What changed in this filing

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Item 1. Financial Statements

2021-08-06 compared with 2021-05-07 · 178 added, 107 removed, 312 unchanged (48% of the section changed)

14 unchanged sentences

Intangible assets, net of accumulated amortization of $ 147,343 and $ 127,172 , respectively

Other long-term assets

Deferred income taxes

18 unchanged sentences

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

Preferred shares, $ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Common shares, $ 0.01 par value, 600,000,000 shares authorized, 152,864,921 and 152,979,479 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss)

Total stockholders’ equity

3 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

THREE MONTHS ENDED MARCH 31,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

(LOSS) INCOME

THREE MONTHS ENDED JUNE 30,

SIX MONTHS ENDED JUNE 30,

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

11 unchanged sentences

Miscellaneous, net

Total other income (expenses)

Income before income taxes

Total other (expenses)

(Loss) income before income taxes

Provision for income taxes

Other comprehensive loss:

Net (loss) income

Other comprehensive (loss) income:

Foreign currency translation adjustment

Change in fair value of interest rate swap, net of tax of $ 161 and $( 680 )

Total other comprehensive loss

Comprehensive loss

Net income per share attributable to common stockholders:

Change in fair value from interest rate swap, net of tax $ 0 , $ 94 , $ 161 , and $( 585 )

Reclassification of fair value of interest rate swap, net of tax of $( 765 ), 0 , $( 765 ), and 0

Total other comprehensive income (loss)

Comprehensive (loss) income

Net (loss) income per share attributable to common stockholders:

Weighted average common shares outstanding:

8 unchanged sentences

PAID-IN CAPITAL

Balance as of March 31, 2021

Equity compensation

Shares issued for employee share-based compensation awards

Restricted stock forfeiture

Change in fair value from interest rate swap, net of tax

Reclassification of fair value of interest rate swap, net of tax

Foreign currency translation adjustment

Balance as of June 30, 2021

Balance as of December 31, 2020

Equity compensation

Change in fair value of interest rate swap, net of tax

Shares issued for employee share-based compensation awards

Restricted stock forfeiture

Change in fair value from interest rate swap, net of tax

Reclassification of fair value of interest rate swap, net of tax

Foreign currency translation adjustment

Balance as of March 31, 2020

Balance as of June 30, 2021

The accompanying notes are an integral part of the condensed consolidated financial statements

7 unchanged sentences

PAID-IN CAPITAL

Balance as of March 31, 2020

Equity compensation

Repurchase of Parent Class B units

Change in fair value of interest rate swap, net of tax

Foreign currency translation adjustment

Balance as of June 30, 2020

Balance as of December 31, 2019

Equity compensation

Repurchase of Parent Class B units

Change in fair value of interest rate swap, net of tax

Foreign currency translation adjustment

Balance as of March 31, 2021

Balance as of June 30, 2020

The accompanying notes are an integral part of the condensed consolidated financial statements

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31,

SIX MONTHS ENDED JUNE 30,

(IN THOUSANDS)

Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization of property and equipment

2 unchanged sentences

Recovery of doubtful accounts

Loss on retirement of assets

Equity-based compensation expense

Unrealized loss on interest rate swap

Deferred income taxes

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Cash flows from financing activities:

Unit repurchase

Proceeds from borrowings on long-term debt

Payments on long-term debt and capital lease obligations

Proceeds from line of credit

Payment of debt issuance costs

Net cash provided by (used in) financing activities

Effect of foreign exchange rate changes on cash, cash equivalents, and restricted cash

Net increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash, at beginning of period

Cash, cash equivalents, and restricted cash, at end of period

Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash

Net (decrease) increase in cash and cash equivalents, and restricted cash

Cash and cash equivalents, and restricted cash, at beginning of period

Cash and cash equivalents, and restricted cash, at end of period

Supplemental disclosures of cash flow information

1 unchanged sentence

Cash paid for taxes

Supplemental schedule of noncash investing and financing activities

Supplemental schedule of non-cash investing and financing activities

Liabilities assumed in connection with business acquisition

4 unchanged sentences

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS, EXCEPT PER SHARE PERCENTAGES AND SHARE AND UNIT DATA)

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Description of Business

11 unchanged sentences

Basis of Presentation and Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S.

