Business Combinations

6 Months Ended

Jun. 30, 2024

Business Combination, Asset Acquisition, and Joint Venture Formation [Abstract]

BUSINESS COMBINATIONS

Intelliwave

On May 30, 2024, the Company completed the acquisition of all outstanding equity of Intelliwave Technologies Inc. (“Intelliwave”), a construction materials management company, for $29.8 million in cash consideration. The purpose of this acquisition was to accelerate development of the Company’s Workforce Management solution.

As of June 30, 2024, the Company has paid $28.3 million in cash and the Company anticipates that the remaining $1.5 million will be paid within six months of the acquisition date. The remaining $1.5 million of purchase consideration is reported in other current liabilities on the accompanying condensed consolidated balance sheets. On the acquisition date, $4.3 million in cash was placed in an escrow account held by a third-party escrow agent for potential breaches of representations, warranties, and indemnities. $3.8 million of the escrow amount was included in the purchase consideration and is scheduled to be released from escrow to Intelliwave stockholders 18 months after the acquisition date (subject to any indemnification claims), and $0.5 million of the escrow amount was excluded from the purchase consideration and is scheduled to be released from escrow to Intelliwave stockholders 24 months after the acquisition date (subject to any indemnification claims).

The preliminary purchase consideration was allocated to the following assets and liabilities at the acquisition date (in thousands):


	Fair Value		Useful Life
Assets acquired
Cash and cash equivalents	$	2,390
Accounts receivable	964
Prepaid expenses and other current assets	17
Other non-current assets	388
Developed technology intangible asset	16,000		7 years
Customer relationships intangible asset	4,700		10 years
Goodwill	11,333
Total assets acquired	$	35,792
Liabilities assumed
Deferred revenue, current	(2,210)
Other current liabilities	(2,605)
Other non-current liabilities	(388)
Net deferred tax liabilities	(790)
Total liabilities assumed	$	(5,993)
Net assets acquired	$	29,799

Developed technology intangible asset represents the fair value of Intelliwave’s technology, which was valued considering both the cost to rebuild and relief from royalty methods. Key assumptions under the cost to rebuild method include the estimated level of effort and related costs of reproducing or replacing the acquired technology. Key assumptions under the relief from royalty method include forecasted revenue to be generated from the developed technology, an estimated royalty rate applicable to the technology, and a discount rate. Developed technology is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the technology are consumed, over its estimated useful life of seven years. The amortization expense is recorded in cost of revenue in the accompanying condensed consolidated statements of operations and comprehensive loss.

Customer relationships represent the fair value of the underlying relationships with Intelliwave’s existing customers, which were valued using the excess earnings method. Key assumptions under the excess earnings method include estimated future revenues, costs, cash flows, and a discount rate. The customer relationship intangible asset is amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the customer relationships are consumed, over its estimated useful life of ten years. The amortization expense is recorded in sales and marketing expenses in the accompanying condensed consolidated statements of operations and comprehensive loss.

The $11.3 million goodwill balance is primarily attributable to synergies and expanded market opportunities that are expected to be achieved from the integration of Intelliwave with the Company’s offerings and assembled workforce. Substantially all of the goodwill balance is not deductible for income taxes purposes.

The measurement period for the valuation of assets acquired and liabilities assumed ends as soon as information on the facts and circumstances that existed as of the acquisition date becomes available, but does not exceed 12 months. The purchase price allocation is subject to future adjustments, including to finalize the closing net working capital.

The Company issued 65,269 performance-based restricted stock units (“PSUs”) and 67,807 service-based restricted stock units (“RSUs”) at a grant date fair value of $68.96 per share in order to retain certain employees of Intelliwave. The PSUs issued to Intelliwave employees will vest upon the achievement of certain integration milestones. The total grant date fair value of the PSUs and RSUs was excluded from purchase consideration and is recognized as post-combination expense. See Note 10 to these condensed consolidated financial statements for details on how the Company expenses stock-based compensation.

The Company has not separately presented pro forma results reflecting the acquisition of Intelliwave or revenue and operating losses of Intelliwave for the period from the acquisition date through June 30, 2024, as the impacts were not material to the condensed consolidated financial statements. The acquisition-related transaction costs were not material and were expensed as incurred in the accompanying condensed consolidated statements of operations and comprehensive loss.