QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||||
(Address of principal executive offices, including zip code) |
Title of each class | Trading symbol | Name of each exchange on which registered | ||||||||||||
(Nasdaq Global Select Market) |
Large accelerated filer | ☐ | ☒ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page No. | ||||||||||||||
PART I. | ||||||||||||||
Item 1. | ||||||||||||||
Item 2. | ||||||||||||||
Item 3. | ||||||||||||||
Item 4. | ||||||||||||||
PART II. | ||||||||||||||
Item 1. | ||||||||||||||
Item 1A. | ||||||||||||||
Item 2. | ||||||||||||||
Item 3. | ||||||||||||||
Item 4. | ||||||||||||||
Item 5. | ||||||||||||||
Item 6. | ||||||||||||||
(IN THOUSANDS, EXCEPT SHARE DATA) | September 30, 2023 | December 31, 2022 | ||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Restricted cash | ||||||||||||||
Accounts receivable, net | ||||||||||||||
Unbilled receivables | ||||||||||||||
Prepaid expenses and other current assets | ||||||||||||||
Due from related party | ||||||||||||||
Total current assets | ||||||||||||||
Property and equipment, net | ||||||||||||||
Internal use software, net | ||||||||||||||
Intangible assets, net | ||||||||||||||
Goodwill | ||||||||||||||
Operating lease right-of-use assets | ||||||||||||||
Deferred tax asset, net | ||||||||||||||
Other long-term assets | ||||||||||||||
Total assets | $ | $ | ||||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued expenses | $ | $ | ||||||||||||
Due to related party | ||||||||||||||
Deferred revenue | ||||||||||||||
Operating lease liabilities, current | ||||||||||||||
Total current liabilities | ||||||||||||||
Net deferred tax liability | ||||||||||||||
Long-term debt | ||||||||||||||
Operating lease liabilities, non-current | ||||||||||||||
Other long-term liabilities | ||||||||||||||
Total liabilities | ||||||||||||||
Commitments and Contingencies (Note 13) | ||||||||||||||
Stockholders’ Equity | ||||||||||||||
Preferred Stock, $ | ||||||||||||||
Common Stock, $ | ||||||||||||||
Additional paid-in-capital | ||||||||||||||
Accumulated other comprehensive loss | ( | ( | ||||||||||||
Retained earnings (accumulated deficit) | ( | |||||||||||||
Total stockholders’ equity | ||||||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||
Revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) | ||||||||||||||||||||||||||
Sales and marketing | ||||||||||||||||||||||||||
Technology and development | ||||||||||||||||||||||||||
General and administrative | ||||||||||||||||||||||||||
Depreciation and amortization | ||||||||||||||||||||||||||
Foreign exchange loss, net | ||||||||||||||||||||||||||
Total operating expenses | ||||||||||||||||||||||||||
Operating income (loss) | ( | |||||||||||||||||||||||||
Interest expense, net | ( | ( | ( | ( | ||||||||||||||||||||||
Employee retention tax credit | ||||||||||||||||||||||||||
Net income (loss) before income taxes | ( | |||||||||||||||||||||||||
Benefit (provision) from income taxes | ( | ( | ( | |||||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Net income (loss) per share: | ||||||||||||||||||||||||||
Basic | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Diluted | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Weighted average shares outstanding: | ||||||||||||||||||||||||||
Basic | ||||||||||||||||||||||||||
Diluted | ||||||||||||||||||||||||||
Other comprehensive loss: | ||||||||||||||||||||||||||
Foreign currency translation adjustments | ( | ( | ( | ( | ||||||||||||||||||||||
Total comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Common Stock | ||||||||||||||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT SHARES) | Shares | Amount | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings (accumulated deficit) | Total stockholders’ equity | ||||||||||||||||||||||||||||||||
Balance, July 1, 2023 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||
RSUs and MSUs vested | — | — | — | |||||||||||||||||||||||||||||||||||
Option exercises | — | — | ||||||||||||||||||||||||||||||||||||
ESPP purchase | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | ( | $ | ( | $ |
Common Stock | ||||||||||||||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT SHARES) | Shares | Amount | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings (accumulated deficit) | Total stockholders’ equity | ||||||||||||||||||||||||||||||||
Balance, January 1, 2023 | $ | $ | $ | ( | $ | $ | ||||||||||||||||||||||||||||||||
RSUs and MSUs vested | — | — | — | |||||||||||||||||||||||||||||||||||
Option exercises | — | — | ||||||||||||||||||||||||||||||||||||
ESPP purchase | — | — | — | |||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Adoption of , net of tax | — | — | — | — | ||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | ( | ||||||||||||||||||||||||||||||||
Balance, September 30, 2023 | $ | $ | $ | ( | $ | ( | $ |
Common Stock | ||||||||||||||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT SHARES) | Shares | Amount | Additional paid-in capital | Accumulated other comprehensive loss | Accumulated deficit | Total stockholders’ equity | ||||||||||||||||||||||||||||||||
Balance, July 1, 2022 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
RSUs vested | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Option exercises | — | — | ||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 | $ | $ | $ | ( | $ | ( | $ |
Common Stock | ||||||||||||||||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT SHARES) | Shares | Amount | Additional paid-in capital | Accumulated other comprehensive loss | Accumulated deficit | Total stockholders’ equity | ||||||||||||||||||||||||||||||||
Balance, January 1, 2022 | $ | $ | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||||||
RSUs vested | — | — | — | |||||||||||||||||||||||||||||||||||
Option exercises | — | — | ||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | ||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment | — | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||
Repurchase of common stock | ( | ( | ( | — | — | ( | ||||||||||||||||||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||||||||||||||||||||
Balance, September 30, 2022 | $ | $ | $ | ( | $ | ( | $ |
Nine Months Ended September 30, | ||||||||||||||
(IN THOUSANDS) | 2023 | 2022 | ||||||||||||
Cash flows from operating activities: | ||||||||||||||
Net income (loss) | $ | ( | $ | |||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||||||||
Depreciation and amortization | ||||||||||||||
Stock-based compensation | ||||||||||||||
Foreign currency loss, net | ||||||||||||||
Deferred tax benefit | ( | ( | ||||||||||||
Amortization of debt issuance costs | ||||||||||||||
Allowance for credit losses | ||||||||||||||
Employee retention tax credit | ( | |||||||||||||
Impairment of assets | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Increase in accounts receivable | ( | ( | ||||||||||||
Increase in unbilled receivables | ( | ( | ||||||||||||
Decrease (increase) in prepaid expenses and other current assets | ( | |||||||||||||
Decrease (increase) in operating leases, net | ( | |||||||||||||
Increase in other long-term assets | ( | ( | ||||||||||||
Increase (decrease) in accounts payable and accrued expenses | ( | |||||||||||||
Increase in deferred revenue | ||||||||||||||
Increase (decrease) in due to/from related party | ( | |||||||||||||
Net cash provided by operating activities | ||||||||||||||
Cash flows from investing activities: | ||||||||||||||
Payment for acquisitions, net of acquired cash | ( | |||||||||||||
Purchase of property and equipment | ( | ( | ||||||||||||
Acquisition and development of internal use software and other | ( | ( | ||||||||||||
Net cash used in investing activities | ( | ( | ||||||||||||
Cash flows from financing activities: | ||||||||||||||
Proceeds from the Revolver | ||||||||||||||
Repayment of long-term debt | ( | ( | ||||||||||||
Repayment of short-term debt | ( | |||||||||||||
Proceeds from exercise of stock options | ||||||||||||||
Payments for repurchase of common stock | ( | |||||||||||||
Cash received from Employee Stock Purchase Program | ||||||||||||||
Net cash used in financing activities | ( | ( | ||||||||||||
Net increase in cash, cash equivalents and restricted cash | ||||||||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ( | ||||||||||||
Cash, cash equivalents and restricted cash at beginning of period | ||||||||||||||
Cash, cash equivalents and restricted cash at end of period | $ | $ | ||||||||||||
Supplemental Disclosures: | ||||||||||||||
Cash paid during the period for: | ||||||||||||||
Interest | $ | $ | ||||||||||||
Taxes | $ | $ | ||||||||||||
Non-cash investing and financing activities: | ||||||||||||||
Property and equipment acquired included in accounts payable | $ | $ | ||||||||||||
Internal use software acquired included in accounts payable | $ | $ | ||||||||||||
Lease liabilities arising from right of use assets | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Cash and cash equivalents | $ | $ | ||||||||||||
Short term restricted cash | $ | $ | ||||||||||||
Long term restricted cash (held in other long-term assets) | $ | $ | ||||||||||||
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | $ | $ |
September 30, 2023 | September 30, 2022 | |||||||||||||
Balance, beginning of period | $ | $ | ||||||||||||
Additional provision | $ | $ | ||||||||||||
Receivables written off and impact of exchange rates | $ | ( | $ | ( | ||||||||||
Adoption of ASC 326 | $ | ( | $ | |||||||||||
Balance, end of period | $ | $ |
September 30, 2023 | September 30, 2022 | |||||||||||||||||||||||||
Estimated fair value | $ | - | $ | $ | - | $ | ||||||||||||||||||||
Expected volatility (%) | - | - | ||||||||||||||||||||||||
Expected term (in years) | - | - | ||||||||||||||||||||||||
Risk-free interest rate (%) | - | - | ||||||||||||||||||||||||
Dividend yield |
Estimated useful life (in years) | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||
Computer and office equipment | - | $ | $ | |||||||||||||||||||||||
Computer software | - | $ | $ | |||||||||||||||||||||||
Leasehold improvements | Various | $ | $ | |||||||||||||||||||||||
Furniture | $ | $ | ||||||||||||||||||||||||
Total property and equipment | $ | $ | ||||||||||||||||||||||||
Less: accumulated depreciation | $ | ( | $ | ( | ||||||||||||||||||||||
Total property and equipment, net | $ | $ |
Estimated useful life (in years) | September 30, 2023 | December 31, 2022 | ||||||||||||||||||||||||
Internal use software | - | $ | $ | |||||||||||||||||||||||
Less: Assets written off | ( | |||||||||||||||||||||||||
Less: Accumulated amortization | ( | ( | ||||||||||||||||||||||||
Total internal use software, net | $ | $ |
September 30, 2023 | ||||||||||||||||||||||||||||||||||||||
Estimated useful life (in years) | Gross book value | Accumulated amortization | Net book value | Weighted average remaining useful life | ||||||||||||||||||||||||||||||||||
