Certara, Inc. 10-K

Item 8. Financial Statements and Supplementary Data. ​ Certara, Inc. Index to Consolidated Financial Statements ​ ​ PAGE ​ ​ Report of Independent Registered Public Accounting Firm 79 Consolidated Balance Sheets 80 Consolidated Statements of Operations and Comprehensive Loss 81 Consolidated Statements of Stockholders’ Equity 82 Consolidated Statements of Cash Flows 83 Notes to the Consolidated Financial Statements 84 ​ ​ ​ 78 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and Stockholders of Certara, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Certara, Inc. and Subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Certara, Inc. and Subsidiaries as of December 31, 2020 and 2019, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. Adoption of New Accounting Standard As discussed in Note 2 to the consolidated financial statements, Certara, Inc. and Subsidiaries adopted Accounting Standard Codification ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”), beginning January 1, 2019, using the modified retrospective method. /s/CohnReznick LLP Tysons, Virginia March 15, 2021 We have served as Certara, Inc. and Subsidiaries’ auditor since October 2019. ​ 79 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) ​ 2020 2019 Assets ​ ​ ​ Current assets: ​ ​ ​ Cash and cash equivalents ​ $ 271,382 ​ $ 29,256 Accounts receivable, net of allowance for doubtful accounts of $132 and $185, respectively ​ 54,091 ​ 49,642 Restricted cash ​ 1,909 ​ 506 Prepaid expenses and other current assets ​ 19,202 ​ 8,119 Total current assets ​ 346,584 ​ 87,523 Other assets: ​ ​ Property and equipment, net ​ 3,872 ​ 4,623 Long-term deposits ​ 1,163 ​ 1,096 Goodwill ​ 518,592 ​ 514,996 Intangible assets, net of accumulated amortization of $127,172 and $85,925, respectively ​ 396,445 ​ 427,998 Deferred income taxes ​ 2,744 ​ 833 Total assets ​ $ 1,269,400 ​ $ 1,037,069 Liabilities and stockholders’ equity ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 6,394 ​ $ 4,917 Accrued expenses ​ 30,729 ​ 27,036 Current portion of deferred revenue ​ 30,662 ​ 26,240 Current portion of interest rate swap liability ​ 2,605 ​ 551 Current portion of long-term debt ​ 4,680 ​ 4,210 Current portion of capital lease obligations ​ 275 ​ 48 Total current liabilities ​ 75,345 ​ 63,002 Long-term liabilities: ​ ​ Capital lease obligations, net of current portion ​ 318 ​ — Deferred revenue, net of current portion ​ 545 ​ 1,137 Deferred income taxes ​ 75,894 ​ 82,160 Long-term portion of interest rate swap liability ​ 1,066 ​ 1,601 Long-term debt, net of current portion and debt discount ​ 294,100 ​ 397,121 Total liabilities ​ 447,268 ​ 545,021 Commitments and contingencies ​ ​ Stockholders' equity ​ ​ Preferred shares, $0.01 par value, 50,000,000 and no shares authorized as of December 31, 2020 and 2019, respectively, no shares issued and outstanding as of December 31, 2020 and 2019, respectively ​ ​ — ​ ​ — Common shares, $0.01 par value, 600,000,000 shares authorized, 152,979,479 and 132,407,786 shares issued and outstanding as of December 31, 2020 and 2019, respectively ​ 1,529 ​ 1,324 Additional paid-in capital ​ 884,528 ​ 509,162 Accumulated deficit ​ (62,338) ​ (12,941) Accumulated other comprehensive loss ​ (1,587) ​ (5,497) Total stockholders’ equity ​ 822,132 ​ 492,048 Total liabilities and stockholders’ equity ​ $ 1,269,400 ​ $ 1,037,069 ​ ​ The accompanying notes are an integral part of the consolidated financial statements ​ 80 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) 2020 2019 2018 Revenues ​ $ 243,530 ​ $ 208,511 ​ $ 163,719 Cost of revenues ​ 100,765 ​ 79,770 ​ ​ 71,043 Operating expenses: ​ ​ ​ ​ ​ ​ ​ Sales and marketing ​ 19,202 ​ 10,732 ​ ​ 9,416 Research and development ​ 19,644 ​ 11,633 ​ ​ 10,478 General and administrative ​ 88,482 ​ 47,926 ​ ​ 43,393 Intangible asset amortization ​ 37,414 ​ 36,241 ​ ​ 31,625 Depreciation and amortization expense ​ 2,443 ​ 2,596 ​ ​ 2,416 Total operating expenses ​ 167,185 ​ 109,128 ​ ​ 97,328 Income (loss) from operations ​ (24,420) ​ 19,613 ​ ​ (4,652) Other income (expenses): ​ ​ ​ ​ ​ ​ ​ Interest expense ​ (25,296) ​ (28,004) ​ ​ (27,802) Miscellaneous, net ​ (465) ​ (760) ​ ​ (107) Total other income (expenses) ​ (25,761) ​ (28,764) ​ ​ (27,909) Loss before income taxes ​ (50,181) ​ (9,151) ​ ​ (32,561) (Benefit from) provision for income taxes ​ (784) ​ (225) ​ ​ 697 Net loss ​ (49,397) ​ (8,926) ​ ​ (33,258) Other comprehensive income (loss) ​ ​ ​ ​ ​ ​ ​ Foreign currency translation adjustment, net of tax of $(277), $267, and $(1,437) ​ 5,045 ​ 433 ​ ​ (16,721) Change in fair value of interest rate swap, net of tax of $(384), $(520), and $0 ​ (1,135) ​ (4,283) ​ ​ 1,079 Total other comprehensive income (loss) ​ 3,910 ​ (3,850) ​ ​ (15,642) Comprehensive loss ​ $ (45,487) ​ $ (12,776) ​ $ (48,900) Net loss per common share – basic and diluted ​ $ (0.37) ​ $ (0.07) ​ $ (0.25) Basic and diluted weighted average common shares outstanding ​ 133,247,212 ​ 132,407,786 ​ ​ 132,407,786 ​ The accompanying notes are an integral part of the consolidated financial statements ​ 81 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ RETAINED ​ ACCUMULATED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ EARNINGS ​ OTHER ​ TOTAL ​ ​ COMMON STOCK ​ ADDITIONAL ​ (ACCUMULATED ​ COMPREHENSIVE ​ STOCKHOLDER’S (IN THOUSANDS, EXCEPT SHARE DATA) SHARES AMOUNT PAID-IN CAPITAL DEFICIT) INCOME (LOSS) EQUITY Balance as of December 31, 2017 ​ 132,407,786 ​ $ 1,324 ​ $ 505,803 ​ $ 18,826 ​ $ 13,995 ​ $ 539,948 Equity compensation ​ — ​ ​ — ​ ​ 1,711 ​ ​ — ​ ​ — ​ ​ 1,711 Capital contributions ​ — ​ ​ — ​ ​ 1,110 ​ ​ — ​ ​ — ​ ​ 1,110 Repurchase of Parent Class B Units ​ — ​ ​ — ​ ​ (1,100) ​ ​ — ​ ​ — ​ ​ (1,100) Change in fair value of interest rate swap, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 1,079 ​ ​ 1,079 Net loss ​ — ​ ​ — ​ ​ — ​ ​ (33,258) ​ ​ — ​ ​ (33,258) Foreign currency translation adjustment ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (16,721) ​ ​ (16,721) Balance as of December 31, 2018 132,407,786 ​ ​ 1,324 ​ ​ 507,524 ​ ​ (14,432) ​ ​ (1,647) ​ ​ 492,769 Cumulative effect adjustment upon adoption of Topic 606 — ​ — ​ — ​ 10,417 ​ — ​ 10,417 Equity compensation — ​ — ​ 1,691 ​ — ​ — ​ 1,691 Repurchases of Parent Class B Units — ​ — ​ (703) ​ — ​ — ​ (703) Capital contributions — ​ — ​ 650 ​ — ​ — ​ 650 Change in fair value of interest rate swap, net of tax — ​ — ​ — ​ — ​ (4,283) ​ (4,283) Net loss — ​ — ​ — ​ (8,926) ​ — ​ (8,926) Foreign currency translation adjustment — ​ — ​ — ​ — ​ 433 ​ 433 Balance as of December 31, 2019 132,407,786 ​ $ 1,324 ​ $ 509,162 ​ $ (12,941) ​ $ (5,497) ​ $ 492,048 Equity compensation — ​ — ​ 64,507 ​ — ​ — ​ 64,507 Repurchases of Parent Class B Units — ​ — ​ (1,079) ​ — ​ — ​ (1,079) Capital contributions — ​ — ​ 250 ​ — ​ — ​ 250 Issuance of common stock upon initial public offering, net 14,630,000 ​ 146 ​ 311,747 ​ — ​ — ​ 311,893 Issuance of restricted stock 5,941,693 ​ 59 ​ (59) ​ — ​ — ​ — Change in fair value of interest rate swap, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ (1,135) ​ ​ (1,135) Net loss ​ — ​ ​ — ​ ​ — ​ ​ (49,397) ​ ​ — ​ ​ (49,397) Foreign currency translation adjustment, net of tax ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 5,045 ​ ​ 5,045 Balance as of December 31, 2020 152,979,479 ​ $ 1,529 ​ $ 884,528 ​ $ (62,338) ​ $ (1,587) ​ $ 822,132 ​ The accompanying notes are an integral part of the consolidated financial statements ​ 82 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, (IN THOUSANDS) 2020 2019 2018 Cash flows from operating activities: ​ ​ ​ ​ ​ Net loss ​ $ (49,397) ​ $ (8,926) ​ $ (33,258) Adjustments to reconcile net loss to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization of property and equipment ​ 2,443 ​ 2,596 ​ ​ 2,416 Amortization of intangible assets ​ 40,310 ​ 38,964 ​ ​ 34,595 Amortization of debt issuance costs ​ 1,520 ​ 1,536 ​ ​ 1,517 (Recovery of) provision for doubtful accounts ​ (53) ​ 10 ​ ​ (250) Loss on retirement of assets ​ 19 ​ 113 ​ ​ 91 Equity compensation expense ​ 64,507 ​ 1,691 ​ ​ 1,711 Deferred income taxes ​ (7,825) ​ (6,703) ​ ​ (3,548) Changes in assets and liabilities, net of acquisitions: ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ (3,932) ​ (1,521) ​ ​ (2,031) Prepaid expenses and other assets ​ (8,257) ​ (1,831) ​ ​ (2,614) Accounts payable and accrued expenses ​ 2,381 ​ 10,031 ​ ​ (6,357) Deferred revenue ​ 3,094 ​ 2,065 ​ ​ 19,320 Net cash provided by operating activities ​ 44,810 ​ 38,025 ​ ​ 11,592 Cash flows from investing activities: ​ ​ ​ ​ ​ Capital expenditures ​ (863) ​ (2,107) ​ ​ (4,758) Capitalized development costs ​ (7,074) ​ (7,410) ​ ​ (6,727) Business acquisitions, net of cash acquired ​ (675) ​ — ​ ​ (62,420) Net cash used in investing activities ​ (8,612) ​ (9,517) ​ ​ (73,905) Cash flows from financing activities: ​ ​ ​ ​ ​ Capital contributions ​ 250 ​ 650 ​ ​ 1,110 Unit repurchase ​ (1,079) ​ (703) ​ ​ (1,100) Proceeds from issuance of common stock upon initial public offering, net of underwriters’ discounts and commissions ​ ​ 316,301 ​ ​ — ​ ​ — Proceeds from borrowings on long-term debt ​ — ​ — ​ ​ 65,000 Payments on long-term debt and capital lease obligations ​ (104,358) ​ (3,436) ​ ​ (3,981) Proceeds from line of credit ​ 19,880 ​ — ​ ​ 10,000 Payments on line of credit ​ (19,880) ​ (5,000) ​ ​ (5,000) Payments of deferred offering costs ​ ​ (2,900) ​ ​ — ​ ​ — Payment of debt issuance costs ​ ​ — ​ ​ — ​ ​ (1,063) Payment of contingent consideration obligations ​ ​ — ​ ​ — ​ ​ (7,670) Net cash provided by (used in) financing activities ​ 208,214 ​ (8,489) ​ ​ 57,296 Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash ​ (883) ​ (2,444) ​ ​ (1,337) Net increase (decrease) in cash, cash equivalents, and restricted cash ​ 243,529 ​ 17,575 ​ ​ (6,354) Cash, cash equivalents, and restricted cash, at beginning of year ​ 29,762 ​ 12,187 ​ ​ 18,541 Cash, cash equivalents, and restricted cash, at end of year ​ $ 273,291 ​ $ 29,762 ​ $ 12,187 Supplemental disclosures of cash flow information ​ ​ ​ ​ ​ Cash paid for interest ​ $ 27,607 ​ $ 26,428 ​ $ 25,713 Cash paid for taxes ​ $ 12,278 ​ $ 4,109 ​ $ 3,165 Supplemental schedule of noncash investing and financing activities ​ ​ ​ ​ ​ ​ ​ Liabilities assumed in connection with business acquisition ​ $ — ​ $ — ​ $ 12,805 Property and equipment controlled through new capital leases ​ $ 831 ​ $ — ​ $ — Deferred offering costs, accrued but not paid ​ $ 1,767 ​ $ — ​ $ — ​ The accompanying notes are an integral part of the consolidated financial statements ​ 83 Table of Contents CERTARA, INC. AND SUBSIDIARIES NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE PERCENTAGES AND SHARE AND UNIT DATA) 1. Description of Business Certara, Inc. and its wholly-owned subsidiaries (together, the “Company”) deliver software products and technology-enabled services to customers to efficiently carry out and realize the full benefits of biosimulation in drug discovery, preclinincal and clinical research, regulatory submissions and market access. The Company is a global leader in biosimulation, and the Company’s biosimulation software and technology-enabled services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success. The Company’s regulatory science and market access software and services are underpinned by technologies such as regulatory submissions software, natural language processing, and Bayesian analytics. When combined, these solutions allow the Company to offer customers end-to-end support across the entire product life cycle. On October 1, 2020, the Company amended the certificate of incorporation of EQT Avatar Topco, Inc. to change the name of the Company to Certara, Inc. The Company has operations in the United States, Canada, Spain, Luxembourg, Portugal, United Kingdom, Germany, France, Netherlands, Denmark, Switzerland, Italy, Poland, Japan, Philippines, India and Australia. ​ 2. Summary of Significant Accounting Policies (a) Basis of Presentation and Use of Estimates The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, among other estimates, the determination of fair values and useful lives of long-lived assets as well as intangible assets, goodwill, allowance for doubtful accounts receivable, recoverability of deferred tax assets, recognition of deferred revenue (including at the date of business combinations), value of interest rate swaps, determination of fair value of equity-based awards and assumptions used in testing for impairment of long-lived assets. Actual results could differ from those estimates, and such differences may be material to the consolidated financial statements. 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. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The adoption dates discussed below reflect this election. (b) Recently Adopted Accounting Pronouncements In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848),” which contains practical expedients for reference rate reform related activities that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. The Company adopted ASU 2020-04 upon issuance and elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives 84 Table of Contents consistent with past presentation. The impact of adopting ASU 2020-04 did not have a material impact to the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract,” which included updated guidance on ASC 350-40 “Intangibles — Goodwill and Other — Internal-Use Software”. The new guidance requires a customer in a cloud computing arrangement that is a service contract to follow the internal-use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. The Company adopted ASU 2018-15 on January 1, 2020. The impact of adopting ASU 2018-15 did not have a material impact to the Company’s consolidated financial statements. In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements (Topic 820)”, which improved the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements. The Company adopted ASU 2018-13 on January 1, 2020. The impact of adopting ASU 2018-13 did not have a material impact to the Company’s consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers” (“Topic 606”). Subsequent to the issuance of Topic 606, the FASB clarified the guidance through several ASUs, referred to as ASC 606. This guidance represents a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which that company expects to be entitled to receive in exchange for those goods or services. This update sets forth a new five-step revenue recognition model which replaces the prior revenue recognition guidance in its entirety. On January 1, 2019, the Company adopted ASC 606, using the modified retrospective method, applied to all contracts not completed as of the date of adoption. This method requires the cumulative effect of the adoption to be recognized as an adjustment to opening retained earnings or accumulated deficit in the period of adoption. The effects of adopting ASC 606 were a decrease of $10,417, net of taxes of $3,325, to accumulated deficit as of January 1, 2019, for the cumulative effect on prior years of having adopted the new standard, a decrease in deferred revenues of $13,587, an increase in deferred taxes of $3,325, and a decrease in cumulative translation adjustment of $155. These adjustments are a result of the upfront recognition of license revenues from term licenses. Financial results for reporting periods beginning January 1, 2019 are presented under ASC 606, while prior period amounts were not adjusted and continue to be reported in accordance with the historical accounting guidance under ASC Topic 605. In November 2016, the FASB issued ASU 2016-18 “Statement of Cash Flows (Topic 230): Restricted Cash”. ASU 2016-18 requires entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. As a result, entities will no longer present transfers between cash and cash equivalents and restricted cash and restricted cash equivalents in the statement of cash flows. The ASU requires changes in the Company’s restricted cash to be classified as either operating activities, investing activities or financing activities in the Consolidated Statements of Cash Flows, depending on the nature of the activities that gave rise to the restriction. The new standard is effective for annual reporting periods beginning after December 15, 2018. Retrospective transition method is to be applied to each period presented. The Company adopted ASU 2016-18 on January 1, 2019. The adoption of ASU 2016-18 did not have a material impact to the Company’s consolidated financial statements. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”. The amendments in this update allow a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for adjustments to the tax effect of items in AOCI, that were originally recognized in other comprehensive income, related to the new statutory rate prescribed in the Tax Cuts and Jobs Act (“TCJA”) enacted on December 22, 2017, which reduced the US federal corporate tax rate from 35% to 21%. The amendments in this update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the US federal 85 Table of Contents corporate income tax rate in the TCJA is recognized. The adoption of this standard on January 1, 2019 had no impact to the Company’s consolidated financial statements. (c) Accounting Pronouncements Not Yet Adopted In December 2019, the FASB issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes” which removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, the recognition of deferred tax liabilities for outside basis differences and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The Company will adopt ASU 2019-12 during the year beginning January 1, 2021 and is currently evaluating the impact of the new guidance on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. In its April 2020 meeting, FASB deferred the effective date for ASC 842 for private companies to fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company will adopt ASU 2016-02 during the year beginning January 1, 2022 and is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In June 2016, the FASB issued ASU 2016-13 “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (ASU 2016-13). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments. For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for losses. The guidance also requires increased disclosures. Per ASU 2019-10 issued in November 2019, ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for private companies. Early adoption is permitted. The Company will adopt ASU 2016-13 during the year beginning January 1, 2023 and is currently evaluating the impact of adopting this guidance on its consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, “Intangibles — Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment”. ASU 2017-04 removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This standard will be effective for a private company (and thus, for those adopting exemption for Emerging Growth Companies) beginning in the first quarter of fiscal year 2022 and is required to be applied prospectively. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company will adopt ASU 2017-04 during the year beginning January 1, 2022 and is currently evaluating the impact of adopting this guidance on its consolidated financial statements. (d) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. (e) Fair Value Measurements The Company follows FASB ASC 820-10, “Fair Value Measurements,” which defines fair value, establishes a framework for measuring fair value in U.S. GAAP, and requires certain disclosures about fair value measurements. 86 Table of Contents ASC 820-10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the most advantageous market for the asset or liability in an orderly transaction. Fair value measurement is based on a hierarchy of observable or unobservable inputs. The standard describes three levels of inputs that may be used to measure fair value. Level 1 — Inputs to the valuation methodology are quoted prices available in active markets for identical securities as of the reporting date; Level 2 — Inputs to the valuation methodology are other significant observable inputs, including quoted prices for similar securities, interest rates, credit risk etc. as of the reporting date, and the fair value can be determined through the use of models or other valuation methodologies; and Level 3 — Inputs to the valuation methodology are unobservable inputs in situations where there is little, or no market activity of the securities and the reporting entity makes estimates and assumptions relating to the pricing of the securities including assumptions regarding risk. If the inputs used to measure fair value fall in different levels of the fair value hierarchy, the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. For the acquisitions noted in Note 5, the fair value measurement methods used to estimate the fair value of the assets acquired and liabilities assumed at the acquisition dates utilized a number of significant unobservable inputs of Level 3 assumptions. These assumptions included, among other things, projections of future operating results, implied fair value of assets using an income approach by preparing a discounted cash flow analysis, and other subjective assumptions. Interest rate swaps are valued in the market using discounted cash flows techniques. These techniques incorporate Level 1 and Level 2 inputs. The market inputs are utilized in the discounted cash flows’ calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative instrument valuation model for interest rate swaps are observable in active markets and are classified as Level 2 in the hierarchy. (f) Cash, Cash Equivalents and Restricted Cash Cash equivalents include highly-liquid investments with maturities of three months or less from the date purchased. At times, cash balances held at financial institutions were in excess of the Federal Deposit Insurance Corporation’s (“FDIC”) insured limits; however, the Company primarily places its temporary cash with high-credit quality financial institutions. The Company has never experienced losses related to these balances and believes it is not exposed to any significant credit risk on cash. Restricted cash represents cash that is used as collateral to support an unsecured Company credit card program through a major bank and unexpended restricted grant funds. The restricted cash balance was $1,909 and $506 at December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, the carrying values reflected in the Consolidated Balance Sheets reasonably approximate the fair values for cash, cash equivalents and restricted cash due to the short-term maturity of these items. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the amounts presented in the consolidated statements of cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ 2020 2019 2018 Cash and cash equivalents ​ $ 271,382 ​ $ 29,256 ​ $ 11,684 Restricted cash, current ​ 1,909 ​ 506 ​ ​ 503 Total cash and cash equivalents, and restricted cash ​ $ 273,291 ​ $ 29,762 ​ $ 12,187 ​ 87 Table of Contents (g) Accounts Receivable Accounts receivable includes current outstanding invoices billed to customers. Invoices are typically issued with net 30-days to net 90-days terms upon delivery of product or upon achievement of billable events for service-based contracts. The carrying amount of accounts receivable is reduced by a valuation allowance, if necessary, which reflects management’s best estimate of the amounts that are doubtful. This allowance is estimated based on management’s knowledge of its customers’ financial condition, credit history, and existing economic conditions. Account balances are considered delinquent if payment is not received by the due date. Accounts receivable are written off when deemed uncollectible. Recovery of accounts receivable previously written off is recorded when received. Interest is not charged on accounts receivable. An allowance for doubtful accounts of $132 and $185 was provided in the accompanying consolidated financial statements as of December 31, 2020 and 2019, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ 2020 2019 Trade receivables ​ $ 46,395 ​ $ 43,649 Unbilled receivables ​ 7,696 ​ 5,635 Other receivables ​ — ​ 358 Accounts receivable, net ​ $ 54,091 ​ $ 49,642 ​ As of December 31, 2020 and 2019, the carrying values reflected in the Consolidated Balance Sheets reasonably approximate the fair values for accounts receivable due to the short-term maturity of these items. (h) Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation and amortization is provided using the straight-line method over the estimated useful lives of the assets, which range from three to ten years for equipment and furniture, the shorter of the useful lives of the improvement or the life of the related lease term for leasehold improvements, and one to three years for purchased software. The Company seeks to match the book useful life of assets to the expected productive lives. Assets deemed to be impaired or no longer productive are written down to their net realizable value. The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If such events or changes in circumstances are present, an impairment loss would be recognized if the sum of the expected future net cash flows is less than the carrying amount of the asset. An impairment loss would be recorded for the excess of the carrying value of the asset over the estimated fair value. There was no impairment of property and equipment for the years ended December 31, 2020, 2019, and 2018. (i) Software Development Costs Software development costs are accounted for in accordance with FASB ASC Subtopic 985-20 if the software is to be sold, leased or otherwise marketed, or by FASB ASC Subtopic 350-40 if the software is for internal use. After the technological feasibility of the software has been established (for software to be marketed), or at the beginning of application development (for internal-use software), software development costs, which include primarily salaries and related payroll costs and costs of independent contractors incurred during