance and future undiscounted cash flows of the assigned asset or asset groups to the underlying carrying value. Charges for impairment losses are recorded if the sum of expected undiscounted future cash flows is less than the carrying value of an asset or asset group. Any necessary write-downs are treated as permanent reductions in the carrying amount of the assets. For the years ended December 31, 2022, 2021, and 2020, the Company did not identify any indicators of impairment, and no impairments of long-lived assets were recorded. Goodwill Goodwill is the excess of the purchase price paid over the fair value of the net assets acquired in a business combination and reflects expected benefits, such as synergies, the ability to access new markets or other favorable impacts. The Company evaluates goodwill for potential impairment annually on the last day of the fourth fiscal quarter, or more frequently if a triggering event has occurred. Significant judgment is involved in determining if an indicator of impairment has occurred. Such indicators include a decline in expected cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, or slower growth rates, lower stock price, among others. In testing goodwill for impairment, the Company first assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if the Company concludes otherwise, it proceeds to a quantitative assessment. If the net book value of the reporting unit’s assets exceeds the reporting unit’s fair value, the goodwill is written down by such excess. For the years ended December 31, 2022, 2021, and 2020, no impairments of goodwill were recorded. Derivatives and Hedging Activities The Company is exposed to variability in future cash flows resulting from fluctuations in interest rates related to its variable rate debt. The Company used interest rate swaps through February 18, 2022, the date the interest rate swaps were terminated, to manage the level of exposure to the risk of fluctuations in interest rates. Prior to termination, the Company designated these interest rate swaps as cash flow hedges of forecasted variable rate interest payments on certain U.S. dollar denominated debt principal balances. The Company recognized all derivative instruments as either assets or liabilities at fair value in the consolidated balance sheets. For derivative instruments that were designated and qualified as cash flow hedges, the effective portion of the gain or loss on such derivative instruments is reported as a component of other comprehensive (loss) income and reclassified into interest expense in the same period or periods during which the hedged debt affects earnings. Following the terminations, unrealized gains related to the terminated interest rate swap agreements included in accumulated other comprehensive income (loss) will be reclassified to earnings as reductions to interest expense through December 31, 2023. Gains and losses on the derivative instruments representing hedge ineffectiveness are recognized in current earnings. The Company had no hedge ineffectiveness at February 18, 2022, the date of termination, and for the years ended December 31, 2021, and 2020. For further information on the termination of the interest rate swap agreements, see “Note 11 — Derivative Instruments.” Contingencies The Company is periodically exposed to various contingencies in the ordinary course of conducting its business, including certain litigation, contractual disputes, employee relations matters, various tax or other governmental audits, and trademark and intellectual property matters and disputes. The Company records a liability for such contingencies to the extent that their occurrence is probable and the related losses are estimable. If it is reasonably possible that an unfavorable settlement of a contingency could exceed the established liability, the Company discloses the estimated impact on its liquidity, financial condition, and results of operations. As the ultimate resolution of contingencies is inherently unpredictable, these assessments can involve judgments about future events including, but not limited to, court rulings, negotiations between affected parties, and governmental actions. As a result, the accounting for loss contingencies relies heavily on management’s judgment in developing the related estimates and assumptions. See Note 14 — Commitments and Contingent Liabilities and Note 15 — Legal Proceedings for additional information regarding the Company’s contingencies and legal proceedings. Treasury Stock The Company accounts for common stock repurchases as treasury stock under the cost method and presents the cost as a component of stockholders’ equity in the consolidated balance sheets. Repurchased shares are held as treasury stock until such time as they are retired or re-issued. The Company did not reissue nor cancel treasury stock during the year ended December 31, 2022. Revenue Recognition The Company records revenue based on a five-step model in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ( “ASC 606” ) . For the Company’s contracts with customers, the Company identifies the performance obligations, determines the transaction price, allocates the contract consideration to the performance obligations utilizing the standalone selling price (“SSP”) of each performance obligation, and recognizes revenue when the performance obligation is satisfied. The Company’s revenues are primarily derived from contracts to provide services. The Company considers the nature of these contracts and the types of services provided when it determines the proper accounting method for a particular contract. The Company transfers control and records revenue upon completion of the performance obligation. The Company’s contracts generally do not include any obligations for returns, refunds, or similar obligations, nor does the Company have a practice of granting significant concessions. The Company extends commercial credit terms to its customers, which may vary by contract and customer. The Company’s customer contracts do not have any significant financing components as payment is received at or shortly after the point of sale. The Company may provide rebate incentives, which are accounted for as variable consideration when determining the amount of revenue to recognize. Rebate incentives are estimated as revenue is earned and updated at the end of each reporting period if additional information becomes available. The Company uses the most likely amount method to determine that the variable consideration is properly constrained. Changes to the Company’s estimated variable consideration were not material for the periods presented. The Company classifies its rebate incentives in accrued expenses and other current liabilities in the consolidated balance sheets. For additional information regarding Revenue see Note 16 — Revenues . Costs to Obtain Contracts with Customers Costs to obtain contracts with customers primarily consist of sales commissions paid to the Company’s sales force, which are based on commissionable revenue from background screening reports that the Company provides to its customers. The Company has elected the practical expedient in ASC 340-40 - “Other Assets and Deferred Costs” , which states the Company may recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. Costs to Fulfill Contracts with Customers The Company recognizes an asset, presented as contract implementation costs within the consolidated balance sheets, for the incremental costs to fulfill contracts with customers, including, for example, salaries and wages incurred to set up the customer and service offerings integrated in its platform. Significant judgment is required to determine whether expenses are incremental and can be specifically identified, whether the costs enhance resources that will be used in satisfying future performance obligations, whether the costs are expected to be recoverable, and the period over which future benefit is expected to be derived. The Company generally amortizes these costs on a straight-line basis over the expected period of benefit, which has been determined to be approximately seven years. The expected period of benefit was determined by taking into consideration the expected life of customer contracts and the useful life of the Company’s technology. See Note 3 — Prepaid Expenses and Other Current Assets, and Other Non-Current Assets for further information. Cost of Services The Company incurs costs in the creation, compilation and delivery of its services and service offerings, which are referred to as cost of services. Cost of services primarily consist of data acquisition expenses, cost of direct labor to collect, compile and prepare background screening reports, and expenses to deliver the reports to customers. The Company incurs expenses to acquire data from multiple sources in the completion of its services, such as data from third-party providers, various governmental jurisdictions such as county level court records, educational institutions, public record sources and various other data sources. Cost of services does not include depreciation and amortization expenses. Stock-Based Compensation The Company measures the cost of services received in exchange for stock-based awards, including stock options, restricted stock awards, and restricted stock units, granted to employees, directors, and non-employees, based on the estimated fair value of the awards on the date of grant. The Company recognizes that cost over the period during which an individual is required to provide service in exchange for the award, usually the vesting period. Performance-based stock options, granted by the Company prior to the IPO, were earned based upon the Company’s performance against specified levels of cash-on-cash return to the Company’s investors as a multiple of invested capital (“MOIC”) on their investments in the Company. Compensation expense was updated for the Company’s expected performance targets at the end of each reporting period. The Company estimated the fair value of performance-based stock options granted pre-IPO using the Monte Carlo simulation method and for stock options granted in conjunction with and post-IPO using the Black-Scholes pricing model. For performance-based restricted stock units, the expense is based on the grant date fair value of the stock, recognized over a service period depending upon the applicable performance condition. For performance-based restricted stock units, the Company re-assesses the probability of achieving the applicable performance condition each reporting period and adjusts the recognition of expense accordingly. The fair value of restricted stock units is based on the fair value of the Company’s common stock on the date of grant. Forfeitures are recognized as they occur. Stock-based compensation expense is included as a component of cost of services (exclusive of depreciation and amortization) and selling, general and administrative expenses. The Monte Carlo simulation method incorporates assumptions as to equity-share price, volatility, the expected term of awards, a risk-free interest rate and dividend yield. In valuing awards, significant judgment is required in determining the expected volatility and the expected term of the awards. The Black-Scholes pricing model requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the options, stock price volatility, which is determined based on the historical volatilities of several publicly listed peer companies as the Company has only a short trading history for its common stock, the risk-free interest rate and expected dividends. The assumptions used in the Company’s Black-Scholes option-pricing model represent management’s estimates and involve numerous variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective. Income Taxes Deferred income tax assets and liabilities are estimated based on enacted tax laws in the jurisdictions where the Company conducts business. Deferred income tax assets and liabilities represent future tax benefits or obligations of the Company’s legal entities. These deferred income tax balances arise from temporary differences due to divergent treatment of certain items for accounting and income tax purposes. Deferred income tax assets are evaluated to ensure that estimated future taxable income will be sufficient in character, amount, and timing to result in the use of the deferred income tax assets. “Character” refers to the type (capital gain vs. ordinary income) as well as the source (foreign vs. domestic) of the income generated. “Timing” refers to the period in which future income is expected to be generated. Timing is important because net operating losses (“NOLs”) in certain jurisdictions expire if not used within an established statutory time frame. Based on these evaluations, the Company determines whether it is more likely than not that expected future earnings will be sufficient to use its deferred tax assets. During the year ended December 31, 2022, the Company determined sufficient positive evidence existed to conclude that the U.S. deferred tax assets are more likely than not realizable. See Note 17 — Income Taxes for additional information regarding the Company’s deferred income tax assets. Judgments and estimates are required to determine income tax expense and deferred income tax valuation allowances and in assessing exposures related to income tax matters. The effect of a change in income tax rates on deferred income tax assets and liabilities is recognized in the year in which the income tax rate change is enacted. Interest and penalties related to uncertain income tax positions are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related income tax benefits are recognized. The Company accounts for uncertain tax positions by recognizing a tax benefit or liability at the largest amount that, in its judgment, is more than 50% likely to be realized or paid based on the technical merits of the position. The Company does not provide for income taxes on the undistributed earnings or losses of its non-U.S. subsidiaries. Management intends that undistributed earnings will be indefinitely reinvested. The Company records deferred income taxes on the temporary differences between the book and tax basis in domestic subsidiaries where required. Fair Value Measurements The accounting standard for fair value measurements defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and requires disclosures about fair value measurements. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows: Level 1 Quoted prices in active markets for identical assets and liabilities; Level 2 Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data; or Level 3 Amounts derived from valuation models in which unobservable inputs reflect the reporting entity’s own assumptions about the assumptions of market participants that would be used in pricing the asset or liability, such as discounted cash flow models or valuations. Recurring Fair Value Measurements The Company’s outstanding debt instruments are recorded at their carrying values in the consolidated balance sheets, which may differ from their respective fair values. The estimated fair value of the Company’s debt, which is Level 2 of the fair value hierarchy, is based on quoted prices for similar instruments in active markets or identical instruments in markets that are not active. See Note 10 — Debt for more information for fair value disclosures related to the Company’s debt. The Company’s derivative instruments, all of which the Company terminated during the quarter ended March 31, 2022, consisted of interest rate swap contracts which were Level 2 of the fair value hierarchy and reported in the consolidated balance sheets as of December 31, 2021 as derivative liabilities short-term and derivative liabilities long-term. See Note 11 — Derivative Instruments for more information. Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company’s cash balances are placed |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Recently Issued Accounting Pronouncements Adopted Accounting Pronouncements Adopted in 2022 In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “ Leases (Topic 842) ” (“Topic 842”) to increase transparency and comparability among organizations related to their leasing arrangements. The update requires lessees to recognize most leases, with the exception of short-term leases if a policy election is made, on their balance sheets as a ROU asset representing the right to use an underlying asset and a lease liability representing the obligation to make lease payments over the lease term, measured on a discounted basis, while recognizing lease expense on their income statements in a manner similar to current GAAP. The guidance also requires an entity to disclose key quantitative and qualitative information about its leasing arrangements. The Company adopted Topic 842 on January 1, 2022 using the modified retrospective transition approach. Under this transition provision, results for the reporting period beginning on January 1, 2022 are presented under Topic 842 while prior period amounts continue to be reported and disclosed in accordance with the Company’s historical accounting treatment under ASC Topic 840, Leases . The Company elected the “package of practical expedients” permitted under the transition guidance, which among other things, does not require reassessment of whether contracts entered into prior to adoption are or contain leases, and allows carryforward of the historical lease classification for existing leases. The Company did not elect the “hindsight” practical expedient, and therefore measured the ROU asset and lease liability using the remaining portion of the lease term at adoption on January 1, 2022. Upon adoption, the Company recorded ROU assets and operating lease liabilities of $9.9 million and $18.9 million, respectively, related to the Company’s operating leases. The adoption of the new lease standard did not materially impact the Company’s consolidated statements of operations for the year ended December 31, 2022, or the consolidated statements of cash flows for the year ended December 31, 2022. In November 2021, the FASB issued ASU 2021-10, “ Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. ” The ASU requires additional disclosures for transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including: (i) information about the nature of the transactions and related accounting policy used to account for the transactions; (ii) the line items on the balance sheet and income statement affected by these transactions including amounts applicable to each line; and (iii) significant terms and conditions of the transactions, including commitments and contingencies. The Company adopted this ASU effective January 1, 2022. The adoption of this ASU did not have a material impact on the consolidated financial statements. Accounting Pronouncements Adopted in 2021 In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15, “ Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”), which clarifies the accounting for implementation costs in cloud computing arrangements. The guidance is effective for the Company for annual periods beginning after December 15, 2020, and early adoption is permitted. The Company adopted this ASU on a prospective basis effective January 1, 2021. The adoption did not have a material impact on the consolidated financial statements. Accounting Pronouncements Adopted in 2020 In August 2018, the FASB issued ASU 2018-13 , “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), to simplify fair value measurement disclosure requirements. The new provisions eliminate the requirements to disclose (1) transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. The FASB also modified disclosure requirements of Level 3 fair value measurements. The Company adopted this ASU effective January 1, 2020. The adoption of this ASU did not have a material impact on the consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” , which aims to improve the accounting for acquired revenue contracts with customers in a business combination. The ASU requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The new guidance is effective for the Company for annual periods beginning after December 15, 2023 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements. In March 2020, the FASB issued ASU 2020-04 , “Reference Rate Reform (Topic 848),” which provides temporary, optional practical expedients and exceptions to enable a smoother transition to the new reference rates which will replace the London Interbank Offered Rate (“LIBOR”) and other reference rates expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope, ” which expanded the scope of Topic 848 to include derivative instruments impacted by the discounting transition. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which extended the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 , “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which delayed the effective date for this guidance until the fiscal year beginning after December 15, 2022 including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-13 effective January 1, 2023, using the modified retrospective transition method. The adoption of this ASU did not have a material impact on the consolidated financial statements. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets | Prepaid Expenses and Other Current Assets, and Other Non-Current Assets The components of prepaid expenses and other current assets were as follows: December 31, 2022 2021 (in thousands) Prepaid software licenses, maintenance and insurance $ 9,237 $ 11,668 Other prepaid expenses and current assets 9,508 6,915 Total prepaid expenses and other current assets $ 18,745 $ 18,583 The components of other non-current assets were as follows: December 31, 2022 2021 (in thousands) Contract implementation costs $ 17,983 $ 17,242 Other non-current assets 966 969 Total other non-current assets $ 18,949 $ 18,211 See Note 16 — Revenues |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net consisted of the following: December 31, 2022 2021 (in thousands) Computer equipment and purchased software $ 28,616 $ 59,326 Equipment 723 3,301 Furniture and fixtures 2,207 6,089 Leasehold improvements 3,421 7,800 Construction in progress 445 711 Total 35,412 77,227 Less: Accumulated depreciation and amortization (26,367) (66,100) Total property and equipment, net $ 9,045 $ 11,127 During the year ended December 31, 2022, the Company wrote-off $43.5 million of property and equipment that was no longer in use. The property and equipment that was disposed consisted primarily of assets that were fully depreciated. The Company recorded a loss on asset disposal of $0.4 million related to the disposed assets. |
Right-of-Use Assets and Lease L