Customer relationships | - | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Developed technology | ( | |||||||||||||||||||||||||||||||||||||
Trademarks | - | ( | ||||||||||||||||||||||||||||||||||||
Favorable leases | ( | |||||||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
December 31, 2022 | ||||||||||||||||||||||||||||||||||||||
Estimated useful life | Gross book value | Accumulated amortization | Net book value | Weighted average remaining useful life | ||||||||||||||||||||||||||||||||||
Customer relationships | - | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Developed technology | - | ( | ||||||||||||||||||||||||||||||||||||
Trademarks | - | ( | ||||||||||||||||||||||||||||||||||||
Favorable leases | ( | |||||||||||||||||||||||||||||||||||||
Total | $ | $ | ( | $ |
Goodwill as of December 31, 2022 | $ | ||||
Impact of exchange rates | ( | ||||
Goodwill as of September 30, 2023 | $ | ||||
September 30, 2023 | December 31, 2022 | ||||||||||
Accounts payable | $ | $ | |||||||||
Accrued payroll | |||||||||||
Accrued professional fees | |||||||||||
Accrued bonuses and commissions | |||||||||||
Accrued revenue sharing | |||||||||||
Taxes payable | |||||||||||
Accrued hosting fees | |||||||||||
Other accrued expenses | |||||||||||
Total accounts payable and accrued expenses | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Security deposit received | $ | $ | |||||||||
Fin 48 liability | |||||||||||
Total Other long-term liabilities | $ | $ |
September 30, 2023 | December 31, 2022 | ||||||||||
Revolver | $ | $ | |||||||||
Less: Unamortized debt issuance costs | ( | ( | |||||||||
Total carrying amount | $ | $ |
Year Ending | |||||
2023 (remaining three months) | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
$ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||
North and South America (“Americas”) | $ | $ | $ | $ | ||||||||||||||||||||||
Europe, Middle East and Africa (“EMEA”) | ||||||||||||||||||||||||||
Asia and Pacific Rim (“APAC”) | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
September 30, 2023 | December 31, 2022 | |||||||||||||
Long lived assets | ||||||||||||||
Americas | $ | $ | ||||||||||||
EMEA | ||||||||||||||
APAC | ||||||||||||||
Total | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Cost of revenue | $ | $ | $ | $ | ||||||||||||||||||||||
Sales and marketing | ||||||||||||||||||||||||||
Technology and development | ||||||||||||||||||||||||||
General and administrative | ||||||||||||||||||||||||||
Total | $ | $ | $ | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | Unamortized Expense as of | Weighted Average Vesting Term | |||||||||||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | September 30, 2023 | ||||||||||||||||||||||||||||||||||
Time Based Options | ||||||||||||||||||||||||||||||||||||||
2018 Plan | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
2021 Plan | ||||||||||||||||||||||||||||||||||||||
Total Time Based Options Expense | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Return Target Options | ||||||||||||||||||||||||||||||||||||||
2018 Plan | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||
2021 Plan | ||||||||||||||||||||||||||||||||||||||
Total Return Target Options Expense | $ | ( | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
LTIP Expense (2018 Plan) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Other equity awards under 2021 Plan | ||||||||||||||||||||||||||||||||||||||
Restricted Stock Units ("RSUs") | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Market Stock Units ("MSUs") | ||||||||||||||||||||||||||||||||||||||
Other equity awards under 2021 Plan expense | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||
Employee Stock Purchase Plan "ESPP" | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Total Stock-Based Compensation Expense | $ | $ | $ | $ | $ |
Stock options | Weighted average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | |||||||||||||||||||||||
Outstanding as of July 1, 2023 | $ | $ | ||||||||||||||||||||||||
Conversion of Return-Target Options to Time-Based Options | — | — | ||||||||||||||||||||||||
Canceled or forfeited | ( | — | — | |||||||||||||||||||||||
Exercised | ( | — | — | |||||||||||||||||||||||
Outstanding at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Vested and expected to vest at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Exercisable as of September 30, 2023 | $ | $ |
Stock options | Weighted average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | |||||||||||||||||||||||
Outstanding as of July 1, 2023 | $ | $ | ||||||||||||||||||||||||
Conversion of Return-Target Options to Time-Based Options | ( | — | — | |||||||||||||||||||||||
Canceled or forfeited | ( | — | — | |||||||||||||||||||||||
Exercised | — | — | ||||||||||||||||||||||||
Outstanding at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Vested and expected to vest at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Exercisable as of September 30, 2023 | — |
Stock options | Weighted average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | |||||||||||||||||||||||
Outstanding at January 1, 2023 | $ | $ | ||||||||||||||||||||||||
Conversion of Return-Target Options to Time-Based Options | — | — | ||||||||||||||||||||||||
Canceled or forfeited | ( | — | — | |||||||||||||||||||||||
Exercised | ( | — | — | |||||||||||||||||||||||
Outstanding at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Vested and expected to vest at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Exercisable as of September 30, 2023 | $ | $ |
Stock options | Weighted average exercise price | Weighted average remaining contractual life (years) | Aggregate intrinsic value | |||||||||||||||||||||||
Outstanding at January 1, 2023 | $ | $ | ||||||||||||||||||||||||
Conversion of Return-Target Options to Time-Based Options | ( | — | — | |||||||||||||||||||||||
Canceled or forfeited | ( | — | — | |||||||||||||||||||||||
Exercised | — | — | ||||||||||||||||||||||||
Outstanding at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Vested and expected to vest at September 30, 2023 | $ | $ | ||||||||||||||||||||||||
Exercisable as of September 30, 2023 | — |
RSUs | |||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding as of July 1, 2023 | $ | ||||||||||
Granted | |||||||||||
Canceled or forfeited | ( | ||||||||||
Vested | ( | ||||||||||
Outstanding as of September 30, 2023 | $ | ||||||||||
Expected to vest as of September 30, 2023 |
RSUs | |||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding as of January 1, 2023 | $ | ||||||||||
Granted | |||||||||||
Canceled or forfeited | ( | ||||||||||
Vested | ( | ||||||||||
Outstanding as of September 30, 2023 | $ | ||||||||||
Expected to vest as of September 30, 2023 |
MSUs | |||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding as of July 1, 2023 | $ | ||||||||||
Granted | |||||||||||
Canceled or forfeited | ( | ||||||||||
Change in awards based on performance | |||||||||||
Vested | ( | ||||||||||
Outstanding as of September 30, 2023 | $ | ||||||||||
Expected to vest as of September 30, 2023 |
MSUs | |||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding as of January 1, 2023 | $ | ||||||||||
Granted | |||||||||||
Canceled or forfeited | ( | ||||||||||
Change in awards based on performance | |||||||||||
Vested | ( | ||||||||||
Outstanding as of September 30, 2023 | $ | ||||||||||
Expected to vest as of September 30, 2023 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Numerator: | ||||||||||||||||||||||||||
Net income (loss) | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Denominator: | ||||||||||||||||||||||||||
Basic Shares: | ||||||||||||||||||||||||||
Weighted-average shares outstanding | ||||||||||||||||||||||||||
Diluted Shares: | ||||||||||||||||||||||||||
Basic weighted-average shares outstanding | ||||||||||||||||||||||||||
Dilutive effect of stock-based awards | ||||||||||||||||||||||||||
Weighted-average diluted shares outstanding | ||||||||||||||||||||||||||
Net income (loss) per share | ||||||||||||||||||||||||||
Basic | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||
Diluted | $ | ( | $ | $ | ( | $ |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Options to purchase common stock | ||||||||||||||||||||||||||
Restricted stock units | ||||||||||||||||||||||||||
Market stock units | ||||||||||||||||||||||||||
ESPP | ||||||||||||||||||||||||||
Total |
Fair value hierarchy | Fair value | |||||||||||||
Money market funds | ||||||||||||||
September 30, 2023 | Level 1 | $ |
Balance at December 31, 2022 | $ | ||||
Restructuring reserve increase | |||||
Payments and impact of FX | ( | ||||
Balance at September 30, 2023 | $ |
September 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net revenue retention of advertising customers (%) (as of the end of the period) | 116 | % | 120 | % | ||||||||||
Total number of large advertising customers (as of the end of the period) | 219 | 184 |
(in thousands, except percentages) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Revenue | $ | 120,331 | $ | 101,343 | $ | 340,074 | $ | 290,913 | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) | 25,599 | 19,171 | 71,100 | 53,864 | ||||||||||||||||||||||
Sales and marketing | 29,604 | 28,190 | 87,566 | 77,961 | ||||||||||||||||||||||
Technology and development | 17,211 | 19,459 | 53,850 | 54,071 | ||||||||||||||||||||||
General and administrative | 22,611 | 20,150 | 85,673 | 56,081 | ||||||||||||||||||||||
Depreciation and amortization | 14,027 | 12,617 | 40,373 | 37,585 | ||||||||||||||||||||||
Foreign exchange loss, net | 2,078 | 4,064 | 931 | 3,503 | ||||||||||||||||||||||
Total operating expenses | 111,130 | 103,651 | 339,493 | 283,065 | ||||||||||||||||||||||
Operating income (loss) | 9,201 | (2,308) | 581 | 7,848 | ||||||||||||||||||||||
Interest expense, net | (3,109) | (2,619) | (9,747) | (5,859) | ||||||||||||||||||||||
Employee retention tax credit | — | 6,981 | — | 6,981 | ||||||||||||||||||||||
Net income (loss) before income taxes | 6,092 | 2,054 | (9,166) | 8,970 | ||||||||||||||||||||||
Benefit (provision) from income taxes | (19,841) | (1,287) | 6,240 | (5,083) | ||||||||||||||||||||||
Net income (loss) | $ | (13,749) | $ | 767 | $ | (2,926) | $ | 3,887 | ||||||||||||||||||
Net income (loss) margin | (11) | % | 1 | % | (1) | % | 1 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Revenue | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) | 21 | % | 19 | % | 21 | % | 19 | % | ||||||||||||||||||
Sales and marketing | 25 | % | 28 | % | 26 | % | 27 | % | ||||||||||||||||||
Technology and development | 14 | % | 19 | % | 16 | % | 19 | % | ||||||||||||||||||
General and administrative | 19 | % | 20 | % | 25 | % | 19 | % | ||||||||||||||||||
Depreciation and amortization | 12 | % | 12 | % | 12 | % | 13 | % | ||||||||||||||||||
Foreign exchange loss, net | 2 | % | 4 | % | — | % | 1 | % | ||||||||||||||||||
Total operating expenses | 92 | % | 102 | % | 100 | % | 97 | % | ||||||||||||||||||
Operating income (loss) | 8 | % | (2) | % | — | % | 3 | % | ||||||||||||||||||
