What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-06 · 144 added, 108 removed, 382 unchanged (40% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30,

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

30 unchanged sentences

Stockholders' equity:

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

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

Common shares, $ 0.01 par value, 600,000,000 shares authorized, 157,353,191 and 152,979,479 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Accumulated deficit

Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss

Total stockholders’ equity

5 unchanged sentences

(LOSS) INCOME

THREE MONTHS ENDED JUNE 30,

SIX MONTHS ENDED JUNE 30,

THREE MONTHS ENDED SEPTEMBER 30,

NINE MONTHS ENDED SEPTEMBER 30,

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

7 unchanged sentences

Total operating expenses

Income from operations

(Loss) income from operations

Other income (expenses):

3 unchanged sentences

(Loss) income before income taxes

Provision for income taxes

(Benefit) provision of income taxes

Net (loss) income

1 unchanged sentence

Foreign currency translation adjustment

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

Change in fair value of interest rate swap, net of tax $( 16 ), $ 97 , $ 145 , and $( 488 )

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

Total other comprehensive income (loss)

Total other comprehensive (loss) income

Comprehensive (loss) income

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PAID-IN CAPITAL

Balance as of March 31, 2021

Balance as of June 30, 2021

Equity compensation

Shares issued for employee share-based compensation awards

Stock offerings

Restricted stock forfeiture

Restricted stock unit shares withheld for employee taxes

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 September 30, 2021

Balance as of December 31, 2020

Equity compensation

Stock offerings

Shares issued for employee share-based compensation awards

Restricted stock forfeiture

Restricted stock unit shares withheld for employee taxes

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

1 unchanged sentence

Foreign currency translation adjustment

Balance as of June 30, 2021

Balance as of September 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

Balance as of June 30, 2020

Equity compensation

Repurchase of Parent Class B units

Capital contribution

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

Foreign currency translation adjustment

Balance as of June 30, 2020

Balance as of September 30, 2020

Balance as of December 31, 2019

1 unchanged sentence

Repurchase of Parent Class B units

Capital contribution

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

Foreign currency translation adjustment

Balance as of June 30, 2020

Balance as of September 30, 2020

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

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30,

NINE MONTHS ENDED SEPTEMBER 30,

(IN THOUSANDS)

5 unchanged sentences

Amortization of debt issuance costs

Recovery of doubtful accounts

Provision for doubtful accounts

Loss on retirement of assets

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Accounts receivable

Prepaid expenses and other current assets

Accounts payable and accrued expenses

Deferred revenue

Prepaid expenses and other assets

Accounts payable and other liabilities

Deferred revenues

Net cash provided by operating activities

5 unchanged sentences

Cash flows from financing activities:

Capital contributions

Unit repurchase

Net proceeds from public offering of common stock

Proceeds from borrowings on long-term debt

Payments on long-term debt and capital lease obligations

Payments on financing component of interest rate swap

Proceeds from line of credit

Payment of taxes on shares withheld for employee taxes

Payment of debt issuance costs

Proceeds from borrowings from affiliate

Payments on line of credit

Net cash provided by (used in) financing activities

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

Net increase in cash and cash equivalents, and restricted cash

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

5 unchanged sentences

Liabilities assumed in connection with business acquisition

Property and equipment controlled through new capital leases

Capital lease

Deferred offering costs, accrued but not paid

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

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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.

The adoption dates discussed below reflect this election.

Unaudited Interim Financial Statements

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.

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.

As of June 30, 2021, the last business day of the Company’s second fiscal quarter, the Company had a public float above the threshold to be deemed to be a large accelerated filer.

In addition, the Company will have been a public company for at least 12 months subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act at December 31, 2021.

Therefore, the Company expects to cease to be an Emerging Growth Company as of December 31, 2021.

As a result, as of December 31, 2021 the Company will no longer qualify for the extended tranition period for adoption of new or revised accounting standards discussed above, will be subject to shortened filing timelines, and required to include an attestation of the Company’s internal control over financial reporting by its independent auditors in its Annual Report on Form 10-K.

(b) Unaudited Interim Financial Statements

The accompanying condensed consolidated balance sheet as of September 30, 2021, the condensed consolidated statements of operations and comprehensive (loss) income for the three and nine months ended September 30, 2021 and 2020, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2021 and 2020, the condensed consolidated statements of cash flows for the nine months ended September 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.

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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 accompanying condensed consolidated financial statements should be read in conjunction with the Company’s 2020 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.

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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 consolidated financial statements.

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

Accounting Pronouncements Not Yet Adopted

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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.

Upon losing EGC status as of December 31, 2021, the Company will adopt this guidance and is currently evaluating the impact of this ASU on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments — Credit Losses (Topic 326):

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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.

Upon losing EGC status as of December 31, 2021, the Company will adopt this guidance 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):

4 unchanged sentences

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.

Principles of Consolidation

(e) Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries.