development, are capitalized. Research and development (“R&D”) costs incurred prior to the establishment of technological feasibility (for software to be marketed), or prior to application development (for internal-use software), are expensed as incurred. Software development costs are amortized on a product-by-product basis commencing on the date of general release of the products (for software to be marketed) or the date placed in service (for internal-use software). During the years ended December 31, 2020, 2019 and 2018, costs of $7,074, $7,410, and $6,727, respectively, were capitalized related to software development activities. Software development costs for software to be marketed are amortized using the straight-line method over its estimated useful life, which is typically three years. The Company reviews capitalized software for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If such events or changes in circumstances are present, an impairment loss would be recognized if the sum of the expected future net cash flows is less than the carrying amount of the asset. An impairment loss would be 88 Table of Contents recorded for the excess of the carrying value of the asset over the estimated fair value. There was no impairment of software development costs for the years ended December 31, 2020, 2019, and 2018. (j) Debt Issuance Costs Debt issuance costs are capitalized and amortized over the term of the related debt using the effective interest rate method. Amortization of debt issuance costs is included in interest expense within the Consolidated Statements of Operations and Comprehensive Loss. The unamortized amount is included as an offset against long-term debt on the Consolidated Balance Sheets. (k) Goodwill and Other Intangible Assets Goodwill is tested for impairment at the reporting unit level, which is one level below or the same as an operating segment. When testing goodwill for impairment, the Company first performs a qualitative assessment to determine whether it is necessary to perform step one of a two-step annual goodwill impairment test for each reporting unit. The Company is required to perform step one only if it concludes that it is more likely than not that a reporting unit’s fair value is less than its carrying value. Should this be the case, the first step of the two-step process is to identify whether a potential impairment exists by comparing the estimated fair values of the Company’s reporting units with their respective book values, including goodwill. If the estimated fair value of the reporting unit exceeds book value, goodwill is considered not to be impaired, and no additional steps are necessary. If, however, the fair value of the reporting unit is less than book value, then the second step is performed to determine if goodwill is impaired and to measure the amount of impairment loss, if any. The amount of the impairment loss is the excess of the carrying amount of the goodwill over its implied fair value. The estimate of implied fair value of goodwill is primarily based on an estimate of the discounted cash flows expected to result from that reporting unit but may require valuations of certain internally generated and unrecognized intangible assets such as the Company’s software, technology, patents and trademarks. If the carrying amount of goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to the excess. For the years ended December 31, 2020, 2019, and 2018, the Company performed a quantitative assessment of goodwill and determined that it is not more-likely-than-not that the fair value of its reporting units is less than the carrying amount. Accordingly, no impairment loss was recorded for the years ended December 31, 2020, 2019, and 2018. Other identifiable intangible assets with finite lives, such as software products acquired in acquisitions, non-compete agreements, tradenames and customer relationship assets, are amortized over their estimated lives using either a straight-line method or a method based on pattern of expected economic benefit of the asset as follows: acquired software — 3 to 10 years; non-compete agreements — 2 to 5 years; tradenames — 20 years; customer relationships — 11 to 16 years; and trademarks — 10 to 17 years. The Company evaluates finite intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset might not be recoverable. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset are less than its carrying amount. There were no impairment charges related to intangible assets for the years ended December 31, 2020, 2019, and 2018. (l) Foreign Currency Translation Generally, the functional currency of the Company’s international subsidiaries is the local currency of the country in which they operate. The Company translates the assets and liabilities of its non-U.S. dollar functional currency subsidiaries into U.S. dollars using exchange rates in effect at the end of each reporting period. Revenue and expenses for these subsidiaries are translated using average exchange rates prevailing during the period. Gains and losses from these translations are recognized as a cumulative translation adjustment and included as a separate component in accumulated other comprehensive loss within stockholders’ equity. 89 Table of Contents For transactions that are not denominated in the local functional currency, the Company remeasures monetary assets and liabilities at exchange rates in effect at the end of each reporting period. Foreign currency transaction gains and losses are included net within comprehensive loss in the Consolidated Statements of Operations and Comprehensive Loss and resulted in foreign currency losses of $715, $431, and $23 for the years ended December 31, 2020, 2019, and 2018, respectively. (m) Derivative Instruments In the normal course of business, the Company is subject to risk from adverse fluctuations in interest rates. The Company has chosen to manage this risk through the use of derivative financial instruments that consist of interest rate swap contracts. Counterparties to these contracts are major financial institutions. The Company is exposed to credit loss in the event of nonperformance by these counterparties. The Company does not use derivative instruments for trading or speculative purposes. The objective in managing exposure to market risk is to limit the impact on cash flows. To qualify for hedge accounting, the interest rate swaps must effectively reduce the risk exposure that they are designed to hedge. In addition, at inception of a qualifying cash flow hedging relationship, the underlying transaction or transactions must be, and be expected to remain, probable of occurring in accordance with the related assertions. FASB ASC 815, “Derivatives and Hedging,” requires the Company to recognize all derivatives on the balance sheet at fair value. The Company may enter into derivative contracts such as interest rate swap contracts that effectively convert portions of the Company’s floating rate debt to a fixed rate, which serves to mitigate interest rate risk. The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of December 31, 2019, the Company had one outstanding interest rate swap that was designated as a cash flow hedge of interest rate risk for a notional amount of $217,500 that fixed the interest rate at 1.8523%, noninclusive of the fixed credit spread. This interest rate swap matured on November 30, 2020. On May 22, 2019, the Company entered into a second interest rate swap agreement, which was effective on November 30, 2020. This second interest rate swap was also designated as a cash flow hedge of interest rate risk for a notional amount of $230,000 that fixed the interest rate at 2.1284%, noninclusive of the fixed credit spread through May 31, 2022. The Company recorded the fair value of its interest rate swaps in the amount of $3,671 and $2,152, as a derivative liability as of December 31, 2020 and 2019, respectively, in its Consolidated Balance Sheets. The Company’s interest rate swaps qualify for hedge accounting. The fair values of the interest rate swaps are recognized in the Consolidated Balance Sheets and the changes in the fair value of the derivatives are recognized in other comprehensive loss. Subsequently, the gain or loss reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. The following table sets forth the liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability ​ ​ ​ ​ Interest rate swap liability ​ $ — ​ $ 3,671 ​ $ — ​ $ 3,671 Total ​ $ — ​ $ 3,671 ​ $ — ​ $ 3,671 ​ The following table sets forth the liabilities that were measured at fair value on a recurring and non-recurring basis by their levels in the fair value hierarchy at December 31, 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability ​ ​ ​ ​ Interest rate swap liability ​ $ — ​ $ 2,152 ​ $ — ​ $ 2,152 Total ​ $ — ​ $ 2,152 ​ $ — ​ $ 2,152 ​ 90 Table of Contents The net amount of deferred gains (losses) related to derivative instruments designated as cash flow hedges that is expected to be reclassified from accumulated other comprehensive loss into interest expense over the next 12 months is insignificant. (n) Warranty The Company includes an assurance commitment warranting the application software products will perform in accordance with written user documentation and the agreements negotiated with customers. Since the Company does not customize its applications software, warranty costs are insignificant and expensed as incurred. (o) Net Loss per Share Basic net loss per common share is computed by dividing the net loss by the weighted-average number of shares outstanding during the reporting period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to stockholders by the weighted-average number of shares and dilutive securities outstanding during the period. (p) Income Taxes The Company accounts for income taxes under the asset and liability method. Under this method, the amount of taxes currently payable or refundable is accrued, and deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial reporting and tax basis of existing assets and liabilities. Deferred tax assets also include realizable tax losses and tax credit carryforwards. The deferred tax assets may be reduced by a valuation allowance, which is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. In addition, management is required to evaluate all available evidence, both positive and negative, when making its judgment to determine whether to record a valuation allowance for a portion, or all, of its deferred tax assets. Deferred tax assets and liabilities are measured using enacted income tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in income tax rate is recognized in the period that includes the enactment date. Uncertainty in Income Taxes The Company accounts for uncertainty in income taxes using a two-step approach. The first step requires the Company to conclude that a tax position, based solely on its technical merits, is more likely than not to be sustained upon examination by a tax authority. The second step requires the Company to measure the largest amount of benefit, determined on a cumulative probability basis, that is more likely than not to be realized upon ultimate settlement with the respective tax authority. The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. Further, the benefit to be recorded in the consolidated financial statements is the amount most likely to be realized assuming a review by the tax authorities having all relevant information and applying current conventions. The Company’s policy is to recognize interest and penalties related to income tax positions taken as a component of the provision for income taxes. The Company recorded unrecognized tax benefits of $897 and $690 as of December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, there were no interest or penalties recorded. The Company does not anticipate any significant changes to its uncertain tax positions during the next twelve months. The audits of the federal income tax returns for the tax year ended December 31, 2016 and December 31, 2017 are closed. The Internal Revenue Service can audit the NOLs generated in respective years in the years that the NOLs are utilized. State income tax returns are generally subject to examination for a period of three to six years after the filing of the respective tax return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. Foreign income tax returns are generally subject to examination based on the tax laws of the respective jurisdictions. 