Right-of-Use Assets and Lease Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Right-of-Use Assets and Lease Liabilities | Right-of-Use Assets and Lease Liabilities The Company determines if an arrangement is or contains a lease at inception, which is the date on which the terms of the contract are agreed, and if the arrangement creates enforceable rights and obligations. Under Topic 842, a contract is or contains a lease when (i) explicitly or implicitly identified assets have been deployed in the contract and (ii) the customer obtains substantially all of the economic benefits from the use of that underlying asset and directs how and for what purpose the asset is used during the term of the contract. The Company leases office facilities under operating lease agreements that have initial terms ranging from 1 to 12 years. Some leases include one or more options to extend the term of the lease, generally at the Company’s sole discretion, with renewal terms that can extend the lease term up to 5 years. In addition, certain leases give the Company, the lessor, or both parties the right to terminate. Options to extend a lease are included in the lease term when it is reasonably certain that the Company will exercise the option. Options to terminate a lease are excluded from the lease term when it is reasonably certain that the Company will not exercise the option. The Company’s leases generally do not contain any material restrictive covenants or residual value guarantees. The Company’s operating leases were as follows: Year Ended (in thousands) Right-of-use assets, net $ 8,423 Current operating lease liabilities (1) $ 5,509 Operating lease liabilities, long-term 10,055 Total operating lease liabilities $ 15,564 (1) Current lease liabilities are recorded in other current liabilities The components of lease cost are recorded in selling, general, and administrative expenses for the year ended December 31, 2022 and were as follows: Year Ended (in thousands) Operating lease cost $ 3,745 Short-term lease cost 435 Variable lease cost 47 Sublease income (483) Total lease cost $ 3,744 Operating lease cost is recognized on a straight-line basis over the lease term. Total lease expense for all office space operating leases for the years ended December 31, 2021, and 2020 was $7.2 million, and $7.0 million, respectively. Supplemental cash flow information related to leases was as follows: Year Ended (in thousands) Cash paid for amounts included in measurement of operating lease liabilities $ 5,687 ROU assets obtained in exchange for operating lease liabilities $ 11,396 The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases were as follows: December 31, 2022 Weighted-average remaining lease term (in years) 4.07 Weighted-average discount rate 4.7 % Maturities of the Company’s operating lease liabilities as of December 31, 2022 were as follows: Year Ended December 31, (in thousands) 2023 $ 6,251 2024 3,821 2025 2,327 2026 1,393 2027 1,065 Thereafter 2,327 Total lease payments 17,184 Less amount representing interest (1,620) Total $ 15,564 As of December 31, 2021, future minimum lease payments for operating leases under ASC Topic 840, Leases , were as follows: Year Ended December 31, (in thousands) 2022 $ 6,757 2023 6,782 2024 4,030 2025 2,934 2026 2,190 Thereafter 4,117 Total $ 26,810 Cease-use Liabilities The Company periodically identifies opportunities for cost savings through office consolidations or by exit from certain underutilized facilities. Cease-use costs represent lease obligation charges and executory costs for exited facilities. The Company accounts for cease-use costs pursuant to guidance under ASC 420, Costs Related to Exit or Disposal Activities . Charges related to these cease-use costs are estimated based on the discounted future cash flows of rent expense and executory costs that the Company is obligated to pay under the lease agreements, partially offset by projected sublease income, which is calculated based on certain sublease assumptions. To the extent our assessment of such assumptions changes, the change in estimate is recorded in the period in which the determination is made. As a result of the exit from certain facilities, the Company recorded a cease-use liability in 2021. The cease-use liability of $9.0 million was reclassified and treated as a reduction to the beginning ROU asset recorded upon adoption of ASC 842, Leases , on January 1, 2022. Cease-use costs were $0.2 million during the year ended December 31, 2022, and are included as a component of selling, general and administrative expenses in the consolidated statements of operations. Cease-use costs were $10.7 million during the year ended December 31, 2021. In December 2022, the Company revised its projected sublease income and estimates of the costs the Company is obligated to pay under certain of its lease agreements. The change in estimate resulted in a reduction of $0.7 million to cease-use costs. Cease-use costs are included in accrued expenses and other current liabilities and other non-current liabilities on the consolidated balance sheets as of December 31, 2022, and 2021. The following table summarizes the activity for the liability for cease-use costs for the periods presented: Cease-use Liability (in thousands) Balance at December 31, 2020 $ — Cease-use costs 10,673 Adjustments to deferred rent 1,168 Cash payments (253) Balance at December 31, 2021 11,588 Cease-use costs 160 Reclassified as a reduction to the beginning ROU asset upon adoption of ASC 842 (9,001) Change in estimate (723) Accretion of liability (194) Payments (908) Foreign currency translation (238) Balance at December 31, 2022 $ 684 |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | Intangible Assets, Net Intangible assets, net consisted of the following: December 31, 2022 Gross Accumulated Amortization Net (in thousands) Customer relationships $ 427,033 $ (213,243) $ 213,790 Trade names 105,401 (31,620) 73,781 Developed software - for internal use 92,907 (50,224) 42,683 Databases 3,876 (2,532) 1,344 Total intangible assets, net $ 629,217 $ (297,619) $ 331,598 December 31, 2021 Gross Accumulated Amortization Net (in thousands) Customer relationships $ 432,606 $ (167,885) $ 264,721 Trade names 105,401 (24,594) 80,807 Developed software - for internal use 80,854 (38,480) 42,374 Databases 3,392 (1,811) 1,581 Favorable contracts 1,497 (1,497) — Total intangible assets, net $ 623,750 $ (234,267) $ 389,483 Total amortization expense for intangible assets was $67.1 million, $67.1 million, and $64.9 million for the years ended December 31, 2022, 2021, and 2020, respectively. Amortization expense related to developed software was $11.7 million, $10.5 million, and $9.4 million for the years ended December 31, 2022, 2021 and 2020, respectively. The Company capitalized $12.1 million, $7.8 million, and $6.1 million of software development costs for the years ended December 31, 2022, 2021, and 2020, respectively. At December 31, 2022, the weighted average remaining useful life of intangible assets subject to amortization was approximately 5.6 years. For the year ended December 31, 2021, the Company recorded accelerated depreciation of $0.5 million related to obsolete capitalized software, which was recorded in depreciation and amortization on the consolidated statements of operations. No impairments of intangible assets were recorded for the years ended December 31, 2022, 2021, and 2020. The estimated future amortization expense related to intangible assets as of December 31, 2022 was as follows: Year Ended December 31, (in thousands) 2023 $ 66,772 2024 66,603 2025 63,023 2026 56,361 2027 30,483 Thereafter 48,356 Total amortization $ 331,598 |
Goodwill
Goodwill | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | Goodwill The changes in the carrying amount of goodwill for the years ended December 31, 2022, and 2021, were as follows: (in thousands) Balance at December 31, 2020 $ 820,032 Foreign currency translation (1,184) Other (1) 690 Balance at December 31, 2021 819,538 Foreign currency translation (10,075) Balance as of December 31, 2022 $ 809,463 (1) Includes $0.7 million related to the out-of-period adjustment discussed in Note 1. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities The components of accrued expenses and other current liabilities were as follows: December 31, 2022 2021 (in thousands) Accrued data costs $ 34,080 $ 34,632 Other (1) 41,128 40,662 Total accrued expenses and other current liabilities $ 75,208 $ 75,294 ______________ |
Accrued Salaries and Payroll
Accrued Salaries and Payroll | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Accrued Salaries and Payroll | Accrued Salaries and Payroll The components of accrued salaries and payroll were as follows: December 31, 2022 2021 (in thousands) Wages, benefits and taxes $ 15,198 $ 12,017 Accrued bonus 15,877 17,263 Total accrued salaries and payroll $ 31,075 $ 29,280 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | Debt The components of debt were as follows: December 31, 2022 2021 (in thousands) Amended First Lien Term Loan Facility $ 699,513 $ 707,863 Amended Revolving Credit Facility — — Total debt 699,513 707,863 Less: Original issue discount (1,464) (1,993) Less: Unamortized debt issuance costs (6,493) (8,837) Less: Current portion of long-term debt (8,350) (8,350) Long-term debt, less current portion $ 683,206 $ 688,683 On July 12, 2018, the Company entered into the following credit arrangements: • a first lien senior secured term loan facility, in an aggregate principal amount of $835.0 million, maturing on July 12, 2025 (“First Lien Term Loan Facility”); • a first lien senior secured revolving credit facility, in an aggregate principal amount of up to $100.0 million, including a $40.0 million letter of credit sub-facility, maturing on July 12, 2023 (“Revolving Credit Facility” and, together with the First Lien Term Loan Facility, the “First Lien Facilities”). On June 3, 2022, the Company entered into an amendment to the First Lien Term Loan Facility (“Amended First Lien Term Loan Facility”) with the lenders party thereto and Bank of America, N.A. as administrative agent. The Amended First Lien Term Loan Facility amends the Company’s First Lien Facilities, by and among the Company, the lending institutions from time to time party thereto and Bank of America, N.A. as administrative agent, collateral agent and a letter of credit issuer (as amended through the Amended First Lien Term Loan Facility, the “Amended First Lien Facilities”). Under the Amended First Lien Facilities, (i) the aggregate commitments under the Company’s Revolving Credit Facility were increased from $100.0 million to $145.0 million; (ii) the maturity date of the Revolving Credit Facility was extended from July 12, 2023 to June 3, 2027 or, if earlier, 91 days prior to the maturity of the Company’s term loans under the Amended First Lien Facilities, as may be extended or refinanced; and (iii) the interest rate benchmark applicable to the Revolving Credit Facility was converted from LIBOR to term Secured Overnight Financing Rate (“SOFR”). The Revolving Credit Facility as amended is herein after referred to as the “Amended Revolving Credit Facility.” The Company’s existing term loans under the Amended First Lien Facilities remained in effect. Upon the effectiveness of the Amended First Lien Term Loan Facilities, the Company did not have any outstanding principal balance on the Revolving Credit Facility. The Amended First Lien Term Loan Facilities did not modify the financial covenants, negative covenants, mandatory prepayment events or security provisions or arrangements under the Amended First Lien Facilities. The Amended First Lien Term Loan Facility was accounted for as a modification for certain lenders and an extinguishment for other lenders and debt issuance costs and lender fees were accounted for in proportion to whether the related borrowing commitment was considered modified or extinguished. Accordingly, newly incurred and existing deferred debt issuance costs of $0.4 million and $0.4 million, respectively, will be amortized to interest expense over the new remaining term of the Amended Revolving Credit Facility. Additionally, the Company wrote off unamortized debt issuance costs of $0.1 million related to the modification of the Revolving Credit Facility, which is recorded to interest expense in the consolidated statements of operations. Amended First Lien Facilities The Company is required to make scheduled quarterly payments equal to 0.25% of the aggregate initial outstanding principal amount of the Amended First Lien Term Loan Facility, or approximately $2.1 million per quarter, with the remaining balance payable at maturity. The Company may make voluntary prepayments on the Amended First Lien Term Loan Facility at any time prior to maturity at par. On November 30, 2021, the Company used $100.0 million of proceeds of the IPO to repay, in part, the First Lien Term Loan Facility. In conjunction with the repayment, the Company recorded a $1.6 million loss on debt extinguishment to write off unamortized deferred financing fees and unamortized original issue discounts. This loss is recorded to interest expense in the consolidated statements of operations. The Company is required to make prepayments on the Amended First Lien Term Loan Facility with the net cash proceeds of certain asset sales, debt incurrences, casualty events and sale-leaseback transactions, subject to certain specified limitations, thresholds and reinvestment rights. Additionally, the Company is required to make annual prepayments on the Amended First Lien Term Loan Facility with a percentage (subject to leverage-based reductions) of the Company’s excess cash flow, as defined therein, if the excess cash flow exceeds a certain specified threshold. For the years ended December 31, 2022, 2021, and 2020, the Company was not required to make an annual prepayment under the Amended First Lien Term Loan Facility based on the Company’s excess cash flow. The Amended First Lien Term Loan Facility has an interest rate calculated as, at the Company’s option, either (a) LIBOR determined by reference to the costs of funds for Eurodollar deposits for the interest period relevant to such borrowing, adjusted for certain additional costs (“LIBOR Reference Rate”) with a floor of 0.00% or (b) a base rate determined by reference to the highest of (i) the federal funds effective rate plus 0.50% per annum, (ii) the rate the Administrative Agent announces from time to time as its prime lending rate in New York City, and (iii) one-month adjusted LIBOR plus 1.00% per annum (“ABR”), in each case, plus the applicable margin of 3.75% for LIBOR loans and 2.75% for ABR loans, and is payable on each interest payment date, at least quarterly, in arrears. The applicable margin for borrowings under the Revolving Credit Facility is 3.00% for SOFR loans and 2.00% for ABR loans, in each case, subject to adjustment pursuant to a leverage-based pricing grid. As of December 31, 2022, the Amended First Lien Term Loan Facility accrued interest at one-month LIBOR plus 3.75%, and the Amended Revolving Credit Facility accrued interest at one-month SOFR plus 2.50% based upon the current pricing grid. Unlike the Amended Revolving Credit Facility, the interest rates for the Amended First Lien Term Loan Facility are calculated using LIBOR, which is scheduled to become unavailable in June 2023. The credit agreement underlying the Amended First Lien Term Loan Facility contemplates that, if the administrative agent determines that LIBOR is unavailable or is replaced by a new benchmark interest rate to replace LIBOR for syndicated loans, then, the administrative agent and the Borrower may amend the Amended First Lien Term Loan Facility to replace LIBOR with an alternate benchmark rate (“LIBOR Successor Rate”) unless lenders holding more than 50% in value of the loans or commitments under the credit agreement do not accept such amendment. If no LIBOR Successor Rate has been determined, the obligation of lenders to make or maintain LIBOR loans will be suspended (to the extent of the affected LIBOR rate loans or interest periods), and the LIBOR component will no longer be utilized in determining an alternative benchmark rate. Under such circumstances, the Borrower can revoke any pending request for a new borrowing, conversion to, or continuation of LIBOR loans or such loans will be deemed to be ABR loans of the same amount. The Borrower from time to time may elect to convert all or a portion of its SOFR loans under the Revolving Credit Facility into ABR loans, and may elect to convert all or a portion of its LIBOR loans under the Amended First Lien Term Loan Facility into ABR loans, in each case, subject to a minimum conversion amount of $2.5 million. The Company’s obligations under the Amended First Lien Facilities are guaranteed, jointly and severally, on a senior secured first-priority basis, by substantially all of the Company’s domestic wholly-owned material subsidiaries, as defined in the agreement, and are secured by first-priority security interests in substantially all of the assets of the Company and its domestic wholly-owned material subsidiaries, subject to certain permitted liens and exceptions. Collateral includes all outstanding equity interests in whatever form of the borrower and each restricted subsidiary that is owned by any credit party. As of December 31, 2022, the Company had $143.7 million in available borrowing under the Amended Revolving Credit Facility, after utilizing $1.3 million for letters of credit. The Company is required to pay a quarterly fee of 0.38% on unutilized commitments under the Amended Revolving Credit Facility, subject to adjustment pursuant to a leverage-based pricing grid. As of December 31, 2022, the quarterly fee on unutilized commitments under the Amended Revolving Credit Facility was 0.38%. Debt Covenants The Amended First Lien Facilities contain certain covenants and restrictions that limit the Company’s ability to, among other things: (a) incur additional debt or issue certain preferred equity interests; (b) create or permit the existence of certain liens; (c) make certain loans or investments (including acquisitions); (d) pay dividends on or make distributions in respect of the capital stock or make other restricted payments; (e) consolidate, merge, sell, or otherwise dispose of all or substantially all of the Company’s assets; (f) sell assets; (g) enter into certain transactions with affiliates; (h) enter into sale-leaseback transactions; (i) restrict dividends from the Company’s subsidiaries or restrict liens; (j) change the Company’s fiscal year; and (k) modify the terms of certain debt agreements. In addition, the Amended First Lien Facilities also provide for customary events of default. The Company was in compliance with the covenants under the Amended First Lien Facilities through the year ended December 31, 2022. The Company is also subject to a springing financial maintenance covenant under the Amended Revolving Credit Facility, which requires the Company to not exceed a specified first lien leverage ratio at the end of each fiscal quarter if the outstanding loans and letters of credit under the Amended Revolving Credit Facility, subject to certain exceptions, exceed 35% of the total commitments under the Amended Revolving Credit Facility at the end of such fiscal quarter. The Company was not subject to this covenant as of December 31, 2022 or 2021, as outstanding loans and letters of credit under the Amended Revolving Credit Facility did not exceed 35% of the total commitments under the facility. Other Amortization of debt discount and debt issuance costs related to the Amended First Lien Term Loan Facility are included to interest expense in the consolidated statements of operations and were as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Debt discount amortization $ 529 $ 571 $ 552 Debt issuance costs amortization 2,344 2,588 2,525 Total debt discount and issuance costs $ 2,873 $ 3,159 $ 3,077 In addition, interest expense includes the amortization of debt issuance costs for the Amended Revolving Credit Facility of $0.5 million for the year ended December 31, 2022, and $0.4 million for each of the years ended December 31, 2021, and 2020. Unamortized debt issuance costs for the Amended Revolving Credit Facility are recorded in other non-current assets on the Company’s consolidated balance sheets. Interest expense for the year ended December 31, 2021, and 2020 includes $17.5 million and $17.7 million, respectively, related to a second lien senior secured term loan facility, which was repaid in full on November 3, 2021 using proceeds from the IPO. Included in the interest expense related to the second lien senior secured term loan facility for the year ended December 31, 2021, is a $3.4 million loss on extinguishment of debt to write off unamortized deferred financing fees and unamortized original issue discounts resulting from the repayment of the second lien senior secured term loan facility. The weighted average interest rate on outstanding borrowings during the years ended December 31, 2022, 2021, and 2020 was 5.5%, 4.5%, and 5.1%, respectively. The maturities of the Company’s outstanding debt were as follows: Year Ended December 31, (in thousands) 2023 $ 8,350 2024 8,350 2025 682,812 2026 — 2027 — Thereafter — $ 699,512 Fair Value The fair value of the Company’s Amended First Lien Term Loan Facility is calculated based upon market price quotes obtained for the Company’s debt agreements (Level 2 fair value inputs). The fair value of the Amended Revolving Credit Facility approximates carrying value, based upon the short-term duration of the interest rate periods currently available to the Company. The estimated fair values were as follows: December 31, 2022 December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Amended First Lien Term Loan Facility $ 698,049 $ 673,617 $ 705,870 $ 704,550 Amended Revolving Credit Facility — — — — Total $ 698,049 $ 673,617 $ 705,870 $ 704,550 |
Derivative Instruments
