What changed in this filing

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Item 1. Financial Statements

2023-09-05 compared with 2023-06-07 · 56 added, 53 removed, 358 unchanged (23% of the section changed)

3 unchanged sentences

Condensed consolidated balance sheets

(in thousands, except par value) April 30, 2023 January 31, 2023

(in thousands, except par value) July 31, 2023 January 31, 2023

Current assets

Cash and cash equivalents $ 290,345 $ 254,266

Accounts receivable, net of allowance for doubtful accounts of $ 4,722 and $ 4,989 as of April 30, 2023 and January 31, 2023, respectively

Accounts receivable, net of allowance for doubtful accounts of $ 4,639 and $ 4,989 as of July 31, 2023 and January 31, 2023, respectively

92,581 96,835

24 unchanged sentences

Stockholders’ equity

Preferred stock, $ 0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of April 30, 2023 and January 31, 2023, respectively

Common stock, $ 0.0001 par value, 900,000 shares authorized, 85,470 and 84,758 shares issued and outstanding as of April 30, 2023 and January 31, 2023, respectively

Preferred stock, $ 0.0001 par value, 100,000 shares authorized, no shares issued and outstanding as of July 31, 2023 and January 31, 2023, respectively

Common stock, $ 0.0001 par value, 900,000 shares authorized, 85,612 and 84,758 shares issued and outstanding as of July 31, 2023 and January 31, 2023, respectively

Additional paid-in capital 1,785,014 1,745,716

7 unchanged sentences

comprehensive income (loss) (unaudited)

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands, except per share data) 2023 2022 2023 2022

34 unchanged sentences

Condensed consolidated statements of stockholders’ equity (unaudited)

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands) 2023 2022 2023 2022

18 unchanged sentences

Condensed consolidated statements of cash flows (unaudited)

Three months ended April 30,

Six months ended July 31,

(in thousands) 2023 2022

6 unchanged sentences

Loss on extinguishment of debt 1,157 —

Other non-cash items — 269

Deferred taxes ( 8,138 ) ( 7,558 )

17 unchanged sentences

Proceeds from exercise of common stock options 1,354 4,936

Net cash provided by (used in) financing activities ( 51,027 ) 2,959

Decrease in cash and cash equivalents ( 28,624 ) ( 64,167 )

Net cash used in financing activities ( 53,182 ) ( 430 )

Increase (decrease) in cash and cash equivalents 36,079 ( 48,528 )

Beginning cash and cash equivalents 254,266 225,414

4 unchanged sentences

Condensed consolidated statements of cash flows (unaudited) (continued)

Three months ended April 30,

Six months ended July 31,

(in thousands) 2023 2022

1 unchanged sentence

Interest expense paid in cash $ 23,504 $ 19,450

Income tax payments (refunds), net ( 7 ) 55

Income tax payments, net 15,113 573

Supplemental disclosures of non-cash investing and financing activities:

3 unchanged sentences

Exercise of common stock options receivable 50 8

Increase in goodwill due to measurement period adjustments, net — 163

See accompanying notes to condensed consolidated financial statements.

10 unchanged sentences

Basis of presentation

The accompanying condensed consolidated financial statements as of April 30, 2023 and for the three months ended April 30, 2023 and 2022 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting.

The accompanying condensed consolidated financial statements as of July 31, 2023 and for the three and six months ended July 31, 2023 and 2022 are unaudited and have been prepared in conformity with accounting principles generally accepted in the United States of America ("GAAP") and the applicable rules and regulations of the Securities and Exchange Commission ("SEC") regarding interim financial reporting.

In the opinion of management, the interim data includes all adjustments necessary for a fair presentation of the results for the interim periods.

8 unchanged sentences

The following table sets forth the computation of basic and diluted net income (loss) per share:

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands, except per share data) 2023 2022 2023 2022

10 unchanged sentences

Diluted $ 0.12 $ ( 0.13 ) $ 0.17 $ ( 0.29 )

For the three months ended April 30, 2023 and 2022, approximately 1.0 million and 2.0 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income (loss) per share as their inclusion would have been anti-dilutive.

For the three months ended July 31, 2023 and 2022, approximately 1.6 million and 3.3 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income (loss) per share as their inclusion would have been anti-dilutive.