We prepared our condensed consolidated financial statements in accordance with U.S.

generally accepted accounting principles (“U.S.

We have eliminated intercompany accounts and transactions.

We have also reclassified certain prior year amounts to conform to the current period presentation, which did not have a material impact on our consolidated financial condition or results of operations.

The preparation of condensed consolidated financial statements in conformity with 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.

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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.

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.

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.

The accompanying condensed consolidated balance sheet as of June 30, 2021, the condensed consolidated statements of operations and comprehensive income (loss) for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2021 and 2020, the condensed consolidated statements of cash flows for the six months ended June 30, 2021 and 2020, and the related interim disclosures are unaudited.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S.

Certain information and note disclosures normally included in annual financial statements prepared in accordance with U.S.

GAAP have been condensed or omitted pursuant to those guidance.

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.

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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.

In January 2021, FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848),” which clarifies that certain optional expedients and exceptions in Accounting Standards Codification ("ASC") Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

Guidance in these ASUs is optional and is effective as of March 12, 2020 through December 31, 2022.

The Company adopted the ASUs 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.

The adoption of the ASUs 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”.

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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.

The adoption of this guidance did not have an impact on the Company's consolidated financial statements.

Accounting Pronouncements Not Yet Adopted

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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.

A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value.

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.

4 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

Cash, Cash Equivalents, and Restricted Cash

Cash equivalents include highly liquid investments with maturities of three months or less from the date purchased.

Cash and Cash Equivalents, and Restricted Cash

Cash equivalents include highly liquid investments with maturities of six 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.

The restricted cash balance was $ 1,838 , $ 1,909 , and $ 3,684 at June 30, 2021, December 31, 2020, and June 30, 2020, respectively.

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:

3 unchanged sentences

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:

The Company has an interest rate swap agreement that was 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 swap in the amount of $ 2,390 and $ 3,671 , as a derivative liability as of June 30, 2021 and December 31, 2020, respectively, in its condensed consolidated balance sheets.

During the second quarter, the Company determined that the hedge has not been highly effective from April 2018 and does not qualify for hedge accounting.

As a result, The Company performed an analysis of the materiality of the out of period error correction in accordance with ASC 250, both quantitively and qualitatively, and concluded that the error correction was immaterial to all periods.

The Company reclassified a $ 3,033 of accumulated comprehensive loss to interest expense in the consolidated statements of comprehensive income (loss) in the current quarter.

The fair value of the interest rate swap is recognized in the condensed consolidated balance sheets and the changes in the fair value of the derivatives are recognized in the condensed consolidated statement of operations as interest expense.

The income recorded in the condensed consolidated statement of operations as offset to interest expense for the activity during the current quarter in interest expense was $ 643 .

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 June 30, 2021:

Interest rate swap liability

1 unchanged sentence

Interest rate swap liability

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.

Revenue Recognition ASC 606

3 unchanged sentences

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.

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.

10 unchanged sentences

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 .

The portion of deferred revenue that will be recognized within 12 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 June 30, 2021 were approximately $ 90,826 .

Sources and Timing of Revenue

1 unchanged sentence

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,

THREE MONTHS ENDED JUNE 30,

SIX MONTHS ENDED JUNE 30,

Software licenses transferred at a point in time

3 unchanged sentences

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.

The dilutive effect of potentially dilutive securities is excluded from basic earnings per share 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.

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.

Since the first quarter of 2020, the COVID-19 pandemic has posed a significant threat to public health as well as the global and U.S.

The continued spread of variants of COVID-19 may adversely impact our business, financial condition or results of operations as a result of increased costs, negative impacts to our workforce, or a sustained economic downturn.

Although the economy has rebounded in many areas, the outlook for containing the outbreak is still highly uncertain.

Given its ongoing and dynamic nature, it is difficult to predict the full impact of the COVID-19 outbreak on the global and US economy and our business.

Initial Public Offering

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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.

It contains provisions that entitle EQT and the other Institutional Investors 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”).

Every Institutional Investor 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 Institutional Investors relating to such registrations and indemnify them against certain liabilities which may arise under the 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;

3 unchanged sentences

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.

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 the Company’s 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.

The Company incurred costs of $ 1,100 , recorded in general and administrative expenses, in relation to the secondary public offering for the six months ended June 30, 2021.

