Certara, Inc. 10-Q

Item 1. Financial Statements CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ MARCH 31, ​ DECEMBER 31, (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) 2021 2020 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 272,988 ​ $ 271,382 Accounts receivable, net of allowance for doubtful accounts of $ 131 and $ 132 , respectively ​ 54,402 ​ 54,091 Restricted cash ​ 733 ​ 1,909 Prepaid expenses and other current assets ​ 19,438 ​ 19,202 Total current assets ​ 347,561 ​ 346,584 Other assets: ​ ​ Property and equipment, net ​ 3,505 ​ 3,872 Long-term deposits ​ 1,184 ​ 1,163 Goodwill ​ 519,226 ​ 518,592 Intangible assets, net of accumulated amortization of $ 137,193 and $ 127,172 , respectively ​ 388,225 ​ 396,445 Deferred income taxes ​ 2,923 ​ 2,744 Total assets ​ $ 1,262,624 ​ $ 1,269,400 Liabilities and stockholders’ equity ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 6,593 ​ $ 6,394 Accrued expenses ​ 19,415 ​ 30,729 Current portion of deferred revenue ​ 29,802 ​ 30,662 Current portion of interest rate swap liability ​ 2,603 ​ 2,605 Current portion of long-term debt ​ 4,680 ​ 4,680 Current portion of capital lease obligations ​ 279 ​ 275 Total current liabilities ​ 63,372 ​ 75,345 Long-term liabilities: ​ ​ Capital lease obligations, net of current portion ​ 246 ​ 318 Deferred revenue, net of current portion ​ 853 ​ 545 Deferred income taxes ​ 76,085 ​ 75,894 Long-term portion of interest rate swap liability ​ 430 ​ 1,066 Long-term debt, net of current portion and debt discount ​ 293,689 ​ 294,100 Other long-term liabilities ​ 682 ​ — Total liabilities ​ 435,357 ​ 447,268 Commitments and contingencies ​ ​ Stockholders' equity: ​ ​ Preferred shares, $ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively ​ ​ — ​ ​ — Common shares, $ 0.01 par value, 600,000,000 shares authorized, 152,979,479 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively ​ 1,529 ​ 1,529 Additional paid-in capital ​ 889,679 ​ 884,528 Accumulated deficit ​ ( 61,286 ) ​ ( 62,338 ) Accumulated other comprehensive loss ​ ( 2,655 ) ​ ( 1,587 ) Total stockholders’ equity ​ 827,267 ​ 822,132 Total liabilities and stockholders’ equity ​ $ 1,262,624 ​ $ 1,269,400 ​ The accompanying notes are an integral part of the condensed consolidated financial statements ​ 6 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED MARCH 31, (IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) 2021 2020 Revenues ​ $ 66,718 ​ $ 57,449 ​ Cost of revenues ​ 26,016 ​ 22,183 ​ Operating expenses: ​ ​ ​ ​ ​ Sales and marketing ​ 3,752 ​ 2,938 ​ Research and development ​ 4,706 ​ 2,875 ​ General and administrative ​ 16,562 ​ 11,541 ​ Intangible asset amortization ​ 9,456 ​ 9,359 ​ Depreciation and amortization expense ​ 602 ​ 553 ​ Total operating expenses ​ 35,078 ​ 27,266 ​ Income from operations ​ 5,624 ​ 8,000 ​ Other income (expenses): ​ ​ ​ ​ ​ Interest expense ​ ( 3,928 ) ​ ( 6,858 ) ​ Miscellaneous, net ​ ( 117 ) ​ 525 ​ Total other income (expenses) ​ ( 4,045 ) ​ ( 6,333 ) ​ Income before income taxes ​ 1,579 ​ 1,667 ​ Provision for income taxes ​ 527 ​ 621 ​ Net income ​ 1,052 ​ 1,046 ​ Other comprehensive loss: ​ ​ ​ ​ ​ Foreign currency translation adjustment ​ ( 1,545 ) ​ ( 3,332 ) ​ Change in fair value of interest rate swap, net of tax of $ 161 and $( 680 ) ​ 477 ​ ( 2,132 ) ​ Total other comprehensive loss ​ ( 1,068 ) ​ ( 5,464 ) ​ Comprehensive loss ​ $ ( 16 ) ​ $ ( 4,418 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per share attributable to common stockholders: ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 0.01 ​ $ 0.01 ​ Diluted ​ $ 0.01 ​ $ 0.01 ​ Weighted average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 147,160,084 ​ ​ 132,407,786 ​ Diluted ​ 152,084,745 ​ 132,407,786 ​ ​ The accompanying notes are an integral part of the condensed consolidated financial statements ​ 7 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACCUMULATED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER ​ TOTAL (IN THOUSANDS, ​ COMMON STOCK ​ ADDITIONAL ​ ACCUMULATED ​ COMPREHENSIVE ​ STOCKHOLDERS' EXCEPT SHARE DATA) SHARES AMOUNT PAID-IN CAPITAL DEFICIT LOSS EQUITY Balance as of December 31, 2019 132,407,786 ​ $ 1,324 ​ $ 509,162 ​ $ ( 12,941 ) ​ $ ( 5,497 ) ​ $ 492,048 Equity compensation — ​ — ​ 538 ​ — ​ — ​ 538 Change in fair value of interest rate swap, net of tax — ​ — ​ — ​ — ​ ( 2,132 ) ​ ( 2,132 ) Net income — ​ — ​ — ​ 1,046 ​ — ​ 1,046 Foreign currency translation adjustment — ​ — ​ — ​ — ​ ( 3,332 ) ​ ( 3,332 ) Balance as of March 31, 2020 132,407,786 ​ $ 1,324 ​ $ 509,700 ​ $ ( 11,895 ) ​ $ ( 10,961 ) ​ $ 488,168 ​ The accompanying notes are an integral part of the condensed consolidated financial statements ​ 8 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ACCUMULATED ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER ​ TOTAL (IN THOUSANDS, ​ COMMON STOCK ​ ADDITIONAL ​ ACCUMULATED ​ COMPREHENSIVE ​ STOCKHOLDERS' EXCEPT SHARE DATA) SHARES AMOUNT PAID-IN CAPITAL DEFICIT LOSS EQUITY Balance as of December 31, 2020 152,979,479 ​ $ 1,529 ​ $ 884,528 ​ $ ( 62,338 ) ​ $ ( 1,587 ) ​ $ 822,132 Equity compensation — ​ — ​ 5,151 ​ — ​ — ​ 5,151 Change in fair value of interest rate swap, net of tax — ​ — ​ — ​ — ​ 477 ​ 477 Net income — ​ — ​ — ​ 1,052 ​ — ​ 1,052 Foreign currency translation adjustment — ​ — ​ — ​ — ​ ( 1,545 ) ​ ( 1,545 ) Balance as of March 31, 2021 152,979,479 ​ $ 1,529 ​ $ 889,679 ​ $ ( 61,286 ) ​ $ ( 2,655 ) ​ $ 827,267 ​ The accompanying notes are an integral part of the condensed consolidated financial statements ​ 9 Table of Contents CERTARA, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED MARCH 31, (IN THOUSANDS) 2021 2020 Cash flows from operating activities: ​ ​ Net income ​ $ 1,052 ​ $ 1,046 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ Depreciation and amortization of property and equipment ​ 602 ​ 553 Amortization of intangible assets ​ 10,102 ​ 9,930 Amortization of debt issuance costs ​ 378 ​ 382 Recovery of doubtful accounts ​ ( 1 ) ​ ( 17 ) Equity-based compensation expense ​ 5,151 ​ 538 Deferred income taxes ​ 12 ​ 1,084 Changes in assets and liabilities, net of acquisitions: ​ ​ ​ ​ Accounts receivable ​ ( 2 ) ​ 49 Prepaid expenses and other current assets ​ ( 673 ) ​ ( 2,025 ) Accounts payable and accrued expenses ​ ( 11,180 ) ​ ( 1,274 ) Deferred revenue ​ ( 507 ) ​ ( 1,443 ) Net cash provided by operating activities ​ 4,934 ​ 8,823 Cash flows from investing activities: ​ ​ Capital expenditures ​ ( 222 ) ​ ( 459 ) Capitalized development costs ​ ( 1,192 ) ​ ( 1,875 ) Business acquisitions, net of cash acquired ​ ( 2,044 ) ​ ( 675 ) Net cash used in investing activities ​ ( 3,458 ) ​ ( 3,009 ) Cash flows from financing activities: ​ ​ Payments on long-term debt and capital lease obligations ​ ( 855 ) ​ ( 849 ) Proceeds from line of credit ​ — ​ 19,880 Net cash provided by (used in) financing activities ​ ( 855 ) ​ 19,031 Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash ​ ( 191 ) ​ ( 251 ) Net increase in cash, cash equivalents, and restricted cash ​ 430 ​ 24,594 Cash, cash equivalents, and restricted cash, at beginning of period ​ 273,291 ​ 29,762 Cash, cash equivalents, and restricted cash, at end of period ​ $ 273,721 ​ $ 54,356 Supplemental disclosures of cash flow information ​ ​ Cash paid for interest ​ $ 3,552 ​ $ 8,987 Cash paid for taxes ​ $ 1,644 ​ $ 1,763 Supplemental schedule of noncash investing and financing activities ​ ​ ​ ​ Liabilities assumed in connection with business acquisition ​ $ 921 ​ $ — Property and equipment controlled through new capital leases ​ $ — ​ $ 831 ​ The accompanying notes are an integral part of the condensed consolidated financial statements ​ 10 Table of Contents CERTARA, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT PER SHARE PERCENTAGES AND SHARE AND UNIT DATA) (UNAUDITED) 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, preclinical 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 software and services for regulatory science and submissions and market access are underpinned by technologies such as 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, Australia, and China. ​ 2. Summary of Significant Accounting Policies There have been no changes other than what is discussed herein to the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2 to the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2020. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes as of and for the year ended December 31, 2020. (a) Basis of Presentation and Use of Estimates The preparation of condensed 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 condensed 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 swap agreements, 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 condensed 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 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 condensed consolidated 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. 