Derivative Instruments | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company entered into interest rate swap agreements with a total notional amount of $700 million with an effective date of December 31, 2018 (“Interest Rate Swap Agreements”). The Interest Rate Swap Agreements were designed to provide predictability against changes in the interest rates on the Company’s debt, as the Interest Rate Swap Agreements converted a portion of the variable interest rate on the Company’s debt to a fixed rate. The Interest Rate Swap Agreements were originally scheduled to expire on December 31, 2023. On September 26, 2019, the Company modified the terms of the Interest Rate Swap Agreements with the then existing counterparties to change the LIBOR reference period to one month. The notional amount and maturities of the Interest Rate Swap Agreements remained unchanged. The Company elected hedge accounting treatment at that time. To ensure the effectiveness of the Interest Rate Swap Agreements, the Company elected the one-month LIBOR rate option for its variable rate interest payments on term balances equal to or in excess of the applicable notional amount of the Interest Rate Swap Agreements as of each reset date. The reset dates and other critical terms on the term loans perfectly matched with the interest rate cap reset dates and other critical terms through February 18, 2022, the date the Interest Rate Swap Agreements were terminated, and during the years ended December 31, 2021 and 2020. At December 31, 2022 and 2021, the effective portion of the Interest Rate Swap Agreements was included on the consolidated balance sheets in accumulated other comprehensive income (loss). For derivative instruments that qualify for hedge accounting treatment, the fair value is recognized on the Company’s consolidated balance sheets as derivative assets or liabilities with offsetting changes in fair value, to the extent effective, recognized in accumulated other comprehensive income (loss) until reclassified into earnings when the related transaction occurs. The portion of a cash flow hedge that does not offset the change in the fair value of the transaction being hedged, which is commonly referred to as the ineffective portion, is immediately recognized in earnings. Prior to termination discussed below, the Interest Rate Swap Agreements were determined to be effective hedging agreements. Effective February 18, 2022, the Company terminated the Interest Rate Swap Agreements. In connection with the termination of the Interest Rate Swap Agreements, the Company made a payment of $18.4 million to the swap counterparties. Following these terminations, $21.5 million of unrealized gains related to the terminated Interest Rate Swap Agreements included in accumulated other comprehensive income (loss) will be reclassified to earnings as reductions to interest expense through December 31, 2023. The Company reclassified interest expense related to hedges of these transactions into earnings as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Reclassification of the effective portion of the gain on the Interest Rate Swap Agreements into interest expense $ 1,679 $ 19,723 $ 16,017 Reclassification of unrealized gains related to terminated Interest Rate Swap Agreements into interest expense (12,634) — — Total reclassification adjustments included in earnings $ (10,955) $ 19,723 $ 16,017 The fair value of the Interest Rate Swap Agreements was as follows: December 31, 2021 (in thousands) Markets for Identical Assets Observable Inputs Unobservable Inputs Total Derivative instruments, short-term $ — $ 16,662 $ — $ 16,662 Derivative instruments, long-term — 11,444 — 11,444 Total liabilities measured at fair value $ — $ 28,106 $ — $ 28,106 There were no amounts excluded from the measurement of hedge effectiveness at February 18, 2022, the date of termination, and December 31, 2021. See Note 12 — Accumulated Other Comprehensive Income (Loss) for further information. The results of derivative activities are recorded in cash flows from operating activities on the consolidated statements of cash flows. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Accumulated other comprehensive income (loss) consists primarily of unrealized changes in fair value of derivative instruments that qualified for hedge accounting prior to termination and cumulative foreign currency translation adjustments. The components of accumulated other comprehensive income (loss) as of December 31, 2022 and 2021 were as follows: Derivative Instruments Currency Translation Adjustment Total (in thousands) Balance at December 31, 2020 $ (13,646) $ 3,523 $ (10,123) Other comprehensive income (loss) 25,469 (2,726) 22,743 Balance at December 31, 2021 $ 11,823 $ 797 $ 12,620 Other comprehensive loss (2,974) (14,590) (17,564) Balance at December 31, 2022 $ 8,849 $ (13,793) $ (4,944) The accumulated net loss in foreign currency translation adjustment primarily reflects the strengthening of the U.S. dollar against the British pound and the Japanese yen. The Company terminated the Interest Rate Swap Agreements effective February 18, 2022. As of December 31, 2022, $8.8 million of the remaining accumulated other comprehensive income related to hedge accounting is expected to be reclassified into earnings over the next 12 months . |
Segments and Geographic Informa
Segments and Geographic Information | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Segments and Geographic Information | Segments and Geographic Information The Company operates in one reportable segment. Revenues are attributed to each geographic region based on the location of the HireRight entity that has contracted for the services that result in the revenues. The following table summarizes the Company’s revenues by region: Year Ended December 31, 2022 2021 2020 (in thousands, except percent) Revenues United States $ 744,216 92.3 % $ 675,073 92.5 % $ 504,950 93.5 % International 62,452 7.7 % 54,983 7.5 % 35,274 6.5 % Total revenue $ 806,668 100.0 % $ 730,056 100.0 % $ 540,224 100.0 % The following table summarizes the Company’s long-lived assets, which consist of property and equipment, net, and operating lease ROU assets, net, by geographic region: December 31, 2022 2021 (in thousands) Long-lived assets: United States $ 10,811 $ 7,154 International 6,657 3,973 Total long-lived assets $ 17,468 $ 11,127 |
Commitments and Contingent Liab
Commitments and Contingent Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingent Liabilities | Commitments and Contingent Liabilities Indemnification In the ordinary course of business, the Company enters into agreements with customers, providers of services and data that the Company uses in its business operations, and other third parties pursuant to which the Company agrees to indemnify and defend them and their affiliates for losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, and other costs and liabilities. Generally, these indemnity and defense obligations relate to claims and losses that result from the Company’s acts or omissions, including actual or alleged process errors, inclusion of erroneous or impermissible information, or omission of includable information in background screening reports that the Company prepares. In addition, under some circumstances, the Company agrees to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations, and acts or omissions, or the business operations, obligations, and acts or omissions of third parties. For example, its business interposes the Company between suppliers of information that the Company includes in its background screening reports and customers that use those reports; the Company generally agrees to indemnify and defend its customers against claims and losses that result from erroneous information provided by its suppliers, and also to indemnify and defend its suppliers against claims and losses that result from misuse of their information by its customers. The Company’s agreements with customers, suppliers, and other third parties typically include provisions limiting its liability to the counterparty, and the counterparty’s liability to the Company. However, these limits often do not apply to indemnity obligations. The Company’s rights to recover from one party for its acts or omissions may be capped below the Company’s obligation to another party for those same acts or omissions, and the Company’s obligation to provide indemnity and defense for its own acts or omissions in any particular situation may be uncapped. The Company has entered into indemnification agreements with the members of its board of directors and executive officers that require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service. In addition, customers of the Company may seek indemnity for negligent hiring claims that result from the Company’s alleged failure to identify or report adverse background information about an individual. As of December 31, 2021, the Company included $1.4 million in accrued expenses and other current liabilities in the consolidated balance sheets as a result of the Company agreeing to indemnify a customer from a negligent hiring claim. While the Company did not believe it had legal responsibility, the Company chose to indemnify the customer against the negligent hiring claim in the interests of customer relations and to limit risk. On January 11, 2022, the Company paid the $1.4 million to the customer. The Company is not aware of any other pending demands to provide indemnity or defense under such agreements that would reasonably be expected to have a material adverse effect on its consolidated financial statements. On December 31, 2022 and February 16, 2023, the Company entered into definitive agreements to purchase 60% of the equity interests in a privately held company for a total purchase price of approximately $26.5 million, subject to satisfaction of closing conditions. |
Legal Proceedings
Legal Proceedings | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings The Company is subject to claims, investigations, audits, and enforcement proceedings by private plaintiffs, third parties the Company does business with, and governmental and regulatory authorities charged with overseeing the enforcement of laws and regulations that govern the Company’s business. In the U.S., most of these matters arise under the federal Fair Credit Reporting Act and various state and local laws focused on privacy and the conduct and content of background reports. These claims are typically brought by individuals alleging process errors, inclusion of erroneous or impermissible information, or failure to include appropriate information in background reports prepared about them by the Company. Proceedings related to the Company’s U.S. operations may also be brought under the same laws by the Consumer Financial Protection Bureau or Federal Trade Commission, or by state authorities. Claims or proceedings may also arise under the European Union (“E.U.”) and U.K. General Data Protection Regulations and other laws around the world addressing privacy and the use of background information such as criminal and credit histories, and may be brought by individuals about whom the Company has prepared background reports or by the Data Protection Authorities of E.U. member states and other governmental authorities. In addition, customers of the Company may seek indemnity for negligent hiring claims that result from the Company’s alleged failure to identify or report adverse background information about an individual. In addition to claims related to privacy and background checks, the Company is also subject to other claims and proceedings arising in the ordinary course of its business, including without limitation claims for indemnity by customers and vendors, employment-related claims, and claims for alleged taxes owed, infringement of intellectual property rights, and breach of contract. The Company accrues for contingent liabilities if it is probable that a liability has been incurred and the amount can be reasonably estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better estimate than any other amount, then the minimum of the range is accrued. The Company does not record liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be reasonably estimated or when the liability is believed to be only reasonably possible or remote. Although the Company and its subsidiaries are subject to various claims and proceedings from time to time in the ordinary course of business, the Company and its subsidiaries are not party to any pending legal proceedings that the Company believes to be material. On November 6, 2020, the Company entered into a settlement agreement related to 24 lawsuits that had been filed in 2009 and 2010 against HireRight Solutions, Inc. (“Old HireRight”), which is the predecessor to the Company’s subsidiary HireRight, LLC, by approximately 1,400 individuals alleging violation of the California Investigative Consumer Reporting Agencies Act by Old HireRight and one of its customers (“Customer”) related to background reports that Old HireRight prepared for the Customer about those individuals. Pursuant to the settlement agreement, the Company paid $11.2 million on November 15, 2021, and the remaining balance of $0.3 million on March 31, 2022. While Old HireRight’s insurer has denied coverage, the Company believes it has valid claims against the carrier and is pursuing those claims. Any insurance recovery would defray the cost of the settlement to HireRight, LLC, but at this time the Company is not able to assess the likelihood or amount of any potential insurance recovery. |
Revenues
Revenues | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenues | Revenues Revenues consist of service revenue and surcharge revenue. Service revenue consists of fees charged to customers for services provided by the Company. Surcharge revenue consists of fees charged to customers for obtaining data from federal, state and local jurisdictions, and certain commercial data providers required to fulfill the Company’s performance obligations. These fees are generally charged to the Company’s customers at cost. Revenue is recognized when the Company satisfies its obligation to complete the service and delivers the screening report to the customer. No customer accounted for more than 3%, 5%, and 7% of the Company’s revenues for the years ended December 31, 2022, 2021, and 2020, respectively. Disaggregated revenues were as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Revenues Service revenues $ 577,796 $ 541,458 $ 404,812 Surcharge revenues 228,872 188,598 135,412 Total revenues $ 806,668 $ 730,056 $ 540,224 Contract Implementation Costs Contract implementation costs represent incremental set up costs to fulfill contracts with customers, including, for example, salaries and wages incurred to onboard customers onto the Company’s platform to enable the customers to request and access completed background screening reports. Contract implementation costs, net of accumulated amortization are recorded in other non-current assets on the Company’s consolidated balance sheets and amortization expense is recorded in cost of services (exclusive of depreciation and amortization) in the Company’s consolidated statements of operations. Amortization of contract implementation costs included in cost of services (exclusive of depreciation and amortization) was $4.5 million, $3.8 million and $3.0 million for the years ended December 31, 2022, 2021, and 2020. See Note 3 — Prepaid Expenses and Other Current Assets, and Other Non-Current Assets for contract implementation costs included in the Company’s consolidated balance sheets. Allowance for Doubtful Accounts The activity in the Company’s allowance for doubtful accounts was as follows: Balance Beginning of Period Charged to Expense Deductions Balance End of Period (in thousands) Year ended December 31, 2022 $ 4,284 $ 1,929 $ (401) $ 5,812 Year ended December 31, 2021 $ 3,919 $ 1,073 $ (708) $ 4,284 Year ended December 31, 2020 $ 3,499 $ 930 $ (510) $ 3,919 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income Tax Expense The following table sets forth the income (loss) before income taxes and the total income tax (benefit) expense. Year Ended December 31, 2022 2021 2020 (in thousands) Income (loss) before income taxes: U.S. $ 65,786 $ (11,100) $ (85,223) Foreign (264) (7,517) (2,916) Income (loss) before income taxes $ 65,522 $ (18,617) $ (88,139) Income tax expense (benefit): Current income taxes: U.S. federal $ — $ — $ (85) U.S. state 1,769 445 672 Foreign 1,837 756 448 Total current income tax expense 3,606 1,201 1,035 Deferred income taxes: U.S. federal (56,754) 545 1,669 U.S. state (24,780) 1,653 1,901 Foreign (1,124) (713) (667) Total deferred income tax (benefit) expense (82,658) 1,485 2,903 Total income tax (benefit) expense $ (79,052) $ 2,686 $ 3,938 The following table sets forth the reconciliations of the statutory federal income tax rate to actual rates based upon the income (loss) before income taxes: Year Ended December 31, 2022 2021 2020 Income tax expense (benefit) and rate attributable to: % % % U.S. federal income tax 21.0 % (21.0) % (21.0) % U.S. state income tax, net of federal benefit 4.9 % 2.3 % (1.5) % Change in valuation allowances (147.5) % (0.4) % 25.5 % U.S. tax on foreign operations 0.2 % 19.4 % 0.8 % Change in tax rates — % 6.6 % 0.8 % Non-deductible IPO costs — % 5.6 % — % Non-deductible stock compensation 3.1 % — % — % Research and development tax credits (1.3) % — % — % Recognition of stranded deferred tax balances (1.3) % — % — % Other 0.3 % 1.9 % (0.1) % Effective income tax rate (120.6) % 14.4 % 4.5 % The effective tax rate for the year ended December 31, 2022 differs from the U.S. federal statutory rate of 21% primarily due to the release of the U.S. federal and state valuation allowances in 2022, and state taxes. The rate for the year ended December 31, 2021 differs from the U.S. federal statutory rate of 21% primarily due to U.S. tax on foreign operations, non-deductible IPO costs, and change in tax rates in the United Kingdom. U.S. tax on foreign operations consists principally of Global Intangible Low-taxed Income (“GILTI”) and Base Erosion Anti-avoidance Tax (“BEAT”). Deferred Tax Assets and Liabilities Significant components of the Company’s deferred tax assets for federal and state income taxes are as follows: December 31, 2022 2021 (in thousands) Deferred tax assets: Income tax loss carryforwards $ 66,135 $ 83,342 Accrued expenses and other liabilities 5,485 7,500 Interest expense carryovers 38,449 38,444 Interest rate swap — 2,188 Stock-based compensation 3,497 3,270 Other 1,225 581 Total deferred tax assets 114,791 135,325 Valuation allowances (1,455) (100,339) Net deferred tax assets 113,336 34,986 Deferred tax liabilities: Property and equipment (2,073) (5,120) Capitalized expenses (4,618) (4,414) Intangible assets (38,157) (40,217) Total deferred tax liabilities (44,848) (49,751) Net deferred tax assets (liabilities) $ 68,488 $ (14,765) Prior to September 2022, the company’s net U.S. federal and state deferred tax assets were fully offset by a valuation allowance, excluding a portion of its deferred tax liabilities for tax deductible goodwill, primarily as a result of the Company’s lack of U.S. earnings history and cumulative loss position. The Company prepares a quarterly analysis of its deferred tax assets which considers positive and negative evidence, including its cumulative income (loss) position, revenue growth, continuing and improved profitability, and expectations regarding future profitability. Although the Company believes its estimates are reasonable, the ultimate determination of the appropriate amount of valuation allowance involves significant judgment. The Company determined sufficient positive evidence existed to conclude that the U.S. deferred tax assets are more likely than not realizable. As a result, the Company released the valuation allowance attributed to the deferred tax assets associated with the Company’s operations in the U.S. during the third quarter of 2022. In making the determination to release the valuation allowance, the Company considered its movement into a cumulative income position for the most recent three-year period, the significant decrease in interest expense from the paydown of debt in the fourth quarter of 2021 using IPO proceeds, its seventh consecutive quarter of operating income, forecasts for future earnings for its U.S. operations, and other factors. The release of the valuation allowance resulted in a non-cash deferred tax benefit of $96.6 million, which materially decreased the Company’s income tax expense during the year ended December 31, 2022. Net Operating Losses As of December 31, 2022, the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $230.8 million, of which $72.8 million may be carried forward indefinitely and $158.0 million will begin to expire in 2036. The Company had total state NOL carryforwards of approximately $310.2 million, which will begin to expire in 2025. Utilization of some of the U.S. federal and state NOL and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of Section 382 of the Internal Revenue Code of 1986 and similar state provisions. The annual limitations may result in the expiration of NOL and credits before utilization. The net operating losses are presented net of any expirations associated with such limitations. At December 31, 2022, the Company had foreign net operating losses of $5.7 million which will begin to expire in 2036. Taxation of Unremitted Foreign Earnings Undistributed foreign earnings of the Company’s foreign subsidiaries were approximately $98.3 million and $116.5 million at December 31, 2022 and 2021, respectively. During the year ended December 31, 2020, the Company re-evaluated its position to repatriate foreign earnings and concluded undistributed foreign earnings will be permanently reinvested in its foreign subsidiaries. The Company believes that it can maintain a sufficient level of liquidity for its U.S. operations arising from the normal course of operations, including liquidity needs associated with U.S. debt service requirements. As a result, deferred taxes associated with foreign withholding taxes of $0.7 million and $0.5 million have not been recorded for repatriation of undistributed foreign earnings as of December 31, 2022 and 2021, respectively. Unrecognized Tax Benefits ASC 740, Income Taxes , prescribes a recognition threshold of more-likely-than not to be sustained upon examination as it relates to the accounting for uncertainty in income tax benefits recognized in an enterprise’s financial statements. The Company’s unrecognized tax benefits are associated with tax positions taken during prior years and amounted to $0.2 million and $0.1 million as of December 31, 2022, and 2021, respectively. There were no unrecognized tax benefits as of December 31, 2020. The Company’s policy is to include interest and penalties related to unrecognized tax benefits, if any, within the income tax expense in the consolidated statements of operations. As of December 31, 2022, and 2021, the Company accrued a nominal amount of interest and penalties. If the Company is eventually able to recognize the uncertain positions, the Company’s effective tax rate would be reduced. The Company is subject to taxation in the United States and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state or foreign income tax examination by taxing authorities for years prior to 2017. Inflation Reduction Act On August 16, 2022, the "Inflation Reduction Act" (H.R. 5376) was signed into law in the United States. Among other things, the Act imposes a 15% corporate alternative minimum tax for tax years beginning after December 31, 2022, levies a 1% non-deductible excise tax on net stock repurchases after December 31, 2022, and provides tax incentives to promote clean energy. We expect the excise tax to apply to the Company’s share repurchase program but do not expect the tax to have a material effect on the Company’s consolidated financial statements. For further information on the share repurchase program, see “Note 20 — Stockholders' Equity.” |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party TransactionsCertain transactions between the Company and its affiliated entities are considered related party transactions. The Company’s affiliates include various entities owned by the same pre-IPO equityholders who hold ownership in the Company. In conjunction with the IPO, the Company entered into the TRA, which provides for the payment by the Company to pre-IPO equityholders or their permitted transferees of certain U.S. federal, state, and local income tax savings as a result of the utilization (or deemed utilization) of certain existing tax attributes. For further information, see paragraph Income Tax Receivable Agreement in “Note 1 — Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies.” On July 12, 2018, the Company entered into an operating lease for office space with a company owned by a former owner of GIS, who, with his wife, continues to be the beneficial owner of approximately 13.8% of the Company’s outstanding common stock as of December 31, 2022. The initial lease contained six options to renew for an additional year. For years one through three, a pre-payment of $6.0 million was made on July 12, 2018. Thereafter, the terms include optional renewals in years four through nine for $0.6 million each year. The initial lease expired on July 11, 2021, at which time the Company exercised an option to renew for an additional year. The Company entered into an amendment to the lease on June 30, 2022, which extended the lease term for an additional 3 years through June 30, 2025, for $0.5 million each year. Transactions with related parties consist primarily of revenues from background searches provided to, and costs incurred for benefits and advisory services obtained from, such parties. Purchases from related parties are recorded in either selling, general and administrative expense or costs of services in the Company’s consolidated statements of operations. Both the revenue and purchase related party transactions are immaterial for the years ended December 31, 2022, 2021 and 2020. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Equity Incentive Plans On October 22, 2018, the Company implemented the HireRight GIS Group Holdings LLC Equity Incentive Plan (“Equity Plan”) providing for the issuance of up to 4,573,463 of its Class A Units (“Units”) pursuant to awards made under the Equity Plan to members of the board of managers, officers and employees as determined by the Company’s compensation committee. Following the adoption of the Omnibus Incentive Plan (as defined below), the Company did not grant further awards under the Equity Plan. However, any outstanding awards granted under the Equity Plan remain subject to the Equity Plan and applicable award agreement. In connection with the Corporate Conversion, each option to purchase units of HireRight GIS Group Holdings LLC was converted into an option to purchase shares of common stock of HireRight Holdings Corporation. On October 18, 2021, the Company’s stockholders adopted the Company’s 2021 Omnibus Incentive Plan (“Omnibus Incentive Plan”), which became effective on October 28, 2021. The Omnibus Incentive Plan provides for the grant of awards of non-qualified stock options, incentive (qualified) stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSU”), other stock-based awards, other cash-based awards or any combination of the foregoing to eligible employees, consultants, directors, and officers. The Omnibus Incentive Plan has a term of 10 years. Pursuant to the Omnibus Incentive Plan, the Company initially reserved an aggregate of 7.9 million shares of the Company’s common stock for issuance pursuant to awards to be granted thereunder, subject to an annual increase equal to the lesser of (a) 4% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as is determined by the Company’s board of directors. If any award granted under the Omnibus Incentive Plan expires, terminates, or is canceled or forfeited without being settled, vested (in the case of restricted stock) or exercised, shares of the Company’s common stock subject to such award will again be made available for future grants. At December 31, 2022, the total number of shares authorized for issuance under the Omnibus Incentive Plan was 11.1 million shares and 5.5 million shares remain available for issuance. Equity Plan Awards and Modification of Certain Equity Plan Awards The exercise price per option award for each option award issued under the Equity Plan is equal to the fair market value of a Unit at the date of grant, as determined by the compensation committee pursuant to the Equity Plan. The outstanding Unit options terminate ten years after grant, or earlier as a result of termination of service. None of the outstanding Unit options were vested at the time of grant. The stock option awards issued prior to the Company’s IPO pursuant to the Equity Plan had vesting schedules based either upon continued service (“Time-Vesting Options”), or upon attainment of specified levels of cash-on-cash return to the Company’s pre-IPO investors as a multiple of invested capital on their investments in the Company (“Performance-Vesting Options”). On March 19, 2022, the compensation committee of the Company’s Board of Directors approved a modification of outstanding Performance-Vesting Options to vest based solely on continued service rather than MOIC attainment. Under the modified vesting terms, the amended Performance-Vesting Options vest quarterly starting March 31, 2022 and ending December 31, 2024 based solely on continued service. The outstanding stock options terminate 10 years after grant, or earlier as a result of termination of service. None of the outstanding stock options were vested at the time of grant. The weighted average per share fair value of the Time-Vesting Options and Performance-Vesting Options was calculated using the Monte Carlo simulation. The volatility assumption used in the Monte Carlo simulation was based on an assessment of the historical and implied volatilities of guideline companies. These historical volatilities were based on daily observations of historical share prices, and implied volatilities were based on the share prices implied by forward-looking option prices. The expected term represented the time from the valuation date to an exit event and was estimated as 5 years. The risk-free rate was based on the yield curve of the US Treasury STRIPS with a 5-year maturity. The dividend yield was zero for the years ended December 31, 2021, and 2020. Omnibus Incentive Plan Awards The calculated value of each option award issued under the Omnibus Incentive Plan is estimated at the date of grant using the Black-Scholes option valuation model that utilizes the assumptions included in the table below. The Company recognizes stock-based expenses related to stock option awards on a straight-line basis over the requisite service period of the awards, which is generally the vesting term of four years. For stock options issued under the Omnibus Incentive Plan, the Company estimates the expected term using the simplified method as specified under Staff Accounting Bulletin Topic 14, which utilizes the midpoint between the stock options’ vesting date and the end of the contractual term. The Company does not plan to pay cash dividends in the foreseeable future; therefore, the Company used an expected dividend yield of zero. The risk-free interest rate is based on U.S. Treasury rates in effect at the time of grant with maturities equal to the grant’s expected term. The expected volatility is based on historical volatility of peer companies for a period consistent with the expected term. The fair value of common stock is based on the grant-date closing price of the Company’s common stock. Stock-Based Compensation Expense Total stock-based compensation expense recognized in the consolidated statements of operations was as follows: December 31, 2022 2021 2020 (in thousands) Selling, general and administrative $ 10,739 $ 4,528 $ 3,218 Cost of services (exclusive of depreciation and amortization) 735 — — Total stock-based compensation expense $ 11,474 $ 4,528 $ 3,218 Stock Options under the Equity Plan At December 31, 2022, outstanding stock options issued pursuant to the Equity Plan had vested with respect to 2,180,758 underlying shares and had no intrinsic value. The total fair value of the stock options that vested during the year ended December 31, 2022 was $4.3 million. At December 31, 2021, outstanding Time-Vesting Options had vested with respect to 1,326,620 underlying shares and had an intrinsic value of $0.1 million, and no Performance-Vesting Options had vested. The total fair value of the stock options that vested during the year ended December 31, 2021 was $3.3 million. At December 31, 2020, outstanding Time-Vesting Options had vested with respect to 923,038 underlying shares and had an intrinsic value of $1.9 million, and no Performance-Vesting Options had vested. The total fair value of the stock options that vested during the year ended December 31, 2019 was $3.2 million. The following inputs and assumptions were used to value the stock options under the Equity Plan as of the grant dates for the years indicated: Year Ended December 31, 2021 2020 Dividend yield NA NA Expected term 5 Years 5 Years Risk-free interest rate 0.5 % 2.1 % Expected volatility 43.3 % 42.5 % The following is a summary of stock option activity under the Equity Plan: Number of Options Weighted Average Exercise Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Stock options Options outstanding at December 31, 2021 3,760,319 $ 16.32 Options granted — — Options exercised (50,291) 15.97 Options cancelled/forfeited (81,510) 16.10 Options outstanding at December 31, 2022 3,628,518 $ 16.33 6.01 $ — Options vested and exercisable at December 31, 2022 2,180,758 $ 16.24 5.87 $ — Options vested and expected to vest 3,628,518 $ 16.33 6.01 $ — For stock options issued under the Equity Plan that were outstanding and unvested as of December 31, 2022, the Company expects to recognize future compensation expense of $5.2 million, over a weighted average remaining vesting period of 2.0 years. The number of outstanding stock options issued under the Equity Plan that were unvested as of December 31, 2022 was 1,447,760 at a weighted average grant date fair value per share of $3.68. Stock Options under the Omnibus Incentive Plan The following inputs and assumptions were used to value the stock options under the Omnibus Plan as of the grant dates for the years indicated: Year Ended December 31, 2022 2021 Dividend yield — — Expected term 5.5 - 6.11 Years 6.11 Years Risk-free interest rate 1.74% - 4.35% 1.30 % Expected volatility 28.67% - 30.83% 28.79 % A summary of the Company’s stock option activity under the Omnibus Incentive Plan is as follows: Number of Options Weighted Average Exercise Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Stock options Options outstanding at December 31, 2021 1,889,313 $ 19.00 Options granted 1,197,596 15.40 Options exercised — — Options cancelled/forfeited (45,836) 19.00 Options outstanding at December 31, 2022 3,041,073 $ 17.58 9.15 $ 129,187 Options vested and exercisable at December 31, 2022 461,236 $ 19.00 8.81 $ — Options vested and expected to vest 3,041,073 $ 17.58 9.15 $ 129,187 For options under the Omnibus Incentive Plan outstanding and unvested as of December 31, 2022, the Company expects to recognize future compensation expense of $13.6 million over a weighted average remaining vesting period of 2.4 years. The number of outstanding stock options issued under the Omnibus Incentive Plan that were unvested as of December 31, 2022 was 2,579,837 at a weighted average grant date fair value per share of $5.49. The total fair value of the options that vested during the year ended December 31, 2022 was $2.8 million. Restricted Stock Units Pursuant to the Omnibus Incentive Plan, the Company has granted RSUs. The Company accounts for RSUs granted to employees at fair value on the date of grant, which is measured at the closing price of our common stock on the New York Stock Exchange on the date of grant, and recognized as compensation expense in the statements of operations over the requisite service period. Outstanding RSUs generally vest over a period of one A summary of RSU activity under the Omnibus Incentive Plan is as follows: Number of Shares Weighted Average Grant Date Fair Value Unvested as of December 31, 2021 710,735 $ 18.97 Granted 1,974,670 12.03 Vested (192,978) 18.83 Cancelled/forfeited (78,896) 16.13 Unvested as of December 31, 2022 2,413,531 $ 13.40 For RSUs outstanding and unvested as of December 31, 2022, the Company expects to recognize future compensation expense of approximately $15.1 million over a weighted average remaining vesting period of 2.8 years. The total fair value of RSUs that vested during the year ended December 31, 2022 was $5.4 million. The weighted average grant date fair value of the RSUs granted during the year ended December 31, 2021 is $18.97. Employee Stock Purchase Plan Offering periods under the Company’s Employee Stock Purchase Plan (the “ESPP”) begin on November 20 and May 20 of each year and end on the following May 19 and November 19, respectively. The first offering period began on May 20, 2022 and continued for six months until the purchase date on November 19, 2022. On each purchase date, accumulated participant contributions are applied to purchase shares at an amount equal to 85% of the fair market value of a share on (i) the purchase date or (ii) the offering date, whichever amount is lower; provided, that the purchase price will in no event be less than the par value of a share. The Company initially reserved 1.6 million shares of common stock for future issuance under the ESPP, subject to an annual increase on the first day of each calendar year, beginning on January 1, 2022 and ending on and including January 1, 2031. The annual increase is equal to the least of (i) 1% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year, (ii) 1.6 million shares of common stock, and (iii) such smaller number of shares as determined by the board of directors. At December 31, 2022, the total number of shares authorized for issuance under the ESPP was 2.4 million shares and 2.3 million shares remain available for issuance. The Company recognized $0.3 million of stock-based compensation expense related to the ESPP during the year ended December 31, 2022. As of December 31, 2022, total unrecognized compensation expense related to the ESPP was $0.2 million, which will be recognized on a straight-line basis over a weighted-average remaining period of 0.4 years. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Prior to the Corporate Conversion, the outstanding equity interests in the Company consisted only of Class A Units of HGGH, and outstanding equity-based compensation awards consisted only of options exercisable for Class A Units of HGGH. As part of the Corporate Conversion, all of HGGH’s outstanding equity interests were converted into shares of common stock of HireRight Holdings Corporation and all of HGGH’s outstanding equity-based compensation awards were converted into options exercisable for common stock of HireRight Holdings Corporation. Summary of Rights and Key Provisions A summary of the rights and key provisions affecting each class of the Company’s stock as of December 31, 2022, is as follows: The authorized capital stock of the Company consists of 1,000,000,000 shares of common stock, par value $0.001 per share, and 100,000,000 shares of undesignated preferred stock, par value $0.001 per share. Common Stock The holders of common stock are entitled to (i) dividend rights, (ii) voting rights, and (iii) liquidation rights. The dividend rights grant holders of common stock the right to receive dividends out of assets legally available at the times and in the amounts as the board of directors may determine from time to time. The voting rights grant each holder of common stock one vote per share on all matters submitted to a vote of stockholders. The liquidation rights grant holders of common stock the right to receive pro rata Company assets that are legally available for distribution, after payment of all debts and other liabilities and subject to the prior rights of any holders of preferred stock then outstanding. Holders of common stock are not entitled to preemptive rights or conversion or redemption rights. Preferred Stock The board of directors may, without further action by the Company’s stockholders, from time to time, direct the issuance of shares of preferred stock in series and may, at the time of issuance, determine the designations, powers, preferences, privileges, and relative participating, optional or special rights as well as the qualifications, limitations or restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of the common stock. Repurchase of Common Stock On November 13, 2022, the Company's Board of Directors authorized a share repurchase program (“Program”). The Program authorizes the Company to repurchase up to $100.0 million of the Company’s common stock, par value $0.0001, and will expire on November 14, 2024. Repurchases under the Program may be made in the open market, in privately negotiated transactions or otherwise, including through Rule 10b5-1 trading plans, with the amount and timing of repurchases depending on stock price, trading volume, market conditions and other general business considerations. Open market repurchases will be structured to occur within the pricing and volume requirements of Rule 10b-18. This Program does not obligate the Company to acquire any particular amount of common stock and the Program may be extended, modified, suspended or discontinued at any time at the Company’s discretion. As of December 31, 2022, the Company repurchased 1,528,829 shares of Common stock for $16.8 million, including commissions paid, at an average price paid of $11.01 per share, which is recorded as “Treasury stock” on the Company's consolidated balance sheets. As of December 31, 2022, approximately $83.2 million remained available for future purchases under the Program. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic net income (loss) per share (“EPS”) is computed by dividing net income (loss) by the weighted-average number of outstanding shares during the period. The weighted average outstanding shares may include potentially dilutive equity awards. Diluted net income (loss) per share includes the effects of potentially dilutive equity awards, which include stock options, restricted stock units, and other potentially dilutive equity awards outstanding during the year. For the years ended December 31, 2022, 2021, and 2020 there were 6,913,703, 6,360,367, and 3,755,942 potentially dilutive equity awards, respectively, which were excluded from the calculations of diluted EPS because including them would have had an anti-dilutive effect. Basic and diluted EPS for the years ended December 31, 2022, 2021, and 2020 were: Year Ended December 31, 2022 2021 2020 (in thousands, except per share data) Numerator: Net income (loss) $ 144,574 $ (21,303) $ (92,077) Denominator: Weighted average shares outstanding - basic 79,344,547 60,821,472 57,168,291 Effect of dilutive equity awards 98,716 — — Weighted average shares outstanding - diluted 79,443,263 60,821,472 57,168,291 Net income (loss) per share: Basic $ 1.82 $ (0.35) $ (1.61) Diluted $ 1.82 $ (0.35) $ (1.61) |
Savings and Incentive Plans
Savings and Incentive Plans | 12 Months Ended |
Dec. 31, 2022 | |
Retirement Benefits [Abstract] | |
Savings and Incentive Plans | Savings and Incentive Plans Savings Plan The Company sponsors a defined contribution plan which includes a savings plan feature provided under Section 401(k) of the Internal Revenue Code. This plan is generally available to all U.S. employees with three months of service and is funded by employee contributions and periodic discretionary contributions from the Company. Under this plan, the Company may make a matching contribution of up to 100% of each pre-tax dollar contributed by the participant on the first 4% of eligible compensation. The Company suspended employer contributions in the first quarter of 2020 and that suspension remained in effect for the balance of 2020. The Company restarted employer contributions during the first quarter of 2021. The Company’s contributions for the years ended December 31, 2022, 2021, and 2020 were $3.1 million, $2.9 million, and $1.0 million, respectively. Annual Incentive Plan The Annual Incentive Plan is approved annually by the compensation committee of the Company’s board of directors. The purpose of the Annual Incentive Plan is to provide an incentive and to reward participants in the plan for achieving certain, pre-established performance targets through a cash bonus. Funding of the plan for management-level participants for the years ended December 31, 2022, 2021, and 2020 included measures of Adjusted Earnings Before Income Taxes and Depreciation and Amortization (“Adjusted EBITDA Target”). The Annual Incentive Plan also incorporates individual performance goals for both management and non-management participants. For the year ended December 31, 2022, and 2021 the Company recognized $12.7 million, and $12.1 million, respectively, as expense under the Annual Incentive Plan. For 2020, the Adjusted EBITDA Target was not met due to the effects of COVID-19, but the compensation committee authorized payments under the plan of 62.5% of the aggregate target bonuses of all participants in the plan. Accordingly, for the year ended December 31, 2020, the Company recognized expense of $8.3 million, as a discretionary incentive under the 2020 Annual Incentive Plan. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Restructuring Plan In March 2023, management approved a global restructuring plan intended to improve the Company’s cost structure and operating efficiency in response to ongoing uncertain macroeconomic conditions. The restructuring plan includes a targeted reduction in its workforce of approximately 3.0%. The Company expects to incur expenses related to employee severance and employee benefits in connection with the workforce reduction during the first quarter of 2023. The Company expects the workforce reduction to be substantially complete by the end of the first quarter of 2023. No accrual was recorded as of December 31, 2022. In addition, as part of the restructuring plan, the Company will exit certain facilities in 2023 and will record accelerated right-of-use lease amortization expense and accelerated depreciation and amortization of related fixed assets. The Company expects to incur expenses of approximately $4.5 million to $5 million in 2023 related to the restructuring plan. |