1 unchanged sentence

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 $ 1,838 , $ 1,909 , and $ 3,684 at June 30, 2021, December 31, 2020, and June 30, 2020, respectively.

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

Restricted cash represents cash that is reserved to support a financing program.

The restricted cash balance was $ 1,108 , $ 1,909 , and $ 1,812 at September 30, 2021, December 31, 2020, and September 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:

SEPTEMBER 30,

Cash and cash equivalents

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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:

In the second quarter of 2021, the Company determined that the hedge has not been highly effective from April 2018 and did 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, “Accounting Changes and Error Corrections”, both quantitively and qualitatively, and concluded that the error correction was immaterial to all periods.

The Company reclassified $ 3,033 of accumulated comprehensive loss to interest expense in the condensed consolidated statements of comprehensive (loss) income in the second quarter of 2021.

Changes in the fair value of the interest rate swap recognized in interest expense excluding the relcassfication discussed previously for the nine months ended September 30, 2021 amounted to $ 638 .

On August 31, 2021, the Company entered an amendment to the interest rate swap agreement.

The amended interest rate swap agreement does not in its entirety meet the definition of a derivative instrument because of its off market fixed rate at inception and is deemed to be a hybrid instrument with a financing component and an embedded at-the-market derivative.

Such embedded derivative is bifurcated and accounted for separately.

At inception, the financing component of $ 1,966 was recorded at amortized cost.

The embedded at-the-market derivative was designated and qualified as a cash flow hedge of interest rate risk for a notional amount of $ 230,000 that fixed the interest rate at 1.2757 %, non-inclusive of the fixed credit spread through May 31, 2022.

The fair value of the embedded at-the-market derivative is recognized in the condensed consolidated balance sheets and the changes in the fair value of the embedded at-the-market derivative is recognized in other comprehensive loss.

At September 30, 2021, the financing component is recorded in current portion of interest rate swap liability in the amount of $ 1,750 .

Due to an other-than-insignificant financing element on a portion of such hybrid instrument, the cash flows associated with this hybrid instrument are classified as financing activities in the condensed consolidated statements of cash flows.

At September 30, 2021, the Company recorded the fair value of the embedded at-the-market derivative in current portion of interest rate swap liability in the amount of $ 63 .

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 September 30, 2021:

Interest rate swap liability

1 unchanged sentence

Interest rate swap liability

The net amount of deferred 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.

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The revenue related to software training and software implementation performance will be recognized at the completion of the service.

The Company’s professional services offerings primarily include consulting services.

The service contracts are either time-and-materials, fixed fee or prepaid.

The revenues are generally recognized over time as the services are performed.

Contract Balances

7 unchanged sentences

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 .

The unsatisfied performance obligations as of September 30, 2021 were approximately $ 93,837 .

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 JUNE 30,

SIX MONTHS ENDED JUNE 30,

THREE MONTHS ENDED SEPTEMBER 30,

NINE MONTHS ENDED SEPTEMBER 30,

Software licenses transferred at a point in time

2 unchanged sentences

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.

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 outstanding during the reporting period, without consideration for potentially dilutive securities.

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.

Diluted earnings per share is computed by dividing the earnings attributable to stockholders by the weighted-average number of shares and potentially dilutive securities outstanding during the period.

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.

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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

Public Offerings

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.

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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 Institutional Investor that holds registration rights will also be entitled to customary “piggyback” registration rights.

EQT is entitled to an unlimited number of “demand” registrations, subject to certain

Every Institutional Investor that holds registration rights is 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.

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

The Company incurred costs of $ 1,100 , recorded in general and administrative expenses, in relation to the secondary public offering.

On September 13, 2021, the Company completed another public offering, at a public offering price of $ 31.00 per share, pursuant to which the Company sold 4,500,000 shares of its common stock, and certain selling stockholders sold 18,500,000 shares of the Company’s common stock, including an additional 3,000,000 shares of common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares.

The Company received net proceeds of $ 134,096 , after deducting underwriters' discounts and commissions.

In addition, $ 745 of legal, accounting and other offering costs incurred in connection with the sale of the Company's common stock in the public offering, were capitalized and offset against the proceeds received.

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 June 30, 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 September 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.

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.

As of September 30, 2021, there was one customer that accounted for more than 10% of the Company’s accounts receivable and no customer accounted for more than 10% of the Company’s revenues during the three and nine months presented for 2021.

No customers accounted for more than 10% of the Company’s accounts receivable or revenues as of December 31, 2020 or during the periods presented.

On March 2, 2021, the Company completed a transaction which qualified as a business combination.

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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.

The condensed consolidated financial statements include the operating results of each acquisition from the date of acquisition.

Pro forma results of operations and the revenue and net income subsequent to the acquisition date for the acquisitions completed nine months ended September 30, 2021 have not been presented because the effects of the acquisitions, individually and in the aggregate, were not material to our financial results.

Long-Term Debt and Revolving Line of Credit

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There were no other changes to the terms of the Credit Agreement.

