FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS

6 Months Ended

Jun. 30, 2021

Investments, All Other Investments [Abstract]

FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS

Fair Value Measurements

Fair value is defined as the price that would be received upon sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. When determining fair value, the Company considers the principal or most advantageous market in which it transacts, and considers assumptions that market participants would use when pricing the asset or liability. Additional information on fair value measurements is included in Note 13 to the Company’s consolidated financial statements for the year ended December 31, 2020, included in the 2020 Form 10-K/A. The Company’s policy is to recognize asset or liability transfers among Level 1, Level 2 and Level 3 as of the actual date of the events or change in circumstances that caused the transfer.

As of June 30, 2021 and December 31, 2020, the Company has determined that its GP Sponsor Private Placement Warrants are subject to treatment as a liability. The GP Sponsor Private Placement Warrants may not be redeemed by the Company so long as these warrants are held by the initial purchasers or such purchasers’ permitted transferees. If these warrants are held by someone other than the initial purchasers or such purchasers’ permitted transferees, these warrants are redeemable by the Company and exercisable on the same basis as certain warrants to purchase approximately 8.6 million shares of the Company’s Common Stock, at $11.50 per share (the “Public Warrants”). As a result, the GP Sponsor Private Placement Warrants were reclassified as a liability. The fair value of these instruments as of June 30, 2021 and December 31, 2020 was $3.1 million and $2.1 million, respectively, utilizing the BSM method. The GP Sponsor Private Placement Warrants are classified as Level 2 financial instruments. The key assumptions used to determine the fair value was the term period of the warrants, the risk free rate and volatility. As of June 30, 2021, the term to expiration was 1.28 years, the risk free rate of 0.12% and the implied volatility of 58.8%.

As discussed in Note 5, the fair value for the Company’s Series A Preferred Stock issuances on June 20, 2019, March 7, 2019 and July 19, 2018 was determined to be $3.0 million, $5.3 million and $126.8 million, respectively, which were utilized to determine the basis for allocating the net proceeds. The fair value was determined by utilizing a combination of a discounted cash flow methodology related to funds generated by the Series A Preferred Stock, along with the BSM option-pricing model in relation to the conversion feature. Key assumptions applied for the discounted cash flow and BSM analysis included (i) three different scenarios whereby the Series A Preferred Stock would remain outstanding between 4 and 5 years along with a probability weighting assigned to each scenario, (ii) an implied yield of the Series A Preferred Stock ranging from 20.9% to 22.9% calibrated to the transaction values as of June 20, 2019, March 7, 2019 and July 19, 2018, respectively, (iii) risk-free interest rates of 1.72%, 2.44% and 2.8% and (iv) historical volatility of 30.0%.

The carrying amounts of the Company’s financial instruments including cash and cash equivalents, restricted cash, accounts receivable, accounts payable, and accrued liabilities approximate fair values due to their short-term maturities. Based on

borrowing rates currently available to the Company for debt with similar terms, the carrying value of capital lease obligations approximate fair value as of the respective balance sheet dates. The liability for redeemable warrants are also considered financial instruments and valued utilizing the BSM method and assumptions noted above.

Significant Concentrations

The Company attributes revenues to geographic regions based on the location of its clients’ contracting entity. The following table shows revenues by geographic region (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
United States of America	$	49,562	$	47,376	$	97,121	$	94,822
International	42,052		31,026		82,388		61,612
Total	$	91,614	$	78,402	$	179,509	$	156,434

No clients represented more than 10% of revenue for both the three months and six months ended June 30, 2021 or 2020. As of June 30, 2021 and 2020, no clients accounted for more than 10% of total net accounts receivable. The Company tracks its assets by physical location. As of June 30, 2021 and 2020, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $1.2 million and $1.3 million, respectively. As of June 30, 2021, the Company had operating lease right-of-use assets of $10.1 million, $5.2 million and $0.4 million in the United States, India and the rest of the world, respectively.

Financial instruments that subject the Company to concentrations of credit risk consist primarily of cash, cash equivalents, restricted cash, and accounts receivable. The Company maintains its cash, cash equivalents and restricted cash at high-quality financial institutions, primarily in the United States. Deposits, including those held in foreign branches of global banks, may exceed the amount of insurance provided on such deposits. As of June 30, 2021 and December 31, 2020, the Company had cash, cash equivalents and restricted cash with a single financial institution for an aggregate of $84.6 million and $50.2 million, respectively. As of June 30, 2021 and December 31, 2020, the Company had restricted cash of $0.3 million and $0.3 million, respectively. The Company has never experienced any losses related to these balances.

Generally, credit risk with respect to accounts receivable is diversified due to the number of entities comprising the Company’s client base and their dispersion across different geographies and industries. The Company performs ongoing credit evaluations on certain clients and generally does not require collateral on accounts receivable. The Company maintains reserves for potential bad debts and historically such losses are generally not significant.