For the six months ended July 31, 2023 and 2022, approximately 0.9 million and 2.6 million shares, respectively, attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted net income (loss) per share as their inclusion would have been anti-dilutive.

Supplemental financial statement information

2 unchanged sentences

Property and equipment consisted of the following:

(in thousands) April 30, 2023 January 31, 2023

(in thousands) July 31, 2023 January 31, 2023

Leasehold improvements $ 18,199 $ 18,269

4 unchanged sentences

Property and equipment, net $ 9,145 $ 12,862

Depreciation expense for the three months ended April 30, 2023 and 2022 was $ 2.5 million and $ 3.3 million, respectively.

Depreciation expense for the three months ended July 31, 2023 and 2022 was $ 2.0 million and $ 3.2 million, respectively, and $ 4.5 million and $ 6.4 million for the six months ended July 31, 2023 and 2022, respectively.

Contract balances

2 unchanged sentences

Alternatively, when payment precedes the related services, the Company records a contract liability, or deferred revenue, until its performance obligations are satisfied.

As of April 30, 2023 and January 31, 2023, the balance of deferred revenue was $ 7.8 million and $ 8.3 million, respectively.

As of July 31, 2023 and January 31, 2023, the balance of deferred revenue was $ 6.7 million and $ 8.3 million, respectively.

The balances are related to cash received in advance for interchange and custodial revenue arrangements, other up-front fees and other commuter deferred revenue.

The Company expects to recognize approximately 63 % of its balance of deferred revenue as revenue over the next 12 months and the remainder thereafter.

During the three months ended April 30, 2023, approximately $ 1.5 million of revenue was recognized that was included in the balance of deferred revenue as of January 31, 2023.

During the three and six months ended July 31, 2023, approximately $ 1.4 million and $ 2.9 million, respectively, of revenue was recognized that was included in the balance of deferred revenue as of January 31, 2023.

The Company expects to satisfy its remaining obligations for these arrangements.

The components of operating lease costs were as follows:

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands)

2023 2022 2023 2022

Operating lease expense $ 2,365 $ 2,854 $ 4,966 $ 5,713

3 unchanged sentences

Other income (expense), net, consisted of the following:

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands) 2023 2022 2023 2022

4 unchanged sentences

Interest expense

Based on the application of Accounting Standards Codification ("ASC") 470-50, Debt - Modifications and Extinguishments , the Company recorded a $ 1.2 million loss on extinguishment of debt due to the prepayment of $ 50.0 million under the Company's Term Loan Facility (as defined in Note 6—Indebtedness) during the three months ended April 30, 2023, which is included within interest expense in the condensed consolidated statement of operations and comprehensive income for the three months ended April 30, 2023.

Based on the application of Accounting Standards Codification ("ASC") 470-50, Debt - Modifications and Extinguishments , the Company recorded a $ 1.2 million loss on extinguishment of debt due to the prepayment of $ 50.0 million under the Company's Term Loan Facility (as defined in Note 6—Indebtedness) in April 2023, which is included within interest expense in the condensed consolidated statement of operations and comprehensive income for the six months ended July 31, 2023.

Supplemental cash flow information

Supplemental cash flow information related to the Company's operating leases was as follows:

Three months ended April 30,

Six months ended July 31,

(in thousands) 2023 2022

5 unchanged sentences

The gross carrying amount and associated accumulated amortization of intangible assets were as follows:

April 30, 2023

July 31, 2023

(in thousands) Gross carrying amount Accumulated amortization Net carrying amount

15 unchanged sentences

Total amortizable intangible assets $ 1,399,889 $ ( 463,530 ) $ 936,359

Amortization expense for the three months ended April 30, 2023 and 2022 was $ 36.5 million and $ 36.2 million, respectively.

There were no changes to the carrying value of goodwill during the three months ended April 30, 2023.

Amortization expense for the three months ended July 31, 2023 and 2022 was $ 36.3 million and $ 37.6 million, respectively, and $ 72.8 million and $ 73.8 million for the six months ended July 31, 2023 and 2022, respectively.

There were no changes to the carrying value of goodwill during the six months ended July 31, 2023.

Commitments and contingencies

The Company’s principal commitments consist of long-term debt, operating lease obligations for office space and data storage facilities, processing services agreements, software subscriptions, telephony services, and other contractual commitments.

During the three months ended April 30, 2023, the Company used $ 50.0 million of cash to prepay, in direct order of maturity, principal due under its Term Loan Facility.

There were no other material changes during the three months ended April 30, 2023, outside of the ordinary course of business, in the Company's commitments from those disclosed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2023.

In April 2023, the Company used $ 50.0 million of cash to prepay, in direct order of maturity, principal due under its Term Loan Facility.

There were no other material changes during the six months ended July 31, 2023, outside of the ordinary course of business, in the Company's commitments from those disclosed in its Annual Report on Form 10-K for the fiscal year ended January 31, 2023.

Contingencies

17 unchanged sentences

On April 26, 2023, Union Mesa filed a motion for partial summary judgment, and the Company expects to file its response in due course.

Through its claims, Union Mesa is seeking direct and consequential damages in an amount to be

proven at trial and an award of its reasonable attorney fees, plus interest until any damages or fees that are awarded are paid.

The parties are currently engaged in discovery.

6 unchanged sentences

Long-term debt consisted of the following:

(in thousands) April 30, 2023 January 31, 2023

(in thousands) July 31, 2023 January 31, 2023

4.50 % Senior Notes due 2029

6 unchanged sentences

Long-term debt, net $ 873,581 $ 907,838

(1) In addition to the $ 14.0 million and $ 15.9 million of unamortized discount and issuance costs related to long-term debt as of April 30, 2023 and January 31, 2023, respectively, $ 3.2 million and $ 3.4 million of unamortized issuance costs related to the Company's Revolving Credit Facility (as defined below) are included within other assets on the condensed consolidated balance sheets as of April 30, 2023 and January 31, 2023, respectively.

(1) In addition to the $ 13.3 million and $ 15.9 million of unamortized discount and issuance costs related to long-term debt as of July 31, 2023 and January 31, 2023, respectively, $ 3.0 million and $ 3.4 million of unamortized issuance costs related to the Company's Revolving Credit Facility (as defined below) are included within other assets on the condensed consolidated balance sheets as of July 31, 2023 and January 31, 2023, respectively.

4.50 % Senior Notes due 2029

4 unchanged sentences

Interest on the Notes is payable on April 1 and October 1 of each year.

As of April 30, 2023 and January 31, 2023, $ 2.3 million and $ 9.0 million, respectively, of accrued interest on the Notes is included within accrued liabilities on the Company's condensed consolidated balance sheets.

Accrued interest on the Notes was $ 9.0 million at each of July 31, 2023 and January 31, 2023, and is included within accrued liabilities on the Company's condensed consolidated balance sheets.

The effective interest rate on the Notes is 4.72 %.

12 unchanged sentences

Subject to the terms and conditions set forth in the Credit Agreement (including obtaining additional commitments from one or more new or existing lenders), the Company may in the future incur additional loans or commitments under the Credit Agreement in an aggregate principal amount of up to $ 300 million, plus an additional amount so long as the Company’s pro forma First Lien Net Leverage Ratio (as defined in the Credit Agreement) would not exceed 3.85 to 1.00 as of the date such loans or commitments are incurred.

Borrowings under the Credit Facilities as of April 30, 2023 bear interest at an annual rate equal to, at the option of the Company, either (i) LIBOR (adjusted for reserves) plus a margin ranging from 1.25 % to 2.25 % or (ii) an alternate base rate plus a margin ranging from 0.25 % to 1.25 %, with the applicable margin determined in either scenario by reference to a leverage-based pricing grid set forth in the Credit Agreement.

As of April 30, 2023, the stated interest rate was 6.56 % and the effective interest rate was 7.32 %.

Prior to June 1, 2023, borrowings under the Credit Facilities bore interest at an annual rate equal to, at the option of the Company, either (i) LIBOR (adjusted for reserves) plus a margin ranging from 1.25 % to 2.25 % or (ii) an alternate base rate plus a margin ranging from 0.25 % to 1.25 %, with the applicable margin determined in either scenario by reference to a leverage-based pricing grid set forth in the Credit Agreement.

On June 1, 2023, the Company entered into an amendment to the Credit Agreement (“Amendment No.

1 unchanged sentence

As a result, borrowings under the Credit Agreement as so amended by Amendment No.

1 will bear interest at an annual rate equal to, at the option of the Company, either (i) Term SOFR, plus a 0.10 % credit spread adjustment, plus a margin ranging from 1.25 % to 2.25 %, or (ii) an alternate base rate, plus a margin ranging from 0.25 % to 1.25 %, with the applicable margin determined in either scenario by reference to a leverage-based pricing grid set forth in the Credit Agreement (as amended by Amendment No.

1 bear interest, as of July 31, 2023, at an annual rate equal to, at the option of the Company, either (i) Term SOFR, plus a 0.10 % credit spread adjustment, plus a margin ranging from 1.25 % to 2.25 %, or (ii) an alternate base rate, plus a margin ranging from 0.25 % to 1.25 %, with the applicable margin determined in either scenario by reference to a leverage-based pricing grid set forth in the Credit Agreement (as amended by Amendment No.

As of July 31, 2023, the stated interest rate was 6.92 % and the effective interest rate was 7.68 %.

The Company is also required to pay certain fees to the Lenders, including, among others, a quarterly commitment fee on the average unused amount of the Revolving Credit Facility at a rate ranging from 0.20 % to 0.40 %, with the applicable rate also determined by reference to a leverage-based pricing grid set forth in the Credit Agreement.

As of April 30, 2023, no amounts have been drawn under the Revolving Credit Facility.

As of July 31, 2023, no amounts have been drawn under the Revolving Credit Facility.

The loans made under the Term Loan Facility amortize in equal quarterly installments in an aggregate annual amount equal to the following percentage of the original principal amount of the Term Loan Facility:

4 unchanged sentences

In addition, the Term Loan Facility is required to be mandatorily prepaid with 100 % of the net cash proceeds of all asset sales, insurance and condemnation recoveries, subject to customary exceptions and thresholds, including to the extent such proceeds are reinvested in assets useful in the business of the Company and its subsidiaries within 450 days following receipt (or committed to be reinvested within such 450 -day period and reinvested within 180 days after the end of such 450 -day period).

The loans under the Credit Facilities may be prepaid, and the commitments thereunder may be reduced, by the Company without penalty or premium, subject to the reimbursement of customary “breakage costs.” During the three months ended April 30, 2023, the Company used $ 50.0 million of cash to prepay, in direct order of maturity, principal due under its Term Loan Facility.

The loans under the Credit Facilities may be prepaid, and the commitments thereunder may be reduced, by the Company without penalty or premium, subject to the reimbursement of customary “breakage costs.” In April 2023, the Company used $ 50.0 million of cash to prepay, in direct order of maturity, principal due under its Term Loan Facility.

The Credit Agreement contains significant customary affirmative and negative covenants, including covenants that limit, among other things, the ability of the Company and its subsidiaries to incur additional indebtedness, create liens, merge or dissolve, make investments, dispose of assets, engage in sale and leaseback transactions, make distributions and dividends and prepayments of junior indebtedness, engage in transactions with affiliates, enter into restrictive agreements, amend documentation governing junior indebtedness, modify its fiscal year and modify its

organizational documents, in each case, subject to customary exceptions, thresholds, qualifications and “baskets.” In addition, the Credit Agreement contains financial performance covenants, which require the Company to maintain (i) a maximum total net leverage ratio, measured as of the last day of each fiscal quarter, of no greater than 5.00 to 1.00 and (ii) a minimum consolidated interest coverage ratio, measured as of the last day of each fiscal quarter, of no less than 3.00 to 1.00.

The Company was in compliance with all covenants under the Credit Agreement as of April 30, 2023, and for the period then ended.

The Company was in compliance with all covenants under the Credit Agreement as of July 31, 2023, and for the period then ended.

The repayment obligation under the Credit Agreement may be accelerated upon the occurrence of an event of default thereunder, including, among other things, failure to pay principal, interest or fees on a timely basis, material inaccuracy of any representation or warranty, failure to comply with covenants, cross-default to other material debt, material judgments, change of control and certain insolvency or bankruptcy-related events, in each case, subject to any certain grace and/or cure periods.

2 unchanged sentences

Accordingly, management estimated the effective annual tax rate and applied this rate to pre-tax income through the end of the latest fiscal quarter to determine the interim income tax provision.

For the three months ended April 30, 2023 and 2022, the Company recorded an income tax provision of $ 5.9 million and an income tax benefit of $ 4.4 million, respectively.