Interest expense, net | (3) | % | (3) | % | (3) | % | (2) | % | ||||||||||||||||||
Employee retention tax credit | — | % | 7 | % | — | % | 2 | % | ||||||||||||||||||
Net income (loss) before income taxes | 5 | % | 2 | % | (3) | % | 3 | % | ||||||||||||||||||
Benefit (provision) from income taxes | (16) | % | (1) | % | 2 | % | (2) | % | ||||||||||||||||||
Net income (loss) | (11) | % | 1 | % | (1) | % | 1 | % |
(in thousands, except percentages) | Three Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | $ change | % change | |||||||||||||||||||||||
Revenue | $ | 120,331 | $ | 101,343 | $ | 18,988 | 19 | % | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) | 25,599 | 19,171 | 6,428 | 34 | % | |||||||||||||||||||||
Sales and marketing | 29,604 | 28,190 | 1,414 | 5 | % | |||||||||||||||||||||
Technology and development | 17,211 | 19,459 | (2,248) | (12) | % | |||||||||||||||||||||
General and administrative | 22,611 | 20,150 | 2,461 | 12 | % | |||||||||||||||||||||
Depreciation and amortization | 14,027 | 12,617 | 1,410 | 11 | % | |||||||||||||||||||||
Foreign exchange loss, net | 2,078 | 4,064 | (1,986) | (49) | % | |||||||||||||||||||||
Total operating expenses | 111,130 | 103,651 | 7,479 | 7 | % | |||||||||||||||||||||
Operating income (loss) | 9,201 | (2,308) | 11,509 | (499) | % | |||||||||||||||||||||
Interest expense, net | (3,109) | (2,619) | (490) | 19 | % | |||||||||||||||||||||
Employee retention tax credit | — | 6,981 | (6,981) | (100) | % | |||||||||||||||||||||
Net income before income taxes | 6,092 | 2,054 | 4,038 | 197 | % | |||||||||||||||||||||
Provision for income taxes | (19,841) | (1,287) | (18,554) | 1,442 | % | |||||||||||||||||||||
Net income (loss) | $ | (13,749) | $ | 767 | $ | (14,516) | (1,893) | % |
(in thousands, except percentages) | Three Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | $ change | % change | |||||||||||||||||||||||
Optimization revenue (f/k/a programmatic revenue) | $ | 56,998 | $ | 47,067 | $ | 9,931 | 21 | % | ||||||||||||||||||
Measurement revenue (f/k/a advertiser direct revenue) | 47,822 | 38,955 | 8,867 | 23 | % | |||||||||||||||||||||
Publisher revenue (f/k/a supply side revenue) | 15,511 | 15,321 | 190 | 1 | % | |||||||||||||||||||||
Total revenue | $ | 120,331 | $ | 101,343 | $ | 18,988 | 19 | % |
(in thousands, except percentages) | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | $ change | % change | |||||||||||||||||||||||
Revenue | $ | 340,074 | $ | 290,913 | $ | 49,161 | 17 | % | ||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) | 71,100 | 53,864 | 17,236 | 32 | % | |||||||||||||||||||||
Sales and marketing | 87,566 | 77,961 | 9,605 | 12 | % | |||||||||||||||||||||
Technology and development | 53,850 | 54,071 | (221) | — | % | |||||||||||||||||||||
General and administrative | 85,673 | 56,081 | 29,592 | 53 | % | |||||||||||||||||||||
Depreciation and amortization | 40,373 | 37,585 | 2,788 | 7 | % | |||||||||||||||||||||
Foreign exchange loss, net | 931 | 3,503 | (2,572) | (73) | % | |||||||||||||||||||||
Total operating expenses | 339,493 | 283,065 | 56,428 | 20 | % | |||||||||||||||||||||
Operating income (loss) | 581 | 7,848 | (7,267) | (93) | % | |||||||||||||||||||||
Interest expense, net | (9,747) | (5,859) | (3,888) | 66 | % | |||||||||||||||||||||
Employee retention tax credit | — | 6,981 | (6,981) | (100) | % | |||||||||||||||||||||
Net income (loss) before income taxes | (9,166) | 8,970 | (18,136) | (202) | % | |||||||||||||||||||||
Benefit (provision) from income taxes | 6,240 | (5,083) | 11,323 | (223) | % | |||||||||||||||||||||
Net income (loss) | $ | (2,926) | $ | 3,887 | $ | (6,813) | (175) | % |
(in thousands, except percentages) | Nine Months Ended September 30, | |||||||||||||||||||||||||
2023 | 2022 | $ change | % change | |||||||||||||||||||||||
Optimization revenue (f/k/a programmatic revenue) | $ | 160,847 | $ | 135,537 | $ | 25,310 | 19 | % | ||||||||||||||||||
Measurement revenue (f/k/a advertiser direct revenue) | 133,433 | 110,210 | 23,223 | 21 | % | |||||||||||||||||||||
Publisher revenue (f/k/a supply side revenue) | 45,794 | 45,166 | 628 | 1 | % | |||||||||||||||||||||
Total revenue | $ | 340,074 | $ | 290,913 | $ | 49,161 | 17 | % |
(in thousands, except percentages) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||
Net income (loss) | $ | (13,749) | $ | 767 | $ | (2,926) | $ | 3,887 | ||||||||||||||||||
Depreciation and amortization | 14,027 | 12,617 | 40,373 | 37,585 | ||||||||||||||||||||||
Stock-based compensation | 13,900 | 14,247 | 65,641 | 33,107 | ||||||||||||||||||||||
Interest expense, net | 3,109 | 2,619 | 9,747 | 5,859 | ||||||||||||||||||||||
Provision (benefit) from income taxes | 19,841 | 1,287 | (6,240) | 5,083 | ||||||||||||||||||||||
Acquisition, restructuring and integration costs | 1,353 | 1,518 | 2,974 | 4,396 | ||||||||||||||||||||||
Foreign exchange loss, net(1) | 2,078 | 4,064 | 931 | 3,551 | ||||||||||||||||||||||
Employee retention tax credit | — | (6,981) | — | (6,981) | ||||||||||||||||||||||
Asset impairments and other costs | 11 | 6 | 1,517 | 55 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 40,570 | $ | 30,144 | $ | 112,017 | $ | 86,542 | ||||||||||||||||||
Revenue | $ | 120,331 | $ | 101,343 | $ | 340,074 | $ | 290,913 | ||||||||||||||||||
Net income (loss) margin | (11) | % | 1 | % | (1) | % | 1 | % | ||||||||||||||||||
Adjusted EBITDA margin | 34 | % | 30 | % | 33 | % | 30 | % |
(in thousands) | Nine Months Ended September 30, | |||||||||||||
2023 | 2022 | |||||||||||||
Net cash provided by operating activities | $ | 74,118 | $ | 47,560 | ||||||||||
Net cash used in investing activities | (25,493) | (12,472) | ||||||||||||
Net cash used in financing activities | (42,180) | (29,195) | ||||||||||||
Net increase in cash and cash equivalents, and restricted cash | $ | 6,445 | $ | 5,893 | ||||||||||
Effect of exchange rate changes on cash and cash equivalents, and restricted cash | (1,330) | (5,396) | ||||||||||||
Cash, cash equivalents, and restricted cash, at beginning of period | 89,671 | 76,078 | ||||||||||||
Cash, cash equivalents and restricted cash, at end of period | $ | 94,786 | $ | 76,575 |
Exhibit Number | Description | |||||||
3.1 | ||||||||
3.2 | ||||||||
31.1 | ||||||||
31.2 | ||||||||
32.1** | ||||||||
32.2** | ||||||||
101.INS | Inline XBRL Instance Document | |||||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document | |||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |||||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
** | The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. |
Integral Ad Science Holding Corp. (Registrant) | |||||||||||
Date: November 2, 2023 | By: | /s/Tania Secor | |||||||||
Tania Secor | |||||||||||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
/s/ Lisa Utzschneider | ||
Lisa Utzschneider | ||
Director and Chief Executive Officer |
/s/ Tania Secor | ||
Tania Secor | ||
Chief Financial Officer |
Date: November 2, 2023 | /s/ Lisa Utzschneider | |||||||||||||
Lisa Utzschneider | ||||||||||||||
Director and Chief Executive Officer |
Date: November 2, 2023 | /s/ Tania Secor | ||||
Tania Secor | |||||
Chief Financial Officer |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - $ / shares |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
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, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares, issued (in shares) | 157,597,931 | 153,990,128 |
Common stock, shares, outstanding (in shares) | 157,597,931 | 153,990,128 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Revenue | $ 120,331 | $ 101,343 | $ 340,074 | $ 290,913 |
Operating expenses: | ||||
Cost of revenue (excluding depreciation and amortization shown below) | 25,599 | 19,171 | 71,100 | 53,864 |
Sales and marketing | 29,604 | 28,190 | 87,566 | 77,961 |
Technology and development | 17,211 | 19,459 | 53,850 | 54,071 |
General and administrative | 22,611 | 20,150 | 85,673 | 56,081 |
Depreciation and amortization | 14,027 | 12,617 | 40,373 | 37,585 |
Foreign exchange loss, net | 2,078 | 4,064 | 931 | 3,503 |
Total operating expenses | 111,130 | 103,651 | 339,493 | 283,065 |
Operating income (loss) | 9,201 | (2,308) | 581 | 7,848 |
Interest expense, net | (3,109) | (2,619) | (9,747) | (5,859) |
Employee retention tax credit | 0 | 6,981 | 0 | 6,981 |
Net income (loss) before income taxes | 6,092 | 2,054 | (9,166) | 8,970 |
Benefit (provision) from income taxes | (19,841) | (1,287) | 6,240 | (5,083) |
Net income (loss) | $ (13,749) | $ 767 | $ (2,926) | $ 3,887 |
Net income (loss) per share: | ||||
Basic (in dollars per share) | $ (0.09) | $ 0.00 | $ (0.02) | $ 0.03 |
Diluted (in dollars per share) | $ (0.09) | $ 0.00 | $ (0.02) | $ 0.02 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 157,055,904 | 155,389,195 | 157,691,005 | 155,007,655 |
Diluted (in shares) | 157,055,904 | 156,696,754 | 157,691,005 | 157,581,569 |
Other comprehensive loss: | ||||
Foreign currency translation adjustments | $ (1,717) | $ (3,248) | $ (789) | $ (11,218) |
Total comprehensive loss | $ (15,466) | $ (2,481) | $ (3,715) | $ (7,331) |
Description of business |
9 Months Ended |
---|---|
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of business | Description of business Integral Ad Science Holding Corp. and its wholly-owned subsidiaries (together, the “Company” or "IAS"), formerly known as Kavacha Topco, LLC, is a leading global media measurement and optimization platform. The Company’s mission is to be the global benchmark for trust and transparency in digital media quality for the world’s leading brands, publishers, and platforms. The Company’s global media measurement and optimization platform provides actionable data and delivers independent measurement and verification of digital advertising across all devices, channels, and formats, including desktop, mobile, connected TV (“CTV”), social, display, audio, gaming, and video. The Company’s Quality Impressions® is a proprietary metric that helps ensure media quality standards. To be counted as a Quality Impression, a digital ad must be viewable, by a real person rather than a bot, in a brand-safe and suitable environment within the correct geography. The viewability and invalid traffic filtration aspects of Quality Impression are accredited by the Media Rating Council across desktop and mobile platforms. The Company is an independent, trusted partner for buyers and sellers of digital advertising to increase accountability, transparency, and effectiveness in the market. The Company helps advertisers optimize their ad spend and better measure consumer engagement with campaigns across platforms, while enabling publishers to improve their inventory yield and revenue. The Company operates within the United States ("U.S.") in New York, California, and Illinois. Operations outside the U.S. include but are not limited to the United Kingdom ("U.K."), Ireland, France, Germany, Italy, Spain, Singapore, Australia, Japan, India, and the Nordics.