91 Table of Contents (q) Revenue Recognition ASC 606 Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for promised goods or services. The Company’s revenue consists of fees for perpetual and term licenses for the Company’s software products, post-contract customer support (referred to as maintenance), software as a service (“SaaS”) and professional services including training and other revenue. For contracts with multiple performance obligations, the Company allocates the transaction price of the contract to each performance obligation on a relative standalone selling price basis. The delivery of a particular type of software and each of the user licenses would be one performance obligation. However, any training, implementation, or support and maintenance promises as part of the software license agreement would be considered separate performance obligations, as those promises are distinct and separately identifiable from the software licenses. The payment terms in these arrangements are sufficiently short such that there is no significant financing component to the transaction. The Company typically recognizes license revenue at a point in time upon delivering the applicable license. The revenue related to the support and maintenance performance obligation will be recognized on an over-time basis using time elapsed methodology. The revenue related to software training and software implementation performance will be recognized at the completion of the service. The following describes the nature of the Company’s primary types of revenues and the revenue recognition policies as they pertain to the types of transactions the Company enters into with its customers. Software Licenses and Support License revenue includes perpetual license fees and term license fees, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the use of software. Both revenues from perpetual license and term license performance obligations are generally recognized upfront at the point in time when the software license has been delivered. A source of software license revenue is from term and bundled licenses that are time-based arrangements for one or multiple software products sold together with maintenance and support for the term of the license arrangement. The Company has determined that post customer support and the right to unspecified enhancements and upgrades on a “when-and-if-available” basis included with term licenses is an immaterial component of the transaction price and, therefore, recognized these performance obligation components up front with the license when delivered. Software License contracts do not provide for any non-cash consideration nor is there consideration payable to a customer. Software Services For contracts that include multiple performance obligations, such as a software license plus software training, implementation, and/or maintenance/support, or in contracts where there are multiple software licenses, the transaction price is allocated to each of the performance obligations on a pro-rata basis based on the relative standalone selling price (“SSP”) of each performance obligation. Maintenance services agreements consist of fees for providing software updates and for providing technical support for software products for a specified term. Revenue allocated to maintenance services is recognized ratably over the contract term beginning on the delivery date of each offering. Maintenance contracts generally have a term of one year. Expenses related to maintenance and subscription are recognized as incurred. While transfer of control of the software training and implementation performance obligations are over time, the services are typically started and completed within a few days. Due to the quick nature of the performance obligation from start to finish and the immaterial amounts, the Company recognizes any software training or implementation revenue at the completion of the service. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. Certara’s software contracts do not typically include discounts, variable consideration, or options for future purchases that would not be similar to the original goods. 92 Table of Contents Consortium revenues consist of contractual agreements with customers where the customer receives multiple benefits as part of their contract with the Company, as follows: access to the latest version simulator software, which has at least one new release per year, free access to a preset number of training workshops, a block of consulting hours to be used at the customer’s discretion, as well as voting rights at the annual consortium meeting where development priorities for the upcoming year are set. The Company’s consortium contracts are generally for three years with annual termination clauses and with annual upfront billings. Consortium revenues are recognized over time as the benefits of the consortium arrangement are realized over the course of the contract. Both the training and consulting services performance obligations will utilize an output method to measure the progress at the end of each reporting period. Revenue from the Company’s performance obligation under the simulation license, which provides customers with access to the latest version of the simulation software, is recognized evenly over the contract period. License revenue and post contract services are combined and reported as software revenue on the Consolidated Statements of Operations and Comprehensive Loss. Subscription Revenues Subscription revenues consists of subscription fees for access to, and related support for, our cloud-based solutions. The Company typically invoices subscription fees in advance in annual installments and recognizes subscription revenue ratably over the term of the applicable agreement, usually one to three years which is initially deferred and recognized ratably over the life of the contract. The output method that accurately depicts the transfer of control was determined to be the delivery of accessibility to the customer. Unearned maintenance and subscription revenue are recorded as deferred revenue. The Company’s subscription services arrangements are generally non-cancelable and do not contain refund-type provisions. In rare instances that subscription services arrangements are deemed cancelable, the Company will adjust the transaction price and period for revenue recognition accordingly to be reflective of the contract term. The contract transaction price is based on the fixed fee for each subscription. Services and Other Revenues Services primarily represent consulting services, which may be either strategic consulting services, reporting and analysis services, regulatory writing services, or any combination of the three. Strategic consulting services consists of consulting, training, and process redesign that enables customers to identify which uncertainties are greatest and matter most and then to design development programs, trial sequences, and individual trials in such a way that those trials systematically reduce the identified uncertainties, in the most rapid and cost-effective manner possible. The Company’s professional services contracts are either time-and-materials, fixed fee or prepaid. Services revenues are generally recognized over time as the services are performed. Revenues for fixed price services and prepaid are generally recognized over time applying input methods to estimate progress to completion. Accordingly, the number of resources being paid for and varying lengths of time they are being paid for, determine the measure of progress. Training revenues are recognized as the services are performed over time. However, due to short period over which the transfer of control occurs for a classroom or on-site training course, the revenue related to these performance obligations is recognized at the completion of the course for administrative feasibility purposes. The training services generally do not provide for any non-cash consideration nor is there consideration payable to a customer. At contract inception, the Company assesses the products and services promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a product or service (or bundle of products or services) that is distinct — i.e., if a product or service is separately identifiable from other items in the bundled package and if a customer can benefit from it on its own or with other resources that are readily available to the customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. The Company has contracts with customers that may have multiple performance obligations, including some or all of the following: software licenses, maintenance, subscriptions, professional services and/or training. For these contracts, the Company accounts for individual performance obligations separately if they are distinct within the context of the contract by allocating the contract’s total transaction price to each performance obligation in an amount based on the relative SSP, of each distinct good or service in the contract. 93 Table of Contents In order to determine the SSP of its promised goods or services, the Company conducts an annual analysis to determine whether its goods or services have an observable SSP. In determining SSP, the Company requires that a substantial majority of the standalone selling prices for goods or services fall within a reasonably narrow pricing range. If the Company does not have a directly observable SSP for a particular good or service, then the Company estimates a SSP by the Company’s overall pricing objectives, taking into consideration market factors, pricing practices including historical discounting, historical standalone sales of similar products, customer demographics, geographic locations, and the number and types of users within the Company’s contracts. The determination of SSP is made by the Company’s management. Selling prices are analyzed at least on an annual basis to identify if the Company has experienced significant changes in its selling prices. The Company allocates the transaction price to each performance obligation identified in the contract on a relative SSP basis and recognizes revenue when or as it satisfies a performance obligation by transferring control of a product or service to a customer. Taxes collected from customers and remitted to governmental authorities are not included in revenue. The Company does not incur shipping and handling for its goods as they are generally delivered to a customer electronically. The Company does not believe that it currently has any rights to return that would result in a material impact to revenues. Contract Balances The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets), and customer advances and deposits (deferred revenue, contract liabilities) on the Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., quarterly or monthly) or upon achievement of contractual milestones. Contract assets relate to the Company’s rights to consideration for performance obligations satisfied but not billed at the reporting date on contracts (i.e., unbilled revenue, a component of accounts receivable in the Consolidated Balance Sheets). Contract assets are billed and transferred to customer accounts receivable when the rights become unconditional. The Company typically invoices customers for term licenses, subscriptions, maintenance and support fees in advance with payment due before the start of the subscription term, ranging from one to three years. The Company records the amounts collected in advance of the satisfaction of performance obligations, usually over time, as a contract liability or deferred revenue. Invoiced amounts for non-cancelable services starting in future periods are included in contract assets and deferred revenue. The portion of deferred revenue that will be recognized within twelve months is recorded as current deferred revenue, and the remaining portion is recorded as non-current deferred revenue in the Consolidated Balance Sheets. The unsatisfied performance obligation as of December 31, 2020 was approximately $80,559. Deferred Contract Acquisition Costs Under ASC 606, sales commissions paid to the sales force and the related employer payroll taxes, collectively “deferred contract acquisition costs”, are considered incremental and recoverable costs of obtaining a contract with a customer. The Company has determined that sales commissions paid are an immaterial component of obtaining a customer’s contract and has elected to expense sales commissions when paid. Revenue Recognition Pre ASC 606 The adoption of ASC 606 changed the way the Company recognizes revenue related to term and bundled license agreements. Prior to ASC 606, the Company recognized software licenses and support revenue in accordance with FASB ASC 985, “Software.” Revenues from software license agreements are recognized when all of the following criteria are met as set forth in FASB ASC 985: (1) persuasive evidence of an arrangement exists, (2) delivery has occurred, (3) the fee is fixed or determinable, and (4) collectability is probable. 94 Table of Contents A source of software license revenue is from term and bundled licenses that are time-based arrangements for one or multiple software products that are sold together with maintenance and support for the term of the license arrangement. The Company does not have vendor specific objective evidence (“VSOE”) to determine fair value of the maintenance and support in term arrangements and, therefore, recognizes revenues from these bundled time-based licenses ratably over the license term, which typically ranges from one to three years. The Company allocates revenues from perpetual software arrangements involving multiple elements to each element based on the relative fair values as determined by the VSOE for each element. The Company limits its assessment of VSOE for each element to the price charged when the same element is sold separately. The Company has analyzed all of the elements included in multiple-element arrangements and determined that the Company has sufficient VSOE to allocate revenues to maintenance and support, deployment, and training. The Company sells training separately and has established VSOE on this basis. VSOE for maintenance and support is determined based upon the renewal rates in contracts themselves, which is based on a fixed percentage of the current perpetual license list price. Deployment services are charged based on standard hourly rates. Accordingly, assuming all other revenue recognition criteria are met, revenues from perpetual licenses are recognized upon delivery of the software using the residual method in accordance with ASC 985 . Software maintenance agreements provide for technical support and the right to unspecified enhancements and upgrades on a “when-and-if-available” basis. Post-contract support (“PCS”) revenues on perpetual agreements are recognized ratably over the term of the support period (generally one year). Deployment, training, and other service revenues are recognized as the related services are provided. Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue. For presentation in the Consolidated Statements of Operations and Comprehensive Loss, license revenues and PCS are combined as allowed under U.S. GAAP due to the immaterial amount of revenues obtained from PCS when charged separately in comparison to the total of these two sources. Sources and Timing of Revenue The Company’s performance obligations are satisfied either over time or at a point in time. The following table presents the Company’s revenue by timing of revenue recognition to understand the risks of timing of transfer of control and cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, ​ ​ 2020 2019 Software licenses transferred at a point in time ​ $ 36,388 ​ $ 35,261 Software licenses transferred over time ​ 37,075 ​ ​ 33,080 Service revenues earned over time ​ 170,067 ​ ​ 140,170 Total ​ $ 243,530 ​ $ 208,511 ​ (r) Equity -based compensation The Company measures equity-based compensation at fair value and recognizes the expense over the vesting period. Compensation costs for our legacy Class B Units, issued by EQT Avatar Parent L.P. (“EQT”), that vested based on continued service requirements and the restricted stock into which they were exchanged are recognized on a straight-line basis over the requisite service period. Compensation costs for our restricted stock units are recognized on a straight-line basis over the requisite service period. Compensation costs for our restricted stock exchanged for our legacy Class B Units with performance vesting conditions are recognized using the accelerated attribution approach. Forfeitures are recognized as they occur for all awards. 95 Table of Contents (s) Comprehensive (Loss) Income FASB ASC 220, “Comprehensive Income,” establishes standards for reporting of comprehensive income and its components (revenue, gains, and losses) in a full set of general-purpose financial statements. FASB ASC 220 requires that all components of comprehensive income, including net income, be reported in a financial statement that is displayed with the same prominence as other financial statements. Comprehensive loss is defined as the change in equity during a period from transactions and other events and circumstances from non-owner sources. Net loss and other comprehensive loss, including foreign currency translation adjustments, and changes in fair value of derivative instruments (interest rate swap agreements) designated as cash flow hedges, shall be reported to arrive at comprehensive loss. Comprehensive loss is displayed in the Consolidated Statements of Operations and Comprehensive Loss. The components of other comprehensive income (loss) consisted of foreign currency translation adjustments totaling $5,045, $433 and $(16,721), respectively, and change in fair value of interest rate swap, net of tax, totaling $(1,135), $(4,283), and $1,079 for the years ended December 31, 2020, 2019, and 2018, respectively. (t) Reclassification Certain amounts in the 2018 and 2019 consolidated financial statements have been reclassified to conform with the current year presentation. ​ 3. Initial Public Offering On December 15, 2020, the Company completed its initial public offering (“IPO”), pursuant to which the Company issued and sold 14,630,000 shares of common stock and certain selling stockholders, including former controlling shareholder, EQT, sold 18,783,250 shares of our common stock (representing the full exercise of the underwriters’ option to purchase additional shares), at a public offering price of $23.00 per share. The Company received net proceeds of $316,301, after deducting underwriters' discounts and commissions. In addition, $4,408 of legal, accounting and other offering costs, net of the tax effect of $259, incurred in connection with the sale of the Company's common stock in the IPO, were capitalized and offset against the proceeds received in the IPO. The Company is party to a registration rights agreement with EQT AB and its affiliates (“EQT AB”), Arsenal, EQT, and certain other stockholders (“Institutional Investors”). The registration rights agreement was amended and restated in connection with the IPO. It contains provisions that entitle EQT AB, Arsenal, EQT, and the other stockholder parties thereto to certain rights to have their securities registered by the Company under the Securities Act. EQT AB will be entitled to an unlimited number of “demand” registrations, subject to certain limitations. Every stockholder that holds registration rights will also be entitled to customary “piggyback” registration rights. In addition, the amended and restated registration rights agreement provides that the Company will pay certain expenses of the stockholder parties relating to such registrations and indemnify them against certain liabilities which may arise under the Securities Act of 1933 (“Securities Act”). The registration rights agreement will terminate (i) with the prior written consent of the Institutional Investors in connection with a change of control; (ii) for those holders (other than the Institutional Investors) that beneficially own less than 5% of the Company’s outstanding shares, if all of the Registrable Securities then owned by such holder could be sold in any 90-day period pursuant to Rule 144; (iii) as to any holder, if all of the Registrable Securities held by such holder have been sold or otherwise transferred in a Registration pursuant to the Securities Act or pursuant to an exemption therefrom; or (iv) with respect to any holder that is an officer, director, employee or consultant of the Company on the date that is 90 days after the date on which such holder ceases to be an employee, director or consultant (as applicable) of the Company. The rights and obligations do not transfer without the written consent of the Company and the Institutional Investors. ​ 96 Table of Contents 4. Concentrations of Credit Risk Financial instruments that potentially subject the Company to concentrations of credit risk have consisted principally of cash and cash equivalent investments and trade receivables. The Company invests available cash in bank deposits, investment-grade securities, and short-term interest-producing investments, including government obligations and other money market instruments. At December 31, 2020 and 2019, the investments were bank deposits and overnight sweep accounts. The Company has adopted credit policies and standards to evaluate the risk associated with sales that require collateral, such as letters of credit or bank guarantees, whenever deemed necessary. Management believes that any risk of loss is significantly reduced due to the nature of the customers and distributors with which the Company does business. As of December 31, 2020 and 2019, no customer accounted for more than 10% of the Company’s accounts receivable. As of December 31, 2020, 2019, and 2018, no customer accounted for more than 10% of the Company’s revenues. ​ 5. Business Combinations Acquisitions have been accounted for using the acquisition method of accounting pursuant to FASB ASC 805, “Business Combinations.” Amounts allocated to the purchased assets and liabilities are based upon the total purchase price and the estimated fair values of such assets and liabilities on the effective date of the purchase as determined by an independent third party. The results of operations have been included in the Company’s results of operations prospectively from the date of acquisition. BaseCase BaseCase provides SaaS in the Life Sciences industry. This acquisition was made to combine its background in health economics with the Company’s background in Computer Science and exploit the gap in the market for health economics by accessing the software market in the life sciences industry. The BaseCase acquisition was funded through proceeds of $25,000 received from an additional tranche of term debt and cash on hand. The following table summarizes the estimates of the fair values of the assets acquired and liabilities assumed in the BaseCase acquisition as of the date of acquisition. ​ ​ ​ ​ ​ ​ JANUARY 25, ​ 2018 Cash ​ $ 1,151 Accounts receivable ​ 2,622 Prepaid expenses and other assets ​ 171 Property and equipment ​ 87 Separately identifiable intangible assets ​ 7,580 Total identifiable assets acquired ​ 11,611 Accounts payable ​ 174 Accrued expenses ​ 3,617 Deferred revenue ​ 830 Deferred tax liability ​ 2,927 Total liabilities assumed ​ 7,548 Net identifiable assets acquired ​ 4,063 Goodwill arising in the acquisition ​ 21,260 Purchase price ​ $ 25,323 ​ The adjustments recorded to reflect the acquired assets at their estimated fair value and liabilities at their estimated fair value or the present value of amounts to be paid included: a. $7,580 to record the estimated fair market value of the acquired intangible assets consisting of: non-compete agreements $10; non-contractual customer relationships $5,480; acquired software $1,120 and tradename $970 97 Table of Contents b. Reduction in deferred revenues of $2,121 c. Other miscellaneous adjustments The fair value of the intangible assets is based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements under FASB ASC 820-10. The fair value of the non-contractual customer relationships was determined under the income approach, specifically the multi-period excess earnings method. The fair value of the non-compete was determined using the income approach, specifically the comparative business valuation method. The fair value of the tradename and acquired software was determined using the income approach, specifically the relief from royalty method. In addition, goodwill of $21,260 was recorded to reflect the excess of the purchase price over the estimated fair value of the net identifiable assets acquired, which is not deductible for tax purposes. The Company incurred $2,122 of acquisition costs related to this acquisition, which are included in operating expenses in the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2018. The Company also incurred costs for the issuance of debt, which was capitalized as a debt issuance costs as of the acquisition date in the amount of $313. Analytica Laser Analytica Laser employs cutting-edge quantitative methodologies and proprietary software to study and predict real-world outcomes for drug value assessment. This acquisition was made so that the Company’s complementary approaches allow integration of Health Economics and Outcomes Research (“HEOR”) and real-world value assessments with Pharmacometrics data — delivering safety, efficacy and effectiveness insights and providing a unique market advantage for our customers. The Analytica Laser acquisition was funded through proceeds of $40,000 received from an additional tranche of term debt and cash on hand. The following table summarizes the estimates of the fair values of the assets acquired and liabilities assumed in the Analytica Laser acquisition as of the date of acquisition. ​ ​ ​ ​ ​ ​ APRIL 3, ​ 2018 Cash ​ $ 427 Accounts receivable ​ 3,629 Prepaid expenses and other assets ​ 721 Property and equipment ​ 111 Separately identifiable intangible assets ​ 17,630 Total identifiable assets acquired ​ 22,518 Accounts payable ​ 118 Accrued expenses ​ 1,727 Deferred revenue ​ 62 Deferred tax liability ​ 3,350 Total liabilities assumed ​ 5,257 Net identifiable assets acquired ​ 17,261 Goodwill arising in the acquisition ​ 22,739 Purchase price ​ $ 40,000 ​ The adjustments recorded to reflect the acquired assets at their estimated fair value and liabilities at their estimated fair value or the present value of amounts to be paid included: a. $17,630 to record the estimated fair market value of the acquired intangible assets