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 invests available cash in bank deposits, investment-grade securities, and short-term interest-producing investments, including government obligations and other

money market instruments.

At June 30, 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.

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.

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 June 30, 2021 and December 31, 2020, no customer accounted for more than 10% of the Company’s accounts receivable or revenues during the periods presented.

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.

Based on the Company’s preliminary purchase price allocation, approximately $ 1,200 , $ 100 and $ 1,100 of the purchase price was assigned to customer relationships, non-compete agreements and goodwill, respectively.

On June 7, 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 $ 7,400 and $ 4,700 of the purchase price was assigned to customer relationships and goodwill, respectively.

Long-Term Debt and Revolving Line of Credit

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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 Company and lenders entered into Amendment No.

1 to the Credit 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 Company and lenders entered into Amendment No.

2 to the Credit 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.

The Company and lenders entered into a third restated and amended loan agreement on June 17, 2021 (“Third Amendment”), which provides for, among other things, (i) the extension of the termination date applicable to the revolving credit commitments under the Credit Agreement to August 2025, (ii) the extension of the maturity date applicable to the term loans under the Credit Agreement to August 2026, and (iii) an increase of approximately $ 80,000 in commitments available under the revolving line of credit (resulting in an aggregate amount of commitments of $ 100,000 ).

The term loan under the Third Amendment has substantially the same terms as the existing term loans and revolving credit commitments.

The Credit 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.

As of June 30, 2021 and December 31, 2020, available borrowings under the modified and original revolving lines of credit of $ 100,000 and $ 20,000 are reduced by $ 120 standby letters of credit issued to a landlord in lieu of a security deposit in addition to any outstanding borrowings.

The Company was in compliance with all financial covenants as of June 30, 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.

The effective interest rate was 3.73 % and 4.48 % for the six months ended June 30, 2021 and the year ended December 31, 2020 for the Credit Agreement, respectively.

As discussed previously, the Company entered into interest rate swap agreements to mitigate the interest risk.

Interest incurred on the Credit Agreement with respect to the term loan amounted to $ 5,671 and $ 8,073 for the six months ended June 30, 2021 and 2020, respectively.

Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 30 and $ 32 at June 30, 2021 and December 31, 2020, respectively, and is included in accrued expenses.

Interest paid on the Credit Agreement with respect to the revolving line of credit was $ 0 and $ 232 for the six months ended June 30, 2021 and 2020, respectively.

There was no accrued interest payable on the revolving line of credit as of June 30, 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”).

2 unchanged sentences

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.

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 $ 0 and $ 4,217 for the three months ended March 31, 2021 and 2020, respectively.

Interest paid on the loan amounted to $ 0 and $ 4,217 for the six months ended June 30, 2021 and 2020, respectively.

Long-term debt consists of the following:

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Long-term debt, net of current portion and debt issuance costs

The principal amount of long-term debt outstanding as of March 31, 2021, matures in the following years:

The principal amount of long-term debt outstanding as of June 30, 2021 matures in the following years:

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 prepayment was included in the current portion of long-term debt on the condensed consolidated balance sheets.

For the amended credit agreement, the Company is required to make a quarterly principal payment of $ 755 on the term loan each quarter starting from the end of September 2021.

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.

1 unchanged sentence

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 gross amounts of assets under capital leases were $ 1,504 and $ 1,501 at June 30, 2021 and December 31, 2020, respectively.

The total accumulated amortization associated with equipment under capital leases was $ 1,094 and $ 946 at June 30, 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:

Rent expense under the operating leases was $ 3,221 and $ 3,281 for the six months ended June 30, 2021 and 2020, respectively.

Non-cancelable future minimum lease commitments as of June 30, 2021 are as follows:

Remainder of 2021

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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.

The Time-based Units generally vest 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.

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 the IPO equaled or exceeded an amount equivalent to the return on investment performance targets.

As of June 30, 2020, 5,508,785 Class B Units were issued and outstanding to Company employees.

The Company granted 156,332 units and recorded actual forfeitures of 76,745 units during the six months ended June 30, 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.

The Company recorded compensation expense related to the Class B Units of $ 567 and $ 1,105 for the three and six months ended June 30, 2020.

Restricted Stock

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Non-vested restricted stock as of December 31, 2020

Non-vested restricted stock as of March 31, 2021

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 .