|
Basis of presentation and summary of significant accounting policies |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of presentation and summary of significant accounting policies | Basis of presentation and summary of significant accounting policies This summary of significant accounting policies is presented to assist in understanding the Company’s condensed consolidated financial statements. These accounting policies have been consistently applied in the preparation of the condensed consolidated financial statements. (a) Basis of presentation The Company’s condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the financial position, results of operations and cash flows for all periods presented. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The accompanying interim Condensed Consolidated Balance Sheets as of September 30, 2023, the Condensed Consolidated Statements of Operations and Comprehensive Loss, of Cash Flows and of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022, and the related footnote disclosures are unaudited. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in management’s opinion, include all adjustments necessary to state fairly the consolidated financial position of the Company. All adjustments made were of a normal recurring nature. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any future period. The Company’s significant accounting policies are discussed in Note 2 to the consolidated financial statements for the years ended December 31, 2022, 2021 and 2020. There have been no significant changes to these policies, except for the adoption of Accounting Standards Update ("ASU") No. 2016-13, "Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," as disclosed in Note 2(g) and Note 2(i), that have had a material impact on the Company’s condensed consolidated financial statements and related notes for the nine months ended September 30, 2023. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 2, 2023. During the year ended December 31, 2022, the Company reclassified foreign exchange loss, net from "General and administrative" expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss as a separate line item "Foreign exchange loss, net" presented on the Condensed Consolidated Statements of Operations and Comprehensive Loss. Corresponding prior period amounts have also been reclassified to conform to current period presentation. The Company is an Emerging Growth Company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, Emerging Growth Companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an Emerging Growth Company or (ii) it affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. On June 30, 2023, the last day of our second fiscal quarter in 2023, the market value of our common stock held by non-affiliates exceeded $700,000. Accordingly, we will be deemed a large accelerated filer as of December 31, 2023. As such, we will no longer (i) qualify as an Emerging Growth Company, (ii) be able to take advantage of the extended timeline to comply with new or revised accounting standards applicable to public companies beginning with our Annual Report on Form 10-K for the year ending December 31, 2023 and (iii) be exempt from providing an auditor's attestation report on our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act. (b) Basis of consolidation The condensed consolidated financial statements include the accounts of Integral Ad Science Holding Corp. and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. (c) Use of estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include fair value of assets acquired in business combinations, including assumptions with respect to future cash inflows and outflows, discount rates, assets useful lives, market multiples, the allocation of purchase price consideration in the business combination valuation of acquired assets and liabilities, the estimated useful lives of intangible assets and internal use software, the allowance for doubtful accounts, goodwill impairment testing, assumptions used to calculate equity-based compensation, and the realization of deferred tax assets. The Company bases its estimates on past experience, market conditions, and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis. Actual results may differ from these estimates due to risks and uncertainties, including the continued uncertainty surrounding rapidly changing market and economic conditions due to high inflation, changes to fiscal and monetary policy, high interest rates, currency fluctuations, instability in the financial markets and disruptions in European economies as a result of the war in Ukraine and other geopolitical issues. (d) Employee retention tax credit The Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") provided an employee retention credit which was a refundable tax credit against certain employment taxes. The Consolidated Appropriations Act (the "Appropriations Act") extended and expanded the availability of the employee retention credit through December 31, 2021. The Appropriations Act amended the employee retention credit to be equal to 70% of qualified wages paid to employees during the 2021 fiscal year. The Company qualified for the employee retention credit beginning in March 2020 for qualified wages through June 2021 and filed a cash refund claim during the year ended December 31, 2022. The employee retention credit totaling $6,981 was included within Prepaid expenses and other current assets on the Company's Condensed Consolidated Balance Sheets as of December 31, 2022. As of September 30, 2023, substantially all of the tax credit receivable has been received. (e) Foreign currency The reporting currency of the Company is the U.S. dollar. The functional currency of our foreign subsidiaries is the currency of the primary economic environment in which they operate, which is their local currency. The financial statements of these subsidiaries are translated into U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenue, costs and expenses. Translation gains and losses are recorded in accumulated other comprehensive loss in stockholders’ equity. Transaction gains and losses including those on intercompany transactions denominated in a currency other than the functional currency of the entity involved are included in foreign exchange loss, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. For the three months ended September 30, 2023, and 2022, foreign exchange loss, net consists of unrealized foreign exchange losses of $1,810 and $4,311, respectively, and realized transaction losses of $268 and gains of $247, respectively. For the nine months ended September 30, 2023, and 2022, foreign exchange loss, net consists of unrealized foreign exchange losses of $571 and $3,985, respectively, and realized transaction losses of $360 and gains of $482, respectively. (f) Cash, cash equivalents, and restricted cash Cash equivalents includes amounts invested in money market accounts. The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows.
(g) Accounts receivable, net Accounts receivable are carried at the original invoiced amount less an allowance for credit losses. The allowance is estimated by pooling accounts receivables based on similar risk characteristics, and expected credit loss exposure is evaluated for each accounts receivable pool. Invoices are typically issued with net 30-days to net 90-days terms. Account balances are considered delinquent if payment is not received by the due date, and the receivables are written off when deemed uncollectible. These costs are recorded in general and administrative expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss. The activity in our allowance for credit losses consists of the following as of:
(h) Stock-based compensation Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period. The Company accounts for forfeitures as they occur. The Company used the following assumptions in valuing its market stock units ("MSUs"), shares granted under the Company's 2021 Employee Stock Purchase Program ("ESPP"), time-based service options, which vest over a period of time subject to continued employment ("Time-Based Options"), and return target options ("Return-Target Options"), which vest upon a realized cash return of the equity investment of funds affiliated with Vista Equity Partners ("Vista"), the Company’s largest shareholder. Expected term — For time-based awards, the estimated expected term of options granted is generally calculated as the vesting period plus the midpoint of the remaining contractual term, as the Company does not have sufficient historical information to develop reasonable expectations surrounding future exercise patterns and post-vesting employment termination behavior. For awards subject to market and performance conditions, the expected term represents the period of time that the options granted are expected to be outstanding. Expected volatility — Volatility is estimated based upon observed option-implied volatilities for the Company in addition to a group of peer companies. The Company believes this is the best estimate of the expected volatility over the weighted-average expected term of its option grants. Risk-free interest rate — The risk-free interest rate is based on the implied yield currently available on U.S. Treasury instruments with terms approximately equal to the expected term of the option. Expected dividend — The expected dividend assumption was based on the Company’s history and expectation of dividend payouts. The Company currently has no history or expectation of paying cash dividends on its common stock. Fair value — Following the pricing of the Initial Public Offering, the Company’s shares have traded publicly, and accordingly the Company uses the applicable closing price of its common stock to determine fair value. The Company used the following assumptions in valuing its stock-based compensation:
(i) Recently adopted accounting pronouncements In February 2016, the FASB issued ASU 2016-2, “Leases (Topic 842)” (“ASU No. 2016-2”). Under ASU No. 2016-2, lessees are required to put most leases on their balance sheets but to recognize expenses in the income statement in a manner similar to current accounting. ASU No. 2016-2 also eliminated the current real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs, and lease executory costs for all entities. The updated guidance is effective for the Company beginning January 1, 2022. Upon adoption, entities are required to use the modified retrospective approach for leases that exist, or are entered into, after the beginning of the earliest comparative period in the financial statements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements, which allows entities to not apply the new leases standard, including its disclosure requirements, in the comparative periods they present in their financial statements in the year of adoption. The Company adopted ASU No. 2016-2 on January 1, 2022 using the modified retrospective transition approach, which resulted in the recognition of right-of-use assets ("ROU assets") of $21,666 and lease liabilities of $29,361. Differences between ROU assets and lease liabilities are attributed to deferred rent, lease incentive obligations and cease-use liability previously recognized under Accounting Standards Codification ("ASC") 420 Exit or Disposal Cost Obligations. The Company elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. In addition, the Company elected the expedient permitting the combination of lease and non-lease components into a single lease component. The Company made a policy election to not recognize ROU assets and lease liabilities for short-term leases for all asset classes. The adoption of ASU No. 2016-2 did not have a material impact on the Consolidated Statements of Operations and Comprehensive Loss or the Consolidated Statements of Cash Flows. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” ("ASU No. 2016-13") which is intended to provide more decision-useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. ASU No. 2016-13 revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses on financial instruments, including, but not limited to accounts receivable. The Company adopted ASU No. 2016-13 on January 1, 2023, utilizing the modified retrospective approach requiring a cumulative-effect adjustment to the opening accumulated deficit in the first quarter of 2023, and the adoption resulted in $941 adjustment to retained earnings on January 1, 2023, net of tax. Refer to Note 2(g), Accounts receivables, net, for details on the Company’s accounting policy in accordance with ASU 2016-13. In March 2020, the FASB issued ASU 2020-4, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” (“ASU No. 2020-4”) which was intended to address accounting consequences that could result from the global markets’ anticipated transition away from the use of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The amendments in ASU No. 2020-4 provide operational expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU No. 2020-4 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. On December 21, 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which defers the sunset date of ASC 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in ASC 848. On June 23, 2023, the Company entered into the First Amendment to Credit Agreement, which changed the market interest rate indices that the Company can elect to accrue interest on outstanding borrowings from LIBOR to the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (“SOFR”). First Amendment to Credit Agreement became effective at the end of the applicable interest period for any LIBOR borrowings outstanding on the amendment effective date, which was June 30, 2023. As a result, as of June 30, 2023, the Company no longer had any contracts that referenced LIBOR. The Company adjusted the effective interest rate on outstanding borrowings on a prospective basis, which did not have a material impact on the condensed consolidated financial statements. (j) Accounting pronouncements not yet adopted In October 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," ("ASU No. 2021-08") which is intended to improve the accounting for acquired revenue contracts with customers in a business combination and create consistency in practice related to (i) the recognition of an acquired contract liability, and (ii) payment terms and their effect on subsequent revenue recognized by the acquirer. ASU No. 2021-08 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2023. The Company will evaluate the impact of this guidance on future acquisitions as transactions occur.