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 Company and lenders entered into a third amended and restated 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.

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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.

As of September 30, 2021, available borrowings under the revolving lines of credits were $ 100,000 .

Available borrowings under the revolving lines of credits of $ 20,000 at December 31, 2020 were 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 September 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 3.73 % and 4.48 % for the six months ended June 30, 2021 and the year ended December 31, 2020 for the Credit Agreement, respectively.

The effective interest rate was 3.68 % and 4.48 % for the nine months ended September 30, 2021 and the year ended December 31, 2020 for the term loan debt, 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.

Interest incurred on the Credit Agreement with respect to the term loan amounted to $ 2,773 , $ 8,444 , $ 2,974 , and $ 11,047 for the three and nine months ended September 30, 2021 and 2020, respectively.

Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 30 and $ 32 at September 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 $ 93 and $ 457 for the nine months ended September 30, 2021 and 2020, respectively.

There was less than $ 1 accrued interest payable and no accrued interest payable on the revolving line of credit at September 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”).

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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 six months ended June 30, 2021 and 2020, respectively.

Interest paid on the loan amounted to $ 0 and $ 8,388 for the nine months ended September 30, 2021 and 2020, respectively.

Long-term debt consists of the following:

SEPTEMBER 30,

debt issuance costs

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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 June 30, 2021 matures in the following years:

The principal amount of long-term debt outstanding as of September 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.

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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.

For the 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.

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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 $ 1,504 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 $ 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:

The gross amounts of assets under capital leases were $ 1,498 and $ 1,501 at September 30, 2021 and December 31, 2020, respectively.

The total accumulated amortization associated with equipment under capital leases was $ 1,158 and $ 946 at September 30, 2021 and December 31, 2020, respectively.

amortization expense is included in depreciation expense.

Rent expense under the operating leases was $ 4,796 and $ 4,929 for the nine months ended September 30, 2021 and 2020, respectively.

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

Remainder of 2021

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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.

As of September 30, 2020, 6,328,153 Class B Units were issued and outstanding to Company employees.

The Company granted 1,357,404 units and recorded actual forfeitures of 377,626 units during the nine months ended September 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 $ 567 and $ 1,105 for the three and six months ended June 30, 2020.

The Company recorded compensation expense related to the Class B Units of $ 1,181 and $ 2,286 for the three and nine months ended September 30, 2020.

Restricted Stock

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Non-vested restricted stock as of December 31, 2020

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 .

( 1,724,979 )

Non-vested restricted stock as of September 30, 2021

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

Equity-based compensation expense related to the restricted stock exchanged for Performance-based Class B Units was $ 3,120 and $ 10,144 for the three and nine months ended September 30, 2021, respectively.

At September 30, 2021, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $ 14,072 , which is expected to be recognized over a weighted-average period of 26 months .

Equity-based compensation expense related to the restricted stock exchanged for Time-based Class B Units were $ 767 and $ 2,298 for the three and nine months ended September 30, 2021 respectively.

At September 30, 2021, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $ 7,230 , which is expected to be recognized over a weighted-average period of 35.2 months.

Restricted Stock Units

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Non-vested RSUs as of December 31, 2020

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 .

Non-vested RSUs as of September 30, 2021

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

Equity-based compensation expense related to the RSUs was $ 2,362 and $ 4,898 for three and nine months ended September 30, 2021, respectively.

At September 30, 2021, the total unrecognized equity-based compensation expense related to outstanding RSUs was $ 22,559 , which is expected to be recognized over a weighted-average period of 29.3 months.

Performance Stock Units

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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.

The following table presents a summary of activity on the PSUs for the period ended September 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 .

Non-vested PSUs as of September 30, 2021

Equity-based compensation expense related to the PSUs was $ 1,916 and $ 3,506 for the three and nine months ended September 30, 2021.

At September 30, 2021, the total unrecognized equity-based compensation expense related to outstanding PSUs was $ 6,982 , which is expected to be recognized over a weighted-average period of 19.5 months.

The following table summarizes the components of total equity-based compensation expense included in the condensed consolidated statements of operations and comprehensive (loss) income for each period presented:

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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 and six months ended June 30, 2021 and 2020:

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

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SEPTEMBER 30,

Revenue (1) :

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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 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

The Company's global ETR for the three and nine months ended September 30, 2021 and 2020 were 48 %, ( 11 )%, 22 %, and 48 %, respectively, including discrete tax items.

The current year decrease 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 overall increase in pre-tax loss.

Earnings 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.

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:

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Net income (loss) available to common shareholders

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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.

On October 1, 2021, the Company completed the acquisition of Pinnacle 21, LLC (“Pinnacle”), a company that develops advanced software for standards-based data management for regulatory submissions, for total consideration of $ 250,000 cash and 2,239,717 shares of restricted common stock of the Company.

We will complete the initial accounting for the acquisition of Pinnacle 21, LLC, including the allocation of purchase consideration, in the fourth quarter of 2021.

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