What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-02-22 compared with 2023-03-01 · 112 added, 247 removed, 409 unchanged (47% of the section changed)

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Management’s Discussion and Analysis” in the Company’s Annual Report on Form 10-K for the years ended December 31, 2022 filed with the SEC on February 28, 2023.

All information presented herein is based on our fiscal calendar.

All in formation presented herein is based on our fiscal calendar.

Unless otherwise stated, references in this report to particular years or quarters refer to our fiscal years ended December 31 and the associated quarters of those fiscal years.

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We service customers ranging from large global corporations and government agencies to small- and medium-sized businesses.

We have more than 10,000 customers with over 1,000,000 users across a broad range of industries, including financial services, consulting services, technology, manufacturing, media, telecommunications, government, political, non-profit, healthcare, life sciences, retail and hospitality.

Through a series of acquisitions and integrations, we have established a diverse family of software applications under the Upland brand and in the product solution categories listed above, each of which addresses a specific software needs.

We have more than 10,000 customers across a broad range of industries, including financial services, consulting services, technology, manufacturing, media, telecommunications, government, insurance, non-profit, healthcare, life sciences, retail and hospitality.

Through a series of acquisitions and integrations, we have established a library of diverse, cloud-based software applications under the Upland brand that address specific digital transformation needs.

Our revenue has grown from $149.9 million in the year ended December 31, 2018 to $297.9 million in the year ended December 31, 2023, representing a compound annual growth rate of 15%.

During the year ended December 31, 2022, domestic revenue as a percent of total revenue decreased to 70% compared to 71% in the year ended December 31, 2021.

During each of the years ended December 31, 2023 and December 31, 2022, non-US revenue as a percent of total revenue was 30% .

Our operating results in a given period can fluctuate based on the mix of subscription and support, perpetual license and professional services revenue.

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Professional services revenue consists of fees related to implementation, data extraction, integration and configuration and training on our applications.

For each of the years ended December 31, 2022, 2021 and 2020, our professional services revenue accounted for 4% of our total revenue .

For the years ended December 31, 2023, 2022 and 2021, our professional services revenue accounted for 3%, 4%, and 4% of our total revenue, respectively.

To support continued growth, we intend to pursue acquisitions of complementary technologies, products and businesses.

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Business ” herein.

Consistent with our growth strategy, we have completed a total of 31 acquisitions in the 11 years ending December 31, 2022.

Consistent with our growth strategy, we have completed a total of 31 acquisitions from February 2012 through December 31, 2023.

Acquisitions completed during the years ended December 31, 2023, 2022 and 2021 include the following:

2023 Acquisitions

2022 Acquisitions

• BA Insight - On February 22, 2022, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of BA Insight Inc., (“BA Insight”), a cloud-based enterprise knowledge management solution.

Revenues recorded since the acquisition date through December 31, 2022 were approximately $7.6 million.

• Objectif Lune - On January 7, 2022, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Objectif Lune Inc., a Quebec proprietary company (“Objectif Lune”), a cloud-based document workflow product.

Revenues recorded since the acquisition date through December 31, 2022 were approximately $20.9 million.

2021 Acquisitions

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• Second Street - On January 19, 2021, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Second Street Media, Inc., a Missouri corporation (“Second Street”), an audience engagement platform.

2020 Acquisitions

• Localytics - On February 6, 2020, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Char Software, Inc (dba Localytics), a Delaware corporation (“Localytics”), a provider of mobile app personalization and analytics solutions.

Sunset Assets

During the fourth quarter of 2022, in connection with the periodic review of its business, the Company decided to sunset certain non-strategic product offerings and customer contracts (collectively referred to as “Sunset Assets”).

Refer to “Adjusted Operating Measures” detail located in this section for further breakdown for adjusted amounts.

In connection with periodic reviews of our business, we have decided to discontinue the availability of certain non-strategic product offerings and a limited number of non-strategic customer contracts (collectively referred to as “Sunset Assets”).

During the three months ended December 31, 2022, we decided to classify as Sunset Assets certain non-strategic product offerings representing an estimated $27.9 million of 2023 annual total revenue.

During the second quarter of 2023, we determined that certain product offerings that had previously been placed in Sunset Assets did have use cases that would be strategic and, as a result, we removed them from our Sunset Assets.

At the same time, we identified other product offerings and certain non-strategic customer contracts to include in Sunset Assets.

The net effect of these actions in the second quarter of 2023 resulted in the estimated addition of approximately $5.0 million in 2023 annual total revenues to our Sunset Assets.

Subsequently, during the three months ended December 31, 2023, a non-strategic product offering was identified and included in Sunset Assets adding an additional estimated $9.9 million in 2023 annual total revenues to our Sunset Assets.

As a result of the discontinuation of these Sunset Assets, the Company has established end of life targets and reduced certain expenditures related to the sales and marketing of the Sunset Assets.

It is possible that during future periodic reviews of our business we may determine to add additional non-strategic product offerings or non-strategic customer contracts to Sunset Assets or remove certain product offerings or customer contracts from the classification of Sunset Assets.

In either case, we will adjust the revenues attributable to Sunset Assets for the then current period and properly reflect the year over year change for such addition or removal.

Components of Operating Results

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We assess Goodwill for impairment annually on October 1st, or more frequently when an event occurs which could cause the Carrying Value of our Company to exceed the estimated fair value of our Company.

As a result of the decline of our stock price during the quarter ended December 31, 2022, we performed a Goodwill impairment evaluation as of December 31, 2022, which resulted in a Goodwill impairment of $12.5 million.

See “ Note 5.

Goodwill and Other Intangible Assets ” in the notes to our consolidated financial statements for more information regarding our fourth quarter 2022 Goodwill impairment.

Goodwill and Other Intangible Assets ” in the notes to our consolidated financial statements for more information regarding our first quarter 2023 and our fourth quarter 2022 Goodwill impairment charges.

We will continue to evaluate Goodwill impairment in future periods.

Total Other Expense

Total other expense consists primarily of amortization of debt issuance costs over the term of the related term loan, revaluation of foreign subsidiaries, interest expense on outstanding debt, partially offset by interest income on our interest-

bearing cash balances held in money market accounts.

We participate in interest rate swap agreements for the purpose of reducing variability in interest rate payments on the Company’s outstanding term loans.

These interest rate swaps fix the Company's interest rate (including the hedge premium) at 5.4% for the term of the Credit Facility (as hereinafter defined in “ —Liquidity and Capital Resources—Credit Facility ”).

These interest rate swaps fix a portion of the Company's interest rate (including the hedge premium) at 5.4% for the term of the Credit Facility (as hereinafter defined in “ Liquidity and Capital Resources—Credit Facility ”).

In addition, gains/losses on divested assets that meet the definition of a business under ASC 805-10, Business Combination—Overall , are included in Total other expense.

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We have historically not recorded any material provision for federal or state income taxes, other than deferred taxes related to tax deductible goodwill and current taxes in certain separate company filing states and states in which loss carryforwards do not fully offset taxable income.

The balance of the tax benefit for the years ended December 31, 2022, 2021 and 2020, outside of tax deductible goodwill and current taxes in separate filing states, is related to foreign income taxes, primarily operations of our subsidiaries in Australia, Canada, Ireland and the United Kingdom, and to the release of valuation allowances associated with acquisitions of domestic entities with deferred tax liabilities.

The balance of the tax benefit for the years ended December 31, 2023, 2022 and 2021, outside of tax deductible goodwill and current taxes in separate filing states, is related to foreign income taxes, primarily operations of our subsidiaries in Canada and Ireland, and to the release of valuation allowances associated with acquisitions of domestic entities with a benefit generated in the UK and Australia fully offset by valuation allowances.

Realization of any of our domestic deferred tax assets depends upon future earnings, the timing and amount of which are uncertain.

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(3) See “ Note 8 Net Loss Per Share ”, in the notes to the consolidated financial statements included elsewhere in this Annual Report on Form 10-K for a discu ssion and a reconciliation of historical net loss attributable to common stockholders and weighted average shares outstanding for historical basic and diluted net loss per share calculations.

Adjusted Operating Measures

In the following discussion of results of operations, we refer to “Core Organic Revenue” and “Organic Revenue” as non-GAAP financial measures.

We believe that, in addition to our financial results determined in accordance with GAAP, these non-GAAP financial measures are useful in evaluating our business, results of operations, and financial condition.

However, our use of non-GAAP financial measures may vary from that of others in our industry.

Non-GAAP financial measures should not be considered as an alternative to the performance measures derived in accordance with GAAP.

There are limitations to the use of non-GAAP measures, as non-GAAP measures may not present complete financial results.

We compensate for these limitations by using these non-GAAP financial measures along with other comparative tools, together with GAAP measurements, to assist in the evaluation of operating performance.

Such GAAP measurements include revenue, gross profit, net loss, net loss per share and other performance measures.

In evaluating these financial measures, you should be aware that in the future we may incur expenses similar to those eliminated in the presentation of our non-GAAP financial measures.

Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

When evaluating our performance, you should consider these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable GAAP measures set forth in the reconciliation tables below and our other GAAP results.

See “—Non-GAAP Financial Measures” for the definitions of the non-GAAP financial measures included herein, as well as a statement disclosing the reasons management believes certain non-GAAP financial measures provide useful information to investors regarding the Company’s financial condition and results of operations.

The following table presents a reconciliation of Total revenue to Core Organic Revenue for each of the periods indicated.

Years Ended December 31,

(dollars in thousands)

Reconciliation of Total revenue to Core Organic Revenue:

Total revenue $ 317,303 $ 302,016

Subscription and support revenue from acquisitions not fully in the prior year comparative period (1)

49,624 24,943

Perpetual license revenue 6,948 2,150

Professional services revenue 12,468 12,246

Subscription and support revenue from Sunset Assets (2)

29,958 35,782

Overage Charges (3)

12,287 16,124

Political Revenue (4)

Core Organic Revenue (5)

$ 206,018 $ 209,791

(1) After the reduction of $5.5 million purchase accounting deferred revenue discount for the year ended December 31, 2022.

(2) Subscription and support revenue from Sunset Assets is revenue related to Sunset Assets.

This excludes Overage Charges, Professional services revenue, Perpetual license revenue and subscription and support revenue from acquisitions not fully in the prior year comparative period all shown separately.

(3) Overage Charges are subscription and support revenue representing amounts paid to the Company by a customer (in addition to such customer’s contractual minimum payment commitments) as a result of such customer’s number of users or level of usage of services including text and e-mail messaging and third party pass-through costs exceeding the levels stipulated in such customer’s license or related purchase agreements with the Company.

(4) Political Revenue is subscription and support usage revenue from US presidential campaigns.

(5) Core Organic Revenue excludes revenues from acquisitions closed during or subsequent to the prior year comparable period, Perpetual license revenues, Professional services revenues, revenue from Sunset Assets, Overage Charges and Political Revenue.

The following table presents a reconciliation of Subscription and support revenue to Core Organic Revenue for each of the periods indicated.

Years Ended December 31,

(dollars in thousands)

Reconciliation of Subscription and support revenue to Core Organic Revenue:

Subscription and support revenue $ 297,887 $ 287,621

Subscription and support revenue from acquisitions not fully in the prior year comparative period (1)

49,624 24,943

Subscription and support revenue from Sunset Assets (2)

29,958 35,782

Overage Charges (3)

12,287 16,124

Political Revenue (4)

Core Organic Revenue (5)

$ 206,018 $ 209,791

(1) After the reduction of $5.5 million purchase accounting deferred revenue discount for the year ended December 31, 2022 .

(2) Subscription and support revenue from Sunset Assets is revenue related to Sunset Assets.

(3) Overage Charges are subscription and support revenue representing amounts paid to the Company by a customer (in addition to such customer’s contractual minimum payment commitments) as a result of such customer’s number of users or volume of usage including text and e-mail messaging and third party pass-through costs exceeding the levels stipulated in such customer’s license or related purchase agreements with the Company.

(4) Political Revenue is subscription and support usage revenue from US presidential campaigns.

(5) Core Organic Revenue excludes revenues from acquisitions closed during or subsequent to the prior year comparable period, revenue from Sunset Assets, Overage Charges and Political Revenue.

Comparison of Years Ended December 31, 2023 and December 31, 2022

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Total revenue $ 297,852 100% $ 317,303 100% $ (19,451) (6)%

Total revenue was $317.3 million in the year ended December 31, 2022, compared to $302.0 million in the year ended December 31, 2021, an increase of $15.3 million, or 5%.

Total revenue growth includes a negative impact of 2% from changes in foreign currency exchange rates.

Our organic revenue excludes acquisitions closed during or subsequent to the prior year comparable period and business operations related to Sunset Assets (the “Organic Revenue”).

The acquisitions not fully in the comparable period contributed $32.8 million to the increase in total revenue for the year ended December 31, 2022.

Total revenue related to Perpetual license and Professional services related to our Organic Business decreased by $3.0 million.

Subscription and support revenue related to Sunset Assets decreased by $5.8 million as a result of decreased sales and marketing focus on those Sunset Assets.

Total revenues related to Overage Charges decreased by $3.8 million as a result of variable demand in the year ended December 31, 2022.

The year ended December 31, 2021 included $1.0 million in Political Revenue, which did not repeat in the year ended December 31, 2022.

Therefore, net of these non-core revenues, our Core Organic Revenue decreased by $3.8 million in the year ended December 31, 2022 compared to the year ended December 31, 2021.

After removing the negative foreign currency exchange impact on our revenue, net of these non-core revenues, our Core Organic Revenue decreased by $2.6 million in the year ended December 31, 2022 compared to the year ended December 31, 2021.

Subscription and support revenue was $297.9 million in the year ended December 31, 2022, compared to $287.6 million in the year ended December 31, 2021, an increase of $10.3 million, or 4%.

Subscription and support revenue growth includes a negative impact of 2% from changes in foreign currency exchange rates.

The acquisitions not fully in the comparable period contributed $24.7 million to the increase in subscription and support revenue in the year ended December 31, 2022.

Subscription and support revenue related to our Sunset Assets decreased $5.8 million as a result of decreased sales and marketing focus on those Sunset Assets.

Subscription and support revenues related to Overage Charges decreased by $3.8 million as a result of variable demand in the year ended December 31, 2022.

The year ended December 31, 2021 included $1.0 million of subscription and support Political Revenues which did not repeat in the year ended December 31, 2022.

Therefore, net of these non-core revenues, our Core Organic Revenue decreased by $3.8 million in the year ended December 31, 2022 compared to the year ended December 31, 2021.

Perpetual license revenue was $6.9 million in the year ended December 31, 2022, compared to $2.2 million in the year ended December 31, 2021, an increase of $4.7 million, or 223%.

The acquisitions not fully in the comparable period contributed $5.0 million to the increase in perpetual license revenue in the year ended December 31, 2022.

Perpetual license revenue related to our Sunset Assets was nil.

Therefore, perpetual license revenue from our Organic Business decreased by $0.3 million in the year ended December 31, 2022 compared to the year ended December 31, 2021.

Professional services revenue was $12.5 million in the year ended December 31, 2022, compared to $12.2 million in the year ended December 31, 2021, an increase of $0.3 million, or 2%.

The acquisitions not fully in the comparable period contributed $3.1 million to the increase in professional services revenue in the year ended December 31, 2022.

Subscription and support revenue was $281.6 million in the year ended December 31, 2023, compared to $297.9 million in the year ended December 31, 2022, a decrease of $16.3 million, or 5%.

$13.9 million of the decrease relates to declining revenue from Sunset Assets as a result of reduced sales and marketing focus on those assets.

Subscription and support revenues related to overage charges decreased by $1.1 million as a result of variable demand fluctuations in the year ended December 31, 2023.

The subscription and support revenue decline includes a negative impact of $0.3 million from changes in foreign currency exchange rates.

Additional decreases in Subscription and support revenue of $4.6 million are due to decreases in customer renewals across product lines and industries.

These decreases are offset by revenue of $3.7 million from prior year acquisitions not fully reflected in the year ended December 31, 2022.

Perpetual license revenue was $6.1 million in the year ended December 31, 2023, compared to $6.9 million in the year ended December 31, 2022, a decrease of $0.8 million, or 13%.

The decrease is attributable to decreases in customer purchases of on-premise software.

Professional services revenue was $10.2 million in the year ended December 31, 2023, compared to $12.5 million in the year ended December 31, 2022, a decrease of $2.3 million, or 18%.

Professional services revenue related to our Sunset Assets decreased by $0.4 million.

Therefore, professional services revenue from our Organic Business decreased by $2.7 million in the year ended December 31, 2022 compared to the year ended December 31, 2021 primarily related to our discipline around not accepting unprofitable professional services projects.

The remaining decrease in professional services revenue is attributable to fewer implementation projects in the year ended December 31, 2023.

Cost of Revenue and Gross Profit Margin

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Amortization $ 13,366 4% $ 12,469 4% $ 897 7%

Cost of subscription and support revenue was $93.9 million in the year ended December 31, 2022, compared to $92.2 million in the year ended December 31, 2021, an increase of $1.7 million, or 2%.

The acquisitions not fully in the comparable period contributed $5.4 million to the increase to cost of subscription and support revenue, primarily related to costs associated with the delivery of the BA Insight, Objectif Lune and Panviva products.

Cost of subscription and support revenue related to our Sunset Assets decreased $2.6 million, primarily related to hosting and infrastructure costs.

Therefore, cost of subscription and support revenue for our Organic Business decreased by $1.1 million mainly due to decreased messaging costs.

Cost of professional services revenue was $9.8 million in the year ended December 31, 2022, compared to $7.3 million in the year ended December 31, 2021, an increase of $2.5 million, or 34%.

The acquisitions not fully in the comparable period contributed $3.2 million to the increase to cost of professional services revenue, primarily related to an increase in personnel and related costs.

Therefore, cost of professional services revenue for our Organic Business decreased by $0.7 million primarily related to a decrease in personnel related costs.

Cost of subscription and support revenue was $88.9 million in the year ended December 31, 2023, compared to $93.9 million in the year ended December 31, 2022, a decrease of $5.0 million, or 5%.

Variable telecom carrier costs decreased $6.5 million as a result of reduced customer demand and non-cash stock based compensation decreased $1.1 million.

These decreases were offset by increased hosting expenses for all of our products and increased non-cash amortization of intangible assets associated with our Sunset Assets.

Cost of professional services revenue was $7.5 million in the year ended December 31, 2023, compared to $9.8 million in the year ended December 31, 2022, a decrease of $2.3 million, or 24%.

The decrease in cost of professional services revenue is primarily related to a decrease in personnel-related costs resulting from decreased professional services delivered.

Operating Expenses

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Sales and marketing expense was $64.3 million in the year ended December 31, 2023, compared to $59.4 million in the year ended December 31, 2022, an increase of $4.9 million, or 8%.

The acquisitions not fully completed in the comparable period contributed $6.6 million to the increase in sales and marketing expense, primarily consisting of increased headcount and personnel related costs in the year ended December 31, 2022.

Sales and marketing expense for our Sunset Assets decreased by $1.1 million primarily as a result of decreased personnel related costs.

Sales and marketing expense for our Organic Business decreased by $1.2 million, primarily as a result of a reduction in personnel related costs which were partially offset by increased commission costs.

We expect to see an increase in sales and marketing expense in 2023 as we increase our go to market investments.

Sales and marketing expense increased approximately $8.8 million as a direct result of our intentional investment in our go to market strategy, including increased marketing spend and increased sales headcount and personnel-related costs to strengthen our marketing and demand generation.

This increase is partially offset by a $2.1 million decrease in stock based compensation expense and a decrease of $1.8 million in sales and marketing expense related to our Sunset Assets.

Research and Development Expense

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Research and development expense was $49.4 million in 2023, compared to $46.2 million in 2022, an increase of $3.2 million, or 7%.

The acquisitions not fully in the comparable period contributed $7.5 million to the increase in research and development expense primarily consisting of personnel related costs.

Research and development expense related to our Sunset Assets decreased by $0.7 million primarily due to reductions in personnel related costs.

Therefore, research and development expense for our Organic Business decreased by $3.3 million primarily related to a decrease in non-cash stock compensation expense coupled with lower outsourced technology services costs as we shift more resources to our India Center of Excellence.

We expect to see an increase in research and development expenses in 2023 due to increased product investments.

Research and development expense increased approximately $5.4 million due to product investments as part of our growth initiative by building our India Center of Excellence.

This increase was partially offset by a decrease of $2.2 million of research and development costs related to our Sunset Assets.

General and Administrative Expense

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General and administrative expense was $61.3 million in 2023, compared to $70.5 million in 2022, a decrease of $9.2 million, or 13%.

General and administrative expense for our Organic Business decreased by $9.8 million, which was driven primarily by lower non-cash stock compensation expense due primarily to lower grant date fair values in 2022 as well as the absence of a one-time non-cash stock compensation charge taken in 2021 of $6.3 million related to the departure of a former executive.

General and administrative expense for our Sunset Assets decreased by $0.9 million.

This was partially offset by an increase in general administrative expense of $4.3 million due to costs related to the acquisitions not fully in the comparable period, which consisted primarily of higher personnel related costs and administrative expenses.

This decrease was driven primarily by $15.2 million in lower non-cash stock compensation expense due to lower grant date fair values partially offset by an increase in general and administrative expense of $3.7 million due to higher personnel-related costs and an increase in legal and professional fees of $2.3 million, which includes $1.1 million in non-recurring litigation costs.

Depreciation and Amortization Expense

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Depreciation and amortization expense was $58.6 million in 2023, compared to $43.7 million in 2022, an increase of $14.9 million, or 34%.

The acquisitions not fully in the comparable period increased depreciation and amortization expense by $6.0 million, primarily related to acquired intangible assets such as customer relationships and tradenames.

Therefore, depreciation and amortization expense for our Organic Business decreased by $3.6 million in the comparative periods due to assets becoming fully depreciated or amortized during the period.

The increase in amortization relates to the reduced useful life expected for the acquired intangible assets such as customer relationships and tradenames for our Sunset Assets.

The offsetting decrease in depreciation is due to assets becoming fully depreciated during the period.

Acquisition-related Expense

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Acquisition-related expense $ 3,060 —% $ 21,556 6% $ (18,496) (86)%

Acquisition-related expenses are one-time expenses typically incurred for up to four quarters after each acquisition, with the majority of these costs being incurred within six to nine months, to transform the acquired business into the Company’s unified operating platform.

These expenses can vary based on the size, timing and location of each acquisition.

These acquisition-related expenses include transaction-related expenses such as banker fees, legal and professional fees, insurance costs, and deal bonuses.

These acquisition-related expenses also include transformational expenses such as severance, compensation for transitional personnel, office lease terminations, and vendor cancellations.

Absent new acquisition activity, acquisition-related expenses are no longer material if the Company has done no acquisitions after one year.

Acquisition-related expense was $21.6 million in 2022, compared to $21.2 million for 2021, a marginal increase of $0.4 million, or 2%.

The Company had two acquisitions in 2022 compared to three acquisitions in 2021.

The 2022 acquisitions were larger and had complex organizational and tax structures, which resulted in slightly higher acquisition-related expenses compared to 2021.

Acquisition-related expense was $3.1 million in 2023, compared to $21.6 million for 2022, a decrease of $18.5 million, or 86%.

The decrease in expense was a result of no acquisitions in 2023 compared to two acquisitions in 2022.

Expense in 2023 primarily related to final settlements of the 2022 acquisitions.

Impairment of goodwill

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(dollars in thousands)

Impairment of goodwill $ 12,500 4% $ — —% $ 12,500 NA

Goodwill impairment is recognized on a non-recurring basis when the Carrying Value (or GAAP basis book value) of our Company (which is our only reporting unit) exceeds the estimated fair value of our Company as determined by reference to a number of factors and assumptions, including the spot closing price of our Common Stock as of a certain reporting or measurement date.

See “ Note 5.

Goodwill and Other Intangible Assets ” in the notes to our consolidated financial statements for more information regarding our fourth quarter 2022 Goodwill impairment.

Impairment of goodwill $ 128,755 43% $ 12,500 4% $ 116,255 930%

Impairment of goodwill was $128.8 million in 2023, compared to $12.5 million for 2022.

This increase was a result of the goodwill impairment evaluation we performed as of March 31, 2023 due to the decline of our stock price.

Other Expense, net

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Total other expense $ (18,448) (6)% $ (29,926) (9)% $ 11,478 (38)%

Interest expense, net was $29.1 million in 2022, compared to $31.6 million for 2021, a decrease of $2.5 million, or 8%, due primarily to higher interest income on our interest-bearing cash balances as well as a decrease in outstanding borrowings on our Credit Facility.

Other expense, net was $0.8 million in 2022, compared to other expense of $0.3 million in 2021, an increase of $0.5 million, or 209%.

The difference in other expense is primarily due to an increase in foreign currency exchange losses compared to 2021.

Interest expense, net was $18.7 million in 2023, compared to $29.1 million for 2022, a change of $10.4 million, or 36%, due primarily to higher interest income on our interest-bearing cash balances, a decrease in outstanding borrowings on our Credit Facility and the $2.5 million amortization of the deferred gain on the liquidation of a portion of our interest rate swaps as well as a $2.8 million benefit related to the deferred gain recognized immediately into earnings upon the $35 million prepayment on our Term Loans.

Other income, net was $0.2 million in 2023, compared to other expense of $0.8 million in 2022, a change $1.0 million.

The difference in other expense is primarily due to an increase in foreign currency exchange gains compared to 2022.

Benefit from Income Taxes

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(dollars in thousands)

Loss before provision for income taxes (70,154) (22)% (66,556) (23)% (3,598) (5)%

Benefit from (provision for) income taxes $ 2,493 1% $ 1,741 —% $ 752 43%

Effective income tax rate (1.4) % (2.5) %

Benefit from income taxes was $1.7 million in 2022, compared to a benefit for income taxes of $8.3 million in 2021, a decrease in the benefit from income taxes of $6.6 million, or 79%.

This decrease was due primarily to decreased benefits recognized during the year attributable to the release of valuation allowances associated with acquisitions of domestic entities with deferred tax liabilities that, upon acquisition, allow us to recognize certain deferred tax assets that had previously been offset by a valuation allowances.

Because we have not generated domestic net income in any period to date, we have recorded a full valuation allowance against our domestic net deferred tax assets, exclusive of any remaining tax deductible goodwill after application of indefinite life deferred tax assets.

Realization of any of our domestic deferred tax assets depends upon future earnings, the timing and amount of which are uncertain.

Based on analysis of acquired net operating losses, utilization of our net operating losses will be subject to annual limitations due to the ownership change rules under the Code and similar state provisions.

Refer to “ Note 6.

Income Taxes ”, in the notes to the consolidated financial statements for more information regarding our income taxes as they relate to foreign and domestic operations.

Benefit from income taxes was $2.5 million in 2023, compared to a benefit for income taxes of $1.7 million in 2022, an increase in the benefit from income taxes of $0.8 million, or 43%.

This increased benefit was related primarily to the reduction of uncertain tax positions due to expiration of related statute of limitation for a Canadian exposure and foreign income taxes associated with our combined non-U.S.

operations which is offset in Australia and the UK by valuation allowances.

These tax benefits are offset by the impact of a material goodwill impairment in 2023, changes in deferred tax liabilities associated with amortization of U.S.

tax deductible goodwill and U.S.

state taxes in certain states in which the Company does not file on a consolidated basis or have net operating loss carryforwards.

Comparison of Years Ended December 31, 2022 and December 31, 2021

For a comparison of the years ended December 31, 2022 and 2021 refer to “ Item 7.

Management’s Discussion and Analysis ” in the Company’s Annual Report on Form 10-K for the years ended December 31, 2021 filed with the SEC on February 24 , 2022.

Non-GAAP Financial Measures

In addition to the GAAP and non-GAAP financial measures described in “ —Results of Operations ” above, we regularly review the following key metrics to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions (in thousands, except percentages):

Management’s Discussion and Analysis ” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 28 , 2023.

Key Metrics and Non-GAAP Financial Measures

In addition to the GAAP financial measures described in “ Results of Operations ” above, we regularly review the following key metrics and non-GAAP financial measures to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions (in thousands, except percentages):

As of December 31,

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Adjusted EBITDA $ 64,438 $ 97,105 $ 96,657

$ 97,105 $ 96,657 $ 99,903

(1) Adjusted EBITDA is presented for the years ended December 31, 2022, 2021 and 2020.

Annualized recurring revenue value at year-end

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Refer to “ Note 3 Acquisitions ” and “ Note 5 Goodwill and Other Intangible Assets ” in the notes to the consolidated financial statements for further discussion.

Our ARR was $266.3 million, $257.1 million and $220.5 million as of December 31, 2022, 2021 and 2020.

Our ARR was $242.1 million, $266.3 million and $257.1 million as of December 31, 2023, 2022 and 2021, respectively.

Annual net dollar retention rate

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Adjusted EBITDA $ 64,438 $ 97,105 $ 96,657

Core Organic Growth Rate

Beginning with the three months ended June 30, 2023, we began disclosing our Core Organic Growth Rate, a non-GAAP financial measure.

We use Core Organic Growth Rate as a key performance measure to assess our consolidated operating performance over time and for planning and forecasting purposes.

Core Organic Growth Rate is the percentage change between two reported periods in subscription and support revenue, excluding subscription and support revenue from Sunset Assets and Overage Charges, as defined below.

We calculate our year-over-year Core Organic Growth Rate as though all acquisitions or dispositions closed as of the end of the latest period were closed as of the first day of the prior year period presented.

Core Organic Growth Rate does not represent actual organic revenue generated by our business as it stood at the beginning of the respective period.

For the three-month period ended December 31, 2023, our Core Organic Growth Rate was negative 0.9%.

Core Organic Growth Rates are not necessarily indicative of either future results of operations or actual results that might have been achieved had certain Sunset Asset classifications not been made or had certain acquisitions or dispositions been consummated on the first day of the prior year period presented.

We believe that this metric is useful to management and investors in analyzing our financial and operational performance period-over-period along with evaluating the growth of our

business normalized for the impact of acquisitions and dispositions, as well as adjusting for the exclusion of non-core Sunset Assets and non-committed Overage Charges.

For example, by including pre-acquisition revenue, Core Organic Growth Rate allows us to measure the underlying revenue growth of our business as of the end of the period presented, which we believe provides insight into our current performance.

Related Defined Terms

Overage Charges are subscription and support revenues earned in addition to contractual minimum customer commitments as a result of the usage volume of services including text and e-mail messaging and third-party pass-through costs that exceed the levels stipulated in contracts with the Company.

The following table represents a reconciliation of total revenue, the most comparable GAAP measure, to core organic revenue for each of the periods indicated.

Three Months Ended December 31,

(dollars in thousands)

Reconciliation of total revenue to core organic revenue:

Total revenue $ 72,178 $ 78,811

Perpetual license revenue 1,760 1,628

Professional services revenue 2,234 3,035

Subscription and support revenue from Sunset Assets 10,211 14,982

Overage Charges 1,422 2,089

Core organic revenue $ 56,551 $ 57,077

Core Organic Revenue is defined as total revenue, less revenue from acquisitions closed during or subsequent to the prior year comparable period, Perpetual license revenues, Professional services revenues, revenue from Sunset Assets, Overage Charges and Political Revenue.

For reconciliations of total revenue to Core Organic Revenue and subscription and support revenue to Core Organic Revenue, see “ —Results of Operations—Adjusted Operating Measures.

Liquidity and Capital Resources

To date, we have financed our operations primarily through the raising of capital including sales of our common stock and preferred stock or our convertible preferred stock, cash from operating activities and borrowings under our Credit Facility (as hereinafter defined).

To date, we have financed our operations primarily through cash generated from operating activities, the raising of capital including sales of our common stock and our convertible preferred stock, and borrowings under our Credit Facility (as hereinafter defined).

We believe that current cash and cash equivalents, cash flows from operating activities and availability under our existing Credit Facility will be sufficient to fund our operations for at least the next twelve months.

In addition, we intend to utilize the sources of capital available to us under our Credit Facility and registration statement to support our continued growth via acquisitions within our core enterprise solution suites of complementary technologies and businesses.

We do not intend to offer for sale any common stock at current market prices.

In addition, we intend to utilize the sources of capital available to us under our Revolver to support our continued growth via acquisitions.

The following table summarizes our liquidity for the periods indicated:

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Available borrowings from our Revolving Credit Facility (1)

60,000 60,000

Total Liquidity $ 296,559 $ 308,653

The $59.5 million increase in cash and cash equivalents from December 31, 2021 to December 31, 2022 includes $110.4 million in cash proceeds related to our Series A Preferred Stock, net of issuance costs which closed in August 2022.

This was partially offset by $62.4 million in cash paid for our two acquisitions closed in January and February 2022, net of $0.7 million in cash acquired.

Non-cash acquisition date consideration to be paid in future periods related to these acquisitions includes $5.9 million in holdback payments and that are due within 12 to 18 months of the closing dates of the underlying acquisitions.

(1) Loans under the Revolver may be borrowed, repaid and reborrowed until August 6, 2024.

The $12.1 million decrease in cash and cash equivalents from December 31, 2022 to December 31, 2023 was due primarily to the $35 million pay down on our outstanding borrowings and the $14.1 million paid to repurchase shares of the Company’s Common Stock, partially offset by the cash gain of $20.5 million from the sale of a portion of our interest rate swaps and other cash flows from operations.

Our cash and cash equivalents held by our foreign subsidiaries was $29.2 million as of December 31, 2023.

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As of December 31, 2023 and 2022, we had a working capital surplus of $169.6 million and $170.1 million, respectively.

Series A Preferred Stock

The Series A Preferred Stock as discussed in “ Note 12.

Series A Preferred Stock ” provided us an additional $115.0 million in liquidity during the year ended December 31, 2022, which we intend to use for (a) for general corporate purposes and (b) for transaction-related fees and expenses.

As of December 31, 2022, the Series A Preferred Stock Issuance Costs totaled $4.6 million.

The holders of Series A Convertible Preferred Stock are entitled to dividends (i) at the rate of 4.5% per annum until but excluding the seven year anniversary of the closing, and (ii) at the rate of 7.0% per annum on and after the seven year anniversary of the closing, and are also entitled to fully participate in any dividends or other distributions declared or paid on our common stock on an as-converted basis.

Dividends will be payable quarterly in arrears, and may be paid, at our option, in cash or by paying dividends in kind .

Our ability to pay cash dividends is subject to the restrictions under the Credit Facility (as defined below).

The Series A Preferred Stock had accrued unpaid dividends of $1.8 million as of December 31, 2022.

The Series A Preferred Stock ranks senior to our common stock with respect to distribution rights and rights upon our liquidation, dissolution or winding up (“Liquidation”), on parity with any class or series of our capital stock expressly designated as ranking on parity with the Series A Preferred Stock with respect to distribution rights and rights upon Liquidation, junior to any class or series of our capital stock expressly designated as ranking senior to the Series A Preferred Stock with respect to distribution rights and rights upon Liquidation and junior in right of payment to our existing and future indebtedness, including the Credit Facility.

Series A Convertible Preferred Stock

In August of 2022, we issued Series A Preferred Stock as discussed in “ Note 12.

Series A Convertible Preferred Stock ” which provided us an additional $110.4 million in liquidity, net of issuance costs of $4.6 million, that we are using for general corporate purposes and intend to use for future acquisitions.

Credit Facility

Our facility is comprised of $540.0 million in original principal term loans and a $60.0 million revolving credit facility.

On August 6, 2019, we entered into a credit agreement (the “Credit Facility”) which provides for (i) a fully-drawn $350 million, 7 year, senior secured term loan B facility (the “Term Loan”) and (ii) a $60 million, 5 year, revolving credit facility (the “Revolver”) that was fully available as of December 31, 2022.

The Credit Facility replaced our previous credit facility.

All outstanding balances under our previous credit facility were paid off using proceeds from our Credit Facility.

On November 26, 2019, the Company entered into a First Incremental Assumption Agreement (the “Incremental Assumption Agreement”) which provides for a term loan facility to be established under the Credit Facility i n an aggregate principal amount of $190 million (the “2019 Incremental Term Loan”) which is in addition to the existing $350 million Term Loan outstanding und er the Credit Facility and the $60 million Revolver under t he Credit Facility.

The Credit Facility has no financial covenants as long as less than 35% of the Revolver is drawn as of the last day of any fiscal quarter.

The Credit Facility is secured by a security interest in substantially all of our assets and requires us to maintain certain financial covenants.

The Credit Facility contains certain non-financial restrictive covenants that limit our ability to transfer or dispose of assets, merge with other companies or consummate certain changes of control, acquire other companies, pay dividends, incur additional indebtedness and liens, effect changes in management and enter into new businesses.

As of December 31, 2022, we were in compliance with all covenants under the Credit Facility.

See “ Note 7.

Debt ” in the notes to the consolidated financial statements for more information regarding our Credit Facility and outstanding debt as of December 31, 2022.

On February 21, 2023, the Company entered into an amendment to its Credit Facility.

The amendment amended the interest rate benchmark from LIBOR to SOFR.

Other than the foregoing, the material terms of the Credit Agreement remains unchanged.

Our Credit Facility, as defined and described in “Note 7.

Debt” , is comprised of fully drawn Term Loans as of December 31, 2023 and a $60.0 million revolving credit facility which was fully available as of December 31, 2023.

On October 21, 2022 we filed a resale registration statement on Form S-3 (File No.

333-267973) (the “2022 S-3”), on behalf of the Purchaser and pursuant to the Registration Rights Agreement, which became effective on November 1, 2022 and covers (i) the issued Series A Preferred Stock and (ii) the number of shares of the Company’s common stock issuable upon conversion of such Series A Preferred Stock, which amount includes and assumes that dividends on the Series A Preferred Stock are paid by increasing the Liquidation Preference of the Series A Preferred Stock for a period of sixteen dividend payment periods from the initial issuance date.

333-267973) (the “2022 S-3”), on behalf of the Purchaser and pursuant to the Registration Rights Agreement, which became effective on November 1, 2022 and covers (i) the issued Series A Convertible Preferred Stock and (ii) the number of shares of the Company’s common stock issuable upon conversion of such Series A Convertible Preferred Stock, which amount includes and assumes that dividends on the Series A Preferred Stock are paid by increasing the Liquidation Preference of the Series A Convertible Preferred Stock for a period of sixteen dividend payment periods from the initial issuance date.

See “ Note 12.

Series A Preferred Stock ” for further details.

Series A Convertible Preferred Stock ” for further details.

The following table summarizes our cash flows for the periods indicated:

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The volume of professional services rendered, the volume and timing of customer bookings and contract renewals, and the related timing of collections and renewals on those bookings, as well as the timing of spending commitments and payments of our accounts payable, accrued expenses, accrued payroll and related benefits, all affect these account balances.

Cash provided by operating activities was $30.0 million for 2022 compared to $41.7 million for 2021, a decrease of $11.8 million.

This decrease in operating cash flow is generally attributable to the working capital uses of cash outweighing the working capital sources of cash outlined below.

Working capital uses of cash for the year ended December 31, 2022 included a $14.0 million decrease in accrued expenses, a decrease of $7.2 million in accounts payable related to timing of payments, a $2.7 million increase in prepaids and other related primarily to an increase in deferred sales commission and a decrease of $5.0 million in deferred revenue.

Working capital sources of cash for 2022 included a decrease of $9.7 million decrease in accounts receivable related to the timing of collections.

Cash provided by operating activities was $49.9 million for 2023 compared to $30.0 million for 2022, an increase of $20.0 million.

This increase in operating cash flow is generally attributable to the working capital sources of cash outweighing the working capital uses of cash outlined below.

Working capital sources of cash for the year ended December 31, 2023 included a one-time $20.5 million cash gain on the sale of a portion of our interest rate swaps in August 2023.

A substantial source of cash is invoicing for subscriptions and support fees in advance, which is recorded as deferred revenue, and is included on our consolidated balance sheet as a liability.

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As our business grows, we expect our primary investing activities to continue to further expand our family of software applications and infrastructure and support additional personnel.

For 2022, cash used in investing activities consisted of $62.4 million associated with the Company’s 2022 acquisitions, and the purchases of property and equipment of $0.9 million.

Cash used in investing activities decreased $30.3 million in 2022 compared to 2021 primarily as a result of closing two acquisitions during the period compared to three acquisition in the comparable prior year period.

Cash used in investing activities decreased $62.0 million in 2023 compared to 2022 primarily as a result of closing no acquisitions during the period compared to two acquisition in the comparable prior year period.

Cash Flows from Financing Activities

Our primary financing activities have consisted of capital raised to fund our acquisitions, proceeds from debt obligations incurred to finance our acquisitions, repayments of our debt obligations, and share based tax payment activity.

Cash provided by financing activities increased $102.3 million in 2022 compared to 2021.

The increase in cash provided by financing activities relates primarily to a $110.4 million in cash proceeds related to our Series A Preferred Stock, net of issuance costs, partially offset by a $7.4 million increase in additional consideration paid to sellers (i.e.

holdbacks) and a $0.6 million increase in net share employee payroll tax settlement payments compared to the same period in 2021.

Cash from financing activities decreased $155.5 million in 2023 compared to 2022.

The decrease in cash provided by financing activities relates primarily to 2022 net cash proceeds of $110.4 million related to our Series A Preferred Stock, which did not reoccur in 2023, and by the use of $35 million used to pay down our Credit Facility in 2023 and $14.1 million of cash used for Common Stock repurchases in 2023.

Contractual Payment Obligations

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(2) Future interest on debt obligations is calculated using the interest rate effective as of December 31, 2023.

We have entered into floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to our debt.

These interest rate swaps effectively converted the entire balance of the Company’s $540 million original principal term loans from variable interest payments to fixed interest rate payments, based on an annualized fixed rate of 5.4%, for the 7 year term of the debt.

In conjunction with our $350 million, 7-year, Credit Facility and our $190 million 2019 Incremental Term Loan, we entered into interest rate hedge instruments for the full 7 year term, effectively fixing our interest rate at 5.4%.

However, the interest rate associated with our $60 million, 5 year, undrawn Revolver remains floating.

We have entered into floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to a portion of our debt.

See “ Item 7A.

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Actual results could differ significantly from the estimates made by our management.

To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

To the extent that there are differences between our estimates and actual results, our future financial

statement presentation, financial condition, results of operations and cash flows will be affected.

While our significant accounting policies are more fully described in “ Note 2.

Basis of Presentation and Summary of Significant Accounting Policies ” in the notes to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K , we believe that the accounting policies discussed below are critical to understanding our historical and future performance, as these policies relate to the more significant areas involving management’s judgments and estimates.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services over the term of the agreement.

We recognize revenues based on the five-step model in accordance with ASC 606, Revenue from Contracts with Customers .

We derive our revenues primarily from subscription and support revenues.

Other revenue-generating activities include perpetual licenses and professional services revenues.

Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment.

In addition, significant judgments are made when determining the standalone selling price (“SSP”) in situations where we have a contract that have multiple performance obligations.

We determine the SSP based on our overall pricing objectives, taking into consideration market conditions and other factors, including the value of our contracts, historical standalone sales, customer demographics, geographic locations, and the number and types of users within our contracts.

For revenue generated from arrangements that involve vendor reseller agreements and messaging-related subscription agreements, there is significant judgment in evaluating whether we are the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis).

In this assessment, we consider if we obtain control of the specified goods or services before they are transferred to the customer.

In reaching conclusions on gross versus net revenue recognition, we place the most weight on the analysis of whether or not we are the primary obligor in the arrangement.

Generally, we report revenue from vendor reseller agreements on a gross basis, meaning the amounts billed to customers are recorded as revenue, and expenses incurred are recorded as cost of revenue.

See “ Note 14.

Revenue Recognition ” in the notes to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a detailed description of our revenue recognition policy.

Deferred Commissions

Sales commissions for new customer contracts are capitalized upon contract signing and amortized over the expected life of the customer relationships, which has been determined to be approximately 6 years, consistent with the prior year.

Sales commissions paid on renewal contracts are deferred and amortized over the average renewal term, which was determined to

be approximately 18 months, consistent with the prior year.

Determining the period of expected life of customer relationships and average renewal term requires judgment for which we take into consideration our customer contracts, our technology life cycle and other factors.

See “ Note 14.

Revenue Recognition—Deferred Commissions ” in the notes to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a detailed description of our deferred commissions.

We are subject to income taxes in the United States and several foreign jurisdictions.

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The Company’s policy is to account for interest and penalties as a component of income tax expense.

Business Combinations

The allocation of the purchase price in a business combination requires management to make significant estimates in determining the fair value of acquired assets and assumed liabilities, especially with respect to intangible assets.

The excess of the purchase price over these estimated fair values is recorded to goodwill.

Estimated fair values of acquired assets and assumed liabilities that are separately identifiable from goodwill are generally based on available historical information, future expectations, available market data, and assumptions determined to be reasonable, but inherently uncertain, with respect to future events, including economic conditions, competition, technological obsolescence, the useful life of the acquired assets, and other factors.

Significant estimates and assumptions, including fair value estimates, are used to determine the fair value of assets acquired, liabilities assumed, and contingent consideration transferred as well as the useful lives of long-lived assets acquired.

The valuation of identifiable intangible assets reflects management’s estimates based on, among other factors, use of established valuation methods, including, but not limited to, the multi-period excess earnings method income approach method and the relief-from-royalty method.

The purchase price transferred in our acquisitions often contain purchase price holdback and contingent consideration provisions, such as earnout payments.

The Company utilizes a third-party valuation specialist to estimate the acquisition date fair value of potential earnout payments.

Subsequent remeasurements of potential earnout payments require significant judgements and estimates including, but not limited to, (and if applicable in the

circumstances) customer renewals, new customers, ARR growth, forecasted bookings, forecasted churn and other factors.

See “ Note 2.

Basis of Presentation and Summary of Significant Accounting Policies—Business Combinations ” in the notes to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K for a detailed description of business combinations.

Stock-Based Compensation

We measure all share-based payments, including grants of options to purchase common stock and the issuance of restricted stock or restricted stock units to employees, service providers and board members, using the fair-value at grant date.

We record forfeitures as they occur.

The cost of services received from employees and non-employees in exchange for awards of equity instruments is recognized on our consolidated statement of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period.

We value restricted stock and restricted stock units at the closing price of our common stock on the grant date.

We value stock option awards using the Black-Scholes option-pricing model.

For the years ended December 31, 2022, 2021, and 2020 stock-based compensation awards consisted primarily of restricted stock and restricted stock units.

From time to time, we grant restricted stock units that also include performance or market-based conditions (“PRSUs”).

For PRSUs granted with a market condition, we use a Monte Carlo simulation analysis to value the award.

Compensation expense for awards with marked-based conditions is recognized over the required service period of the grant based on the grant date fair value of the award and is not subject to fluctuation due to achievement of the underlying market-based condition.

Goodwill and Other Intangibles

Goodwill Impairment

We assess Goodwill for impairment annually on October 1st, or more frequently when an event occurs which could cause the Carrying Value (or GAAP basis book value) of our Company to exceed the estimated fair value of our Company.

The Company adopted ASU 2017-04, Intangibles - Goodwill and Other:

Simplifying the Test for Goodwill Impairment during the first quarter of 2018.

As we operate as one reporting unit, the Goodwill impairment evaluation is performed at the consolidated entity level by comparing the estimated fair value of the Company to its Carrying Value.

We first assess qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its Carrying Value.

qualitative factors considered include:

industry and market considerations;

macroeconomic conditions;

and other relevant events and factors.

Based on the qualitative assessment, if it is determined that it is more likely than not that the Company's fair value is less than its Carrying Value, then we perform a quantitative analysis using a fair-value-based approach to determine if the fair value of our reporting unit is less than its Carrying Value.

Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit and involves significant estimates and assumptions.

These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables.

See “ Note 5.

Goodwill and Other Intangible Assets ” for more information regarding our fourth quarter 2022 Goodwill impairment.

Identifiable intangible assets

Identifiable intangible assets consist of customer relationships, marketing-related intangible assets and developed technology.

Intangible assets with definite lives are amortized over their estimated useful lives on a straight-line basis.

The straight-line method of amortization represents our best estimate of the distribution of the economic value of the identifiable intangible assets.

The Company periodically reviews the estimated useful lives of its identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value or revised useful life.

Goodwill and Other Intangible Assets ” for more information regarding our 2022 and 2023 Goodwill impairments.

Recent Accounting Pronouncements

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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-K

Item 7. Management’s Discussion and Analysis