11 Table of Contents (b) Unaudited Interim Financial Statements The accompanying condensed consolidated balance sheet as of March 31, 2021, the condensed consolidated statements of operations and comprehensive loss for the three months ended March 31, 2021 and 2020, the condensed consolidated statements of stockholders’ equity for the three months ended March 31, 2021 and 2020, the condensed consolidated statements of cash flows for the three months ended March 31, 2021 and 2020, and the related interim disclosures are unaudited. The accompanying unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and note disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to those rules and regulations, although the Company believes that the disclosures made are adequate to make the information not misleading. These unaudited condensed consolidated financial statements include all adjustments necessary, consisting of only normal recurring adjustments, to fairly state the financial position and the results of the Company’s operations and cash flows for interim periods in accordance with U.S. GAAP. Interim period results are not necessarily indicative of results of operations or cash flows for a full year or any subsequent interim period. The accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2020 and 2019 audited consolidated financial statements and notes thereto. The information as of December 31, 2020 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the 2020 Annual Report on Form 10-K. (c) 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 consistent with past presentation. The impact of adopting ASU 2020-04 did not have a material impact to the Company’s condensed 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. ASU 2018-15 is effective for calendar-year public business entities in 2020. For all other calendar-year entities, it is effective for annual periods beginning in 2021 and interim periods in 2022. Early adoption is permitted. The Company has adopted ASU 2018-15 during the year beginning January 1, 2020. The adoption of ASU 2018-15 did not materially impact the condensed 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 amendments in this update are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company has adopted ASU 2018-13 during the year beginning January 1, 2020. The adoption of ASU 2018-13 did not materially impact the condensed consolidated financial statements. 12 Table of Contents In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes”, which removes certain exceptions related to the approach for calculating income taxes in an interim period and to the recognition of deferred tax liabilities for outside basis differences for certain investments. The Company adopted this guidance on January 1, 2021 on a prospective basis. The adoption of this guidance did not have an impact on the Company’s financial statements. (d) Accounting Pronouncements Not Yet Adopted 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, the 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 condensed 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 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 condensed 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 condensed consolidated financial statements. (e) Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. (f) Cash, Cash Equivalents, and Restricted Cash Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased. Restricted cash represents cash that is used as collateral to support an unsecured Company credit card program through a major bank and a grant funding. The restricted cash balance was $ 733 , $ 1,909 , and $ 506 at March 31, 2021, December 31, 2020, and March 31, 2020, respectively. 13 Table of Contents The following table provides a reconciliation of cash and cash equivalents and restricted cash to the amounts presented in the condensed consolidated statements of cash flows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ MARCH 31, ​ DECEMBER 31, ​ MARCH 31, ​ 2021 2020 2020 Cash and cash equivalents ​ $ 272,988 ​ $ 271,382 ​ $ 53,850 Restricted cash, current ​ 733 ​ 1,909 ​ 506 Total cash and cash equivalents, and restricted cash ​ $ 273,721 ​ $ 273,291 ​ $ 54,356 ​ (g) Derivative Instruments The Company has an interest rate swap agreement that is 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 %, non-inclusive of the fixed credit spread through May 31, 2022. The Company recorded the fair value of its interest rate swaps in the amount of $ 3,033 and $ 3,671 , as a derivative liability as of March 31, 2021 and December 31, 2020, respectively, in its condensed consolidated balance sheets. The Company’s interest rate swaps qualify for hedge accounting. The fair value of the interest rate swaps is recognized in the condensed consolidated balance sheets and the changes in the fair value of the derivatives