This resulted in an effective income tax provision rate of 59.1 % and an income tax benefit rate of 24.4 % for the three months ended April 30, 2023 and 2022, respectively.

For the three months ended April 30, 2023 and 2022, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation expense compared to GAAP stock-based compensation expense.

As of April 30, 2023 and January 31, 2023, the Company’s total gross unrecognized tax benefit was $ 8.8 million and $ 8.7 million, respectively.

If recognized, $ 5.4 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of April 30, 2023.

As of April 30, 2023, $ 6.9 million of federal income tax payable is included within accrued liabilities on the Company's condensed consolidated balance sheet.

For the three and six months ended July 31, 2023, the Company recorded an income tax provision of $ 3.6 million and $ 9.6 million, respectively.

This resulted in an effective income tax provision rate of 25.6 % and 39.4 % for the three and six months ended July 31, 2023, respectively, compared with an effective income tax benefit rate of 23.2 % and 23.9 % for the three and six months ended July 31, 2022, respectively.

For the three and six months ended July 31, 2023 and 2022, discrete tax items impacting the effective tax rate were primarily due to differences in tax deductible stock-based compensation compared to GAAP stock-based compensation expense.

As of July 31, 2023 and January 31, 2023, the Company’s total gross unrecognized tax benefit was $ 8.9 million and $ 8.7 million, respectively.

If recognized, $ 5.6 million of the total gross unrecognized tax benefits would affect the Company's effective tax rate as of July 31, 2023.

The Company files income tax returns with U.S.

4 unchanged sentences

The following table shows a summary of stock-based compensation in the Company's condensed consolidated statements of operations and comprehensive income (loss) during the periods presented:

Three months ended April 30,

Three months ended July 31, Six months ended July 31,

(in thousands) 2023 2022 2023 2022

8 unchanged sentences

2014 Equity Incentive Plan (as amended and restated, the "Incentive Plan"), which provided for the issuance of stock awards to the directors and team members of the Company to purchase up to an aggregate of 2.6 million shares of common stock.

In addition, under the Incentive Plan, the number of shares of common stock reserved for issuance under the Incentive Plan automatically increases on February 1 of each year, beginning as of February 1, 2015 and continuing through and including February 1, 2024, by 3 % of the total number of shares of the Company’s capital stock outstanding on January 31 of the preceding fiscal year, or a lesser number of shares determined by the board of directors.

As of April 30, 2023, 11.4 million shares were available for grant under the Incentive Plan.

through and including February 1, 2024, by 3 % of the total number of shares of the Company’s capital stock outstanding on January 31 of the preceding fiscal year, or a lesser number of shares determined by the board of directors.

As of July 31, 2023, 11.5 million shares were available for grant under the Incentive Plan.

Stock options

10 unchanged sentences

Forfeited ( 4 ) $ 24.36 - 44.53

Outstanding as of April 30, 2023 999 $ 14.00 - 82.39

Outstanding as of July 31, 2023 983 $ 14.00 - 82.39

$ 36.27 2.6 $ 32,047

Vested and expected to vest as of April 30, 2023 999 $ 36.10 2.9 $ 20,970

Exercisable as of April 30, 2023 999 $ 36.10 2.9 $ 20,970

Vested and expected to vest as of July 31, 2023 983 $ 36.27 2.6 $ 32,047

Exercisable as of July 31, 2023 983 $ 36.27 2.6 $ 32,047

Restricted stock units

6 unchanged sentences

Forfeited ( 250 ) 71.53

Outstanding as of April 30, 2023 3,813 $ 68.60

Outstanding as of July 31, 2023 3,727 $ 68.13

Performance restricted stock units.

15 unchanged sentences

The Notes are valued based upon quoted market prices and are considered Level 2 instruments because the markets in which the Notes trade are not considered active markets.

As of April 30, 2023, the fair value of the Notes was $ 536.6 million.

As of July 31, 2023, the fair value of the Notes was $ 536.7 million.

The Term Loan Facility is considered a Level 2 instrument and recorded at book value in the Company's condensed consolidated financial statements.

1 unchanged sentence

As a result, the fair value of the Term Loan Facility approximates carrying value.

Subsequent events

Except for Amendment No.

1 to the Credit Agreement, as described in Note 6—Indebtedness, there were no subsequent events that required recognition or disclosure.

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