Organization, Basis of Presen_2
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of Consolidation The consolidated financial statements include the Company’s accounts and those of its wholly-owned subsidiaries presented in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). All |
Use of Estimates | Use of Estimates Preparation of the Company’s consolidated financial statements in conformity with GAAP requires the Company to make estimates, judgments, and assumptions that affect the amounts reported and disclosed in the financial statements. The Company believes that the estimates, judgments, and assumptions used to determine certain amounts that affect the financial statements are reasonable based upon information available at the time they are made. The Company uses such estimates, judgments, and assumptions when accounting for items and matters such as, but not limited to, the allowance for doubtful accounts, customer rebates, impairment assessments and charges, recoverability of long-lived assets, deferred tax assets, lease accounting, uncertain tax positions, income tax expense, liabilities under the TRA, derivative instruments, fair value of debt, stock-based compensation expense, useful lives assigned to long-lived assets, and the stand-alone selling price of performance obligations for revenue recognition purposes. Results and outcomes could differ materially from these estimates, judgments, and assumptions due to risks and uncertainties. Segment Reporting The Company determines its operating segments based on how the chief operating decision maker (“CODM”) manages the business, allocates resources, makes operating decisions and evaluates operating performance. The Company’s Chief Executive Officer is the Company’s CODM. The Company’s operating segments may not be comparable to similar companies in similar industries. The Company operates in one reportable segment. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. Due to the short maturity of these investments, the carrying values on the consolidated balance sheets approximate fair value. Fair value for cash and cash equivalents are Level 1 on the fair value hierarchy discussed below. Cash is held in highly-rated financial institutions. |
Restricted Cash | Restricted Cash Restricted cash represents cash that is not immediately available for general use due to certain legal requirements. As of both December 31, 2022 and 2021, the Company had restricted cash of $1.1 million, held in escrow for the benefit of former investors in the Company pursuant to the terms of the divestiture by the Company of a former affiliate in April 2018. A total of $3.9 million was held in escrow as of December 31, 2021 related to prior restructurings from predecessor entities, such amount was paid during the year ended December 31, 2022. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts The Company makes ongoing estimates related to the collectability of its accounts receivable. The Company maintains an allowance for estimated losses resulting from the assessment of uncollectible accounts and records accounts receivable at net realizable value. The Company’s estimates are based on a variety of factors, including the length of time receivables are past due, economic trends and conditions affecting its customer base, significant non-recurring events, and historical write-off experience. |
Deferred Offering Costs | Deferred Offering Costs Prior to the IPO, the Company capitalized offering costs incurred in connection with the anticipated sale of common stock in the IPO. Deferred offering costs consist of certain legal, accounting, and other IPO-related costs. Upon completion of the IPO and the partial exercise of the underwriters’ option to purchase additional shares, $5.5 million of deferred offering costs were reclassified from prepaid expenses and other current assets to |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are computed using the straight-line method over the assets’ estimated useful lives, which are periodically reviewed. Leasehold improvements are stated at cost and amortized on a straight-line basis over their estimated economic useful lives or the lease term, whichever is shorter. The Company’s lease terms range from 1 to 12 years. The estimated useful lives for significant components of property and equipment are as follows: Computer equipment and purchased software 3-5 years Equipment 3-7 years Furniture and fixtures 3-7 years The useful lives are estimated based on historical experience with similar assets and consider anticipated technological changes. The Company periodically reviews these lives relative to physical factors, economic factors, and industry trends. If there are changes in the planned use of property and equipment or technological changes occur more rapidly than anticipated, the useful lives assigned may be adjusted resulting in a change in depreciation and amortization expense recognition or write-offs in the period in which such changes occur. Expenditures for major renewals and betterments that extend the useful lives or capabilities of property and equipment are capitalized and depreciated over the estimated useful lives. Expenditures for maintenance and repairs are charged to expense as incurred. When assets are sold or otherwise disposed of, the cost and the related accumulated depreciation or amortization are removed from the consolidated balance sheets and any resulting gain or loss is recognized in the consolidated statements of operations. |
Intangible Assets, Net | Intangible Assets, Net Intangible assets are carried at amortized cost. Such assets primarily consist of acquired contractual relationships, trade names, customer relationships, databases, internally-developed software, and favorable lease contracts. Amortization is recorded using the straight-line method using estimated useful lives of the assets as shown below: Customer relationships 9 years Trade names 15 years Databases 5 years Developed software - for internal use 3 and 7 years Favorable contracts 5-6 years |
Developed Software-For Internal Use | Developed Software-For Internal Use The Company’s technology platform comprises a set of software-based systems and databases that work together in support of the specific risk management and compliance objectives of the Company’s customers. The Company’s customers and applicants access the Company’s global platform through HireRight Screening Manager and HireRight Applicant Center. The Company’s platform integrates through the HireRight Connect application programming interface (“API”) with third-party human capital management (“HCM”) systems, including UKG, Workday, IBM, Oracle, and SAP. The Company’s capitalized software development costs relate primarily to development of enterprise resource and order management software, and also the Company’s self-service system for customers through backgroundchecks.com. Developed software costs, including employee costs and costs incurred by third-parties, are capitalized as intangible assets during the application development stage. Costs incurred during subsequent efforts to significantly upgrade or enhance the functionality of the software are also capitalized. Software costs, including training and maintenance costs, incurred during the preliminary project and post implementation stages are expensed as incurred. The useful lives noted in the table above are estimated based on historical experience and anticipated technological changes. If there are changes in the planned use of developed software or technological changes occur more rapidly than anticipated, the useful lives assigned may be adjusted resulting in a change in amortization expense recognition or write-offs in the period in which such changes occur. Amortization of software costs are recorded in depreciation and amortization in the consolidated statements of operations and begins once the project is substantially complete and the software is ready for its intended use. Implementation Costs Incurred in Cloud Computing Arrangements For cloud computing arrangements that are a service contract, the Company capitalizes certain implementation costs incurred, including employee costs and third-party costs, during the application development stage, and expenses costs as incurred during the preliminary project and post-implementation stages. Capitalized implementation costs are expensed on a straight-line basis over the estimated useful life. Capitalized amounts related to such arrangements are recorded within prepaid expenses and other current assets and within cloud computing software, net in the consolidated balance sheets and amortized to selling, general and administrative expenses in the consolidated statement of operations. |
Long-Lived Assets | Long-Lived Assets The carrying values of definite-lived long-lived assets, which include property and equipment and intangible assets subject to amortization, are evaluated for impairment when events or changes in circumstances indicate the carrying value of such assets may not be recoverable. If an indication of impairment is present, the Company compares the operating performance and future undiscounted cash flows of the assigned asset or asset groups to the underlying carrying value. Charges for impairment losses are recorded if the sum of expected undiscounted future cash flows is less than the carrying value of an asset or asset group. Any necessary write-downs are treated as permanent reductions in the carrying amount of the assets. For the years ended December 31, 2022, 2021, and 2020, the Company did not identify any indicators of impairment, and no impairments of long-lived assets were recorded. |
Goodwill | Goodwill Goodwill is the excess of the purchase price paid over the fair value of the net assets acquired in a business combination and reflects expected benefits, such as synergies, the ability to access new markets or other favorable impacts. The Company evaluates goodwill for potential impairment annually on the last day of the fourth fiscal quarter, or more frequently if a triggering event has occurred. Significant judgment is involved in determining if an indicator of impairment has occurred. Such indicators include a decline in expected cash flows, a significant adverse change in legal factors or in the business climate, unanticipated competition, or slower growth rates, lower stock price, among others. In testing goodwill for impairment, the Company first assesses qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the fair value of a reporting unit is less than the carrying amount. If, after assessing the totality of events or circumstances, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then additional impairment testing is not required. However, if the Company concludes otherwise, it proceeds to a quantitative assessment. If the net book value of the reporting unit’s assets exceeds the reporting unit’s fair value, the goodwill is written down by such excess. |
Derivatives and Hedging Activities | Derivatives and Hedging Activities The Company is exposed to variability in future cash flows resulting from fluctuations in interest rates related to its variable rate debt. The Company used interest rate swaps through February 18, 2022, the date the interest rate swaps were terminated, to manage the level of exposure to the risk of fluctuations in interest rates. Prior to termination, the Company designated these interest rate swaps as cash flow hedges of forecasted variable rate interest payments on certain U.S. dollar denominated debt principal balances. The Company recognized all derivative instruments as either assets or liabilities at fair value in the consolidated balance sheets. For derivative instruments that were designated and qualified as cash flow hedges, the effective portion of the gain or loss on such derivative instruments is reported as a component of other comprehensive (loss) income and reclassified into interest expense in the same period or periods during which the hedged debt affects earnings. Following the terminations, unrealized gains related to the terminated interest rate swap agreements included in accumulated other comprehensive income (loss) will be reclassified to earnings as reductions to interest expense through December 31, 2023. Gains and losses on the derivative instruments representing hedge ineffectiveness are recognized in current earnings. The Company had no hedge ineffectiveness at February 18, 2022, the date of termination, and for the years ended December 31, 2021, and 2020. |
Contingencies | Contingencies The Company is periodically exposed to various contingencies in the ordinary course of conducting its business, including certain litigation, contractual disputes, employee relations matters, various tax or other governmental audits, and trademark and intellectual property matters and disputes. The Company records a liability for such contingencies to the extent that their occurrence is probable and the related losses are estimable. If it is reasonably |
Revenue Recognition | Revenue Recognition The Company records revenue based on a five-step model in accordance with Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers ( “ASC 606” ) . For the Company’s contracts with customers, the Company identifies the performance obligations, determines the transaction price, allocates the contract consideration to the performance obligations utilizing the standalone selling price (“SSP”) of each performance obligation, and recognizes revenue when the performance obligation is satisfied. The Company’s revenues are primarily derived from contracts to provide services. The Company considers the nature of these contracts and the types of services provided when it determines the proper accounting method for a particular contract. The Company transfers control and records revenue upon completion of the performance obligation. The Company’s contracts generally do not include any obligations for returns, refunds, or similar obligations, nor does the Company have a practice of granting significant concessions. The Company extends commercial credit terms to its customers, which may vary by contract and customer. The Company’s customer contracts do not have any significant financing components as payment is received at or shortly after the point of sale. The Company may provide rebate incentives, which are accounted for as variable consideration when determining the amount of revenue to recognize. Rebate incentives are estimated as revenue is earned and updated at the end of each reporting period if additional information becomes available. The Company uses the most likely amount method to determine that the variable consideration is properly constrained. Changes to the Company’s estimated variable consideration were not material for the periods presented. The Company classifies its rebate incentives in accrued expenses and other current liabilities in the consolidated balance sheets. For additional information regarding Revenue see Note 16 — Revenues . Costs to Obtain Contracts with Customers Costs to obtain contracts with customers primarily consist of sales commissions paid to the Company’s sales force, which are based on commissionable revenue from background screening reports that the Company provides to its customers. The Company has elected the practical expedient in ASC 340-40 - “Other Assets and Deferred Costs” , which states the Company may recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less. Costs to Fulfill Contracts with Customers The Company recognizes an asset, presented as contract implementation costs within the consolidated balance sheets, for the incremental costs to fulfill contracts with customers, including, for example, salaries and wages incurred to set up the customer and service offerings integrated in its platform. Significant judgment is required to |
Cost of Services | Cost of Services The Company incurs costs in the creation, compilation and delivery of its services and service offerings, which are referred to as cost of services. Cost of services primarily consist of data acquisition expenses, cost of direct labor to collect, compile and prepare background screening reports, and expenses to deliver the reports to customers. The Company incurs expenses to acquire data from multiple sources in the completion of its services, such as data from third-party providers, various governmental jurisdictions such as county level court records, educational institutions, public record sources and various other data sources. Cost of services does not include depreciation and amortization expenses. |
Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of services received in exchange for stock-based awards, including stock options, restricted stock awards, and restricted stock units, granted to employees, directors, and non-employees, based on the estimated fair value of the awards on the date of grant. The Company recognizes that cost over the period during which an individual is required to provide service in exchange for the award, usually the vesting period. Performance-based stock options, granted by the Company prior to the IPO, were earned based upon the Company’s performance against specified levels of cash-on-cash return to the Company’s investors as a multiple of invested capital (“MOIC”) on their investments in the Company. Compensation expense was updated for the Company’s expected performance targets at the end of each reporting period. The Company estimated the fair value of performance-based stock options granted pre-IPO using the Monte Carlo simulation method and for stock options granted in conjunction with and post-IPO using the Black-Scholes pricing model. For performance-based restricted stock units, the expense is based on the grant date fair value of the stock, recognized over a service period depending upon the applicable performance condition. For performance-based restricted stock units, the Company re-assesses the probability of achieving the applicable performance condition each reporting period and adjusts the recognition of expense accordingly. The fair value of restricted stock units is based on the fair value of the Company’s common stock on the date of grant. Forfeitures are recognized as they occur. Stock-based compensation expense is included as a component of cost of services (exclusive of depreciation and amortization) and selling, general and administrative expenses. The Monte Carlo simulation method incorporates assumptions as to equity-share price, volatility, the expected term of awards, a risk-free interest rate and dividend yield. In valuing awards, significant judgment is required in determining the expected volatility and the expected term of the awards. The Black-Scholes pricing model requires the input of subjective assumptions, including the estimated fair value of the Company’s common stock, the expected life of the options, stock price volatility, which is determined based on the historical volatilities of several publicly listed peer companies as the Company has only a short trading history for its common stock, the risk-free interest rate and expected dividends. The assumptions used in the Company’s Black-Scholes option-pricing model represent management’s estimates and involve numerous variables, uncertainties and assumptions and the application of management’s judgment, as they are inherently subjective. |
Income Taxes | Income Taxes Deferred income tax assets and liabilities are estimated based on enacted tax laws in the jurisdictions where the Company conducts business. Deferred income tax assets and liabilities represent future tax benefits or obligations of the Company’s legal entities. These deferred income tax balances arise from temporary differences due to divergent treatment of certain items for accounting and income tax purposes. Deferred income tax assets are evaluated to ensure that estimated future taxable income will be sufficient in character, amount, and timing to result in the use of the deferred income tax assets. “Character” refers to the type (capital gain vs. ordinary income) as well as the source (foreign vs. domestic) of the income generated. “Timing” refers to the period in which future income is expected to be generated. Timing is important because net operating losses (“NOLs”) in certain jurisdictions expire if not used within an established statutory time frame. Based on these evaluations, the Company determines whether it is more likely than not that expected future earnings will be sufficient to use its deferred tax assets. During the year ended December 31, 2022, the Company determined sufficient positive evidence existed to conclude that the U.S. deferred tax assets are more likely than not realizable. See Note 17 — Income Taxes for additional information regarding the Company’s deferred income tax assets. Judgments and estimates are required to determine income tax expense and deferred income tax valuation allowances and in assessing exposures related to income tax matters. The effect of a change in income tax rates on deferred income tax assets and liabilities is recognized in the year in which the income tax rate change is enacted. Interest and penalties related to uncertain income tax positions are recognized as part of the provision for income taxes and are accrued beginning in the period that such interest and penalties would be applicable under relevant tax law until such time that the related income tax benefits are recognized. The Company accounts for uncertain tax positions by recognizing a tax benefit or liability at the largest amount that, in its judgment, is more than 50% likely to be realized or paid based on the technical merits of the position. The Company does not provide for income taxes on the undistributed earnings or losses of its non-U.S. subsidiaries. Management intends that undistributed earnings will be indefinitely reinvested. The Company records deferred income taxes on the temporary differences between the book and tax basis in domestic subsidiaries where required. |