are recognized in other comprehensive loss. The following table sets forth the liability that is measured at fair value on a recurring basis by the levels in the fair value hierarchy at March 31, 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ LEVEL 1 LEVEL 2 LEVEL 3 TOTAL Liability ​ ​ ​ ​ Interest rate swap liability ​ $ — ​ $ 3,033 ​ $ — ​ $ 3,033 Total ​ $ — ​ $ 3,033 ​ $ — ​ $ 3,033 ​ The following table sets forth the liability that is measured at fair value on a recurring basis by the 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 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 earnings over the next twelve months is insignificant. (h) 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. 14 Table of Contents 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. 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) on the condensed 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 condensed 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. Invoice 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 condensed consolidated balance sheets. The unsatisfied performance obligations as of March 31, 2021 were approximately $ 83,218 . 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: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED MARCH 31, ​ ​ 2021 2020 Software licenses transferred at a point in time ​ $ 12,425 ​ $ 11,365 Software licenses transferred over time ​ 9,479 ​ ​ 8,896 Service revenues earned over time ​ 44,814 ​ ​ 37,188 Total ​ $ 66,718 ​ $ 57,449 ​ (i) Earnings per Share Basic earnings per common share is computed by dividing the net income that is attributable to common stockholders by the weighted-average number of common shares or common share equivalents outstanding during the reporting period, without consideration for potentially dilutive securities. The dilutive effect of common share equivalients is excluded from basic EPS and is included in the calculation of diluted earnings per share. Restricted stock and restricted stock units granted by the Company are treated as potential common shares outstanding in computing diluted earnings per share. Diluted earnings per share is computed by dividing the net income attributable to stockholders by the weighted-average number of shares and potentially dilutive securities outstanding during the period. The Company had potentially dilutive securities of 4,924,661 and 0 outstanding as of March 31, 2021 and 2020, respectively. 15 Table of Contents (j) COVID-19 In December 2019 and early 2020, the coronavirus known as COVID-19 was reported to have surfaced in China. The spread of this virus globally in early 2020 has caused business disruption domestically in the United States, the area in which the Company primarily operates. While the disruption is currently expected to be temporary, there is considerable uncertainty around the duration of this disruption. Therefore, while the Company expects that this matter may impact the Company’s financial condition, results of operations, or cash flows, the extent of the financial impact and duration cannot be reasonably estimated at this time. ​ 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 our former controlling shareholders, an affiliate of EQT AB (“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 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 and the other stockholder parties thereto to certain rights to have their securities registered by the Company under the Securities Act. EQT 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. On March 29, 2021, the Company completed an underwritten secondary public offering in which certain selling stockholders, including EQT, sold 10,000,000 shares of its common stock, including an additional 1,500,000 shares of common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares. The Company did no t offer any common stock in this transaction and did no t receive any proceeds from the sale of the shares of common stock by the selling stockholders. The Company incurred costs of $ 0.7 million, recorded in general and administrative expenses, in relation to the secondary public offering for the three months ended March 31, 2021. 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 March 31, 2021 and December 31, 2020, 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 16 Table of Contents 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 March 31, 2021 and December 31, 2020, no customer accounted for more than 10% of the Company’s accounts receivable or revenues during the periods presented. 