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Property and equipment, net |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property and equipment, net | Property and equipment, net Property and equipment consisted of the following:
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Internal use software, net |
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Internal Use Software [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Internal use software, net | Internal use software, net Internal use software consisted of the following:
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Intangible assets, net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets, net | Intangible assets, net The gross book value, accumulated amortization, net book value and amortization periods of the intangible assets were as follows:
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Goodwill |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Goodwill | Goodwill The following table provides a roll forward of the changes in the goodwill balance:
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Accounts payable and accrued expenses and other long-term liabilities |
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Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts payable and accrued expenses and other long-term liabilities | Accounts payable and accrued expenses and other long-term liabilities Accounts payable and accrued expenses consisted of the following:
Other long-term liabilities consisted of the following:
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Long-term debt |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt | Long-term debt On September 29, 2021, the Company entered into a credit agreement with various lenders, which was amended on June 23, 2023 (as amended, the "Credit Agreement”). The Credit Agreement provides for an initial $300,000 in commitments for revolving credit loans (the “Revolver”), which amount may be increased or decreased under specific circumstances, with a $30,000 letter of credit sublimit and a $100,000 alternative currency sublimit. In addition, the Credit Agreement provides for the ability to request incremental term loan facilities, in a minimum amount of $5,000 for each facility. Borrowings pursuant to the Credit Agreement may be used for working capital and other general corporate purposes, including for acquisitions permitted under the Credit Agreement. During the nine months ended September 30, 2023, the Company drew down $75,000 and paid down $125,000 on the Revolver. Borrowings under the Credit Agreement are scheduled to mature on September 29, 2026. The Credit Agreement contains certain customary events of default including failure to make payments when due thereunder, and failure to observe or perform certain covenants. The initial proceeds of the Revolver in September 2021, together with cash on hand, were used to repay the outstanding balance of the term loan and revolving loan under the prior credit agreement. In connection with the entry into the Revolver, the Company incurred costs of $2,318 that are included in Long-term debt, net, in the Condensed Consolidated Balance Sheets. The interest rates for the Revolver under the Credit Agreement (i) for U.S. dollar loans are equal to the applicable rate for base rate loans ranging from 0.75% to 1.50% per annum, (ii) for Term SOFR Loans (as defined in the Credit Agreement) ranging from 1.75% to 2.50% per annum, (iii) for RFR Loans (as defined in the Credit Agreement) denominated in sterling ranging from 1.7826% to 2.5326%, and (iv) for RFR Loans denominated in euro range from 1.7956% to 2.5456%, in each case, based on the Senior Secured Net Leverage Ratio (as defined in the Credit Agreement). Base rate borrowings may only be made in dollars. The Company is required to pay a commitment fee during the term of the Credit Agreement ranging from 0.20% to 0.35% per annum of the average daily undrawn portion of the revolving commitments based on the Senior Secured Net Leverage Ratio. The interest rate on September 30, 2023 was 7.3%. Any borrowings under the Credit Agreement may be repaid, in whole or in part, at any time and from time to time without premium or penalty other than customary breakage costs, and any amounts repaid may be reborrowed. No mandatory prepayments will be required other than when borrowings and letter of credit usage exceed the aggregate commitment of all lenders. The Credit Agreement contains covenants requiring certain financial information to be submitted quarterly and annually. In addition, the Company is also required to comply with certain financial covenants such as maintaining a Total Net Leverage Ratio (as defined in the Credit Agreement) of 3.50 to 1.00 or lower and maintaining a minimum Interest Coverage Ratio (as defined in the Credit Agreement) of 2.50 to 1.00. As of September 30, 2023, the Company was in compliance with all covenants contained in the Credit Agreement.
Amortization of debt issuance costs for the three months ended September 30, 2023 and 2022 were $116, respectively. Amortization of debt issuance costs for the nine months ended September 30, 2023 and 2022 were $348, respectively. Amortization of debt issuance costs is recorded to interest expense, net on the Company's Condensed Consolidated Statements of Operations and Comprehensive Loss. The Company recognized interest expense of $3,639 and $2,592 during the three months ended September 30, 2023 and 2022, respectively. The Company recognized interest expense of $11,326 and $5,615 during the nine months ended September 30, 2023 and 2022, respectively. Future principal payments of long-term debt as of September 30, 2023 are as follows:
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Income taxes |
9 Months Ended |
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Sep. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income taxes | Income taxes At the end of each interim period, the Company estimates the annual expected effective income tax rate and applies that rate to its ordinary year-to-date earnings or loss. The income tax provision or benefit related to significant, unusual, or extraordinary items, if applicable, that will be separately reported or reported net of their related tax effects are individually computed and recognized in the interim period in which they occur. In addition, the effect of changes in enacted tax laws or rates, tax status, judgment on the realizability of a beginning-of-the-year deferred tax asset in future years or unrecognized tax benefits is recognized in the interim period in which the change occurs. The computation of the annual expected effective income tax rate at each interim period requires certain estimates and assumptions including, but not limited to, the expected pre-tax income (or loss) for the year, projections of the proportion of income (and/or loss) earned and taxed in foreign jurisdictions, permanent and temporary differences, and the likelihood of the realization of deferred tax assets generated in the current year. The accounting estimates used to compute the provision or benefit for income taxes may change as new events occur, more experience is acquired, additional information is obtained or the Company’s tax environment changes. To the extent that the expected annual effective income tax rate changes during a quarter, the effect of the change on prior quarters is included in income tax provision in the quarter in which the change occurs. For the three months ended September 30, 2023 and 2022, the Company recorded an income tax provision of $19,841 and $1,287, respectively. The Company’s effective tax rate for the three months ended September 30, 2023 and 2022 was 325.7% and 62.7%, respectively. The Company's effective tax rate for the three months ended September 30, 2023 is higher than for the respective three months ended September 30, 2022, primarily due to non-deductible stock-based compensation and other permanent tax differences and discrete items. For the nine months ended September 30, 2023 and 2022, the Company recorded an income tax benefit of $6,240 and income tax provision of $5,083, respectively. The Company’s effective tax rate for the nine months ended September 30, 2023 and 2022 was 68.1% and 56.7%, respectively. The Company's effective tax rate for the nine months ended September 30, 2023 is higher than for the respective nine months ended September 30, 2022, primarily due to non-deductible executive compensation and other permanent tax differences and discrete items. The Company recognizes interest and, if applicable, penalties related to unrecognized tax benefits in the income tax provision. The Company is not currently under audit in any taxing jurisdiction.
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment data | Segment data Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. The Company’s Chief Executive Officer is the CODM. The Company manages its operations as a single segment for the purpose of assessing and making operating decisions. The CODM allocates resources and assesses performance based upon financial information at the consolidated level. Since the Company operates in one operating segment, all required financial segment information can be found in the condensed consolidated financial statements. The following table summarizes revenue by geographic area:
For the three months ended September 30, 2023 and 2022, revenue in the U.S. was $78,777 and $65,725, respectively. For the nine months ended September 30, 2023 and 2022, revenue in the U.S. was $224,743 and $188,193, respectively. The following table summarizes long lived assets, net by geographic area:
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Stock-based compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | Stock-based compensation Total stock-based compensation expense for all equity arrangements for the three and nine months ended September 30, 2023 and 2022 were as follows:
The Company maintains multiple stock-based incentive compensation plans. Expense relating to outstanding awards under such plans is summarized as follows:
Integral Ad Science Holding Corp. Amended and Restated 2018 Non-Qualified Stock Option Plan On August 1, 2018, the Company adopted the 2018 Non-Qualified Stock Option Plan (“2018 Plan”). Under the 2018 Plan, the Company issued (i) Time-Based Options that vest over four years with 25% vesting after twelve months and an additional 6.25% vesting at the end of each successive quarter thereafter; and (ii) Return-Target Options that were to vest upon the first to occur of sale of the Company, or, sale or transfer to any third party of shares, as a result of which, any person or group other than Vista, obtains possession of voting power to elect a majority of the Board or any other governing body and the achievement of a total equity return multiple of 3.0 or greater. The 2018 Plan contained a provision wherein, the Time-Based Options could be repurchased by the Company at cost upon resignation of the employee. Due to this repurchase feature, the Time-Based Options did not provide the employee with the potential benefits associated with a stock award holder, and therefore, these awards were not accounted for as a stock-based award under ASC 718, Compensation - Stock Compensation but instead, compensation cost was recognized when the benefit to the employee was determined to be probable. The Return-Target Options were considered to contain both market (total stockholder return threshold) and performance (exit event) conditions. As such, the award was measured on the date of grant. Since the conditions for vesting related to the Return-Target Options were not met prior to the IPO, no stock-based compensation was recognized in the pre-IPO financial statements of the Company. During the three months ended June 30, 2023, with the filing of a “shelf” registration statement on Form S-3, the market condition and the implied performance condition relating to the Return-Target Options were deemed to be probable. In connection with the IPO, the 2018 Plan was amended and restated (the “Amended and Restated 2018 Plan”) with the following modifications: (i) the provision to repurchase the Time-Based Options at cost upon resignation of the employee was removed and (ii) the Return-Target Options were modified to include vesting upon a sale of shares by Vista following the IPO resulting in Vista realizing a cash return on its investment in the Company equaling or exceeding $1.17 billion. As a result of the modification to the Time-Based Options, the awards became subject to the guidance in ASC 718, Compensation - Stock Compensation. As the return multiple and vesting conditions associated with the Return-Target Options were also modified, the Company fair valued the Return-Target Options using a Monte Carlo simulation model. The Return-Target Options become exercisable following both (i) a registration of shares of common stock held by Vista and (ii) Vista realizing a cash return on its investment in the Company equaling or exceeding $1.17 billion. Vesting of the Time-Based Options accelerates when the Return-Target Options vest and therefore, recognition of the remaining unamortized stock compensation expense related to the Time-Based Options will accelerate when the Return-Target Options vest. The total number of Time-Based Options and Return Target Options outstanding under the Amended and Restated 2018 Plan as of September 30, 2023 were 2,656,023 and 1,342,092, respectively. The Company does not expect to issue any additional awards under the Amended and Restated 2018 Plan. 2021 Omnibus Incentive Plan (“2021 Plan”) On June 29, 2021, the Company adopted the 2021 Plan to incentivize executive officers, management, employees, consultants and directors of the Company and to align the interests of the participants with those of the Company’s shareholders. As of September 30, 2023, there were 35,121,308 shares reserved for issuance under the 2021 Plan. The total number of shares reserved for issuance under the 2021 Plan is increased on January 1 of each of the first 10 calendar years during the term of the 2021 Plan, by the lesser of (i) 5% of the total number of shares of common stock outstanding on each December 31st immediately prior to the date of increase or (ii) such number of shares of common stock determined by our Board or compensation committee. As of September 30, 2023, there were 1,147,846 total options outstanding under the 2021 Plan, consisting of 764,908 Time-Based Options and 382,938 Return-Target Options. The vesting conditions for the options issued under the 2021 Plan are identical to those described under the Amended and Restated 2018 Plan. Stock option activity for the three months ended September 30, 2023 is as follows: Time-Based Options