consisting of: non-compete agreements $390 and non-contractual customer relationships $17,240 b. Reduction in deferred revenues of $135 c. Other miscellaneous adjustments 98 Table of Contents The fair value of the intangible assets is based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements under FASB ASC 820-10. The fair value of the non-contractual customer relationships was determined under the income approach, specifically the multi-period excess earnings method. The fair value of the non-compete was determined using the income approach, specifically the comparative business valuation method. In addition, goodwill of $22,739 was recorded to reflect the excess of the purchase price over the estimated fair value of the net identifiable assets acquired, which is not deductible for tax purposes. The Company incurred $1,728 of acquisition costs related to this acquisition, which are included in operating expenses in the Consolidated Statement of Operations and Comprehensive Loss for the year ended December 31, 2018. The Company also incurred costs for the issuance of debt, which was capitalized as a debt issuance cost as of the acquisition date in the amount of $750. ​ 6. Prepaid Expenses and Other Current Assets Prepaid and other current assets consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ 2020 2019 Prepaid expenses ​ $ 7,372 ​ $ 4,379 Income tax receivable ​ 7,098 ​ 302 R&D tax credit receivable ​ 3,610 ​ 2,412 Other current assets ​ 1,122 ​ 1,026 Prepaid expenses and other current assets ​ $ 19,202 ​ $ 8,119 ​ ​ 7. Property and Equipment Property and equipment consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ 2020 2019 Computer equipment ​ $ 5,619 ​ $ 3,736 Furniture ​ 3,147 ​ 2,776 Purchased software for internal use ​ 679 ​ 212 Leasehold improvements ​ 2,386 ​ 2,254 Property and equipment ​ 11,831 ​ 8,978 Less: Accumulated depreciation and amortization ​ (7,959) ​ (4,355) Property and equipment, net ​ $ 3,872 ​ $ 4,623 ​ Depreciation and amortization expense were $2,443, $2,596, and $2,416 for the years ended December 31, 2020, 2019, and 2018, respectively. ​ 99 Table of Contents 8. Goodwill and Other Intangible Assets The following table presents the Company’s intangible assets (other than goodwill) and the related amortization: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ AVERAGE ​ DECEMBER 31, 2020 ​ DECEMBER 31, 2019 ​ ​ AMORTIZATION ​ GROSS ​ ​ ​ ​ ​ ​ ​ GROSS ​ ​ ​ ​ ​ ​ ​ ​ PERIOD ​ CARRYING ​ ACCUMULATED ​ ​ ​ ​ CARRYING ​ ACCUMULATED ​ ​ ​ ​ (IN YEARS) ​ AMOUNT ​ AMORTIZATION ​ NET ​ AMOUNT ​ AMORTIZATION ​ NET Acquired software 10.03 ​ $ 24,275 ​ $ 8,099 ​ $ 16,176 ​ $ 23,571 ​ $ 5,307 ​ $ 18,264 Capitalized software development costs 2.43 ​ 24,009 ​ 13,930 ​ 10,079 ​ 16,566 ​ 6,896 ​ 9,670 Non-compete agreements 2.17 ​ 1,353 ​ 1,145 ​ 208 ​ 1,318 ​ 977 ​ 341 Tradename 16.63 ​ 40,683 ​ 6,845 ​ 33,838 ​ 40,683 ​ 4,810 ​ 35,873 Customer relationships 11.63 ​ 433,297 ​ 97,153 ​ 336,144 ​ 431,785 ​ 67,935 ​ 363,850 Total ​ $ 523,617 ​ $ 127,172 ​ $ 396,445 ​ $ 513,923 ​ $ 85,925 ​ $ 427,998 ​ Amortization expense for intangible assets was $40,310, $38,964, and $34,595 for the years ended December 31, 2020, 2019, and 2018, respectively. Amortization expense of $2,896, $2,723, and $2,970 was recorded in cost of revenues for the years ended December 31, 2020, 2019, and 2018, respectively. The remaining amortization of $37,414, $36,241, and $31,625 was recorded in operating expenses for the years ended December 31, 2020, 2019, and 2018, respectively. Based on the current amount of intangibles subject to amortization, the estimated annual amortization expense for each of the succeeding five years and thereafter is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CAPITALIZED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SOFTWARE ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACQUIRED ​ DEVELOPMENT ​ NON-COMPETE ​ ​ ​ ​ CUSTOMER ​ ​ ​ ​ SOFTWARE COSTS AGREEMENTS TRADENAMES RELATIONSHIPS TOTAL 2021 $ 2,564 ​ $ 4,869 ​ $ 106 ​ $ 2,034 ​ $ 28,917 ​ $ 38,490 2022 ​ ​ 2,391 ​ ​ 3,440 ​ ​ 80 ​ ​ 2,034 ​ ​ 28,904 ​ ​ 36,849 2023 ​ ​ 2,202 ​ ​ 1,770 ​ ​ 22 ​ ​ 2,034 ​ ​ 28,904 ​ ​ 34,932 2024 ​ ​ 1,819 ​ ​ — ​ ​ — ​ ​ 2,034 ​ ​ 28,904 ​ ​ 32,757 2025 ​ ​ 1,665 ​ ​ — ​ ​ — ​ ​ 2,034 ​ ​ 28,904 ​ ​ 32,603 Thereafter ​ ​ 5,535 ​ ​ — ​ ​ — ​ ​ 23,668 ​ ​ 191,611 ​ ​ 220,814 Total ​ $ 16,176 ​ $ 10,079 ​ $ 208 ​ $ 33,838 ​ $ 336,144 ​ $ 396,445 ​ Goodwill The Company has not recognized any impairment charges for the years ended December 31, 2020, 2019, and 2018. A reconciliation of the change in the carrying value of goodwill is as follows: ​ ​ ​ ​ ​ Balance, December 31, 2018 $ 514,274 Foreign currency translation ​ 722 Balance, December 31, 2019 ​ ​ 514,996 ISB acquisition ​ ​ 685 Foreign currency translation ​ 2,911 Balance, December 31, 2020 ​ $ 518,592 ​ ​ 100 Table of Contents 9. Accrued Expenses Accrued expenses consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ 2020 2019 Accrued compensation $ 24,941 ​ $ 18,476 Accrued severance 143 ​ 762 Product distributor fees 149 ​ 102 Legal and professional accruals 2,779 ​ 2,461 Local sales and VAT taxes 58 ​ 51 Interest payable 39 ​ 3,871 Income taxes payable 854 ​ — Deferred rent 919 ​ 1,066 Contingent earn-out ​ ​ 230 ​ ​ — Other 617 ​ 247 Total accrued expenses $ 30,729 ​ $ 27,036 ​ ​ 10. Long-Term Debt and Revolving Line of Credit Effective August 14, 2017, the Company entered into a credit agreement with lenders for a $250,000 term loan (“Credit Agreement”). The Credit Agreement is a syndicated arrangement with various lenders providing the financing. The $250,000 term loan is due to mature on August 14, 2024. The Company also entered into a $20,000 revolving line of credit with lenders with a sub-commitment for issuance of letters of credit of $10,000. As of December 31, 2020 and 2019, available borrowings under the $20,000 revolving line of credit are reduced by a $120 standby letter of credit issued to a landlord in lieu of a security deposit. This agreement is collateralized by substantially all U.S. assets and stock pledges for the non-U.S. subsidiaries and contain various financial and nonfinancial covenants. The Company and lenders entered into a restated and amended loan agreement on January 25, 2018 where an additional tranche of $25,000 was added to the Credit Agreement with respect to the loan. The amortization schedule of the new tranche was made coterminous with the rest of the agreement. There were no other changes to the terms of the agreement. The Company and lenders entered into a second restated and amended loan agreement on April 3, 2018 where an additional tranche of $40,000 was added to the Credit Agreement with respect to the loan. The amortization schedule of the new tranche was made coterminous with the rest of the agreement. There were no other changes to the terms of the agreement. The Company was in compliance with all covenants as of December 31, 2020 and 2019. Borrowings under the Credit Agreement are subject to a variable interest rate at LIBOR plus a margin. The applicable margins are based on achieving certain levels of compliance with financial covenants. The effective interest rate was 4.48% and 5.89% for the years ended December 31, 2020 and 2019, respectively, for the Credit Agreement. As discussed previously, the Company entered into interest rate swap agreements that fixed the interest rate. Interest paid on the Credit Agreement with respect to the term loan amounted to $13,960, $18,520, and $17,827 for the years ended December 31, 2020, 2019, and 2018, respectively. Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $32 and $47 at December 31, 2020 and 2019, respectively,and is included in accrued expenses. Interest paid on the Credit Agreement with respect to the revolving line of credit amounted to $457, $174, and $419 for the years ended December 31, 2020, 2019, and 2018, respectively. There was no accrued interest payable on the revolving line of credit as of December 31, 2020 and 2019. 101 Table of Contents Effective August 14, 2017, the Company entered into an unsecured credit agreement with another lender for a $100,000 term loan (“Loan Agreement”). The loan bears interest at 8.25% which is payable in semi-annual installments on January and July 15 through August 14, 2025, at which time all outstanding principal and interest are due. Under the Loan Agreement, the Company could voluntarily repay outstanding loans without premium or penalty. On July 15, 2020, the Company made a $20,000 prepayment on the loan, which reduced the amount outstanding to $80,000. On December 28, 2020, the Company repaid the $80,000 aggregate principal amount owed under the Loan Agreement, including $3,000 of accrued interest using a portion of the proceeds from the IPO. The Company's obligations under the Loan Agreement were discharged on that date. Interest paid on the loan amounted to $11,449, $8,365, and $7,654 for the years ended December 31, 2020, 2019, and 2018, respectively. Accrued interest payable on the loan amounting to $0 and $3,896 at December 31, 2020 and 2019, respectively, is included in accrued expenses. Long-term debt consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ ​ 2020 2019 Term loans ​ $ 304,099 ​ $ 408,170 Revolving line of credit ​ — ​ — Less: debt issuance costs ​ (5,319) ​ (6,839) Total ​ 298,780 ​ 401,331 Current portion of long-term debt ​ (4,680) ​ (4,210) Long-term debt, net of current portion and debt issuance costs ​ $ 294,100 ​ $ 397,121 ​ The principal amount of long-term debt outstanding as of December 31, 2020, matures in the following years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2022 2023 2024 TOTAL Maturities ​ $ 4,680 ​ $ 3,153 ​ $ 3,153 ​ $ 293,113 ​ $ 304,099 ​ The variable interest term loan agreement dated August 14, 2017 requires the Company to make an annual mandatory prepayment as it relates to the Company’s Excess Cash Flow calculation. For the year ended December 31, 2020, the Company was required to make a mandatory prepayment on the term loan of approximately $1,527 on or before April 30, 2021. For the year ended December 31, 2019, the Company was required to make a mandatory repayment on the term loan of approximately $1,057 on or before April 29, 2020. The prepayment is included in the current portion of long-term debt on the Consolidated Balance Sheets. The fair values of the Company’s variable interest term loan and revolving line of credit are not significantly different than their carrying value because the interest rates on these instruments are subject to change with market interest rates. ​ 11. Employee Benefit Plan The Company established a defined contribution 401(k) plan covering all U.S. employees who are at least 21 years of age. Employees may contribute to the plan up to 50% of their compensation, which may be further limited by law. In addition, employees who reached the age of 50 during the calendar years 2020, 2019, and 2018 are eligible to make an additional catch up contribution of 6.0%, subject to income limitations. The Company matches employee contributions for a percentage of the employee’s deferral, limited to the first 6% of each employee’s compensation. The Company also operates a Group Personal Pension plan covering all U.K. employees. Employees are auto-enrolled in the plan who are at least 22 years of age and paid more than £10 a year, up to the State Pension Age. However, all employees who are between the ages of 16 and 75 can elect to join the plan. Employees may contribute to their personal pension account and then convert that account into income at retirement. The Company contributes an additional 8% of salary for those employees who have registered for the plan. In addition to the U.S. and U.K. pension plans, the Company also maintains immaterial defined pension plans in several other countries. 102 Table of Contents Total contributions made by the Company were $3,342, $2,864, and $2,304 for the years ended December 31, 2020, 2019, and 2018 respectively. ​ 12. Commitments and Contingencies Leases The Company leases certain office facilities and equipment under non-cancelable operating and capital leases with remaining terms from one to eight years. The gross amounts of assets under capital leases were $1,501 and $663 at December 31, 2020 and 2019, respectively. The total accumulated amortization associated with equipment under capital leases was approximately $946 and $659 at December 31, 2020 and 2019, respectively. The related amortization expense is included in depreciation expense. Rent expense under the operating leases was $6,534, $6,377, and $5,587 for the years ended December 31, 2020, 2019, and 2018, respectively. Non-cancelable future minimum lease commitments as of December 31, 2020 are: ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING CAPITAL ​ ​ LEASES ​ LEASES Year ending December 31, ​ ​ 2021 ​ $ 6,023 ​ $ 304 2022 ​ 4,698 ​ 304 2023 ​ 3,191 ​ 25 2024 ​ 2,559 ​ — 2025 ​ 2,065 ​ — Thereafter ​ 2,372 ​ — Non-cancelable future minimum lease payments ​ 20,908 ​ 633 Less amount representing interest ​ — ​ (40) Net non-cancelable future minimum lease payments ​ $ 20,908 ​ $ 593 ​ ​ 13. Equity-Based Compensation Class B Plan The Company’s management, through the Company’s affiliation with its shareholder and former parent, EQT, participated in a 2017 Class B Profits Interest Unit Incentive Plan (the “Class B Plan”), whereby EQT was authorized to issue a total of 6,366,891 Profit Interest Units (“Class B Units”), representing the right to share a portion of the value appreciation in EQT. The majority of the employee grant agreements for the Class B Units were comprised of 50% time-based vesting units (“Time-based Units”) and 50% performance-based vesting units (“Performance-based Units”). The Time-based Units generally vested over a five-year period; The Performance-based Units would vest if EQT achieved specified levels of return on investment at the time of i) a change in control, ii) a reduction in holdings of the Company by EQT to 10% or less following an IPO or iii) certain distributions to EQT. There were also certain grant agreements for the Class B Units that were entirely comprised of Time-based Units. Upon vesting, the holder of Class B Units received a right to a fractional portion of the profits and distributions of the parent in excess of a “participation threshold” determined in accordance with the EQT limited partnership agreement. In addition to the performance conditions above, the Chief Executive Officer’s (“CEO”) performance-based Class B Units also vested if the aggregate value attributable to an IPO equaled or exceeded an amount equivalent to the return on investment performance targets. The Class B Units were in a secondary position to the Class A units in EQT, in that in any event in which the EQT equity was valued and paid out, holders of the Class B Units would only be paid if an amount at least equal to the applicable participation threshold was first allocated to all of the outstanding classes of units under EQT’s limited 103 Table of Contents partnership agreement. In addition, EQT had the right, but not the obligation, to repurchase units at fair value upon certain events, such as a termination of employment. During the years ended December 31, 2020, 2019 and 2018, EQT repurchased 87,930, 241,601 and 100,000 Class B Units at their intrinsic value of $1,079, $703 and $1,100 respectively. These repurchases were funded through dividends paid by the Company to EQT. These Class B Units do not have a maximum contractual life, and as such, these Class B Units do not expire. The fair value of the Time-based Units that vested solely upon continued employment was measured at the grant date and was recognized as cost over the employee’s requisite service period, which was generally 5 years. The expense related to the vesting of the Time-based Units was recorded on the Company’s books because the Company directly benefited from the services provided by Class B Unit holders. The grant date fair values were determined based on the pricing models and valuation assumptions noted in the following table, shown at their weighted-average values: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, ​ 2020 2019 2018 Pricing model Monte Carlo Monte Carlo ​ Black-Scholes ​ Expected dividend yield ​ 0.0 % 0.0 % 0.0 % Risk-free interest rate (1) 0.3 % 1.6 % 2.2 % Expected stock price volatility (2) 59 % 55 % 50 % Expected exercise term (in years) (3) 2.3 2.0 ​ 6.7 ​ (1) Based on the U.S. Treasury constant maturity interest rate whose term is consistent with the expected exercise term of our incentive units (2) In projecting expected stock price volatility, we consider the historical volatility of the stock prices of comparable public companies. (3) The Company estimates the expected life of incentive units based upon the timing of a potential liquidity event. A summary of the Class B Units activity for the period is presented below (dollar amounts are not in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED-AVERAGE ​ ​ ​ ​ ​ ​ GRANT DATE ​ WEIGHTED-AVERAGE ​ ​ ​ ​ FAIR VALUE ​ EXERCISE PRICE PER ​ ​ UNITS ​ PER UNIT ​ UNIT Outstanding, as of December 31, 2019 5,436,299 ​ $ 3.53 ​ $ 11.43 Granted 1,357,408 ​ 7.39 ​ 26.96 Exercised (87,930) ​ 3.55 ​ 10.20 Forfeited (377,626) ​ 3.63 ​ 10.31 Exchanged ​ (6,328,151) ​ ​ 4.37 ​ ​ — Outstanding, December 31, 2020 — ​ — ​ — ​ Outstanding units represent the total of vested Class B Units and those expected to vest, including Time-based Units for which the requisite service period has not yet been rendered. Of those Class B Units that were vested and exercisable at December 31, 2019, the weighted-average distribution threshold was $10.16. The weighted-average grant date fair value per unit was $3.53 and $3.30 as of December 31, 2019 and 2018, respectively. The aggregate intrinsic value of Class B Units outstanding, vested and exercisable at December 31, 2019 and 2018 was $38,440 and $5,499, respectively. There were no Class B Units outstanding as of December 31, 2020. The total fair value of Class B Units vested and exercisable during 2019 and 2018 was $1,872 and $1,509, respectively. Equity-based compensation expense related to the Time-based Units was $2,776, $1,691, and $1,711 for the years ended December 31, 2020, 2019, and 2018, respectively. The Performance-based Units were not probable of vesting prior to the exchange of Class B Units for common shares, as described below; as such, no expense was recorded for these Units prior to the IPO. As of December 31, 2020, there were no unrecognized compensation costs related to the Units as they had been exchanged for restricted stock as discussed below. 104 Table of Contents Exchange Effective as of December 10, 2020 (the “Exchange Date”), all vested Class B Units were exchanged by EQT for shares of common stock of the Company held by EQT, and unvested Class B Units were exchanged for shares of restricted common stock of the Company. On the Exchange Date, holders of unvested Time-based and Performance-based Units elected to either (1) exchange their unvested Class B Units with shares of restricted common stock of the Company that maintained the same vesting conditions (both time-based and performance-based) of such unvested Class B Units or (2) exchange their unvested Class B Units (both Time-based and Performance-based Units) with shares of restricted common stock of the Company that would be subject only to the same time-vesting conditions of such unvested Time-based Units, based on the original grant date. 53 holders of Class B Units elected the latter option. The CEO elected for the former option, based on the fact that his Performance-based Units vested upon the consummation of the offering. The number of shares of common stock exchanged by EQT for vested Class B Units and number of shares of restricted common stock exchanged by EQT for unvested Class B Units were based on their deemed value as of the date of the offering divided by the estimated per share offering price. The deemed value of Class B Units considered the overall implied value of the Company based on the offering price and considering their economic rights pursuant to the contractual waterfall and related distribution thresholds. ​ Based on the IPO price of $23.00 per share, the Company issued 5,941,693 shares of restricted common stock to holders of unvested Class B Units in exchange for such unvested Class B Units and holders of vested Class B Units received an aggregate of 4,211,598 shares of common stock in exchange for vested Class B Units. Modification accounting was not required for the time-based vesting Class B Units for which the vesting conditions, classification and fair market value did not change as a result of the shares of restricted common stock that replaced them. The original grant date fair value will continue to be recognized on a straight-line basis. Modification accounting was required for the performance-based vesting Class B Units that were exchanged for time-based vesting restricted common stock, given the vesting conditions were changed. Such performance-vesting Class B Units that were improbable of vesting were remeasured based on the modification date fair value of the shares of restricted common stock replacing such Class B Units. The total fair value of the restricted stock was $83,260. Because the service inception date preceded the grant date of the replacement awards, a catch up-adjustment of $56,487 was recorded at the modification date, based on the portion of the requisite service period that had elapsed since the original grant date for each tranche of the award. Considering the original awards contained performance conditions necessary to vest, the accelerated attribution approach was applied. The accelerated attribution approach results in cost being allocated to each of the tranches of the awards and recognized ratably over each tranche as if they were separate awards. Separately, upon completion of the offering, $3,912 of compensation cost was recognized related to our Chief Executive Officer’s 853,001 performance-based Class B Units that automatically vested upon the IPO of the Company and were exchanged for 1,561,950 common shares of the Company. 105 Table of Contents Restricted Stock As detailed above, unvested Class B Units were exchanged for restricted stock of the Company. Share based compensation for the restricted stock exchanged for the time-based Class B Units is recognized on a straight-line basis over the requisite service period of the award, which is generally 5 years. Share-based compensation for the restricted stock exchanged for the performance-based Class B Units is recognized using the accelerated attribution approach. A summary of the restricted stock is shown below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED- ​ ​ ​ ​ AVERAGE ​ ​ ​ ​ GRANT DATE ​ SHARES FAIR VALUE Non-vested restricted stock as of December 31, 2019 ​ — ​ $ — Exchanged ​ 5,941,693 ​ 23.00 Granted ​ — ​ ​ — Vested ​ — ​ — Forfeited ​ — ​ — Non-vested restricted stock as of December 31, 2020 ​ 5,941,693 ​ $ 23.00 ​ The Company was not authorized and did not issue any restricted stock in 2018 or 2019. Equity-based compensation expense related to the restricted stock exchanged for performance-based Class B Units was $57,421 for the year ended December 31, 2020. At December 31, 2020, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $25,838, which is expected to be recognized over a weighted-average period of 29 months. Equity-based compensation expense related to the restricted stock exchanged for time-based Class B Units was $167 for the year ended December 31, 2020. At December 31, 2020, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $9,599, which is expected to be recognized over a weighted-average period of 43 months. 2020 Incentive Plan In order to align our equity compensation program with public company practices, the Company’s Board of Directors adopted and stockholders approved the 2020 Incentive Plan. The 2020 Incentive Plan allows for grants of non-qualified stock options, incentive stock options, restricted stock, and restricted stock units (RSUs) to employees, directors and officers, and consultants or advisors of the Company. The 2020 Incentive Plan allows for 20,000,000 shares (the “plan share reserve”) of common stock to be issued. No more than the number of shares of common stock equal to the plan share reserve may be issued in the aggregate pursuant to the exercise of incentive stock options. The maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year, may not exceed $1,000,000 in total value, except for certain awards made to a non-executive chair of our board of directors. The plan share reserve will be increased on the first day of each fiscal year beginning with the 2021 fiscal year and ending after the tenth anniversary of the effective date in an amount equal to the lesser of (i) the positive difference, if any, between (x) 4.0% of the outstanding common stock on the last day of the immediately preceding fiscal year and (y) the plan share reserve on the last day of the immediately preceding fiscal year and (ii) a lower number of shares of our common stock as determined by our board of directors. Restricted Stock Units Restricted stock units (RSUs) represent the right to receive shares of the Company’s common stock at a specified date in the future. In December 2020, the Company granted 30,228 RSUs under the 2020 Incentive Plan that vest over a six-month period. The fair value of the RSUs is based on the fair value of the underlying shares on the date of grant. 