5. Acquisition On March 2, 2021, the Company completed a transaction which qualified as a business combination. The business combination was not material to our condensed consolidated financial statements. Based on the Company’s preliminary purchase price allocation, approximately $ 1.2 million, $ 0.1 million and $ 1.1 million of the purchase price was assigned to customer relationships, non-compete agreements and goodwill, respectively. 6. 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 March 31, 2021 and December 31, 2020, 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 in addition to any outstanding borrowings. 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 term loan. The amortization schedule of the new tranche was made coterminous with the rest of the term loan. There were no other changes to the terms of the Credit 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 term loan. The amortization schedule of the new tranche was made coterminous with the rest of the term loan. There were no other changes to the terms of the Credit Agreement. The Company was in compliance with all financial covenants as of March 31, 2021 and December 31, 2020. 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 3.75 % and 4.48 % for the three months ended March 31, 2021 and year ended December 31, 2020, 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 $ 2,854 and $ 4,241 for the three months ended March 31, 2021 and 2020, respectively. Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 31 and $ 32 at March 31, 2021 and December 31, 2020, respectively, and is included in accrued expenses. There was no interest paid on the Credit Agreement with respect to the revolving line of credit for the three months ended March 31, 2021 and 2020. There was no accrued interest payable on the revolving line of credit as of March 31, 2021 and December 31, 2020. 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 15 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, 17 Table of Contents 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 $ 0 and $ 4,217 for the three months ended March 31, 2021 and 2020, respectively. Long-term debt consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ MARCH 31, ​ DECEMBER 31, ​ 2021 2020 Term loans ​ $ 303,310 ​ $ 304,099 Less: debt issuance costs ​ ( 4,941 ) ​ ( 5,319 ) Total ​ 298,369 ​ 298,780 Current portion of long-term debt ​ ( 4,680 ) ​ ( 4,680 ) Long-term debt, net of current portion and debt issuance costs ​ $ 293,689 ​ $ 294,100 ​ The principal amount of long-term debt outstanding as of March 31, 2021, matures in the following years: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 2022 2023 2024 TOTAL Maturities ​ $ 3,891 ​ $ 3,153 ​ $ 3,153 ​ $ 293,113 ​ $ 303,310 ​ The Credit Agreement 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. The prepayment is included in the current portion of long-term debt on the condensed 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. ​ 7. 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 $ 1,501 at March 31, 2021 and December 31, 2020, respectively. The total accumulated amortization associated with equipment under capital leases was $ 1,024 and $ 946 at March 31, 2021 and December 31, 2020, respectively. The related amortization expense is included in depreciation expense. Rent expense under the operating leases was $ 1,626 and $ 1,684 for the three months ended March 31, 2021 and 2020, respectively. Non-cancelable future minimum lease commitments as of March 31, 2021 are: ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING CAPITAL ​ ​ LEASES ​ LEASES Remainder of 2021 ​ $ 4,418 ​ $ 228 2022 ​ 4,768 ​ 304 2023 ​ 3,268 ​ 25 2024 ​ 2,612 ​ — 2025 ​ 2,069 ​ — Thereafter ​ 2,381 ​ — Non-cancelable future minimum lease payments ​ 19,516 ​ 557 Less amount representing interest ​ — ​ ( 32 ) Net non-cancelable future minimum lease payments ​ $ 19,516 ​ $ 525 Current portion of net non-cancelable future minimum lease payments ​ ​ ​ ​ ​ 279 Net long-term non-cancelable future minimum lease payments ​ ​ ​ ​ $ 246 ​ 18 Table of Contents ​ 8. Equity-Based Compensation Class B Incentive Units 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 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. As of March 31, 2020, 5,500,258 Class B Profits Interest Units (“Class B Units”) were issued and outstanding to the Company employees. The Company granted 127,908 units and recorded actual forfeitures of 63,954 during the three months ended March 31, 2020. 