Return-Target Options
Stock option activity for the nine months ended September 30, 2023 is as follows: Time-Based Options
Return-Target Options
Restricted Stock Units ("RSUs") RSUs under the 2021 Plan granted prior to May 2022 vest 25% each year and become fully vested after four years of service. RSUs under the 2021 Plan granted during or after May 2022 vest 6.25% at the end of each successive quarter and become fully vested after four years of service. RSU activity for the three months ended September 30, 2023 is as follows:
RSU activity for the nine months ended September 30, 2023 is as follows:
Market Stock Units ("MSUs") The Company granted MSUs under the 2021 Plan to certain executive officers. MSUs vest over four years, 25% on the first anniversary of the vesting commencement date and 6.25% at the end of each quarter thereafter. The number of MSUs eligible to vest is based on the performance of the Company's common stock over each applicable vesting period. The number of shares eligible to vest is calculated based on a payout factor. The payout factor is calculated by dividing (i) the average closing price of the Company's stock during the ten trading days immediately preceding the applicable vesting date by (ii) the closing price of the Company's stock on the vesting commencement date. The payout factor is zero if such quotient is less than 0.60 and is capped at 2.25. Such quotient is then multiplied by the target number of MSUs granted to the relevant officer to determine the number of shares to be issued to the officer at vesting. The grant date fair value of the MSUs was determined using a Monte-Carlo simulation. The Company uses the accelerated attribution method to account for these awards. MSU activity for the three months ended September 30, 2023 is as follows:
MSU activity for the nine months ended September 30, 2023 is as follows:
2021 Employee Stock Purchase Plan The Company adopted the ESPP for the primary purpose of incentivizing employees in future periods. As of September 30, 2023, 4,573,457 shares of common stock are reserved for issuance under the ESPP. The number of shares available for issuance under the ESPP is increased on January 1st of each calendar year, ending in and including 2031, by an amount equal to the lesser of (i) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by our Board, subject to a maximum of 16,000,000 shares of our common stock for the portion of the ESPP intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code. All Company employees and employees of designated subsidiaries are eligible to participate in the ESPP and may purchase shares through payroll deductions of up to 15% of their eligible compensation, subject to a maximum of $25 in any annual period for the portion of the ESPP intended to qualify as an employee purchase plan under Section 423 of the Internal Revenue Code. The ESPP provides eligible employees the opportunity to purchase shares of the Company's common stock through payroll deductions at a price equal to 85% of the fair market value of the shares on (i) the first business day of the offering period or (ii) the last business day of the offering period, whichever is lower. The ESPP is offered to employees in six-month windows, with phases beginning on February 1 and August 1 of each calendar year. For the window that ended on January 31, 2023, employees purchased 111,163 shares at a price of $7.93 per share. For the window that ended on July 31, 2023, employees purchased 162,406 shares at a price of $8.77 per share. After such purchases, 4,299,888 shares were available for future purchase under the ESPP.
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Stockholders' equity |
9 Months Ended |
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Sep. 30, 2023 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' equity | Stockholders’ equity As of September 30, 2023, our authorized common stock consists of 500,000,000 shares of common stock, par value $0.001 per share and 50,000,000 preferred stock, par value $0.001 per share. For the three months ended September 30, 2023, the Company issued 1,102,702 shares of common stock for vested RSUs and MSUs, employees exercised stock options in exchange for 53,748 shares of common stock for $591, and employees purchased 162,406 shares of common stock through the ESPP. For the nine months ended September 30, 2023, the Company issued 2,692,984 shares of common stock for vested RSUs and MSUs, employees exercised stock options in exchange for 641,250 shares of common stock for $5,584 and employees purchased 273,569 shares of common stock through the ESPP. For the three months ended September 30, 2022, the Company issued 471,995 shares of common stock for vested RSUs and employees exercised stock options in exchange for 603,670 shares of common stock for $2,527. For the nine months ended September 30, 2022, the Company issued 761,208 shares of common stock for vested RSUs and employees exercised stock options in exchange for 1,414,666 shares of common stock for $5,908. During the three and nine months ended September 30, 2022, the Company repurchased 3,080,061 shares of common stock for $23,655.
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Commitments and contingencies |
9 Months Ended |
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Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and contingencies | Commitments and contingencies Indemnifications In its normal course of business, the Company has made certain indemnities, commitments, and guarantees under which it may be required to make payments in relation to certain transactions. Those indemnities include intellectual property indemnities to the Company’s customers, indemnities to directors and officers of the Company to the maximum extent permitted under the laws of the State of Delaware, and indemnifications related to the Company’s lease agreements. In addition, the Company’s advertiser and distribution partner agreements contain certain indemnification provisions which are generally consistent with those prevalent in the Company’s industry. The Company has not incurred any obligations under indemnification provisions historically and does not expect to incur significant obligations in the future. Accordingly, the Company has not recorded any liability for these indemnities, commitments, and guarantees in the accompanying balance sheets. Purchase commitments In the ordinary course of business, the Company enters into various purchase commitments primarily related to third-party cloud hosting and data services, and information technology operations. Total non-cancelable purchase commitments as of September 30, 2023 were approximately $163,905 for periods through 2028.
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Net income (loss) per share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) per share | Net income (loss) per share Basic and diluted income (loss) per share is computed by dividing net income (loss) by the weighted-average shares outstanding:
The following potential outstanding equity awards were excluded from the computation of diluted net income (loss) per share attributable to common stockholders for the periods presented given that their inclusion would have been anti-dilutive.
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Fair value disclosures |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value disclosures | Fair value disclosures Assets and liabilities measured at fair value on a recurring basis The Company invests in money market funds, which are measured and recorded at fair value on a recurring basis at each reporting period. Money market funds are valued based on quoted market prices in active markets and classified within Level 1 of the fair value hierarchy. The following table summarizes our cash equivalents measured at fair value on a recurring basis:
There were no money market funds included in cash and cash equivalents as of December 31, 2022. The carrying value of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximated fair value due to their short maturities. Financial instruments Financial instruments are valued based on observable inputs and classified within Level 2 of the fair value hierarchy. The carrying value of long-term debt approximates its fair value based on Level 2 inputs as the principal amounts outstanding are subject to variable interest rates that are based on market rates (see Note 8).
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Related-party transactions |
9 Months Ended |
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Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
Related-party transactions | Related-party transactions The Company incurs expenses for consulting services and other expenses related to services provided by Vista Consulting Group, LLC (“VCG”). For the three months ended September 30, 2023 and 2022, the Company incurred expenses of $0 and $18, respectively. For the nine months ended September 30, 2023 and 2022, the Company incurred expenses of $0 and $82, respectively. These costs were included in general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Amounts due to VCG as of September 30, 2023 and December 31, 2022 were $0 in both periods. The Company incurs various travel and other expenses related to services provided by Vista Equity Partners Management, LLC (“VEP”). For the three months ended September 30, 2023 and 2022, the Company incurred expenses of $21 and $19, respectively. For the nine months ended September 30, 2023 and 2022, the Company incurred expenses of $64 and $56, respectively. These costs were included in general and administrative expenses in the Condensed Consolidated Statements of Operations and Comprehensive Loss. Amounts due to VEP as of September 30, 2023 and December 31, 2022 were $2 and $13, respectively. In May 2023, funds affiliated with Vista conducted an underwritten secondary offering of 11,500,000 shares of the Company’s common stock. In June 2023, funds affiliated with Vista sold 5,220,000 shares of the Company’s common stock in a block trade in compliance with Rule 144 of the Securities Act of 1933, as amended (the “Securities Act”). The Company did not receive any proceeds from these sales, but bore the costs associated with therewith (other than underwriting discounts and commissions), which were $1,404 and were recorded within General and administrative expenses in the Condensed Consolidated Statement of Operations and Comprehensive Loss. The Company had other related party transactions with companies owned by Vista Equity Partners that are immaterial individually and in aggregate to the Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations and Comprehensive Loss.
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Restructuring |
9 Months Ended | ||||||||||||||||||||||||||||||
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||
Restructuring | Restructuring On December 7, 2022, the Company announced a reduction in workforce of approximately 120 employees to better align resources, consistent with the Company’s strategy of increasing operational efficiency and improving productivity. The Company expects to pay the remaining balance of restructuring costs by the end of 2023. The Company recognized a liability and the related expense for these restructuring costs when the liability was incurred and could be measured. Restructuring accruals are based upon management estimates at the time and can change depending upon changes in facts and circumstances subsequent to the date the original liability was recorded. Activity impacting the Company’s restructuring reserves, recorded within Accounts payable and accrued expenses on the Consolidated Balance Sheets, for the nine months ended September 30, 2023, was as follows:
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Pay vs Performance Disclosure - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
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Pay vs Performance Disclosure | ||||
Net income (loss) | $ (13,749) | $ 767 | $ (2,926) | $ 3,887 |
Insider Trading Arrangements |
3 Months Ended |
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Sep. 30, 2023 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
Basis of presentation and summary of significant accounting policies (Policies) |
9 Months Ended |
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Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The Company’s condensed consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and reflect the financial position, results of operations and cash flows for all periods presented. The year-end condensed balance sheet data was derived from audited financial statements but does not include all disclosures required by U.S. GAAP. The accompanying interim Condensed Consolidated Balance Sheets as of September 30, 2023, the Condensed Consolidated Statements of Operations and Comprehensive Loss, of Cash Flows and of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022, and the related footnote disclosures are unaudited. These unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in management’s opinion, include all adjustments necessary to state fairly the consolidated financial position of the Company. All adjustments made were of a normal recurring nature. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023, or for any future period. The Company’s significant accounting policies are discussed in Note 2 to the consolidated financial statements for the years ended December 31, 2022, 2021 and 2020. There have been no significant changes to these policies, except for the adoption of Accounting Standards Update ("ASU") No. 2016-13, "Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," as disclosed in Note 2(g) and Note 2(i), that have had a material impact on the Company’s condensed consolidated financial statements and related notes for the nine months ended September 30, 2023. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 2, 2023.