Fair Value Measurements | Fair Value Measurements The accounting standard for fair value measurements defines fair value, establishes a market-based framework or hierarchy for measuring fair value, and requires disclosures about fair value measurements. The standard is applicable whenever assets and liabilities are measured at fair value. The fair value hierarchy established in the standard prioritizes the inputs used in valuation techniques into three levels as follows: Level 1 Quoted prices in active markets for identical assets and liabilities; Level 2 Quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in inactive markets, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data; or Level 3 Amounts derived from valuation models in which unobservable inputs reflect the reporting entity’s own assumptions about the assumptions of market participants that would be used in pricing the asset or liability, such as discounted cash flow models or valuations. Recurring Fair Value Measurements The Company’s outstanding debt instruments are recorded at their carrying values in the consolidated balance sheets, which may differ from their respective fair values. The estimated fair value of the Company’s debt, which is Level 2 of the fair value hierarchy, is based on quoted prices for similar instruments in active markets or identical instruments in markets that are not active. See Note 10 — Debt for more information for fair value disclosures related to the Company’s debt. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents. The Company’s cash balances are placed with highly-rated financial institutions. Such cash balances may be in excess of the Federal Deposit Insurance Corporation insured limits. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Company’s customer base and their dispersion across many different industries and geographic regions. The Company generally does not require collateral to support accounts receivable. See Note 16 — Revenues for further information. |
Foreign Currency | Foreign Currency The Company’s consolidated financial statements are reported in United States dollars (“USD”). Changes in foreign currency exchange rates have a direct effect on the Company’s consolidated financial statements because the Company translates the operating results and financial position of its foreign subsidiaries to USD using current period foreign exchange rates. As a result, comparisons of reported results between reporting periods may be impacted due to differences in the exchange rates in effect at those times. The functional currencies of the Company’s foreign subsidiaries are the currency of the primary economic environment in which its subsidiaries operate, generate and expend cash, and consist primarily of the Euro, the Pound Sterling and the Polish Zloty. The statement of operations of the Company’s foreign subsidiaries are translated into USD using the average exchange rates for each reporting period. The balance sheets of the Company’s foreign subsidiaries are translated into USD using the period-end exchange rates. The resulting differences are recorded in the Company’s consolidated balance sheets within accumulated other comprehensive (loss) income as a currency translation adjustment. |
Correction of Immaterial Misstatement | Correction of Immaterial Misstatement During the third quarter of 2021, the Company determined that there were immaterial errors in its historical financial statements. The errors resulted in understatement of goodwill, provision for income taxes, and deferred tax liability and overstatement of prepaid expenses and other current assets, accrued expenses and other current liabilities, and selling, general and administrative expenses. The Company evaluated the effect of these errors on prior periods under the guidance of the Securities Exchange Commission Staff Accounting Bulletin (“SAB”) No. 99 - Materiality , and determined the amounts were not material to any previously issued financial statements. The Company corrected these misstatements with an out-of-period adjustment during the third quarter of 2021. |
Recently Issued Accounting Pronouncements Adopted | Recently Issued Accounting Pronouncements Adopted Accounting Pronouncements Adopted in 2022 In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, “ Leases (Topic 842) ” (“Topic 842”) to increase transparency and comparability among organizations related to their leasing arrangements. The update requires lessees to recognize most leases, with the exception of short-term leases if a policy election is made, on their balance sheets as a ROU asset representing the right to use an underlying asset and a lease liability representing the obligation to make lease payments over the lease term, measured on a discounted basis, while recognizing lease expense on their income statements in a manner similar to current GAAP. The guidance also requires an entity to disclose key quantitative and qualitative information about its leasing arrangements. The Company adopted Topic 842 on January 1, 2022 using the modified retrospective transition approach. Under this transition provision, results for the reporting period beginning on January 1, 2022 are presented under Topic 842 while prior period amounts continue to be reported and disclosed in accordance with the Company’s historical accounting treatment under ASC Topic 840, Leases . The Company elected the “package of practical expedients” permitted under the transition guidance, which among other things, does not require reassessment of whether contracts entered into prior to adoption are or contain leases, and allows carryforward of the historical lease classification for existing leases. The Company did not elect the “hindsight” practical expedient, and therefore measured the ROU asset and lease liability using the remaining portion of the lease term at adoption on January 1, 2022. Upon adoption, the Company recorded ROU assets and operating lease liabilities of $9.9 million and $18.9 million, respectively, related to the Company’s operating leases. The adoption of the new lease standard did not materially impact the Company’s consolidated statements of operations for the year ended December 31, 2022, or the consolidated statements of cash flows for the year ended December 31, 2022. In November 2021, the FASB issued ASU 2021-10, “ Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance. ” The ASU requires additional disclosures for transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including: (i) information about the nature of the transactions and related accounting policy used to account for the transactions; (ii) the line items on the balance sheet and income statement affected by these transactions including amounts applicable to each line; and (iii) significant terms and conditions of the transactions, including commitments and contingencies. The Company adopted this ASU effective January 1, 2022. The adoption of this ASU did not have a material impact on the consolidated financial statements. Accounting Pronouncements Adopted in 2021 In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2018-15, “ Intangibles-Goodwill and Other-Internal Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” (“ASU 2018-15”), which clarifies the accounting for implementation costs in cloud computing arrangements. The guidance is effective for the Company for annual periods beginning after December 15, 2020, and early adoption is permitted. The Company adopted this ASU on a prospective basis effective January 1, 2021. The adoption did not have a material impact on the consolidated financial statements. Accounting Pronouncements Adopted in 2020 In August 2018, the FASB issued ASU 2018-13 , “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” (“ASU 2018-13”), to simplify fair value measurement disclosure requirements. The new provisions eliminate the requirements to disclose (1) transfers between Level 1 and Level 2 of the fair value hierarchy, (2) the policy for timing of transfers between levels, and (3) the valuation processes for Level 3 fair value measurements. The FASB also modified disclosure requirements of Level 3 fair value measurements. The Company adopted this ASU effective January 1, 2020. The adoption of this ASU did not have a material impact on the consolidated financial statements. Recently Issued Accounting Pronouncements Not Yet Adopted In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers” , which aims to improve the accounting for acquired revenue contracts with customers in a business combination. The ASU requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. The new guidance is effective for the Company for annual periods beginning after December 15, 2023 and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of this standard on the consolidated financial statements. In March 2020, the FASB issued ASU 2020-04 , “Reference Rate Reform (Topic 848),” which provides temporary, optional practical expedients and exceptions to enable a smoother transition to the new reference rates which will replace the London Interbank Offered Rate (“LIBOR”) and other reference rates expected to be discontinued. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope, ” which expanded the scope of Topic 848 to include derivative instruments impacted by the discounting transition. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which extended the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 , “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments,” to provide financial statement users with more useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. In November 2019, the FASB issued ASU 2019-10, “Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842),” which delayed the effective date for this guidance until the fiscal year beginning after December 15, 2022 including interim periods within those fiscal years. Early adoption is permitted. The Company adopted ASU 2016-13 effective January 1, 2023, using the modified retrospective transition method. The adoption of this ASU did not have a material impact on the consolidated financial statements. |
Organization, Basis of Presen_3
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Property and Equipment | The estimated useful lives for significant components of property and equipment are as follows: Computer equipment and purchased software 3-5 years Equipment 3-7 years Furniture and fixtures 3-7 years Property and equipment, net consisted of the following: December 31, 2022 2021 (in thousands) Computer equipment and purchased software $ 28,616 $ 59,326 Equipment 723 3,301 Furniture and fixtures 2,207 6,089 Leasehold improvements 3,421 7,800 Construction in progress 445 711 Total 35,412 77,227 Less: Accumulated depreciation and amortization (26,367) (66,100) Total property and equipment, net $ 9,045 $ 11,127 |
Schedule of Finite-Lived Intangible Assets | Amortization is recorded using the straight-line method using estimated useful lives of the assets as shown below: Customer relationships 9 years Trade names 15 years Databases 5 years Developed software - for internal use 3 and 7 years Favorable contracts 5-6 years Intangible assets, net consisted of the following: December 31, 2022 Gross Accumulated Amortization Net (in thousands) Customer relationships $ 427,033 $ (213,243) $ 213,790 Trade names 105,401 (31,620) 73,781 Developed software - for internal use 92,907 (50,224) 42,683 Databases 3,876 (2,532) 1,344 Total intangible assets, net $ 629,217 $ (297,619) $ 331,598 December 31, 2021 Gross Accumulated Amortization Net (in thousands) Customer relationships $ 432,606 $ (167,885) $ 264,721 Trade names 105,401 (24,594) 80,807 Developed software - for internal use 80,854 (38,480) 42,374 Databases 3,392 (1,811) 1,581 Favorable contracts 1,497 (1,497) — Total intangible assets, net $ 623,750 $ (234,267) $ 389,483 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Summary of Prepaid Expenses and Other Current Assets | The components of prepaid expenses and other current assets were as follows: December 31, 2022 2021 (in thousands) Prepaid software licenses, maintenance and insurance $ 9,237 $ 11,668 Other prepaid expenses and current assets 9,508 6,915 Total prepaid expenses and other current assets $ 18,745 $ 18,583 |
Summary of Other Non-Current Assets | The components of other non-current assets were as follows: December 31, 2022 2021 (in thousands) Contract implementation costs $ 17,983 $ 17,242 Other non-current assets 966 969 Total other non-current assets $ 18,949 $ 18,211 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | The estimated useful lives for significant components of property and equipment are as follows: Computer equipment and purchased software 3-5 years Equipment 3-7 years Furniture and fixtures 3-7 years Property and equipment, net consisted of the following: December 31, 2022 2021 (in thousands) Computer equipment and purchased software $ 28,616 $ 59,326 Equipment 723 3,301 Furniture and fixtures 2,207 6,089 Leasehold improvements 3,421 7,800 Construction in progress 445 711 Total 35,412 77,227 Less: Accumulated depreciation and amortization (26,367) (66,100) Total property and equipment, net $ 9,045 $ 11,127 |
Right-of-Use Assets and Lease_2
Right-of-Use Assets and Lease Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases [Abstract] | |
Assets And Liabilities, Lessee | The Company’s operating leases were as follows: Year Ended (in thousands) Right-of-use assets, net $ 8,423 Current operating lease liabilities (1) $ 5,509 Operating lease liabilities, long-term 10,055 Total operating lease liabilities $ 15,564 other current liabilities |
Lease, Cost | The components of lease cost are recorded in selling, general, and administrative expenses for the year ended December 31, 2022 and were as follows: Year Ended (in thousands) Operating lease cost $ 3,745 Short-term lease cost 435 Variable lease cost 47 Sublease income (483) Total lease cost $ 3,744 Supplemental cash flow information related to leases was as follows: Year Ended (in thousands) Cash paid for amounts included in measurement of operating lease liabilities $ 5,687 ROU assets obtained in exchange for operating lease liabilities $ 11,396 The weighted-average remaining lease term and weighted-average discount rate for the Company’s operating leases were as follows: December 31, 2022 Weighted-average remaining lease term (in years) 4.07 Weighted-average discount rate 4.7 % |
Lessee, Operating Lease, Liability, Maturity | Maturities of the Company’s operating lease liabilities as of December 31, 2022 were as follows: Year Ended December 31, (in thousands) 2023 $ 6,251 2024 3,821 2025 2,327 2026 1,393 2027 1,065 Thereafter 2,327 Total lease payments 17,184 Less amount representing interest (1,620) Total $ 15,564 As of December 31, 2021, future minimum lease payments for operating leases under ASC Topic 840, Leases , were as follows: Year Ended December 31, (in thousands) 2022 $ 6,757 2023 6,782 2024 4,030 2025 2,934 2026 2,190 Thereafter 4,117 Total $ 26,810 |
Schedule of Restructuring Reserve by Type of Cost | The following table summarizes the activity for the liability for cease-use costs for the periods presented: Cease-use Liability (in thousands) Balance at December 31, 2020 $ — Cease-use costs 10,673 Adjustments to deferred rent 1,168 Cash payments (253) Balance at December 31, 2021 11,588 Cease-use costs 160 Reclassified as a reduction to the beginning ROU asset upon adoption of ASC 842 (9,001) Change in estimate (723) Accretion of liability (194) Payments (908) Foreign currency translation (238) Balance at December 31, 2022 $ 684 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | Amortization is recorded using the straight-line method using estimated useful lives of the assets as shown below: Customer relationships 9 years Trade names 15 years Databases 5 years Developed software - for internal use 3 and 7 years Favorable contracts 5-6 years Intangible assets, net consisted of the following: December 31, 2022 Gross Accumulated Amortization Net (in thousands) Customer relationships $ 427,033 $ (213,243) $ 213,790 Trade names 105,401 (31,620) 73,781 Developed software - for internal use 92,907 (50,224) 42,683 Databases 3,876 (2,532) 1,344 Total intangible assets, net $ 629,217 $ (297,619) $ 331,598 December 31, 2021 Gross Accumulated Amortization Net (in thousands) Customer relationships $ 432,606 $ (167,885) $ 264,721 Trade names 105,401 (24,594) 80,807 Developed software - for internal use 80,854 (38,480) 42,374 Databases 3,392 (1,811) 1,581 Favorable contracts 1,497 (1,497) — Total intangible assets, net $ 623,750 $ (234,267) $ 389,483 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated future amortization expense related to intangible assets as of December 31, 2022 was as follows: Year Ended December 31, (in thousands) 2023 $ 66,772 2024 66,603 2025 63,023 2026 56,361 2027 30,483 Thereafter 48,356 Total amortization $ 331,598 |
Goodwill (Tables)
Goodwill (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the carrying amount of goodwill for the years ended December 31, 2022, and 2021, were as follows: (in thousands) Balance at December 31, 2020 $ 820,032 Foreign currency translation (1,184) Other (1) 690 Balance at December 31, 2021 819,538 Foreign currency translation (10,075) Balance as of December 31, 2022 $ 809,463 (1) Includes $0.7 million related to the out-of-period adjustment discussed in Note 1. |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | The components of accrued expenses and other current liabilities were as follows: December 31, 2022 2021 (in thousands) Accrued data costs $ 34,080 $ 34,632 Other (1) 41,128 40,662 Total accrued expenses and other current liabilities $ 75,208 $ 75,294 ______________ |
Accrued Salaries and Payroll (T
Accrued Salaries and Payroll (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Salaries and Payroll | The components of accrued salaries and payroll were as follows: December 31, 2022 2021 (in thousands) Wages, benefits and taxes $ 15,198 $ 12,017 Accrued bonus 15,877 17,263 Total accrued salaries and payroll $ 31,075 $ 29,280 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The components of debt were as follows: December 31, 2022 2021 (in thousands) Amended First Lien Term Loan Facility $ 699,513 $ 707,863 Amended Revolving Credit Facility — — Total debt 699,513 707,863 Less: Original issue discount (1,464) (1,993) Less: Unamortized debt issuance costs (6,493) (8,837) Less: Current portion of long-term debt (8,350) (8,350) Long-term debt, less current portion $ 683,206 $ 688,683 |
Amortization of Debt Discount and Debt Issuance | Amortization of debt discount and debt issuance costs related to the Amended First Lien Term Loan Facility are included to interest expense in the consolidated statements of operations and were as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Debt discount amortization $ 529 $ 571 $ 552 Debt issuance costs amortization 2,344 2,588 2,525 Total debt discount and issuance costs $ 2,873 $ 3,159 $ 3,077 |
Schedule of Maturities of Long-term Debt | The maturities of the Company’s outstanding debt were as follows: Year Ended December 31, (in thousands) 2023 $ 8,350 2024 8,350 2025 682,812 2026 — 2027 — Thereafter — $ 699,512 |
Schedule of Fair Value of Liabilities | The estimated fair values were as follows: December 31, 2022 December 31, 2021 Carrying Value Fair Value Carrying Value Fair Value (in thousands) Amended First Lien Term Loan Facility $ 698,049 $ 673,617 $ 705,870 $ 704,550 Amended Revolving Credit Facility — — — — Total $ 698,049 $ 673,617 $ 705,870 $ 704,550 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Interest Expense Reclassification | The Company reclassified interest expense related to hedges of these transactions into earnings as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Reclassification of the effective portion of the gain on the Interest Rate Swap Agreements into interest expense $ 1,679 $ 19,723 $ 16,017 Reclassification of unrealized gains related to terminated Interest Rate Swap Agreements into interest expense (12,634) — — Total reclassification adjustments included in earnings $ (10,955) $ 19,723 $ 16,017 |
Summary of Derivative Liabilities at Fair Value | The fair value of the Interest Rate Swap Agreements was as follows: December 31, 2021 (in thousands) Markets for Identical Assets Observable Inputs Unobservable Inputs Total Derivative instruments, short-term $ — $ 16,662 $ — $ 16,662 Derivative instruments, long-term — 11,444 — 11,444 Total liabilities measured at fair value $ — $ 28,106 $ — $ 28,106 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Loss) (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Equity [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The components of accumulated other comprehensive income (loss) as of December 31, 2022 and 2021 were as follows: Derivative Instruments Currency Translation Adjustment Total (in thousands) Balance at December 31, 2020 $ (13,646) $ 3,523 $ (10,123) Other comprehensive income (loss) 25,469 (2,726) 22,743 Balance at December 31, 2021 $ 11,823 $ 797 $ 12,620 Other comprehensive loss (2,974) (14,590) (17,564) Balance at December 31, 2022 $ 8,849 $ (13,793) $ (4,944) |
Segments and Geographic Infor_2
Segments and Geographic Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Revenues and Property and Equipment by Geographic Region | The following table summarizes the Company’s revenues by region: Year Ended December 31, 2022 2021 2020 (in thousands, except percent) Revenues United States $ 744,216 92.3 % $ 675,073 92.5 % $ 504,950 93.5 % International 62,452 7.7 % 54,983 7.5 % 35,274 6.5 % Total revenue $ 806,668 100.0 % $ 730,056 100.0 % $ 540,224 100.0 % The following table summarizes the Company’s long-lived assets, which consist of property and equipment, net, and operating lease ROU assets, net, by geographic region: December 31, 2022 2021 (in thousands) Long-lived assets: United States $ 10,811 $ 7,154 International 6,657 3,973 Total long-lived assets $ 17,468 $ 11,127 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | Disaggregated revenues were as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Revenues Service revenues $ 577,796 $ 541,458 $ 404,812 Surcharge revenues 228,872 188,598 135,412 Total revenues $ 806,668 $ 730,056 $ 540,224 |
Allowance for Doubtful Accounts | The activity in the Company’s allowance for doubtful accounts was as follows: Balance Beginning of Period Charged to Expense Deductions Balance End of Period (in thousands) Year ended December 31, 2022 $ 4,284 $ 1,929 $ (401) $ 5,812 Year ended December 31, 2021 $ 3,919 $ 1,073 $ (708) $ 4,284 Year ended December 31, 2020 $ 3,499 $ 930 $ (510) $ 3,919 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | The following table sets forth the income (loss) before income taxes and the total income tax (benefit) expense. Year Ended December 31, 2022 2021 2020 (in thousands) Income (loss) before income taxes: U.S. $ 65,786 $ (11,100) $ (85,223) Foreign (264) (7,517) (2,916) Income (loss) before income taxes $ 65,522 $ (18,617) $ (88,139) Income tax expense (benefit): Current income taxes: U.S. federal $ — $ — $ (85) U.S. state 1,769 445 672 Foreign 1,837 756 448 Total current income tax expense 3,606 1,201 1,035 Deferred income taxes: U.S. federal (56,754) 545 1,669 U.S. state (24,780) 1,653 1,901 Foreign (1,124) (713) (667) Total deferred income tax (benefit) expense (82,658) 1,485 2,903 Total income tax (benefit) expense $ (79,052) $ 2,686 $ 3,938 |
