Restructuring and Restructuring-Related Activities

3 Months Ended

Mar. 31, 2024

Restructuring and Restructuring-Related Activities

(18) Restructuring and Restructuring-Related Activities

In May 2022, the Board approved a program (the “2022 Strategic Realignment”) to strategically realign the Company’s resources in order to accelerate and grow the Company’s investments in the Company’s largest growth opportunities while streamlining the Company’s operations. The 2022 Strategic Realignment program includes a targeted realignment and reduction of headcount, facilities and other third-party spend. In November 2022 and July 2023, the Board approved amendments to the 2022 Strategic Realignment program to include additional targeted realignment and reduction of headcount and other third-party spend.

The 2022 Strategic Realignment program is in support of the 2022 strategic initiatives to simplify the Company’s business and accelerate the integration of recent acquisitions, and will help to drive the financial outcomes of sustainable growth and improved profitability and cash flow and is expected to be substantially completed by the first half of fiscal 2024.

In addition to restructuring costs, the Company will also incur costs that do not constitute restructuring under ASC 420, Exit and Disposal Cost Obligations, and which the Company instead refers to as business transformation costs. These costs consist primarily of expenditures directly related to the 2022 Strategic Realignment and include employee retention costs, professional fees and investments in automation and technology. The following table provides a summary of the Company’s estimates of total pre-tax charges associated with the 2022 Strategic Realignment, by major type of cost, of which approximately $33 million to $35 million are expected to result in cash outlays (in millions):


	Total Estimated Amount Expected to be Incurred
Restructuring charges:
Workforce	$	13	to	$	14
Facilities-related		5	to		5
Other		—	to		—
Business transformation charges		16	to		17
Total restructuring and business transformation charges	$	34	to	$	36

The following table sets provides a summary of restructuring activities (in thousands):


	Workforce (1)			Facilities- related (2)			Other		Total
Balance at January 1, 2024	$	1,444		$	(5	)	$	—	$	1,439
Charges		2,334			10			—		2,344
Charges settled in cash		(1,921	)		(9	)		—		(1,930	)
Charges settled in non-cash		(44	)		—			—		(44	)
Balance at March 31, 2024	$	1,813		$	(4	)	$	—	$	1,809

(1)

Balance at March 31, 2024 is recorded in accrued payroll and employee related liabilities, accounts payable and accrued expenses on the condensed consolidated balance sheet.

(2)

Balance at March 31, 2024 is recorded in prepaid expenses on the condensed consolidated balance sheet.

Since the inception of the 2022 Strategic Realignment program through March 31, 2024, the Company incurred approximately $18.1 million of restructuring charges, of which $13.6 million was for employee-related expenses, $4.3 million was for facilities-related expenses and $0.2 million for other expenses.

The following table presents restructuring and business transformation expenses by major type and line item within our accompanying condensed consolidated statement of operations (in thousands):


	Three Months Ended March 31,
	2024			2023
Restructuring charges	$	2,344		$	21
Business transformation charges:
Cost of revenue		65			341
Sales and marketing		(32	)		1,066
Research and development		463			646
General and administrative		243			331
Other income (expense), net		—			(1	)
Total business transformation charges		739			2,383
Total restructuring and business transformation charges	$	3,083		$	2,404