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Basis of consolidation | Basis of consolidationThe condensed consolidated financial statements include the accounts of Integral Ad Science Holding Corp. and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated in consolidation. |
Use of estimates | Use of estimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates include fair value of assets acquired in business combinations, including assumptions with respect to future cash inflows and outflows, discount rates, assets useful lives, market multiples, the allocation of purchase price consideration in the business combination valuation of acquired assets and liabilities, the estimated useful lives of intangible assets and internal use software, the allowance for doubtful accounts, goodwill impairment testing, assumptions used to calculate equity-based compensation, and the realization of deferred tax assets. The Company bases its estimates on past experience, market conditions, and other assumptions that the Company believes are reasonable under the circumstances, and the Company evaluates these estimates on an ongoing basis. Actual results may differ from these estimates due to risks and uncertainties, including the continued uncertainty surrounding rapidly changing market and economic conditions due to high inflation, changes to fiscal and monetary policy, high interest rates, currency fluctuations, instability in the financial markets and disruptions in European economies as a result of the war in Ukraine and other geopolitical issues. |
Foreign currency | Foreign currencyThe reporting currency of the Company is the U.S. dollar. The functional currency of our foreign subsidiaries is the currency of the primary economic environment in which they operate, which is their local currency. The financial statements of these subsidiaries are translated into U.S. dollars using month-end rates of exchange for assets and liabilities, and average rates of exchange for revenue, costs and expenses. Translation gains and losses are recorded in accumulated other comprehensive loss in stockholders’ equity. Transaction gains and losses including those on intercompany transactions denominated in a currency other than the functional currency of the entity involved are included in foreign exchange loss, net in the Condensed Consolidated Statements of Operations and Comprehensive Loss. |
Cash, cash equivalents, and restricted cash | Cash equivalents includes amounts invested in money market accounts. The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. |
Accounts receivable, net | Accounts receivable, netAccounts receivable are carried at the original invoiced amount less an allowance for credit losses. The allowance is estimated by pooling accounts receivables based on similar risk characteristics, and expected credit loss exposure is evaluated for each accounts receivable pool. Invoices are typically issued with net 30-days to net 90-days terms. Account balances are considered delinquent if payment is not received by the due date, and the receivables are written off when deemed uncollectible. These costs are recorded in general and administrative expenses within the Condensed Consolidated Statements of Operations and Comprehensive Loss. |
Stock-based compensation | Stock-based compensation Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period. The Company accounts for forfeitures as they occur. The Company used the following assumptions in valuing its market stock units ("MSUs"), shares granted under the Company's 2021 Employee Stock Purchase Program ("ESPP"), time-based service options, which vest over a period of time subject to continued employment ("Time-Based Options"), and return target options ("Return-Target Options"), which vest upon a realized cash return of the equity investment of funds affiliated with Vista Equity Partners ("Vista"), the Company’s largest shareholder. Expected term — For time-based awards, the estimated expected term of options granted is generally calculated as the vesting period plus the midpoint of the remaining contractual term, as the Company does not have sufficient historical information to develop reasonable expectations surrounding future exercise patterns and post-vesting employment termination behavior. For awards subject to market and performance conditions, the expected term represents the period of time that the options granted are expected to be outstanding. Expected volatility — Volatility is estimated based upon observed option-implied volatilities for the Company in addition to a group of peer companies. The Company believes this is the best estimate of the expected volatility over the weighted-average expected term of its option grants. Risk-free interest rate — The risk-free interest rate is based on the implied yield currently available on U.S. Treasury instruments with terms approximately equal to the expected term of the option. Expected dividend — The expected dividend assumption was based on the Company’s history and expectation of dividend payouts. The Company currently has no history or expectation of paying cash dividends on its common stock. Fair value — Following the pricing of the Initial Public Offering, the Company’s shares have traded publicly, and accordingly the Company uses the applicable closing price of its common stock to determine fair value.
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Recently adopted accounting pronouncements & Accounting pronouncements not yet adopted | Recently adopted accounting pronouncements In February 2016, the FASB issued ASU 2016-2, “Leases (Topic 842)” (“ASU No. 2016-2”). Under ASU No. 2016-2, lessees are required to put most leases on their balance sheets but to recognize expenses in the income statement in a manner similar to current accounting. ASU No. 2016-2 also eliminated the current real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs, and lease executory costs for all entities. The updated guidance is effective for the Company beginning January 1, 2022. Upon adoption, entities are required to use the modified retrospective approach for leases that exist, or are entered into, after the beginning of the earliest comparative period in the financial statements. In July 2018, the FASB issued ASU 2018-11, Leases (Topic 842), Targeted Improvements, which allows entities to not apply the new leases standard, including its disclosure requirements, in the comparative periods they present in their financial statements in the year of adoption. The Company adopted ASU No. 2016-2 on January 1, 2022 using the modified retrospective transition approach, which resulted in the recognition of right-of-use assets ("ROU assets") of $21,666 and lease liabilities of $29,361. Differences between ROU assets and lease liabilities are attributed to deferred rent, lease incentive obligations and cease-use liability previously recognized under Accounting Standards Codification ("ASC") 420 Exit or Disposal Cost Obligations. The Company elected the package of practical expedients not to reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. In addition, the Company elected the expedient permitting the combination of lease and non-lease components into a single lease component. The Company made a policy election to not recognize ROU assets and lease liabilities for short-term leases for all asset classes. The adoption of ASU No. 2016-2 did not have a material impact on the Consolidated Statements of Operations and Comprehensive Loss or the Consolidated Statements of Cash Flows. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments — Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” ("ASU No. 2016-13") which is intended to provide more decision-useful information about expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. ASU No. 2016-13 revises the impairment model to utilize an expected loss methodology in place of the currently used incurred loss methodology, which will result in more timely recognition of losses on financial instruments, including, but not limited to accounts receivable. The Company adopted ASU No. 2016-13 on January 1, 2023, utilizing the modified retrospective approach requiring a cumulative-effect adjustment to the opening accumulated deficit in the first quarter of 2023, and the adoption resulted in $941 adjustment to retained earnings on January 1, 2023, net of tax. Refer to Note 2(g), Accounts receivables, net, for details on the Company’s accounting policy in accordance with ASU 2016-13. In March 2020, the FASB issued ASU 2020-4, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” (“ASU No. 2020-4”) which was intended to address accounting consequences that could result from the global markets’ anticipated transition away from the use of the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates. The amendments in ASU No. 2020-4 provide operational expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments in ASU No. 2020-4 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of the reference rate reform. On December 21, 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848,” which defers the sunset date of ASC 848 from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in ASC 848. On June 23, 2023, the Company entered into the First Amendment to Credit Agreement, which changed the market interest rate indices that the Company can elect to accrue interest on outstanding borrowings from LIBOR to the Secured Overnight Financing Rate as administered by the Federal Reserve Bank of New York (“SOFR”). First Amendment to Credit Agreement became effective at the end of the applicable interest period for any LIBOR borrowings outstanding on the amendment effective date, which was June 30, 2023. As a result, as of June 30, 2023, the Company no longer had any contracts that referenced LIBOR. The Company adjusted the effective interest rate on outstanding borrowings on a prospective basis, which did not have a material impact on the condensed consolidated financial statements. (j) Accounting pronouncements not yet adopted In October 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers," ("ASU No. 2021-08") which is intended to improve the accounting for acquired revenue contracts with customers in a business combination and create consistency in practice related to (i) the recognition of an acquired contract liability, and (ii) payment terms and their effect on subsequent revenue recognized by the acquirer. ASU No. 2021-08 is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2023. The Company will evaluate the impact of this guidance on future acquisitions as transactions occur.
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Basis of presentation and summary of significant accounting policies (Tables) |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows.
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Schedule of Restricted Cash | The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets to the amounts shown in the Condensed Consolidated Statements of Cash Flows.
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Schedule of Allowance for Credit Losses | The activity in our allowance for credit losses consists of the following as of:
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Schedule of Valuation Assumptions of Stock Options | The Company used the following assumptions in valuing its stock-based compensation:
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Property and equipment, net (Tables) |
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Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment | Property and equipment consisted of the following:
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Internal use software, net (Tables) |
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Internal Use Software [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Internal Use Software, Net | Internal use software consisted of the following:
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Intangible assets, net (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Gross Book Value, Accumulated Amortization, Net Book Value and Amortization Periods of Intangible Assets | The gross book value, accumulated amortization, net book value and amortization periods of the intangible assets were as follows:
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Goodwill (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||
Schedule of Changes in Goodwill | The following table provides a roll forward of the changes in the goodwill balance:
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Accounts payable and accrued expenses and other long-term liabilities (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses consisted of the following:
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Schedule of Other Long-Term Liabilities | Other long-term liabilities consisted of the following:
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Long-term debt (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt Instruments | As of September 30, 2023, the Company was in compliance with all covenants contained in the Credit Agreement.
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Schedule of Future Principal Payments of Long-term Debt | Future principal payments of long-term debt as of September 30, 2023 are as follows:
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Segment data (Tables) |
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Sep. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas | The following table summarizes revenue by geographic area:
The following table summarizes long lived assets, net by geographic area:
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Stock-based compensation (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Stock-Based Compensation Expense | Total stock-based compensation expense for all equity arrangements for the three and nine months ended September 30, 2023 and 2022 were as follows:
The Company maintains multiple stock-based incentive compensation plans. Expense relating to outstanding awards under such plans is summarized as follows:
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Schedule of Stock Option Activity | Stock option activity for the three months ended September 30, 2023 is as follows: Time-Based Options
Return-Target Options
Stock option activity for the nine months ended September 30, 2023 is as follows: Time-Based Options
Return-Target Options
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Schedule of Restricted Stock Unit Activity | RSU activity for the three months ended September 30, 2023 is as follows:
RSU activity for the nine months ended September 30, 2023 is as follows:
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Schedule of Market Stock Unit Activity | MSU activity for the three months ended September 30, 2023 is as follows:
MSU activity for the nine months ended September 30, 2023 is as follows:
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Net income (loss) per share (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | Basic and diluted income (loss) per share is computed by dividing net income (loss) by the weighted-average shares outstanding:
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Schedule of Antidilutive Securities Excluded From Computation of Earnings Per Share | The following potential outstanding equity awards were excluded from the computation of diluted net income (loss) per share attributable to common stockholders for the periods presented given that their inclusion would have been anti-dilutive.
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Fair value disclosures (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Cash Equivalents Measured at Fair Value on a Recurring Basis | The following table summarizes our cash equivalents measured at fair value on a recurring basis:
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Restructuring (Tables) |
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Sep. 30, 2023 | |||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||
Schedule of Restructuring Reserve Activity | Activity impacting the Company’s restructuring reserves, recorded within Accounts payable and accrued expenses on the Consolidated Balance Sheets, for the nine months ended September 30, 2023, was as follows:
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Basis of presentation and summary of significant accounting policies - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
Jun. 30, 2023 |
Jan. 01, 2023 |
Jan. 01, 2022 |
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New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Market value of common stock held by non-affiliates | $ 700,000 | |||||||
Employee retention tax credit | $ 0 | $ 6,981 | $ 0 | $ 6,981 | $ 6,981 | |||
Unrealized foreign exchange losses | 1,810 | 4,311 | 571 | 3,985 | ||||
Realized transaction gains (losses) | (268) | $ 247 | (360) | $ 482 | ||||
Operating lease right-of-use assets | 22,368 | 22,368 | 22,787 | $ 21,666 | ||||
Lease liabilities | $ 29,361 | |||||||
Adjustment to retained earnings | $ (1,210) | $ (1,210) | $ 775 | |||||
Cumulative Effect, Period of Adoption, Adjustment | Accounting Standards Update 2016-13 | ||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||||
Adjustment to retained earnings | $ 941 |
Basis of presentation and summary of significant accounting policies - Reconciliation of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
Sep. 30, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 92,248 | $ 86,877 | ||
Short term restricted cash | 127 | 45 | ||
Long term restricted cash (held in other long-term assets) | 2,411 | 2,749 | ||
Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statements of Cash Flows | $ 94,786 | $ 89,671 | $ 76,575 | $ 76,078 |
Basis of presentation and summary of significant accounting policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | $ 6,691 | $ 5,883 |
Additional provision | 2,223 | 647 |
Receivables written off and impact of exchange rates | (406) | (1,129) |
Balance, end of period | 7,237 | 5,401 |
Cumulative Effect, Period of Adoption, Adjustment | ||
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance, beginning of period | $ (1,271) | $ 0 |
Basis of presentation and summary of significant accounting policies - Valuation Assumptions of Stock Options (Details) - $ / shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected volatility (%), minimum | 50.00% | 65.00% |
Expected volatility (%), maximum | 65.00% | 80.00% |
Risk-free interest rate (%), minimum | 3.63% | 0.46% |
Risk-free interest rate (%), maximum | 5.55% | 3.35% |
Dividend yield | 0.00% | 0.00% |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Estimated fair value (in dollars per share) | $ 3.35 | $ 3.26 |
Expected term (in years) | 3 months 3 days | 6 months |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Estimated fair value (in dollars per share) | $ 38.36 | $ 14.43 |
Expected term (in years) | 4 years | 10 years |
Property and equipment, net - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Property, Plant and Equipment [Abstract] | ||||
Depreciation expense | $ 287 | $ 234 | $ 772 | $ 669 |
Internal use software, net - Schedule of Internal Use Software, Net (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2023 |
Dec. 31, 2022 |
|
Internal Use Software [Line Items] | ||
Internal use software | $ 70,556 | $ 47,658 |
Less: Assets written off | 0 | (199) |
Less: Accumulated amortization | (34,477) | (23,817) |
Total internal use software, net | $ 36,079 | $ 23,642 |
Minimum | ||
Internal Use Software [Line Items] | ||
Estimated useful life (in years) | 3 years | |
Maximum | ||
Internal Use Software [Line Items] | ||
Estimated useful life (in years) | 5 years |
Internal use software, net - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Internal Use Software [Abstract] | ||||
Amortization expense | $ 4,032 | $ 2,453 | $ 10,477 | $ 7,000 |
Intangible assets, net - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 9,708 | $ 9,930 | $ 29,124 | $ 29,916 |
Goodwill (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
| |
Goodwill [Roll Forward] | |
Goodwill at beginning of period | $ 674,094 |
Impact of exchange rates | (339) |
Goodwill at end of period | $ 673,755 |
Accounts payable and accrued expenses and other long-term liabilities - Schedule of Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Payables and Accruals [Abstract] | ||
Accounts payable | $ 8,201 | $ 10,487 |
Accrued payroll | 8,249 | 12,623 |
Accrued professional fees | 3,941 | 3,150 |
Accrued bonuses and commissions | 15,294 | 16,527 |
Accrued revenue sharing | 5,467 | 3,522 |
Taxes payable | 3,803 | 3,130 |
Accrued hosting fees | 4,597 | 5,949 |
Other accrued expenses | 10,196 | 5,411 |
Total accounts payable and accrued expenses | $ 59,748 | $ 60,799 |
Accounts payable and accrued expenses and other long-term liabilities - Other Long-Term Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Payables and Accruals [Abstract] | ||
Security deposit received | $ 672 | $ 672 |
Fin 48 liability | 3,624 | 394 |
Total Other long-term liabilities | $ 4,296 | $ 1,066 |
Long-term debt - Schedule of Long-term Debt Instruments (Details) - USD ($) $ in Thousands |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Less: Unamortized debt issuance costs | $ (1,391) | $ (1,738) |
Total carrying amount | 173,609 | 223,262 |
Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Revolver | $ 175,000 | $ 225,000 |
Long-term debt - Future Principal Payments of Long-term Debt (Details) $ in Thousands |
Sep. 30, 2023
USD ($)
|
---|---|
Maturities of Long-term Debt [Abstract] | |
2023 (remaining three months) | $ 0 |
2024 | 0 |
2025 | 0 |
2026 | 175,000 |
Long-term debt | $ 175,000 |
Income taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax provision (benefit) | $ 19,841 | $ 1,287 | $ (6,240) | $ 5,083 |
Effective tax rate | 325.70% | 62.70% | 68.10% | 56.70% |
Segment data - Narrative (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023
USD ($)
|
Sep. 30, 2022
USD ($)
|
Sep. 30, 2023
USD ($)
segment
|
Sep. 30, 2022
USD ($)
|
|
Segment Reporting Information [Line Items] | ||||
Number of operating segments | segment | 1 | |||
Revenue | $ 120,331 | $ 101,343 | $ 340,074 | $ 290,913 |
United States | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | $ 78,777 | $ 65,725 | $ 224,743 | $ 188,193 |
Segment data - Schedule of Revenue from External Customers and Long-Lived Assets, by Geographical Areas (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | $ 120,331 | $ 101,343 | $ 340,074 | $ 290,913 | |
Long lived assets | 25,874 | 25,874 | $ 25,199 | ||
North and South America (“Americas”) | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | 83,419 | 69,786 | 236,610 | 199,078 | |
Long lived assets | 15,301 | 15,301 | 16,016 | ||
Europe, Middle East and Africa (“EMEA”) | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | 27,649 | 23,110 | 78,201 | 68,368 | |
Long lived assets | 8,597 | 8,597 | 6,419 | ||
Asia and Pacific Rim (“APAC”) | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Revenue | 9,263 | $ 8,447 | 25,263 | $ 23,467 | |
Long lived assets | $ 1,976 | $ 1,976 | $ 2,764 |
Stockholders' equity (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
Dec. 31, 2022 |
|
Class of Stock [Line Items] | |||||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | 500,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 | 50,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | $ 0.001 | ||
Option exercises | $ 591 | $ 2,527 | $ 5,584 | $ 5,908 | |
Repurchase of common stock (in shares) | 3,080,061 | 3,080,061 | |||
Repurchase of common stock | $ 23,655 | $ 23,655 | |||
Common Stock | |||||
Class of Stock [Line Items] | |||||
RSUs and MSUs vested (in shares) | 1,102,702 | 471,995 | 2,692,984 | 761,208 | |
Option exercises (in shares) | 53,748 | 603,670 | 641,250 | 1,414,666 | |
Option exercises | $ 1 | $ 1 | $ 1 | $ 1 | |
ESPP purchase (in shares) | 162,406 | 273,569 | |||
Repurchase of common stock (in shares) | 3,080,061 | 3,080,061 | |||
Repurchase of common stock | $ 3 | $ 3 |
Commitments and contingencies (Details) $ in Thousands |
Sep. 30, 2023
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Purchase obligation | $ 163,905 |
Net income (loss) per share - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2023 |
Sep. 30, 2022 |
Sep. 30, 2023 |
Sep. 30, 2022 |
|
Numerator: | ||||
Net income (loss) | $ (13,749) | $ 767 | $ (2,926) | $ 3,887 |
Denominator: | ||||
Weighted-average shares outstanding, basic (in shares) | 157,055,904 | 155,389,195 | 157,691,005 | 155,007,655 |
Dilutive effect of stock-based awards (in shares) | 0 | 1,307,559 | 0 | 2,573,914 |
Weighted-average shares outstanding, diluted (in shares) | 157,055,904 | 156,696,754 | 157,691,005 | 157,581,569 |
Net income (loss) per share | ||||
Basic (in dollars per share) | $ (0.09) | $ 0.00 | $ (0.02) | $ 0.03 |
Diluted (in dollars per share) | $ (0.09) | $ 0.00 | $ (0.02) | $ 0.02 |
Fair value disclosures (Details) - USD ($) |
Sep. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Level 1 | Money market funds | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Money market funds included in cash and cash equivalents | $ 15,132,000 | $ 0 |
Restructuring - Narrative (Details) |
Dec. 07, 2022
employee
|
---|---|
Employee Severance | |
Restructuring Cost and Reserve [Line Items] | |
Approximate workforce reduction, number of employees | 120 |
Restructuring - Restructuring Reserve Activity (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2023
USD ($)
| |
Restructuring Reserve [Roll Forward] | |
Restructuring reserve increase | $ 69 |
Employee Severance | |
Restructuring Reserve [Roll Forward] | |
Beginning balance | 4,315 |
Payments and impact of FX | (4,112) |
Ending balance | $ 272 |
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