106 Table of Contents A summary of the Company’s RSU activity is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED- ​ ​ ​ ​ AVERAGE ​ ​ ​ ​ GRANT DATE ​ UNITS FAIR VALUE Non-vested RSUs as of December 31, 2019 — ​ $ — Granted 30,228 ​ 23.00 Vested — ​ — Forfeited (176) ​ 23.00 Non-vested RSUs as of December 31, 2020 30,052 ​ $ 23.00 ​ Equity-based compensation expense related to the RSUs was $81 for the year ended December 31, 2020. At December 31, 2020, the total unrecognized equity-based compensation expense related to outstanding RSUs was $611, which is expected to be recognized over a weighted-average period of 5 months. ​ 2020 Employee Stock Purchase Plan ​ On December 10, 2020, stockholders approved the 2020 Employee Stock Purchase Plan (the “Employee Stock Purchase Plan”). Under the Employee Stock Purchase Plan, employees, and those of the Company’s subsidiaries, may purchase shares of common stock, during pre-specified offering periods. Named executive officers will be eligible to participate in the Employee Stock Purchase Plan on the same terms and conditions as all other participating employees. The maximum number of shares authorized for sale under the Employee Stock Purchase Plan is 1,700,000 shares. Generally, all employees and those of the Company’s subsidiaries will be eligible to participate in the Employee Stock Purchase Plan, except for employees who own 5% or more of the combined voting power or value of all issued and outstanding stock. Employees may contribute through payroll deductions of 1% to 15% of such employees’ base compensation on each payroll date that falls within an offering period. Participants may not acquire rights to purchase more than $25 of common stock under the Employee Stock Purchase Plan for any calendar year. Common stock will be available for purchase for up to 27 months, with an expected period of six months, beginning in 2021. Shares will be purchased at a discounted per-share purchase price equal to 85% of the per-share closing price of the Company’s common stock on the last day of the applicable offering period. As of December 31, 2020, no shares of common stock have been purchased under the Employee Stock Purchase Plan and no offering has been made to eligible employees under the Plan. ​ Equity-based compensation expense The following table summarizes the components of total equity-based compensation expense included in the Consolidated Statements of Operations and Comprehensive Loss for each period presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, ​ 2020 2019 2018 Cost of revenues ​ $ 8,805 ​ $ 156 ​ $ 138 Sales and marketing ​ 7,390 ​ 110 ​ 95 Research and development ​ 7,133 ​ 121 ​ 121 General and administrative expenses ​ 41,179 ​ 1,304 ​ 1,357 Total ​ $ 64,507 ​ $ 1,691 ​ $ 1,711 ​ ​ 107 Table of Contents 14. 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 has determined that its chief executive officer (“CEO”) is its CODM. The Company manages its operations as a single segment for the purpose of assessing and making operating decisions. The Company’s 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 consolidated financial statements. The following table summarizes revenue by geographic area: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, ​ 2020 2019 2018 Revenue (1) : ​ ​ ​ United States ​ $ 181,049 ​ $ 152,368 ​ $ 116,765 EMEA ​ 42,844 ​ 40,299 ​ 34,259 Others ​ 19,637 ​ 15,844 ​ 12,695 Total ​ $ 243,530 ​ $ 208,511 ​ $ 163,719 (1) Revenue is attributable to the countries based on the location of the customer The following table summarizes property, plant and equipment, net by geographic area as of December 31, 2020 and 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ 2020 2019 Property, plant and equipment, net: ​ ​ United States ​ $ 2,669 ​ $ 2,825 EMEA ​ 817 ​ 1,243 Others ​ 386 ​ 555 Total ​ $ 3,872 ​ $ 4,623 ​ ​ ​ ​ 15. Income Taxes The components of loss before income taxes were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, ​ 2020 2019 ​ 2018 Domestic ​ $ (55,355) ​ $ (12,995) ​ $ (35,318) Foreign ​ 5,174 ​ ​ 3,844 ​ 2,757 Total ​ $ (50,181) ​ $ (9,151) ​ $ (32,561) ​ 108 Table of Contents The components of income tax expense (benefit) were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, ​ 2020 ​ 2019 2018 Current tax expense (benefit) ​ ​ ​ ​ ​ Federal ​ $ 326 ​ $ 483 ​ $ (300) State and local ​ 1,659 ​ ​ 1,692 ​ 312 Foreign ​ 4,634 ​ ​ 4,303 ​ 4,233 Total current ​ 6,619 ​ ​ 6,478 ​ 4,245 Deferred tax expense (benefit) ​ ​ ​ ​ ​ Federal ​ (3,620) ​ ​ 3,137 ​ (3,207) State and local ​ 276 ​ ​ (5,431) ​ (603) Foreign ​ (4,059) ​ ​ (4,409) ​ 262 Total deferred ​ (7,403) ​ ​ (6,703) ​ (3,548) Total (benefit) provision ​ $ (784) ​ $ (225) ​ $ 697 ​ The effective income tax rate was 1.56%, 2.46%, and (2.14%) for the years ended December 31, 2020, 2019 and 2018, respectively. The primary reconciling items between the statutory income tax rate of 21% and the effective income tax rate were as a result of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ ​ 2020 2019 ​ 2018 Tax at U.S. federal statutory rate ​ $ (10,538) 21.00 % $ (1,919) ​ 21.00 % $ (6,833) 21.00 % State taxes, net of federal benefit ​ 1,125 (2.24) ​ ​ (3,852) ​ 42.14 ​ (357) 1.10 ​ Foreign rate differential ​ 2,296 (4.58) ​ ​ 1,654 ​ (18.09) ​ 5,170 (15.89) ​ Permanent items ​ (139) 0.28 ​ ​ (177) ​ 1.93 ​ 457 (1.42) ​ Equity compensation ​ ​ 13,562 ​ (27.03) ​ ​ 412 ​ (4.51) ​ ​ 359 ​ (1.10) ​ GILTI inclusion ​ ​ 932 ​ (1.86) ​ ​ 570 ​ (6.24) ​ ​ 479 ​ (1.47) ​ Tax credits ​ (7,618) 15.18 ​ ​ (4,264) ​ 46.65 ​ (2,625) 8.07 ​ Rate change ​ ​ 2,076 ​ (4.14) ​ ​ (2,922) ​ 31.97 ​ ​ — ​ 0.00 ​ Other adjustments ​ 1,223 (2.43) ​ ​ 3,736 ​ (40.87) ​ 549 (1.68) ​ Return to provision adjustments ​ (103) 0.21 ​ ​ (139) ​ 1.52 ​ — 0.00 ​ Valuation allowance ​ (3,600) 7.17 ​ ​ 6,676 ​ (73.04) ​ 3,498 (10.75) ​ Effective tax rate ​ $ (784) 1.56 % $ (225) ​ 2.46 % $ 697 (2.14) % ​ A portion of the Company’s income was attributable to Madeira, Portugal, which qualified for special tax programs authorized by the European Union. For the period of 2008 through 2011, the Company was subject to Madeira's income tax rate of 0%, for 2012 an income tax rate of 4% applied, and for the period of 2013 through 2020 an income tax rate of 5% applied. 109 Table of Contents The tax effects of temporary differences that gave rise to deferred tax assets and liabilities are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ DECEMBER 31, ​ 2020 2019 Deferred tax assets ​ ​ Accounts receivable ​ $ 29 ​ $ 23 Accrued compensation ​ 4,222 ​ 2,868 Accrued expenses ​ 137 ​ 810 Net operating loss carryforwards ​ 5,229 ​ 5,807 R&D credit carryforward ​ 7,054 ​ 4,005 Foreign tax credits ​ 12,485 ​ 8,513 Interest rate hedge ​ 925 ​ 520 Other assets ​ 115 ​ 242 Interest expense ​ 869 ​ 5,406 Total gross deferred tax asset ​ 31,065 ​ 28,194 Less: Valuation allowance ​ (16,715) ​ (20,546) Net deferred tax asset ​ 14,350 ​ 7,648 Deferred tax liabilities ​ ​ Property, equipment, and other long-lived assets ​ (359) ​ (307) Goodwill and intangible assets ​ (83,935) ​ (85,664) Prepaid expenses ​ (1,724) ​ (786) Deferred revenue ​ (1,482) ​ (2,218) Total gross deferred tax liability ​ (87,500) ​ (88,975) Net deferred tax liability ​ $ (73,150) ​ $ (81,327) ​ The net change in the total valuation allowance resulted in a decrease of $3,831 in 2020 compared to an increase of $7,439 in 2019. The valuation allowance was determined separately for each jurisdiction. A U.S. valuation allowance was required against the foreign tax credit carryforward. At the foreign subsidiaries, the valuation allowance was primarily related to foreign net operating losses that, in the judgment of management, are not more likely than not to be realized. The Company released the valuation allowance against certain U.S. carryforwards and foreign tax credits, as management deemed such attributes more likely than not to be realized. In assessing the realizability of deferred tax assets, management considered whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible and carryforward attributes can be utilized. Management considered the reversal of deferred tax liabilities in making this assessment. Management believes it is more likely than not that the Company will realize the benefits of the deferred tax assets, net of the existing valuation allowance, at December 31, 2020. At December 31, 2020, the Company has net operating loss carryforwards for federal income tax purposes of approximately $3,350, majority of which will expire if unused in years 2024 through 2036. The Company has net operating loss carryforwards for state income tax purposes of approximately $3,021, which will expire if unused in years 2029 through 2038. The Company has foreign net operating loss carryforwards of $16,115 which will expire if unused starting in 2022. The Company has $2,268 of federal research and development credits that will expire if unused in years 2024 through 2040, $570 of California research and development credits with indefinite carryover period, and $2,504 of foreign research and development credits that will expire if unused in years 2029 through 2030. The Company has foreign tax credits of $12,485 that will expire if unused in years 2025 through 2030, and also Canadian investment tax credits of $2,722 which will expire if unused in years 2030 through 2039. 110 Table of Contents The Company has net operating losses and tax credits that are subject to limitation under Internal Revenue Code Section 382 and Section 383 due to changes in ownership. The Company has analyzed the realizability of these tax attributes carried forward and have recorded deferred tax assets for the attributes that meet the more-likely-than-not realizability threshold. Foreign undistributed earnings were considered permanently invested, therefore no provision for US income taxes was accrued as of December 31, 2020 and 2019, with the exception of the withholding tax liability of $168 on the potential repatriation from Certara Canada Corporation. The Company assessed its uncertain tax positions and determined that a liability of $897 and $690 was required to be recorded for uncertain tax positions as of December 31, 2020 and 2019, respectively. Uncertain tax positions relate primarily to federal and state R&D credits. The Company's policy is to recognize interest and penalties as a component of the provision for income taxes. For December 31, 2020 and 2019, there were no interest or penalties recorded. The Company does not anticipate any significant changes to its uncertain tax positions during the next twelve months. A reconciliation of the beginning and ending balance of unrecognized tax benefits is as follows: ​ ​ ​ ​ ​ Balance at December 31, 2018 $ 592 Additions for tax positions related to the current year ​ 68 Additions for tax positions of prior years ​ 30 Balance at December 31, 2019 ​ 690 Additions for tax positions related to the current year ​ 198 Additions for tax positions of prior years ​ 9 Balance at December 31, 2020 ​ $ 897 ​ The uncertain tax positions, exclusive of interest and penalties, were $897 and $690 as of December 31, 2020 and December 31, 2019, respectively, which also represents potential tax benefits that if recognized, would impact the effective tax rate. The audits of the federal income tax returns for the tax year ended December 31, 2016 and December 31, 2017 are closed. The Internal Revenue Service can audit the NOLs generated in respective years in the years that the NOLs are utilized. State income tax returns are generally subject to examination for a period of three to six years after the filing of the respective return. The state impact of any federal changes remains subject to examination by various states for a period of up to one year after formal notification to the states. Foreign income tax returns are generally subject to examination based on the tax laws of the respective jurisdictions. The Company is subject to tax on Global Intangible Low-Taxed Income (GILTI) and has elected to account for GILTI as a current period expense. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted and implemented certain tax legislation, among which temporarily increases the interest expense limitation pursuant to Section 163(j), allows for acceleration of refunds of alternative minimum tax (AMT) credits, and retroactively clarified the immediate recovery of qualified improvement property costs under 100% expensing rather than 39 year recovery period for assets placed in service after November 27, 2017. The Company was able to deduct all of its' interest expense incurred during 2020, as a result of the CARES Act. ​ 111 Table of Contents 16. Net Loss per Share Basic and diluted loss per share is computed by dividing net loss by the weighted-average shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ YEAR ENDED DECEMBER 31, ​ ​ 2020 2019 2018 Numerator: ​ ​ ​ ​ Net loss ​ ​ $ (49,397) ​ $ (8,926) ​ $ (33,258) Denominator: ​ ​ ​ ​ Weighted average common shares outstanding, basic and diluted ​ ​ 133,247,212 ​ 132,407,786 ​ 132,407,786 Net loss per common share, basic and diluted ​ ​ $ (0.37) ​ $ (0.07) ​ $ (0.25) ​ The Company had 5,941,693 restricted share awards that were excluded from the calculation of diluted EPS during the year ended December 31, 2020 that could potentially dilute EPS in the future due to being in a net loss position. During the years ended December 31, 2019 and 2018, there were no potentially dilutive securities outstanding. ​ ​ ​ 112 Table of Contents Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure. None. ​