Non-vested restricted stock as of June 30, 2021

The Company did no t authorize or issue any restricted stock during the six-month period ended June 30, 2021.

Equity-based compensation expense related to the restricted stock exchanged for Performance-based Class B Units was $ 2,983 and $ 7,025 for the three and six months ended June 30, 2021, respectively.

At June 30, 2021, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $ 18,116 , which is expected to be recognized over a weighted-average period of 27 months .

Equity-based compensation expense related to the restricted stock exchanged for Time-based Class B Units were $ 754 and $ 1,531 for the three and six months ended June 30, 2021, respectively.

At June 30, 2021, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $ 7,936 , which is expected to be recognized over a weighted-average period of 38 months .

Restricted Stock Units

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Non-vested RSUs as of December 31, 2020

Non-vested RSUs as of March 31, 2021

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,

Non-vested RSUs as of June 30, 2021

The number of RSUs vested includes 10,003 shares of common stock that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

Equity-based compensation expense related to the RSUs was $ 2,202 and $ 2,534 for three and six months ended June 30, 2021, respectively.

At June 30, 2021, the total unrecognized equity-based compensation expense related to outstanding RSUs was $ 23,027 , which is expected to be recognized over a weighted-average period of 32 months .

Performance Stock Units

Performance stock units (“PSUs”) are issued under the 2020 Incentive Plan and represent the right to receive shares of the Company’s common stock at a specified date in the future based on the satisfaction of various service conditions and the achievement of certain performance thresholds including year over year revenue growth and unlevered free cash flow growth.

Share-based compensation for the PSUs is only recognized to the extent a threshold is probable of being achieved and is recognized using the accelerated attribution approach.

The Company will continue to assess the probability of each condition being achieved at each reporting period to determine whether and when to recognize compensation cost.

The following table presents a summary of activity on the PSUs for the period ended June 30, 2021.

A summary of the Company’s PSU activity is as follows:

Non-vested PSUs as of December 31, 2020

Non-vested PSUs as of June 30, 2021

Equity-based compensation expense related to the PSUs was $ 1,591 for both the three and six months ended June 30, 2021.

At June 30, 2021, the total unrecognized equity-based compensation expense related to outstanding PSUs was $ 8,206 , which is expected to be recognized over a weighted-average period of 21 months .

THREE MONTHS ENDED JUNE 30,

SIX MONTHS ENDED JUNE 30,

Cost of revenues

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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,

The following table summarizes revenue by geographic area for the three and six months ended June 30, 2021 and 2020:

THREE MONTHS ENDED

SIX MONTHS ENDED

Revenue (1) :

4 unchanged sentences

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.

Earnings per Share

The Company's global ETR for the three and six months ended June 30, 2021 and 2020 were ( 103 )%, 1,131 %, 57 %, and 53 %, respectively, including discrete tax items.

The current year increase in the ETR was principally due to the combined effect of the discrete tax effect of certain prior period swap losses that are required to be excluded from the EAETR

calculation and the near break-even operating results, which resulted in a significant variation in the customary relationship between income tax expense and pre-tax book income.

Earnings (loss) per Share

Earnings per share is computed by dividing net income (loss) by the weighted-average common shares outstanding.

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted- average number of common shares outstanding during the period.

Diluted earnings per common share considers potentially dilutive securities outstanding during the period.

Basic and diluted earnings per share is computed by dividing net income by the weighted-average common shares outstanding:

THREE MONTHS ENDED MARCH 31,

THREE MONTHS ENDED JUNE 30,

SIX MONTHS ENDED JUNE 30,

Net income (loss) available to common shareholders

Basic weighted average common shares outstanding

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Diluted weighted average common shares outstanding

Earnings per share:

Earnings (loss) per share:

Subsequent Events

On August 2, 2021, Certara, Inc.

entered into a merger agreement (the “Merger Agreement”) with Pinnacle 21, LLC (“Pinnacle”), a company that develops advanced software for standards-based data management for regulatory submissions.

Pursuant to the Merger Agreement, a subsidiary of Certara will merge with Pinnacle, and the equity holders of Pinnacle will receive consideration of $ 250,000 cash and $ 60,000 worth of restricted common stock of Certara, Inc.

We expect to close the transaction following receipt of all necessary regulatory approvals, which we anticipate will occur early in the fourth quarter.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements