What changed in this filing

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Item 1. Financial Statements

2022-11-07 compared with 2022-08-09 · 141 added, 120 removed, 461 unchanged (36% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30,

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

25 unchanged sentences

Long-term debt, net of current portion and debt discount

Non-current finance lease liabilities

Other long-term liabilities

Total liabilities

1 unchanged sentence

Stockholders' equity:

Preferred shares, $ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively

Common shares, $ 0.01 par value, 600,000,000 shares authorized, 159,991,357 and 159,660,048 shares issued as of June 30, 2022 and December 31, 2021, respectively;

159,882,362 and 159,658,948 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

Preferred shares, $ 0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively

Common shares, $ 0.01 par value, 600,000,000 shares authorized, 159,921,814 and 159,660,048 shares issued as of September 30, 2022 and December 31, 2021, respectively;

159,781,270 and 159,658,948 shares outstanding as of September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive loss

Treasury stock at cost, 108,995 and 1,100 shares at June 30, 2022 and December 31, 2021, respectively

Treasury stock at cost, 140,544 and 1,100 shares at September 30, 2022 and December 31, 2021, respectively

Total stockholders’ equity

4 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

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

Income (loss) from operations

Other income (expenses):

2 unchanged sentences

Income (loss) before income taxes

Provision for income taxes

Provision for (benefit from) income taxes

Net income (loss)

3 unchanged sentences

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

Total other comprehensive income (loss)

Total other comprehensive loss

Comprehensive loss

7 unchanged sentences

COMPREHENSIVE

TREASURY STOCK

STOCKHOLDERS'

EXCEPT SHARE DATA)

Balance as of March 31, 2021

Balance as of June 30, 2021

Equity-based compensation expense

Common shares issued for employee share-based compensation

Common stock offerings

Restricted stock forfeiture

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

Restricted stock withheld for tax liability

Change in fair value from 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-based compensation expense

Common stock offerings

Common shares issued for employee share-based compensation

Restricted stock forfeiture

Restricted stock withheld for tax liability

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

4 unchanged sentences

COMPREHENSIVE

TREASURY STOCK

STOCKHOLDERS'

EXCEPT SHARE DATA)

Balance as of March 31, 2022

Balance as of June 30, 2022

Equity-based compensation expense

1 unchanged sentence

Common shares issued for employee share-based compensation

Restricted stock withheld for tax liability and in treasury

Restricted stock withheld for tax liability

Restricted stock forfeiture

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

Foreign currency translation adjustment, net of tax

Balance as of June 30, 2022

Balance as of September 30, 2022

Balance as of December 31, 2021

2 unchanged sentences

Common shares issued for employee share-based compensation

Restricted stock withheld for tax liability and in treasury

Restricted stock withheld for tax liability

Restricted stock forfeiture

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

Foreign currency translation adjustment, net of tax

Balance as of June 30, 2022

Balance as of September 30, 2022

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) provision for credit losses

Provision for credit losses

Loss on retirement of assets

16 unchanged sentences

Cash flows from financing activities:

Net proceeds from public offering of common stock

Proceeds from borrowings on long-term debt

3 unchanged sentences

Payment of taxes on shares withheld for employee taxes

Net cash used in financing activities

Net cash (used) provided by 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

13 unchanged sentences

and its wholly-owned subsidiaries (together, the “Company”) deliver software products and technology-driven 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-driven services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success.

The Company is a global leader in biosimulation.

The Company’s biosimulation software and technology-driven services help optimize, streamline, or even waive certain clinical trials to accelerate programs, reduce costs, and increase the probability of success.

The Company’s regulatory science and market access software and services are underpinned by technologies such as regulatory submissions software, natural language processing, and Bayesian analytics.

2 unchanged sentences

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 our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

These unaudited 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, 2021.

5 unchanged sentences

(b) Unaudited Interim Financial Statements

The accompanying condensed consolidated balance sheet as of June 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2022 and 2021, the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2022 and 2021, the condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021, and the related interim disclosures are unaudited.