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 five 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 Company recorded compensation expense related to the Class B Units of $ 538 for the three months ended March 31, 2020. Restricted Stock Effective as of December 10, 2020, 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. 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. 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 five 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, 2020 ​ 5,941,693 ​ $ 23.00 Exchanged ​ ​ ​ ​ ​ Granted ​ — ​ ​ — Vested ​ 310,762 ​ 23.00 Forfeited ​ — ​ — 19 Table of Contents Non-vested restricted stock as of March 31, 2021 ​ 5,630,931 ​ $ 23.00 ​ The Company did not authorize or issue any restricted stock during the three month periods ended March 31, 2021 or 2020. Equity-based compensation expense related to the restricted stock exchanged for Performance-based Class B Units was $ 4,041 for the three months ended March 31, 2021. At March 31, 2021, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $ 21,797 which is expected to be recognized over a weighted-average period of 28 months . Equity-based compensation expense related to the restricted stock exchanged for Time-based Class B Units was $ 777 for the three months ended March 31, 2021. At March 31, 2021, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $ 8,823 , which is expected to be recognized over a weighted-average period of 40 months . 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. The fair value of the RSUs is based on the fair value of the underlying shares on the date of grant. 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, 2020 30,052 ​ $ 23.00 Granted — ​ — Vested — ​ — Forfeited ( 880 ) ​ 23.00 Non-vested RSUs as of March 31, 2021 29,172 ​ $ 23.00 ​ Equity-based compensation expense related to the RSUs was $ 333 for the three months ended March 31, 2021. At March 31, 2021, the total unrecognized equity-bsed compensation expense related to outstanding RSUs was $ 257 , which is expected to be recognized over aweighted-average period of two months . The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss for each period presented: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED MARCH 31, ​ 2021 2020 Cost of revenues ​ $ 840 ​ $ 39 Sales and marketing ​ 398 ​ 32 Research and development ​ 399 ​ 30 General and administrative expenses ​ 3,514 ​ 437 Total ​ $ 5,151 ​ $ 538 ​ ​ 9. 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. 20 Table of Contents The Company has determined that its chief executive officer is its CODM. The Company manages its operations as a single segment for the purposes 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 condensed consolidated financial statements. The following table summarizes revenue by geographic area for the three months ended March 31, 2021 and 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED MARCH 31, ​ 2021 2020 Revenue (1) : ​ ​ Americas ​ $ 46,574 ​ $ 43,094 EMEA ​ 14,226 ​ 10,860 Asia Pac ​ 5,918 ​ 3,495 Total ​ $ 66,718 ​ $ 57,449 (1) Revenue is attributable to the countries based on the location of the customer ​ 10. Income Taxes The Company generally records its interim tax provision based upon a projection of the Company's estimated annual effective tax rate ("EAETR"). This EAETR is applied to the year-to-date consolidated pre-tax income to determine the interim provisions for income taxes before discrete items. The effective tax rate ("ETR") each period is impacted by a number of factors, including the relative mix of domestic and international earnings, adjustments to the valuation allowances, and discrete items. The currently forecasted ETR may vary from the actual year-end due to the changes in these factors. The Company's global ETR for the three months ended March 31, 2021 and 2020 was 33 % and 37 %, respectively, including discrete tax items. The current year decrease in the ETR was principally due to the combined effect of the relative mix of domestic and international earnings and changes in valuation allowance. ​ 11. Earnings per Share Basic and diluted earnings per share is computed by dividing net income by the weighted-average common shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ THREE MONTHS ENDED MARCH 31, ​ ​ 2021 2020 Numerator: ​ ​ ​ Net income ​ ​ $ 1,052 ​ $ 1,046 Denominator: ​ ​ ​ ​ Basic weighted average common shares outstanding ​ ​ 147,160,084 ​ 132,407,786 Effects of dilutive securities ​ ​ ​ 4,924,661 ​ ​ — Diluted weighted average common shares outstanding ​ ​ ​ 152,084,745 ​ ​ 132,407,786 Earnings per share: ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ $ 0.01 ​ $ 0.01 Diluted ​ ​ $ 0.01 ​ $ 0.01 ​ ​ ​ ​ 21 Table of Contents