Schedule of Effective Income Tax Rate Reconciliation | The following table sets forth the reconciliations of the statutory federal income tax rate to actual rates based upon the income (loss) before income taxes: Year Ended December 31, 2022 2021 2020 Income tax expense (benefit) and rate attributable to: % % % U.S. federal income tax 21.0 % (21.0) % (21.0) % U.S. state income tax, net of federal benefit 4.9 % 2.3 % (1.5) % Change in valuation allowances (147.5) % (0.4) % 25.5 % U.S. tax on foreign operations 0.2 % 19.4 % 0.8 % Change in tax rates — % 6.6 % 0.8 % Non-deductible IPO costs — % 5.6 % — % Non-deductible stock compensation 3.1 % — % — % Research and development tax credits (1.3) % — % — % Recognition of stranded deferred tax balances (1.3) % — % — % Other 0.3 % 1.9 % (0.1) % Effective income tax rate (120.6) % 14.4 % 4.5 % |
Schedule of Deferred Tax Assets and Liabilities | Significant components of the Company’s deferred tax assets for federal and state income taxes are as follows: December 31, 2022 2021 (in thousands) Deferred tax assets: Income tax loss carryforwards $ 66,135 $ 83,342 Accrued expenses and other liabilities 5,485 7,500 Interest expense carryovers 38,449 38,444 Interest rate swap — 2,188 Stock-based compensation 3,497 3,270 Other 1,225 581 Total deferred tax assets 114,791 135,325 Valuation allowances (1,455) (100,339) Net deferred tax assets 113,336 34,986 Deferred tax liabilities: Property and equipment (2,073) (5,120) Capitalized expenses (4,618) (4,414) Intangible assets (38,157) (40,217) Total deferred tax liabilities (44,848) (49,751) Net deferred tax assets (liabilities) $ 68,488 $ (14,765) |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount | Total stock-based compensation expense recognized in the consolidated statements of operations was as follows: December 31, 2022 2021 2020 (in thousands) Selling, general and administrative $ 10,739 $ 4,528 $ 3,218 Cost of services (exclusive of depreciation and amortization) 735 — — Total stock-based compensation expense $ 11,474 $ 4,528 $ 3,218 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The following inputs and assumptions were used to value the stock options under the Equity Plan as of the grant dates for the years indicated: Year Ended December 31, 2021 2020 Dividend yield NA NA Expected term 5 Years 5 Years Risk-free interest rate 0.5 % 2.1 % Expected volatility 43.3 % 42.5 % The following inputs and assumptions were used to value the stock options under the Omnibus Plan as of the grant dates for the years indicated: Year Ended December 31, 2022 2021 Dividend yield — — Expected term 5.5 - 6.11 Years 6.11 Years Risk-free interest rate 1.74% - 4.35% 1.30 % Expected volatility 28.67% - 30.83% 28.79 % |
Share-based Payment Arrangement, Option, Activity | The following is a summary of stock option activity under the Equity Plan: Number of Options Weighted Average Exercise Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Stock options Options outstanding at December 31, 2021 3,760,319 $ 16.32 Options granted — — Options exercised (50,291) 15.97 Options cancelled/forfeited (81,510) 16.10 Options outstanding at December 31, 2022 3,628,518 $ 16.33 6.01 $ — Options vested and exercisable at December 31, 2022 2,180,758 $ 16.24 5.87 $ — Options vested and expected to vest 3,628,518 $ 16.33 6.01 $ — Number of Options Weighted Average Exercise Weighted- Average Remaining Contractual Term Aggregate Intrinsic Value Stock options Options outstanding at December 31, 2021 1,889,313 $ 19.00 Options granted 1,197,596 15.40 Options exercised — — Options cancelled/forfeited (45,836) 19.00 Options outstanding at December 31, 2022 3,041,073 $ 17.58 9.15 $ 129,187 Options vested and exercisable at December 31, 2022 461,236 $ 19.00 8.81 $ — Options vested and expected to vest 3,041,073 $ 17.58 9.15 $ 129,187 |
Schedule of Unvested Restricted Stock Units Roll Forward | A summary of RSU activity under the Omnibus Incentive Plan is as follows: Number of Shares Weighted Average Grant Date Fair Value Unvested as of December 31, 2021 710,735 $ 18.97 Granted 1,974,670 12.03 Vested (192,978) 18.83 Cancelled/forfeited (78,896) 16.13 Unvested as of December 31, 2022 2,413,531 $ 13.40 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Unit, Basic and Diluted | Basic and diluted EPS for the years ended December 31, 2022, 2021, and 2020 were: Year Ended December 31, 2022 2021 2020 (in thousands, except per share data) Numerator: Net income (loss) $ 144,574 $ (21,303) $ (92,077) Denominator: Weighted average shares outstanding - basic 79,344,547 60,821,472 57,168,291 Effect of dilutive equity awards 98,716 — — Weighted average shares outstanding - diluted 79,443,263 60,821,472 57,168,291 Net income (loss) per share: Basic $ 1.82 $ (0.35) $ (1.61) Diluted $ 1.82 $ (0.35) $ (1.61) |
Organization, Basis of Presen_4
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies - Additional Information (Details) | 3 Months Ended | 12 Months Ended | |||||
Nov. 30, 2021 shares | Nov. 02, 2021 USD ($) $ / shares shares | Oct. 18, 2021 | Dec. 31, 2022 USD ($) | Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Subsidiary, Sale of Stock [Line Items] | |||||||
Reverse stock split ratio | 0.06262000 | ||||||
Payment of initial public offering issuance costs | $ 0 | $ 5,543,000 | $ 0 | ||||
Options exercised (in shares) | shares | (2,424) | ||||||
Tax receivable agreements, term | 12 years | ||||||
Tax receivable agreements, percentage of benefits payable to shareholders | 0.85 | 0.85 | |||||
Income tax (benefit) expense | $ 100,000 | $ (79,052,000) | 2,686,000 | 3,938,000 | |||
Tax receivable agreement liability | 210,543,000 | $ 210,543,000 | 210,639,000 | ||||
Number of reportable segments | segment | 1 | ||||||
Restricted cash held in escrow | 41,128,000 | $ 41,128,000 | 40,662,000 | ||||
Restricted cash and cash equivalents | 3,900,000 | ||||||
Deferred offering costs | $ 5,500,000 | 5,500,000 | |||||
Goodwill, impairment loss | $ 0 | 0 | $ 0 | ||||
Capitalized contract cost, amortization period | 7 years | 7 years | |||||
CARES retention credits | 3,900,000 | ||||||
Former Investor | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Restricted cash held in escrow | $ 1,100,000 | $ 1,100,000 | $ 1,100,000 | ||||
Minimum | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Lessee, operating lease, term of contract | 1 year | 1 year | |||||
Maximum | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Lessee, operating lease, term of contract | 12 years | 12 years | |||||
IPO | |||||||
Subsidiary, Sale of Stock [Line Items] | |||||||
Sale of stock, number of shares issued (in shares) | shares | 22,222,222 | ||||||
Sale of stock, price (in dollars per share) | $ / shares | $ 19 | ||||||
Sale of stock, consideration received | $ 393,500,000 | ||||||
Payment of initial public offering issuance costs | 23,200,000 | ||||||
Recognition of liability under tax receivable agreement | $ 5,500,000 |
Organization, Basis of Presen_5
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies - Property, Plant and Equipment (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Computer equipment and purchased software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Computer equipment and purchased software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 5 years |
Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 7 years |
Furniture and fixtures | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 3 years |
Furniture and fixtures | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful life | 7 years |
Organization, Basis of Presen_6
Organization, Basis of Presentation and Consolidation, and Significant Accounting Policies - Intangible Assets (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 5 years 7 months 6 days |
Customer relationships | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 9 years |
Trade names | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 15 years |
Databases | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 5 years |
Developed software - for internal use | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 3 years |
Developed software - for internal use | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 7 years |
Favorable contracts | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 5 years |
Favorable contracts | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Finite-lived intangible asset, useful life | 6 years |
Recently Issued Accounting Pr_2
Recently Issued Accounting Pronouncements (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jan. 01, 2022 | Dec. 31, 2021 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right-of-use assets, net | $ 8,423 | $ 0 | |
Total | $ 15,564 | ||
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right-of-use assets, net | $ 9,900 | ||
Total | $ 18,900 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets - Summary of Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid software licenses, maintenance and insurance | $ 9,237 | $ 11,668 |
Other prepaid expenses and current assets | 9,508 | 6,915 |
Total prepaid expenses and other current assets | $ 18,745 | $ 18,583 |
Prepaid Expenses and Other Cu_4
Prepaid Expenses and Other Current Assets, and Other Non-Current Assets - Summary of Other Non-Current Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Contract implementation costs | $ 17,983 | $ 17,242 |
Other non-current assets | 966 | 969 |
Total other non-current assets | $ 18,949 | $ 18,211 |
Property and Equipment, Net (De
Property and Equipment, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 35,412 | $ 77,227 | |
Less: Accumulated depreciation and amortization | (26,367) | (66,100) | |
Property and equipment, net | 9,045 | 11,127 | |
Depreciation | 4,900 | 11,300 | $ 12,000 |
Property and equipment no longer in use | 43,500 | ||
Gain (loss) on disposition of property plant equipment | 400 | 100 | $ 100 |
Computer equipment and purchased software | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 28,616 | 59,326 | |
Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 723 | 3,301 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 2,207 | 6,089 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | 3,421 | 7,800 | |
Construction in progress | |||
Property, Plant and Equipment [Line Items] | |||
Property, plant and equipment, gross | $ 445 | $ 711 |
Right-of-Use Assets and Lease_3
Right-of-Use Assets and Lease Liabilities - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Jan. 01, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jun. 30, 2022 | |
Lessee, Lease, Description [Line Items] | |||||
Lease renewal term | 5 years | 3 years | |||
Operating lease, expense | $ 7,200 | ||||
Operating lease, expense | $ 7,000 | ||||
Adjustments | $ 9,000 | $ (9,001) | 1,168 | ||
Cease-use costs | 160 | $ 10,673 | |||
Change in estimate | $ 723 | ||||
Minimum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 1 year | ||||
Maximum | |||||
Lessee, Lease, Description [Line Items] | |||||
Lease term | 12 years |
Right-of-Use Assets and Lease_4
Right-of-Use Assets and Lease Liabilities - Lease Summary (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Right-of-use assets, net | $ 8,423 | $ 0 |
Current operating lease liabilities | 5,509 | |
Operating lease liabilities, long- term | 10,055 | $ 0 |
Total operating lease liabilities | $ 15,564 | |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued expenses and other current liabilities |
Right-of-Use Assets and Lease_5
Right-of-Use Assets and Lease Liabilities - Lease Cost (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Dec. 31, 2022 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Operating lease cost | $ 3,745 | |
Short-term lease cost | 435 | |
Variable lease cost | 47 | |
Sublease income | $ (483) | |
Total lease cost | $ 3,744 |
Right-of-Use Assets and Lease_6
Right-of-Use Assets and Lease Liabilities - Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Jul. 12, 2018 | Dec. 31, 2022 | |
Leases [Abstract] | ||
Cash paid for amounts included in measurement of operating lease liabilities | $ 6,000 | $ 5,687 |
ROU assets obtained in exchange for operating lease liabilities | $ 11,396 |
Right-of-Use Assets and Lease_7
Right-of-Use Assets and Lease Liabilities - Weighted Average (Details) | Dec. 31, 2022 |
Leases [Abstract] | |
Weighted-average remaining lease term (in years) | 4 years 25 days |
Weighted-average discount rate | 4.70% |
Right-of-Use Assets and Lease_8
Right-of-Use Assets and Lease Liabilities - Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Jul. 12, 2018 |
Leases [Abstract] | ||
2023 | $ 6,251 | |
2024 | 3,821 | |
2025 | 2,327 | |
2026 | 1,393 | |
Lessee, Operating Lease, Liability, to be Paid, Year Four | 1,065 | $ 600 |
Thereafter | 2,327 | |
Total lease payments | 17,184 | |
Less amount representing interest | (1,620) | |
Total | $ 15,564 |
Right-of-Use Assets and Lease_9
Right-of-Use Assets and Lease Liabilities - Maturities under ASC 840 (Details) $ in Thousands | Dec. 31, 2021 USD ($) |
Leases [Abstract] | |
2022 | $ 6,757 |
2023 | 6,782 |
2024 | 4,030 |
2025 | 2,934 |
2026 | 2,190 |
Thereafter | 4,117 |
Total | $ 26,810 |
Right-of-Use Assets and Leas_10
Right-of-Use Assets and Lease Liabilities - Facility Exit Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Jan. 01, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Restructuring Reserve | |||
Balance at December 31, 2021 | $ 11,588 | $ 11,588 | $ 0 |
Cease-use costs | 160 | 10,673 | |
Adjustments | $ 9,000 | (9,001) | 1,168 |
Change in estimate | (723) | ||
Accretion of liability | (194) | ||
Payments | (908) | (253) | |
Foreign currency translation | (238) | ||
Balance at December 31, 2022 | $ 684 | $ 11,588 |
Intangible Assets, Net - Narrat
Intangible Assets, Net - Narrative (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization of intangible assets | $ 67,100,000 | $ 67,100,000 | $ 64,900,000 |
Capitalized computer software, gross | 11,700,000 | 10,500,000 | 9,400,000 |
Capitalized computer software costs | $ 12,100,000 | 7,800,000 | 6,100,000 |
Finite-lived intangible asset, useful life | 5 years 7 months 6 days | ||
Capitalized computer software, impairments | 500,000 | ||
Impairment of intangible assets | $ 0 | $ 0 | $ 0 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule of Finite-Lived Intangible Assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross | $ 629,217 | $ 623,750 |
Accumulated Amortization | (297,619) | (234,267) |
Net | 331,598 | 389,483 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 427,033 | 432,606 |
Accumulated Amortization | (213,243) | (167,885) |
Net | 213,790 | 264,721 |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 105,401 | 105,401 |
Accumulated Amortization | (31,620) | (24,594) |
Net | 73,781 | 80,807 |
Developed software - for internal use | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 92,907 | 80,854 |
Accumulated Amortization | (50,224) | (38,480) |
Net | 42,683 | 42,374 |
Databases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 3,876 | 3,392 |
Accumulated Amortization | (2,532) | (1,811) |
Net | $ 1,344 | 1,581 |
Favorable contracts | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross | 1,497 | |
Accumulated Amortization | (1,497) | |
Net | $ 0 |
Intangible Assets, Net - Future
Intangible Assets, Net - Future Amortization (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2023 | $ 66,772 | |
2024 | 66,603 | |
2025 | 63,023 | |
2026 | 56,361 | |
2027 | 30,483 | |
Thereafter | 48,356 | |
Net | $ 331,598 | $ 389,483 |
Goodwill (Details)
Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 819,538 | $ 820,032 |
Foreign currency translation | (10,075) | (1,184) |
Other increase (decrease) | 700 | 690 |
Ending balance | $ 809,463 | $ 819,538 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Offsetting Liabilities [Line Items] | ||
Accrued data costs | $ 34,080 | $ 34,632 |
Other | 41,128 | 40,662 |
Total accrued expenses and other current liabilities | 75,208 | 75,294 |
Payments for restructuring | 908 | 253 |
Former Investor | ||
Offsetting Liabilities [Line Items] | ||
Other | 1,100 | $ 1,100 |
Payments for restructuring | $ 3,900 |
Accrued Salaries and Payroll (D
Accrued Salaries and Payroll (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Payables and Accruals [Abstract] | ||
Wages, benefits and taxes | $ 15,198 | $ 12,017 |
Accrued bonus | 15,877 | 17,263 |
Total accrued salaries and payroll | $ 31,075 | $ 29,280 |
Debt - Schedule of Debt Instrum
Debt - Schedule of Debt Instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Debt Instrument [Line Items] | ||
Total debt | $ 699,513 | $ 707,863 |
Less: Original issue discount | (1,464) | (1,993) |
Less: Unamortized debt issuance costs | (6,493) | (8,837) |
Less: Current portion of long-term debt | (8,350) | (8,350) |
Long-term debt, less current portion | 683,206 | 688,683 |
Amended First Lien Term Loan Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total debt | 699,513 | 707,863 |
Less: Unamortized debt issuance costs | (100) | |
Amended Revolving Credit Facility | Line of Credit | ||
Debt Instrument [Line Items] | ||
Total debt | $ 0 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Jun. 03, 2022 | Nov. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Jul. 12, 2018 | |
Debt Instrument [Line Items] | |||||||
Maturity, days prior to term loan debt | 91 days | ||||||
Unamortized debt issuance expense | $ 6,493,000 | $ 6,493,000 | $ 8,837,000 | ||||
Gain (loss) on extinguishment of debt | 0 | (5,006,000) | $ 0 | ||||
Amortization of debt issuance costs | 3,345,000 | 4,080,000 | 4,036,000 | ||||
Interest expense | $ 32,122,000 | $ 74,815,000 | $ 75,118,000 | ||||
Weighted average interest rate | 5.50% | 5.50% | 4.50% | 5.10% | |||
Amended First Lien Term Loan Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt instrument, successor holding rate, threshold | 50% | 50% | |||||
Debt instrument, interest rate conversion, convertible amount of debt | $ 2,500,000 | $ 2,500,000 | |||||
Second Lien Term Loan Facility | |||||||
Debt Instrument [Line Items] | |||||||
Gain (loss) on extinguishment of debt | $ (3,400,000) | ||||||
Interest expense | $ 17,500,000 | $ 17,700,000 | |||||
Line of Credit | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 1% | ||||||
Line of Credit | Amended First Lien Term Loan Facility | |||||||
Debt Instrument [Line Items] | |||||||
Principal amount | $ 835,000,000 | ||||||
Deferred tax liabilities, deferred expense, debt issuance costs | $ 400,000 | ||||||
Debt issuance costs | $ 400,000 | ||||||
Unamortized debt issuance expense | 100,000 | 100,000 | |||||
Periodic payment percentage of principal | 0.25% | ||||||
Periodic payment, amount | $ 2,100,000 | ||||||
Repayments of debt | $ 100,000,000 | ||||||
Gain (loss) on extinguishment of debt | $ (1,600,000) | ||||||
Debt instrument, floor | 0% | ||||||
Line of Credit | Amended First Lien Term Loan Facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 3.75% | ||||||
Line of Credit | Amended First Lien Term Loan Facility | Federal Funds | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 0.50% | ||||||
Line of Credit | Amended First Lien Term Loan Facility | ABR | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 2.75% | ||||||
Line of Credit | Amended Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 145,000,000 | 100,000,000 | |||||
Available borrowing | $ 143,700,000 | $ 143,700,000 | |||||
Unused capacity, commitment fee percentage | 0.38% | ||||||
Debt instrument leverage ratio percent | 35% | 35% | 35% | ||||
Amortization of debt issuance costs | $ 500,000 | $ 400,000 | $ 400,000 | ||||
Line of Credit | Amended Revolving Credit Facility | LIBOR | |||||||
Debt Instrument [Line Items] | |||||||
Margin for borrowing | 3% | ||||||
Line of Credit | Amended Revolving Credit Facility | ABR | |||||||
Debt Instrument [Line Items] | |||||||
Margin for borrowing | 2% | ||||||
Line of Credit | Amended Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | |||||||
Debt Instrument [Line Items] | |||||||
Basis spread on variable rate | 2.50% | ||||||
Line of Credit | Letter of Credit | |||||||
Debt Instrument [Line Items] | |||||||
Maximum borrowing capacity | $ 40,000,000 | ||||||
Letters of credit outstanding | $ 1,300,000 | $ 1,300,000 |
Debt - Amortization (Details)
Debt - Amortization (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt Instrument [Line Items] | |||
Amortization of debt issuance costs | $ 3,345 | $ 4,080 | $ 4,036 |
First and Second Lien Term Loan Facility | Line of Credit | |||
Debt Instrument [Line Items] | |||
Debt discount amortization | 529 | 571 | 552 |
Amortization of debt issuance costs | 2,344 | 2,588 | 2,525 |
Total debt discount and issuance costs | $ 2,873 | $ 3,159 | $ 3,077 |
Debt - Maturities (Details)
Debt - Maturities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Debt Disclosure [Abstract] | |
2023 | $ 8,350 |
2024 | 8,350 |
2025 | 682,812 |
2026 | 0 |
2027 | 0 |
Thereafter | 0 |
Total debt | $ 699,512 |
Debt - Fair Value (Details)
Debt - Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Carrying Value | ||
Debt Instrument [Line Items] | ||
Debt instruments | $ 698,049 | $ 705,870 |
Fair Value | ||
Debt Instrument [Line Items] | ||
Debt instruments | 673,617 | 704,550 |
Amended First Lien Term Loan Facility | Carrying Value | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instruments | 698,049 | 705,870 |
Amended First Lien Term Loan Facility | Fair Value | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instruments | 673,617 | 704,550 |
Amended Revolving Credit Facility | Carrying Value | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instruments | 0 | 0 |
Amended Revolving Credit Facility | Fair Value | Line of Credit | ||
Debt Instrument [Line Items] | ||
Debt instruments | $ 0 | $ 0 |
Derivative Instruments - Narrat
Derivative Instruments - Narrative (Details) - USD ($) | 12 Months Ended | ||||
Feb. 18, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Sep. 26, 2019 | |
Derivative [Line Items] | |||||
Payments for termination of interest swap | $ 18,445,000 | $ 0 | $ 0 | ||
Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Notional amount | $ 700,000,000 | ||||
Payments for termination of interest swap | $ 18,400,000 | ||||
Unrealized gains related to terminated interest rate swap | $ 21,500,000 |
Derivative Instruments - Summar
Derivative Instruments - Summary of Reclassification (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Derivative [Line Items] | |||||
Derivative Instrument, Gain (Loss) Reclassified from AOCI into Income, Effective Portion, Statement of Income or Comprehensive Income [Extensible Enumeration] | Interest expense | Interest expense | Interest expense | ||
Total reclassification adjustments included in earnings | [1] | $ (10,955) | $ 19,723 | $ 16,017 | |
Interest Rate Swap | |||||
Derivative [Line Items] | |||||