The accompanying condensed consolidated balance sheet as of September 30, 2022, the condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2022 and 2021, the condensed consolidated statements of cash flows for the nine months ended September 30, 2022 and 2021, and the related interim disclosures are unaudited.

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

These unaudited condensed consolidated financial statements include all adjustments necessary 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.

Certain amounts reported in prior periods have been reclassified to conform with the current presentation.

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 2021 audited consolidated financial statements and notes thereto.

The information as of December 31, 2021 in the Company’s condensed consolidated balance sheet included herein is derived from the Company’s audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

Accounting Pronouncements Not Yet Adopted

11 unchanged sentences

Restricted cash represents cash that is reserved to provide for a Company credit card program and unexpended restricted grant funds.

The restricted cash balance was $ 3,495 and $ 827 at June 30, 2022 and December 31, 2021, respectively.

The restricted cash balance was $ 3,274 and $ 827 at September 30, 2022 and December 31, 2021, 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

4 unchanged sentences

The swap agreement has a notional amount of $ 230,000 , a fixed rate of 2.8 % and a termination date of August 31, 2025.

At June 30, 2022, the interest swap had a fair value of $ 1,391 and the amount recognized in the other comprehensive income was $ 1,391 .

During the three and six months ended June 30, 2022, the amounts recognized on the condensed consolidated statements of operations and comprehensive loss related to interest on derivative were $ 0 and $ 345 .

At September 30, 2022, the interest swap had a fair value of $ 8,385 and the fair value recognized in accumulated other comprehensive income was $ 8,385 .

During the three and nine months ended September 30, 2022, the amounts recognized as interest expense on the condensed consolidated statements of operations and comprehensive loss on the derivative were $ 355 and $ 700 .

The Company also had an interest rate swap agreement for a notional amount of $ 230,000 that fixed the interest rate at 2.1 %, non-inclusive of the fixed credit spread through May 31, 2022.

On August 31, 2021, the Company entered into an

amendment to the interest rate swap agreement.

On August 31, 2021, the Company entered into 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.

2 unchanged sentences

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.

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

The interest rate swap matured on May 31, 2022.

At June 30, 2022, the Company did not record any amounts for the financing component and fair value of the interest rate swap in the condensed consolidated balance sheets.

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 due to hedge ineffectiveness.

Excluding the amount reclassified, the interest expense recognized on the derivative was $ 7 , $ 649 , $( 179 ), $ 661 for the three and six months ended June 30, 2022 and 2021, respectively.

At September 30, 2022, the Company did not record any amounts for the financing component and fair value of the interest rate swap in the condensed consolidated balance sheets.

The Company reclassified $ 3,033 of accumulated comprehensive loss to interest expense in the condensed consolidated statements of comprehensive loss in the second quarter of 2021 due to hedge ineffectiveness.

Excluding the amount reclassified, the interest expense recognized on the derivative was $ 0 , $ 29 , $( 179 ), $ 690 for the three and nine months ended September 30, 2022 and 2021, respectively.

The Company uses derivatives to manage certain interest exposures and designated all the derivatives as cash flow hedges.

The Company records derivatives at fair value on its condensed consolidated balance sheets.

Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income.

Changes in the fair value of derivatives designated as cash flow hedges are recorded as a component of accumulated other comprehensive income (loss).

Those amounts are reclassified into interest expenses in the same period during which the hedged transactions impact earnings.

The following table sets forth the assets that are measured at fair value on a recurring basis by the levels in the fair value hierarchy at June 30, 2022:

The following table sets forth the assets that are measured at fair value on a recurring basis by the levels in the fair value hierarchy at September 30, 2022:

Interest rate swap asset

3 unchanged sentences

For more information regarding fair value measurement and fair value hierarchy, see Note 2.

“Summary of Significant Accounting Policies” in the notes to the consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

“Summary of Significant Accounting Policies” in the notes to the condensed consolidated Financial Statements in the Company’s 2021 Annual Report.

Revenue Recognition

5 unchanged sentences

Recognition of revenue when, or as, the Company satisfies a performance obligation

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.

The Company’s revenue consists of fees for perpetual and term licenses for its software products, post- contract customer support (referred to as maintenance), software as a service (“SaaS”), and professional services including training and other revenue.

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.

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Due to the quick nature of the performance obligation from start to finish and the insignificant amounts, the Company recognizes any software training or implementation revenue at the completion of the service.

Any unrecognized portion of amounts paid in advance for licenses and services is recorded as

deferred revenue.

Any unrecognized portion of amounts paid in advance for licenses and services is recorded as deferred revenue.

The Company’s software contracts do not typically include discounts, variable consideration, or options for future purchases that would not be similar to the original goods.

22 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, 2022 were approximately $ 120,980 .

The unsatisfied performance obligations as of September 30, 2022 were approximately $ 119,255 .

Deferred Contract Acquisition Costs

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year.

The Company recognizes an asset for the incremental costs of obtaining a contract with a customer if the Company expects the benefit of those costs to be longer than one year.

The Company has determined that certain sales incentive programs meet the requirements to be capitalized.

2 unchanged sentences

Amortization of capitalized costs are included in sales and marketing expense in our condensed consolidated statements of operations and comprehensive loss.

Capitalized contract acquisition cost was $ 495 as of June 30, 2022 and was included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

Capitalized contract acquisition cost was $ 631 as of September 30, 2022 and was included in prepaid expenses and other current assets in the condensed consolidated balance sheets.

Grant Revenue

1 unchanged sentence

These grants specify the funds provided are to be used exclusively to satisfy the deliverables outlined in the grant agreements.

In these agreements both involved parties receive and sacrifice approximately commensurate value so these are accounted as exchange transactions, so revenue is recognized according to ASC Topic 606.

In these agreements, both involved parties receive and sacrifice approximately commensurate value so these are accounted for as exchange transactions and revenue is recognized according to ASC Topic 606.

The grant funding is generally provided near contract inception so a contract liability is initially recorded and revenue is recognized as the performance obligations are satisfied over time.

2 unchanged sentences

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

14 unchanged sentences

Every Institutional Investor that holds registration rights is also 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 of 1933.

The registration rights agreement will terminate (i) with the prior written consent of the Institutional Investors in connection with a change of control;

6 unchanged sentences

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 a 3,000,000 shares of common stock pursuant to the full exercise of the underwriters’ option to purchase additional shares.

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 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.

1 unchanged sentence

On November 22, 2021, the Company completed another secondary public offering in which certain selling stockholders, including EQT, sold 10,000,000 shares of the Company’s common stock.

The Company did not 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 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 $ 644 , recorded in general and administrative expenses, in relation to the secondary public offering.

On August 11, 2022, the Company completed another secondary public offering in which certain selling stockholders, including EQT, sold 7,000,000 shares of the Company’s common stock.

The Company did no t offer any common stock in this transaction and did no t receive any proceeds form the sale of the shares of common stock by the selling stockholders.

The Company incurred costs of $ 596 , recorded in general and administrative expenses, in relation to the secondary public offering.

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, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, no single customer accounted for more than 10% of the Company’s accounts receivable.

No single customers accounted for more than 10% of the Company’s revenues during the six months ended June 30, 2022 and 2021.

Management believes that any risk of loss is significantly reduced due to the nature of the customers with which the Company does business.

As of September 30, 2022 and December 31, 2021, no single customer accounted for more than 10% of the Company’s accounts receivable.

No single customers accounted for more than 10% of the Company’s revenues during the nine months ended September 30, 2022 and 2021.

Acquisitions have been accounted for using the acquisition method of accounting pursuant to FASB ASC 805, “Business Combinations.” Amounts allocated to the purchased assets and liabilities are based upon the total purchase price and the estimated fair values of such assets and liabilities on the effective date of the purchase as determined by an independent third party.

The results of operations have been included in the Company’s results of operations prospectively from the date of acquisition.

On March 2, 2021, the Company completed a transaction which qualified as a business combination for a total consideration of $ 2,667 .

The business combination was not significant to our consolidated financial statements.

On March 2, 2021, the Company completed a transaction that qualified as a business combination for a total consideration of $ 2,667 .

The business combination was not significant to our condensed consolidated financial statements.

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

Insight Medical Writing Limited

On June 7, 2021, the Company completed a transaction which qualified as a business combination for a total consideration of $ 15,197 .

The business combination was not significant to our consolidated financial statements.

On June 7, 2021, the Company completed a transaction that qualified as a business combination for a total consideration of $ 15,197 .

The business combination was not significant to our condensed consolidated financial statements.

Based on the Company’s purchase price allocation, approximately $ 7,400 and $ 4,700 of the purchase price was assigned to customer relationships and goodwill, respectively.

2 unchanged sentences

Pinnacle provides software and services for preparing clinical trial data for regulatory submission.

The acquisition executes on the Company’s strategy to invest in innovation to increase the use cases of biosimulation and grow adoption of Certara’s end-to-end platform.

The acquisition executed on the Company’s strategy to invest in innovation to increase the use cases of biosimulation and grow adoption of Certara’s end-to-end platform.

The acquisition of Pinnacle was treated as a purchase in accordance with ASC 805, “Business Combinations”, which requires allocation of the purchase price to the estimated fair values of assets and liabilities acquired in the transaction.

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The excess of the purchase prices over the fair values of the acquired business's net assets represent cost and revenue synergies specific to the Company, as well as non-capitalizable intangible assets, such as the employee workforces acquired, and has been allocated to goodwill.

Integrated Nonclinical Development Solutions

Integrated Nonclinical Development Solutions, Inc.

On January 3, 2022, the Company completed the acquisition of Integrated Nonclinical Development Solutions, Inc.

4 unchanged sentences

Prepaid Expenses and Other Current Assets and Other Long-Term Assets

SEPTEMBER 30,

Prepaid expenses

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Other long-term assets consisted of the following:

SEPTEMBER 30,

Long-term deposits

Derivative assets - long-term

Interest rate swap asset - long-term

Deferred financing cost

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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.

The Credit Agreement (as amended) 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, 2022 and December 31, 2021, available borrowings under the revolving lines of credits were $ 100,000 .

Available borrowings under the revolving lines of credits as of June 30, 2022 and December 31, 2021 were reduced by $ 120 and $ 239 standby letters of credit issued to a landlord in lieu of a security deposit in addition to any outstanding borrowings.

As of September 30, 2022 and December 31, 2021, available borrowings under the revolving lines of credits were $ 100,000 .

Available borrowings under the revolving lines of credits as of September 30, 2022 and December 31, 2021 were reduced by $ 120 and $ 239 standby letters of credit issued to a landlord in lieu of a security deposit in addition to any outstanding borrowings.

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 3.98 % and 3.73 % for the six months ended June 30, 2022 and 2021 for the term loan debt, respectively.

The effective interest rate was 4.60 % and 3.68 % for the nine months ended September 30, 2022 and 2021 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 $ 5,978 and $ 5,671 for the six months ended June 30, 2022 and 2021, respectively.

Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 43 and $ 30 at June 30, 2022 and December 31, 2021, respectively, and is included in accrued expenses.

Interest incurred on the Credit Agreement with respect to the revolving line of credit was $ 128 and $ 33 for the six months ended June 30, 2022 and 2021, respectively.

There was $ 1 and $ 66 accrued interest payable on the revolving line of credit at June 30, 2022 and December 31, 2021, respectively.

Interest incurred on the Credit Agreement with respect to the term loan amounted to $ 4,366 , $ 2,773 , $ 10,344 , and $ 8,444 for the three and nine months ended September 30, 2022 and 2021, respectively.

Accrued interest payable on the Credit Agreement with respect to the term loan amounted to $ 55 and $ 30 at September 30, 2022 and December 31, 2021, respectively, and is included in accrued expenses.

Interest incurred on the Credit Agreement with respect to the revolving line of credit was $ 65 , $ 65 , $ 193 and $ 98 for the three and nine months ended September 30, 2022 and 2021, respectively.

There was $ 2 and $ 66 accrued interest payable on the revolving line of credit at September 30, 2022 and December 31, 2021, respectively.

Long-term debt consists of the following:

SEPTEMBER 30,

Revolving line of credit

2 unchanged sentences

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

The principal amount of long-term debt outstanding as of June 30, 2022 matures in the following years:

The principal amount of long-term debt outstanding as of September 30, 2022 matures in the following years:

Remainder of 2022

1 unchanged sentence

For the year ended December 31, 2021, the Company was not required to make a mandatory prepayment on the term loan.

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.

For the Credit Agreement, the Company is required to make a quarterly principal payment of $ 755 on the term loan each quarter starting from September 30, 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.

The Company leases certain office facilities and equipment under non-cancelable operating and finance leases with remaining terms from one to six years .

Operating lease right of use assets are included in “other assets” section while finance lease right of use assets are included in "property and equipment, net"

Operating lease right of use assets are included in the “other assets” section while finance lease right of use assets are included in "property and equipment, net"

in the condensed consolidated balance sheets.

3 unchanged sentences

in the condensed consolidated balance sheets.

At June 30, 2022, the weighted average remaining lease terms were 3.49 years and 0.58 year for operating and finance leases, respectively;

the weighted average discount rate were 4.10 % and 6.19 % for operating and finance leases, respectively.

For additional information on the Company's leases, see Note 14 to the consolidated financial statements included the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at June 30, 2022 and December 31, 2021:

At September 30, 2022, the weighted average remaining lease terms were 3.33 years and 0.33 year for operating and finance leases, respectively;

the weighted average discount rate was 4.11 % and 6.19 % for operating and finance leases, respectively.

For additional information on the Company's leases, see Note 14 to the condensed consolidated financial statements included the Company’s 2021Annual Report.

The following table summarizes the lease-related assets and liabilities recorded in the condensed consolidated balance sheets at September 30, 2022 and December 31, 2021:

Lease Position

Balance Sheet Classification

JUNE 30, 2022

SEPTEMBER 30, 2022

DECEMBER 31, 2021

9 unchanged sentences

Total lease liabilities

The following table summarizes by year the maturities of our minimum lease payments as of June 30, 2022.

The following table summarizes by year the maturities of our minimum lease payments as of September 30, 2022.

Remainder of 2022

3 unchanged sentences

Accrued expenses consist of the following:

SEPTEMBER 30,

Accrued compensation

5 unchanged sentences

Total accrued expenses

Other current liabilities consist of the following:

Current portion of interest rate swap liability

Current finance lease liabilities

Total other current liabilities

Equity-Based Compensation

Restricted Stock

The majority of the Company’s restricted stock awarded to its employees were originally issued in December 2020 to exchange the Class B Profits Interest Unit (the “Class B Units”) of EQT.

The majority of the Company’s restricted stock awarded to its employees was originally issued in December 2020 to exchange the Class B Profits Interest Unit (the “Class B Units”) of EQT.

Modification accounting was not required for the time-based vesting Class B Units for which the vesting conditions, classification and fair market value did not change as a result of the shares of restricted common stock that replaced them.

3 unchanged sentences

Share-based compensation for the restricted stock exchanged for the performance-based Class B Units is recognized using the accelerated attribution approach.

In 2021, the Company granted 87,127 replacement shares of restricted stock in connection with the Pinnacle business acquisition under which equity-based awards are outstanding.

The fair value of the restricted stock awarded was initially based on the fair value of our common stock on the date of grant, then adjusted for time restrictions due to unregistered

shares and lack of marketability.

In 2021, the Company granted 87,127 replacement shares of restricted stock in connection with the Pinnacle acquisition under which equity-based awards are outstanding.

The fair value of the restricted stock awarded was initially based on the fair value of our common stock on the date of grant, then adjusted for time restrictions due to unregistered shares and lack of marketability.

Total grant date fair value was $ 2,762 .

The restricted stock issued in 2021 generally have a three year vesting period except for one holder whose shares vests equally on a monthly basis for two years .

The restricted stock issued in 2021 generally has a three-year vesting period except for one holder whose shares vests equally on a monthly basis for two years .

Non-vested restricted stock as of December 31, 2021

Non-vested restricted stock as of June 30, 2022

The Company did no t authorize or issue any restricted stock during the six-month period ended June 30, 2022.

The number of the restricted stock vested includes 3,478 shares of common stock that were withheld on behalf of employees to satisfy the statutory tax withholding requirements.

Equity-based compensation expenses related to the restricted stock exchanged for performance-based Class B Units were $ 1,957 and $ 4,077 for the three and six months ended June 30, 2022, respectively.

At June 30, 2022, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $ 7,561 , which is expected to be recognized over a weighted-average period of 22.6 months.

Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $ 766 and $ 1,531 for the three and six months ended June 30, 2022, respectively.

At June 30, 2022, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $ 4,862 , which is expected to be recognized over a weighted-average period of 29.6 months.

Equity-based employee compensation expense related to the time-based restricted stock for the Pinnacle acquisition were $ 292 and $ 584 for the three and six months ended June 30, 2022.

At June 30, 2022, the total unrecognized equity-based compensation expenses related to outstanding restricted stock recognized using the straight-line attribution approach was $ 1,886 , which is expected to be recognized over a weighted-average period of 21.1 months.

( 1,772,239 )

Non-vested restricted stock as of September 30, 2022

The Company did not legally authorize or issue any restricted stock during the nine-month period ended September 30, 2022.

During the third quarter of 2022, the Company modified an award for a recipient that resulted in 66,220 shares each

assumed cancelled, granted, and forfeited.

The shares of restricted stock vested includes 5,182 shares of common stock that were withheld on behalf of employees to satisfy the statutory tax withholding requirements.

Equity-based compensation expenses (income) related to the restricted stock exchanged for performance-based Class B Units were $( 319 ) and $ 3,758 for the three and nine months ended September 30, 2022, respectively.

At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the accelerated attribution approach was $ 5,039 , which is expected to be recognized over a weighted-average period of 22.5 months.

Equity-based compensation expenses related to the restricted stock exchanged for time-based Class B Units were $ 1,174 and $ 2,705 for the three and nine months ended September 30, 2022, respectively.

At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding restricted stock recognized using the straight-line attribution approach was $ 3,821 , which is expected to be recognized over a weighted-average period of 28.0 months.

Equity-based employee compensation expense related to the time-based restricted stock for the Pinnacle acquisition was $ 292 and $ 877 for the three and nine months ended September 30, 2022.

At September 30, 2022, the total unrecognized equity-based compensation expenses related to outstanding restricted stock recognized using the straight-line attribution approach was $ 1,593 , which is expected to be recognized over a weighted-average period of 18.4 months.

2020 Incentive Plan

In order to align the Company’s equity compensation program with public company practices, the Company’s Board of Directors adopted and stockholders approved the 2020 Incentive Plan.

The 2020 Incentive Plan allows for grants of non-qualified stock options, incentive stock options, restricted stock, restricted stock units (RSUs), and performance stock units (PSUs) to employees, directors and officers, and consultants or advisors of the Company.

The 2020 Incentive Plan allows for grants of non-qualified stock options, incentive stock options, restricted stock, restricted stock units (“RSUs”), and performance stock units (“PSUs”) to employees, directors, officers, and consultants or advisors of the Company.

The 2020 Incentive Plan allows for 20,000,000 shares (the “plan share reserve”) of common stock to be issued.

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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.

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.

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Non-vested RSUs as of December 31, 2021

Non-vested RSUs as of June 30, 2022

Non-vested RSUs as of September 30, 2022

* The shares granted during 2022 were primarily issued on April 1, 2022 under the 2020 Incentive Plan.

