XML 27 R17.htm IDEA: XBRL DOCUMENT v3.23.2
FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS
 6 Months Ended
Jun. 30, 2023
Investments, All Other Investments [Abstract]  
FINANCIAL INSTRUMENTS AND SIGNIFICANT CONCENTRATIONS 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, 2022, included in Part II, Item 8 of the 2022 Form 10-K. 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.

Investments

During September 2022, the Company invested $20 million of its cash and cash equivalents into U.S. Federal agency bonds, U.S. government bonds, U.S. treasury notes and other securities. We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values.

In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Debt investments are classified as available-for-sale and gains and losses are recorded using the specific identification method. Changes in fair value are recorded in the operating statement. Fair value is calculated based on publicly available market information.
Listed below are the cash equivalent and investment balances as of June 30, 2023 (in thousands):
Fair Value LevelCost BasisUnrealized Gains (Losses)Recorded BasisCash EquivalentsShort-term InvestmentsLong-term Investments
Federal Agency BondsLevel 2$15,213 $139 $15,352 $404 $12,919 $2,029 
US Treasury notesLevel 25,180 29 5,209 998 4,211 — 
$20,393 $168 $20,561 $1,402 $17,130 $2,029 

Derivatives

On May 18, 2022, the Company entered into an interest rate swap agreement for a notional value of $40.0 million. The derivative was recognized in the accompanying Unaudited Condensed Consolidated Balance Sheets at its estimated fair value as of June 30, 2023. The Company uses derivatives to manage the risk associated with changes in interest rates. The Company does not enter into derivatives for speculative purposes.

To estimate fair value for the Company's interest rate swap agreement as of June 30, 2023, the Company utilized a present value of future cash flows, leveraging a model-derived valuation that uses Level 2 observable inputs such as interest rate yield curves. The Company estimated the fair value of the interest rate swap agreement to be $1.6 million as of June 30, 2023.

Changes in the fair value of the derivatives that qualify as cash flow hedges are recorded in Accumulated other comprehensive loss in the accompanying Unaudited Condensed Consolidated Balance Sheets until earnings are affected by the variability of the cash flows.

The Company received interest swap payments of $0.2 million and $0.4 million during the three and six months ended June 30, 2023, respectively, which were recorded as a reduction to interest expense. The Company incurred interest payments of $0.1 million during the three and six months ended June 30, 2022, which were recorded as interest expense.

The amounts recorded for the interest rate swap agreement are described below (in thousands):
Derivative InstrumentBalance Sheet ClassificationJune 30, 2023December 31, 2022
Interest rate swapDeposits and other$1,616 $1,402 
Accumulated other comprehensive loss1,270 1,107 
Three Months Ended June 30,Six Months Ended June 30,
Derivative InstrumentIncome Statement Classification2023202220232022
Interest rate swapInterest expense (benefit)$(208)$142 $(365)$142 

Significant Concentrations
 
The Company attributes revenues to geographic regions based on the location of its clients’ contracting entities. The following table shows revenues by geographic region (in thousands):
Three Months Ended
June 30,		Six Months Ended June 30,
 2023202220232022
United States of America$53,973 $53,909 $107,406 $106,194 
International52,448 47,291 104,527 92,916 
Total$106,421 $101,200 $211,933 $199,110 
 
No clients represented more than 10% of revenue for both the three and six months ended June 30, 2023 and 2022. As of June 30, 2023 and December 31, 2022, no clients accounted for more than 10% of total net accounts receivable. The Company tracks its assets by physical location. As of June 30, 2023 and December 31, 2022, the net carrying value of the Company’s property and equipment located outside of the United States amounted to approximately $1.8 million and $1.8 million respectively. As of June 30, 2023, the Company had operating lease right-of-use assets of $3.6 million, $2.7 million and $0.9 million in the United States, India and the rest of the world, respectively. As of December 31, 2022, the Company had operating lease right-of-use assets of $2.6 million, $3.4 million and $1.2 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, 2023 and December 31, 2022, the Company had cash, cash equivalents and restricted cash with a single financial institution for an aggregate of $47.4 million and $44.9 million, respectively. In addition, as of June 30, 2023 the Company had cash and cash equivalents with two other single financial institutions of $26.6 million. As of June 30, 2023 and December 31, 2022, the Company had restricted cash of $0.4 million. 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.