Total reclassification adjustments included in earnings | 1,679 | 19,723 | 16,017 | ||
Interest Rate Swap, Terminated | |||||
Derivative [Line Items] | |||||
Total reclassification adjustments included in earnings | $ (12,634) | $ 0 | $ 0 | ||
[1]Represents the reclassification of the effective portion of the gain or loss on the Company’s interest rate swap into interest expense. Includes reclassification to earnings as a reduction to interest expense of unrealized gains included in accumulated other comprehensive income (loss) on the consolidated balance sheet related to the interest rate swap agreements terminated on February 18, 2022. See Note 11 for additional information. |
Derivative Instruments - Summ_2
Derivative Instruments - Summary of Derivative Liabilities at Fair Value (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Derivative [Line Items] | ||
Derivative instruments, short-term | $ 0 | $ 16,662 |
Derivative instruments, long-term | $ 0 | 11,444 |
Total liabilities measured at fair value | 28,106 | |
Derivative Liability, Statement of Financial Position [Extensible Enumeration] | Derivative instruments, short-term, Derivative instruments, long-term | |
Markets for Identical Assets (Level 1) | ||
Derivative [Line Items] | ||
Derivative instruments, short-term | 0 | |
Derivative instruments, long-term | 0 | |
Total liabilities measured at fair value | 0 | |
Observable Inputs (Level 2) | ||
Derivative [Line Items] | ||
Derivative instruments, short-term | 16,662 | |
Derivative instruments, long-term | 11,444 | |
Total liabilities measured at fair value | 28,106 | |
Unobservable Inputs (Level 3) | ||
Derivative [Line Items] | ||
Derivative instruments, short-term | 0 | |
Derivative instruments, long-term | 0 | |
Total liabilities measured at fair value | $ 0 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | $ 445,717 | $ 256,887 | $ 361,108 |
Other comprehensive income (loss) | (17,564) | 22,743 | (15,362) |
Ending balance | 568,318 | 445,717 | 256,887 |
Interest expense on hedges expected to be reclassified into earnings | 8,800 | ||
Derivative Instruments | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 11,823 | (13,646) | |
Other comprehensive income (loss) | (2,974) | 25,469 | |
Ending balance | 8,849 | 11,823 | (13,646) |
Currency Translation Adjustment | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 797 | 3,523 | |
Other comprehensive income (loss) | (14,590) | (2,726) | |
Ending balance | (13,793) | 797 | 3,523 |
Accumulated Other Comprehensive (Loss) Income | |||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | |||
Beginning balance | 12,620 | (10,123) | 5,239 |
Other comprehensive income (loss) | (17,564) | 22,743 | (15,362) |
Ending balance | $ (4,944) | $ 12,620 | $ (10,123) |
Segments and Geographic Infor_3
Segments and Geographic Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) segment | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Segment Reporting Information [Line Items] | |||
Number of reportable segments | segment | 1 | ||
Total revenues | $ 806,668 | $ 730,056 | $ 540,224 |
Long-lived assets: | 17,468 | 11,127 | |
Geographic Concentration Risk | |||
Segment Reporting Information [Line Items] | |||
Total revenues | $ 806,668 | $ 730,056 | $ 540,224 |
Geographic Concentration Risk | Revenue from Contract with Customer Benchmark | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 100% | 100% | 100% |
United States | |||
Segment Reporting Information [Line Items] | |||
Long-lived assets: | $ 10,811 | $ 7,154 | |
United States | Geographic Concentration Risk | |||
Segment Reporting Information [Line Items] | |||
Total revenues | $ 744,216 | $ 675,073 | $ 504,950 |
United States | Geographic Concentration Risk | Revenue from Contract with Customer Benchmark | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 92.30% | 92.50% | 93.50% |
International | |||
Segment Reporting Information [Line Items] | |||
Long-lived assets: | $ 6,657 | $ 3,973 | |
International | Geographic Concentration Risk | |||
Segment Reporting Information [Line Items] | |||
Total revenues | $ 62,452 | $ 54,983 | $ 35,274 |
International | Geographic Concentration Risk | Revenue from Contract with Customer Benchmark | |||
Segment Reporting Information [Line Items] | |||
Concentration risk percentage | 7.70% | 7.50% | 6.50% |
Commitments and Contingent Li_2
Commitments and Contingent Liabilities - Additional Information (Details) - USD ($) $ in Millions | Jan. 11, 2022 | Dec. 31, 2022 | Dec. 31, 2021 |
Business Acquisition [Line Items] | |||
Loss contingency accrual | $ 1.4 | ||
Payment on contingent liability | $ 1.4 | ||
Private Investment | |||
Business Acquisition [Line Items] | |||
Percentage of voting interests in agreement | 60% | ||
Purchase agreement | $ 26.5 |
Legal Proceedings (Details)
Legal Proceedings (Details) $ in Millions | 24 Months Ended | ||
Nov. 15, 2021 USD ($) | Dec. 31, 2010 individual lawsuit | Mar. 31, 2022 USD ($) | |
Loss Contingencies [Line Items] | |||
Number of lawsuits filed | lawsuit | 24 | ||
Number of individuals alleging violation | individual | 1,400 | ||
Initial payment legal settlement | $ 11.2 | ||
Settlement Agreement Liability | |||
Loss Contingencies [Line Items] | |||
Litigation settlements accrued | $ 0.3 |
Revenues - Disaggregated Revenu
Revenues - Disaggregated Revenue (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 806,668 | $ 730,056 | $ 540,224 |
Service revenues | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | 577,796 | 541,458 | 404,812 |
Surcharge revenues | |||
Disaggregation of Revenue [Line Items] | |||
Total revenues | $ 228,872 | $ 188,598 | $ 135,412 |
Revenues - Additional Informati
Revenues - Additional Information (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Amortization of contract assets | $ 4,505 | $ 3,796 | $ 2,984 |
Customer | Revenue Benchmark | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk percentage | 3% | 5% | 7% |
Revenues - Allowance (Details)
Revenues - Allowance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Contract with Customer, Allowance for Credit Loss [Roll Forward] | |||
Balance Beginning of Period | $ 4,284 | $ 3,919 | $ 3,499 |
Charged to Expense | 1,929 | 1,073 | 930 |
Deductions | (401) | (708) | (510) |
Balance End of Period | $ 5,812 | $ 4,284 | $ 3,919 |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense (Benefit) and Effective Tax Rates (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Income (loss) before income taxes | $ 65,522 | $ (18,617) | $ (88,139) | |
Income tax (benefit) expense | $ 100 | $ (79,052) | $ 2,686 | $ 3,938 |
Effective income tax rate | (120.60%) | (14.40%) | (4.50%) |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Tax Credit Carryforward [Line Items] | ||||
Income tax (benefit) expense | $ 100,000 | $ (79,052,000) | $ 2,686,000 | $ 3,938,000 |
Effective income tax rate | (120.60%) | (14.40%) | (4.50%) | |
Release of valuation allowance | 96,600,000 | |||
Undistributed earnings of foreign subsidiaries | 98,300,000 | $ 98,300,000 | $ 116,500,000 | |
Deferred tax liability foreign subsidiaries | 700,000 | 700,000 | 500,000 | |
Unrecognized tax benefits | 200,000 | 200,000 | $ 100,000 | $ 0 |
Domestic Tax Authority | ||||
Tax Credit Carryforward [Line Items] | ||||
Operating loss carryforwards | 230,800,000 | 230,800,000 | ||
Operating loss carryforwards, not subject to expiration | 72,800,000 | 72,800,000 | ||
Operating loss carryforwards, subject to expiration | 158,000,000 | 158,000,000 | ||
Foreign Tax Authority | ||||
Tax Credit Carryforward [Line Items] | ||||
Operating loss carryforwards | 5,700,000 | 5,700,000 | ||
State and Local Jurisdiction | ||||
Tax Credit Carryforward [Line Items] | ||||
Operating loss carryforwards | $ 310,200,000 | $ 310,200,000 |
Income Taxes - Components of In
Income Taxes - Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||||
U.S. | $ 65,786 | $ (11,100) | $ (85,223) | |
Foreign | (264) | (7,517) | (2,916) | |
Income (loss) before income taxes | 65,522 | (18,617) | (88,139) | |
Current income taxes: | ||||
U.S. federal | 0 | 0 | (85) | |
U.S. state | 1,769 | 445 | 672 | |
Foreign | 1,837 | 756 | 448 | |
Total current income tax expense | 3,606 | 1,201 | 1,035 | |
Deferred income taxes: | ||||
U.S. federal | (56,754) | 545 | 1,669 | |
U.S. state | (24,780) | 1,653 | 1,901 | |
Foreign | (1,124) | (713) | (667) | |
Deferred income taxes | (82,658) | 1,485 | 2,903 | |
Total income tax (benefit) expense | $ 100 | $ (79,052) | $ 2,686 | $ 3,938 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of statutory to effective income tax rate (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
U.S. federal income tax | 21% | 21% | 21% |
U.S. state income tax, net of federal benefit | 4.90% | (2.30%) | 1.50% |
Change in valuation allowances | (147.50%) | 0.40% | (25.50%) |
U.S. tax on foreign operations | 0.20% | (19.40%) | (0.80%) |
Change in tax rates | 0% | (6.60%) | (0.80%) |
Non-deductible IPO costs | 0% | (5.60%) | 0% |
Non-deductible stock compensation | 3.10% | 0% | 0% |
Research and development tax credits | (1.30%) | 0% | 0% |
Recognition of stranded deferred tax balances | (1.30%) | 0% | 0% |
Other | 0.30% | (1.90%) | 0.10% |
Effective income tax rate | (120.60%) | (14.40%) | (4.50%) |
Income Taxes - Significant Comp
Income Taxes - Significant Components of our deferred tax assets & liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Income tax loss carryforwards | $ 66,135 | $ 83,342 |
Accrued expenses and other liabilities | 5,485 | 7,500 |
Interest expense carryovers | 38,449 | 38,444 |
Interest rate swap | 0 | 2,188 |
Stock-based compensation | 3,497 | 3,270 |
Other | 1,225 | 581 |
Total deferred tax assets | 114,791 | 135,325 |
Valuation allowances | (1,455) | (100,339) |
Net deferred tax assets | 113,336 | 34,986 |
Deferred tax liabilities: | ||
Property and equipment | (2,073) | (5,120) |
Capitalized expenses | (4,618) | (4,414) |
Intangible assets | (38,157) | (40,217) |
Total deferred tax liabilities | (44,848) | (49,751) |
Net deferred tax assets (liabilities) | $ 68,488 | |
Net deferred tax assets (liabilities) | $ (14,765) |
Related Party Transactions (Det
Related Party Transactions (Details) $ in Thousands | 12 Months Ended | ||
Jul. 12, 2018 USD ($) | Dec. 31, 2022 USD ($) leaseRenewalOption | Jun. 30, 2022 USD ($) | |
Related Party Transaction [Line Items] | |||
Operating lease renewal number of options | leaseRenewalOption | 6 | ||
Cash paid for amounts included in measurement of operating lease liabilities | $ 6,000 | $ 5,687 | |
Year four | 600 | $ 1,065 | |
Year five | 600 | ||
Year six | 600 | ||
Year seven | 600 | ||
Year eight | 600 | ||
Year nine | $ 600 | ||
Lease renewal term | 5 years | 3 years | |
Total lease payments | $ 500 | ||
GIS Owner | Beneficial Owner | |||
Related Party Transaction [Line Items] | |||
Ownership percentage by noncontrolling owners | 13.80% |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Details) - USD ($) | 12 Months Ended | ||||||
Oct. 28, 2021 | Oct. 18, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Nov. 01, 2021 | Oct. 22, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of units authorized to issue (in shares) | 4,573,463 | ||||||
Equity-based compensation | $ 11,474,000 | $ 4,528,000 | $ 3,218,000 | ||||
Omnibus incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of units authorized to issue (in shares) | 11,100,000 | ||||||
Share-based payment award, expiration period | 10 years | ||||||
Shares reserved for future issuance (in shares) | 7,900,000 | ||||||
Percent of outstanding shares | 4% | ||||||
Expected term | 6 years 1 month 9 days | ||||||
Dividend yield | 0% | 0% | |||||
Options vested and exercisable (in shares) | 461,236 | ||||||
Outstanding options | $ 129,187 | ||||||
Options granted (in shares) | 1,197,596 | ||||||
Number of shares remaining (in shares) | 5,500,000 | ||||||
Omnibus incentive Plan | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expected term | 5 years 6 months | ||||||
Omnibus incentive Plan | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expected term | 6 years 1 month 9 days | ||||||
Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Share-based payment award, expiration period | 10 years | ||||||
Expected term | 5 years | 5 years | 5 years | ||||
Dividend yield | 0% | 0% | |||||
Options | Omnibus incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Dividend yield | 0% | ||||||
Vesting period | 4 years | ||||||
Fair value of options | $ 2,800,000 | ||||||
Compensation expense not yet recognized | $ 13,600,000 | ||||||
Compensation expense not yet recognized, weighted-average period | 2 years 4 months 24 days | ||||||
Options granted (in shares) | 2,579,837 | ||||||
Weighted-average grant date fair value for options granted (in dollars per share) | $ 5.49 | ||||||
Time-Vesting Options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Compensation expense not yet recognized | $ 5,200,000 | ||||||
Compensation expense not yet recognized, weighted-average period | 2 years | ||||||
Options granted (in shares) | 1,447,760 | ||||||
Weighted-average grant date fair value for options granted (in dollars per share) | $ 3.68 | ||||||
Time-Vesting Options | Equity Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Expected term | 5 years | 5 years | |||||
Options vested and exercisable (in shares) | 2,180,758 | 1,326,620 | 923,038 | ||||
Outstanding options | $ 0 | $ 100,000 | $ 1,900,000 | ||||
Vested (in shares) | 0 | 0 | |||||
Fair value of options | $ 4,300,000 | $ 3,300,000 | $ 3,200,000 | ||||
Options granted (in shares) | 0 | ||||||
Restricted Stock Units (RSUs) | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
RSUs granted (in shares) | 2,413,531 | 710,735 | 0 | ||||
Fair value of RSUs | $ 5,400,000 | ||||||
Compensation expense not yet recognized | $ 15,100,000 | ||||||
Compensation expense not yet recognized, weighted-average period | 2 years 9 months 18 days | ||||||
Restricted Stock Units (RSUs) | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 1 year | ||||||
Restricted Stock Units (RSUs) | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Vesting period | 4 years | ||||||
ESPP | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Number of units authorized to issue (in shares) | 2,400,000 | ||||||
Shares reserved for future issuance (in shares) | 1,600,000 | ||||||
Percent of outstanding shares | 100% | ||||||
Equity-based compensation | $ 300,000 | ||||||
Compensation expense not yet recognized | $ 200,000 | ||||||
Compensation expense not yet recognized, weighted-average period | 4 months 24 days | ||||||
Award offering period | 6 months | ||||||
Fair market value discount | 85% | ||||||
Number of shares remaining (in shares) | 2,300,000 |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Equity-based compensation | $ 11,474 | $ 4,528 | $ 3,218 |
Selling, general and administrative expenses | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Equity-based compensation | 10,739 | 4,528 | 3,218 |
Cost of services | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Equity-based compensation | $ 735 | $ 0 | $ 0 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Omnibus incentive Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Dividend yield | 0% | 0% | |
Expected term | 6 years 1 month 9 days | ||
Risk-free interest rate | 1.30% | ||
Expected volatility | 28.79% | ||
Omnibus incentive Plan | Minimum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 5 years 6 months | ||
Risk-free interest rate | 1.74% | ||
Expected volatility | 28.67% | ||
Omnibus incentive Plan | Maximum | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 6 years 1 month 9 days | ||
Risk-free interest rate | 4.35% | ||
Expected volatility | 30.83% | ||
Time-Vesting Options | Equity Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Expected term | 5 years | 5 years | |
Risk-free interest rate | 0.50% | 2.10% | |
Expected volatility | 43.30% | 42.50% |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Activity (Details) - USD ($) | 12 Months Ended | |||
Nov. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of Options | ||||
Options exercised (in shares) | (2,424) | |||
Time-Vesting Options | ||||
Number of Options | ||||
Options granted (in shares) | 1,447,760 | |||
Equity Plan | Time-Vesting Options | ||||
Number of Options | ||||
Beginning balance, options outstanding (in shares) | 3,760,319 | |||
Options granted (in shares) | 0 | |||
Options exercised (in shares) | (50,291) | |||
Options cancelled/ forfeited (in shares) | (81,510) | |||
Ending balance, options outstanding (in shares) | 3,628,518 | |||
Options vested and exercisable (in shares) | 2,180,758 | 1,326,620 | 923,038 | |
Options vested and expected to vest, outstanding (in shares) | 3,628,518 | |||
Weighted Average Exercise Price | ||||
Beginning balance, options outstanding (in dollars per share) | $ 16.32 | |||
Options granted (in dollars per share) | 0 | |||
Options exercised (in dollars per share) | 15.97 | |||
Options cancelled/ forfeited (in dollars per share) | 16.10 | |||
Ending balance, options outstanding (in dollars per share) | 16.33 | |||
Vested and exercisable (in dollars per share) | 16.24 | |||
Vested and expected to vest (in dollars per share) | $ 16.33 | |||
Weighted- Average Remaining Contractual Term (in years) | ||||
Outstanding options (in years) | 6 years 3 days | |||
Vested and exercisable (in years) | 5 years 10 months 13 days | |||
Vested and expected to vest (in years) | 6 years 3 days | |||
Aggregate Intrinsic Value | ||||
Outstanding options | $ 0 | $ 100,000 | $ 1,900,000 | |
Vested and exercisable | 0 | |||
Vested and expected to vest | $ 0 | |||
Omnibus incentive Plan | ||||
Number of Options | ||||
Beginning balance, options outstanding (in shares) | 1,889,313 | |||
Options granted (in shares) | 1,197,596 | |||
Options exercised (in shares) | 0 | |||
Options cancelled/ forfeited (in shares) | (45,836) | |||
Ending balance, options outstanding (in shares) | 3,041,073 | |||
Options vested and exercisable (in shares) | 461,236 | |||
Options vested and expected to vest, outstanding (in shares) | 3,041,073 | |||
Weighted Average Exercise Price | ||||
Beginning balance, options outstanding (in dollars per share) | $ 19 | |||
Options granted (in dollars per share) | 15.40 | |||
Options exercised (in dollars per share) | 0 | |||
Options cancelled/ forfeited (in dollars per share) | 19 | |||
Ending balance, options outstanding (in dollars per share) | 17.58 | |||
Vested and exercisable (in dollars per share) | 19 | |||
Vested and expected to vest (in dollars per share) | $ 17.58 | |||
Weighted- Average Remaining Contractual Term (in years) | ||||
Outstanding options (in years) | 9 years 1 month 24 days | |||
Vested and expected to vest (in years) | 9 years 1 month 24 days | |||
Aggregate Intrinsic Value | ||||
Outstanding options | $ 129,187 | |||
Vested and exercisable | 0 | |||
Vested and expected to vest | $ 129,187 | |||
Omnibus incentive Plan | Time-Vesting Options | ||||
Weighted- Average Remaining Contractual Term (in years) | ||||
Vested and exercisable (in years) | 8 years 9 months 21 days |
Share-based Compensation - RSU
Share-based Compensation - RSU Activity (Details) - Restricted Stock Units (RSUs) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of Shares | |
Outstanding period start (in shares) | shares | 710,735 |
Granted (in shares) | shares | 1,974,670 |
Vested (in shares) | shares | (192,978) |
Cancelled/forfeited (in shares) | shares | (78,896) |
Outstanding period end (in shares) | shares | 2,413,531 |
Weighted- Average Remaining Contractual Term (in years) | |
Beginning balance (in dollars per share) | $ / shares | $ 18.97 |
Granted (in dollars per share) | $ / shares | 12.03 |
Vested (in dollars per share) | $ / shares | 18.83 |
Cancelled/forfeited (in dollars per share) | $ / shares | 16.13 |
Ending balance (in dollars per share) | $ / shares | $ 13.40 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 2 Months Ended | 12 Months Ended | ||
Dec. 31, 2022 USD ($) vote $ / shares shares | Dec. 31, 2022 USD ($) vote $ / shares shares | Nov. 13, 2022 USD ($) $ / shares | Dec. 31, 2021 $ / shares shares | |
Equity [Abstract] | ||||
Common stock, authorized (in shares) | shares | 1,000,000,000 | 1,000,000,000 | 1,000,000,000 | |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.0001 | $ 0.001 |
Preferred stock, authorized (in shares) | shares | 100,000,000 | 100,000,000 | 100,000,000 | |
Preferred stock, par (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | |
Number of votes for share | vote | 1 | 1 | ||
Stock repurchase program, authorized amount | $ | $ 100,000,000 | |||
Repurchases of common stock (in shares) | shares | 1,528,829 | |||
Stock repurchase program, remaining authorized repurchase amount | $ | $ 16,800,000 | $ 16,800,000 | ||
Treasury stock acquired, average cost per share (in dollars per share) | $ / shares | $ 11.01 | |||
Remaining for future purchases | $ | $ 83,200,000 |
Earnings Per Share - Narrative
Earnings Per Share - Narrative (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share [Abstract] | |||
Antidilutive securities excluded from computation of earnings per unit (in shares) | 6,913,703 | 6,360,367 | 3,755,942 |
Earnings Per Share - Schedule o
Earnings Per Share - Schedule of Earnings Per Unit, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Numerator: | |||
Net income (loss) | $ 144,574 | $ (21,303) | $ (92,077) |
Denominator: | |||
Weighted average units outstanding - basic (in shares) | 79,344,547 | 60,821,472 | 57,168,291 |
Effect of dilutive securities (in shares) | 98,716 | 0 | 0 |
Weighted average units outstanding - diluted (in shares) | 79,443,263 | 60,821,472 | 57,168,291 |
Net income (loss) per share: | |||
Basic (in dollars per share) | $ 1.82 | $ (0.35) | $ (1.61) |
Diluted (in dollars per share) | $ 1.82 | $ (0.35) | $ (1.61) |
Savings and Incentive Plans (De
Savings and Incentive Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Retirement Benefits [Abstract] | |||
Service period | 3 months | ||
Percent of match | 100% | ||
Percent of employees' gross pay | 4% | ||
Employer contribution amount | $ 3.1 | $ 2.9 | $ 1 |
Annual incentive plan, expense | $ 12.7 | $ 12.1 | $ 8.3 |
Aggregate target bonus, percentage | 62.50% |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | ||||
Mar. 31, 2023 | Mar. 09, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Subsequent Event [Line Items] | |||||
Restructuring reserve | $ 684,000 | $ 11,588,000 | $ 0 | ||
Subsequent Event | Forecast | |||||
Subsequent Event [Line Items] | |||||
Workforce reduction, percent | 300% | ||||
Employee Severance | |||||
Subsequent Event [Line Items] | |||||
Restructuring reserve | $ 0 | ||||
Minimum | Employee Severance | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Restructuring and related cost | $ 4,500,000 | ||||
Maximum | Employee Severance | Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Restructuring and related cost | $ 5,000,000 |