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The vested shares included 7,059 shares vested but deferred in connection with our director deferral plan.

Equity-based compensation expenses related to the RSUs were $ 5,838 and $ 9,226 for three and six months ended June 30, 2022, respectively.

At June 30, 2022, the total unrecognized equity-based compensation expense related to outstanding RSUs was $ 49,967 , which is expected to be recognized over a weighted-average period of 28.2 months.

Equity-based compensation expenses related to the RSUs were $ 5,312 and $ 14,538 for three and nine months ended September 30, 2022, respectively.

At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding RSUs was $ 42,927 , which is expected to be recognized over a weighted-average period of 25.5 months.

Performance Stock Units

Performance stock units (“PSUs”) granted in April 2021 and 2022 were 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 for individual PSU plans including year over year revenue growth and unlevered free cash flow growth.

PSUs granted in April 2021 and 2022 were 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 for individual PSU plans 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, 2022.

The following table presents a summary of activity on the PSUs for the period ended September 30, 2022.

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

Non-vested PSUs as of December 31, 2021

Non-vested PSUs as of June 30, 2022

Equity-based compensation expenses related to the PSUs were $ 648 and $ 1,595 for the three and six months ended June 30, 2022.

At June 30, 2022, the total unrecognized equity-based compensation expense related to outstanding PSUs was $ 5,293 , which is expected to be recognized over a weighted-average period of 17.4 months.

Non-vested PSUs as of September 30, 2022

Equity-based compensation expenses related to the PSUs were $ 345 and $ 1,940 for the three and nine months ended September 30, 2022.

At September 30, 2022, the total unrecognized equity-based compensation expense related to outstanding PSUs was $ 3,467 , which is expected to be recognized over a weighted-average period of 15.6 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 JUNE 30,

SIX MONTHS ENDED JUNE 30,

THREE MONTHS ENDED SEPTEMBER 30,

NINE MONTHS ENDED SEPTEMBER 30,

Cost of revenues

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Under the Employee Stock Purchase Plan, employees, and those of the Company’s subsidiaries, may purchase shares of common stock, during pre-specified offering periods.

Named executive officers will be eligible to participate in the Employee Stock Purchase Plan on the same terms and conditions as all other participating employees.

Named executive officers will be eligible to participate in

the Employee Stock Purchase Plan on the same terms and conditions as all other participating employees.

The maximum number of shares authorized for sale under the Employee Stock Purchase Plan is 1,700,000 shares.

As of June 30, 2022, no shares of common stock have been purchased under the Employee Stock Purchase Plan and no offering has been made to eligible employees under the Plan.

As of September 30, 2022, no shares of common stock have been purchased under the Employee Stock Purchase Plan and no offering has been made to eligible employees under the Plan.

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.

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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, 2022 and 2021:

The following table summarizes revenue by geographic area for the three and nine months ended September 30, 2022 and 2021:

THREE MONTHS ENDED

SIX MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

Revenue (1) :

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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 and six months ended June 30, 2022 and 2021 were 121 %, ( 103 )%, 75 %, and 1,131 % , respectively, including discrete tax items.

The current year increase in the ETR was principally due to the relative mix of domestic and international earnings.

The 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 September 30, 2022 and 2021 was 54 % and 48 %, respectively, including discrete tax items.

The period-over-period increase in the ETR was principally due to the combined effect of the overall increase in pre-tax book income and the tax effect of certain discrete items.

The Company's global ETR for the nine months ended September 30, 2022 and 2021 was 63 %, and ( 11 )%, respectively, including discrete tax items.

The current year increase in the ETR was principally due to the combined effect of the overall increase in pre-tax book income and the tax effect of certain discrete items.

Earnings per Share

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

THREE MONTHS ENDED JUNE 30,

SIX MONTHS ENDED JUNE 30,

THREE MONTHS ENDED SEPTEMBER 30,

NINE MONTHS ENDED SEPTEMBER 30,

Net income (loss) available to common shareholders

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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