What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-02-22 compared with 2023-03-01 · 229 added, 302 removed, 993 unchanged (35% of the section changed)

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Upland Software, Inc.

To the Shareholders and the Board of Directors of Upland Software, Inc.

Opinion on the Financial Statements

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue recognition for new products and services

Description of the Matter

The Company frequently acquires companies that have their own portfolio of products and services that will be included in the Upland suite of offerings.

For each of these new products and services, the Company must understand the terms and conditions contained in the contracts with customers and evaluate and apply the five-step model under ASC 606 to ensure proper revenue recognition.

Management performs detailed contract review procedures to ensure that any non-standard terms and conditions included in the contracts are properly considered in relation to the accounting literature.

Auditing the Company’s revenue recognition analysis related to new products and services, primarily from acquisitions, was challenging due to the effort required in identifying and evaluating non-standard terms and conditions in contracts under Upland’s revenue recognition policy, in accordance with ASC 606.

For example, there may be non-standard terms and conditions that required judgment to determine distinct performance obligations, transaction price, or the pattern of revenue recognition.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of the Company's internal controls over the process to evaluate the application of the Company’s revenue recognition policy to newly added products and services.

This included the controls related to the determination of distinct performance obligations, transaction price, and pattern of revenue recognition.

Among other procedures, we obtained and evaluated management’s assessment of the respective revenue recognition for new products and services.

We also reviewed management’s evidence for compiling the complete portfolio of contracts and selected a sample of executed contracts to review the terms and conditions.

For each of the contracts we reviewed, we identified the promised goods and services in the contract and assessed the distinct performance obligations.

We also evaluated the impact of non-standard terms and conditions on the determination of the transaction price and pattern of revenue recognition.

Measurement of Income Tax Provision

Description of the Matter

As more fully described in Notes 2 and 6 to the consolidated financial statements, the Company operates in domestic and international markets and is subject to tax law in the U.S., U.K., and other foreign tax jurisdictions.

The income tax provision is an estimate based on management’s understanding of current enacted tax laws and tax rates of each tax jurisdiction.

The Company’s accounting for income taxes involves the application of complex and changing tax laws, regulations, and case law in multiple jurisdictions as it relates to non-routine transactions such as acquisitions.

The Company utilizes judgment in the interpretation of tax laws, regulations, and case law as they apply to its tax positions.

For the year ended December 31, 2022, income tax benefit was $1.7 million.

Auditing management’s calculation of the provision for income taxes was complex because the provision for income taxes involved auditor judgment, due to the interpretation of tax laws, regulations, and case law across multiple jurisdictions, the application of those laws, regulations, and case law as it relates to non-routine transactions such as acquisitions, and evaluation of the application of such tax laws, regulations, and case law to the Company’s tax positions.

These matters are subject to legal and factual interpretation.

Our audit procedures required significant audit effort, including the use of our tax professionals to assist in evaluating the audit evidence obtained from our procedures.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design and tested the operating effectiveness of internal controls relating to the provision for income taxes, inclusive of management’s review of the provision for income taxes and interpretation of tax laws, regulations, and case law.

For example, we tested the Company’s controls over management’s review of the underlying data used in the provision for income tax calculations and controls over management’s review of the analysis provided by advisors utilized in the application of tax law to the Company’s tax positions.

Among other audit procedures performed, we assessed the Company’s evaluation of tax laws, regulations, and case law, and tested the provision for income tax calculations including the completeness and accuracy of underlying data used in the calculations.

We involved our tax matter professionals to evaluate the Company’s interpretation and application of tax laws, regulations, and case law to the Company’s tax positions.

This included evaluating advice obtained by the Company.

We have also evaluated the Company’s income tax disclosures included in Notes 2 and 6 of the consolidated financial statements in relation to these matters.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of goodwill for impairment

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Accounts receivable, net of allowance for credit losses 38,765 47,594

47,594 50,499

Deferred commissions, current 10,429 10,961

Unbilled receivables 2,701 5,313

Income tax receivable, current 3,775 542

Prepaid expenses and other current assets 8,004 8,232

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Total assets $ 870,024 $ 1,113,459

(in thousands, except share and per share amounts) December 31,

LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY

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Noncurrent deferred tax liability, net 16,025 18,416

Interest rate swap liabilities — 8,409

Other long-term liabilities 461 1,170

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5,000,000 shares authorized:

115,000 shares issued and outstanding as of December 31, 2022;

no shares issued and outstanding as of December 31, 2021, respectively.

115,000 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

117,638 112,291

Stockholders’ equity:

Common stock, $ 0.0001 par value;

50,000,000 shares authorized:

75,000,000 and 50,000,000 shares authorized as of December 31, 2023 and December 31, 2022, respectively;

29,908,407 and 32,221,855 shares issued and outstanding as of December 31, 2023 and December 31, 2022, respectively

Additional paid-in capital 608,995 606,755

Accumulated other comprehensive income (loss) 11,110 ( 11,514 )

Accumulated other comprehensive income

Accumulated deficit ( 488,872 ) ( 308,998 )

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Interest expense, net ( 18,684 ) ( 29,145 ) ( 31,626 )

Other expense, net ( 781 ) ( 253 ) ( 111 )

Other income (expense), net

236 ( 781 ) ( 253 )

Total other expense ( 18,448 ) ( 29,926 ) ( 31,879 )

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Unrealized translation gain (loss) on intercompany loans with foreign subsidiaries 4,096 ( 9,978 ) ( 602 )

Unrealized gain (loss) on interest rate swaps 49,577 21,623 ( 32,455 )

Interest rate swaps ( 11,723 ) 49,577 21,623

Other comprehensive income (loss):

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Issuance of stock under Company plans, net of shares withheld for tax — — 1,109,434 — ( 708 ) — — ( 708 )

Issuance of stock, net of issuance costs — — 4,025,000 — 130,073 — — 130,073

Stock-based compensation — — — — 53,873 — — 53,873

Cumulative adjustment related to adoption of accounting standard — — — — — — ( 108 ) ( 108 )

Foreign currency translation adjustment — — — — — ( 6,301 ) — ( 6,301 )

Unrealized translation gain on foreign currency denominated intercompany loans — — — — — 2,271 — 2,271

Unrealized loss on interest rate swaps — — — — — ( 32,455 ) — ( 32,455 )

Unrealized translation loss on foreign currency denominated intercompany loans — — — — — ( 602 ) — ( 602 )

Interest rate swaps — — — — — 21,623 — 21,623

Net loss — — — — — — ( 58,212 ) ( 58,212 )

Balance at December 31, 2021 — — 31,096,548 $ 3 $ 568,384 $ ( 11,514 ) $ ( 240,585 ) $ 316,288

Issuance of Convertible Preferred Stock 115,000 $ 110,445 — — — — — —

Dividends accrued - Convertible Preferred Stock — 1,846 — — ( 1,846 ) — — ( 1,846 )

Issuance of stock under Company plans, net of shares withheld for tax — — 1,125,307 — ( 1,385 ) — — ( 1,385 )

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Unrealized translation loss on intercompany loans with foreign subsidiaries — — ( 9,978 ) ( 9,978 )

Unrealized gain on interest rate swaps — — — — — 21,623 — 21,623

Interest rate swaps — — 49,577 49,577

Net loss — — — — — — ( 68,413 ) ( 68,413 )

Balance at December 31, 2022 115,000 $ 112,291 32,221,855 $ 3 $ 606,755 $ 11,110 $ ( 308,998 ) $ 308,870

Issuance of Convertible Preferred Stock 115,000 110,445 — — — — — —

Dividends accrued - Convertible Preferred Stock — 5,347 — — ( 5,347 ) — — ( 5,347 )

Issuance of stock under Company plans, net of shares withheld for tax — — 931,652 — ( 1,086 ) — — ( 1,086 )

Stock repurchases and retirements ( 3,245,100 ) ( 14,201 ) ( 14,201 )

Stock-based compensation — — — — 22,874 — — 22,874

Foreign currency translation adjustment — — — — 2,685 — 2,685

Unrealized translation loss on intercompany loans with foreign subsidiaries — — — — — ( 9,978 ) — ( 9,978 )

Unrealized gain on interest rate swaps — — — — — 49,577 — 49,577

Unrealized translation loss on foreign currency denominated intercompany loans — — — — 4,096 — 4,096

Interest rate swaps — — — — ( 11,723 ) — ( 11,723 )

Net loss — — — — — — ( 179,874 ) ( 179,874 )

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Foreign currency re-measurement loss ( 538 ) ( 12 ) 25

Non-cash interest and other expense 2,256 2,249 2,233

Non-cash stock compensation expense 41,602 53,873 41,692

Non-cash interest, net and other income, net ( 2,976 ) 2,256 2,249

Non-cash stock-based compensation expense 22,874 41,602 53,873

Non-cash loss on impairment of goodwill 128,755 12,500 —

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Prepaid expenses and other current assets ( 471 ) 10,070 5,761

Other assets 10,866 ( 12,811 ) ( 13,260 )

Accounts payable ( 6,896 ) ( 7,175 ) 10,865

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Purchase of property and equipment ( 1,220 ) ( 866 ) ( 1,115 )

Purchase of customer relationships — — ( 201 )

Purchase business combinations, net of cash acquired — ( 62,356 ) ( 92,417 )

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Payments on finance leases — — ( 12 )

Proceeds from notes payable, net of issuance costs ( 203 ) ( 122 ) ( 303 )

Payments of debt costs ( 221 ) ( 203 ) ( 122 )

Payments on notes payable ( 40,400 ) ( 5,400 ) ( 5,400 )

Stock repurchases and retirement ( 14,060 ) — —

Issuance of Series A Convertible Preferred stock, net of issuance costs — 110,445 —

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Upland expects that this will expand its product offerings, customer base and market access, resulting in increased benefits of scale.

Consistent with Upland’s growth strategy, Upland has made a total of 31 acquisitions in the 11 years ending December 31, 2022.

Consistent with Upland’s growth strategy, Upland has made a total of 31 acquisitions in the 12 years ended December 31, 2023.

Basis of Presentation and Summary of Significant Accounting Policies

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Accounts Receivable and Allowance for Credit Losses

On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments - Credit Losses:

Measurement of Credit Losses on Financial Instruments .

The adoption of ASU 2016-13 resulted in recording a cumulative-effect adjustment to decrease the beginning balance (at January 1, 2020) of Accumulated deficit in the amount of $ 0.1 million, which represented the accelerated recognition of credit losses related to our trade receivables under the expected credit loss model of calculating our current expected credit losses compared to the previous incurred loss model.

The Company extends credit to the majority of its customers.

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Invoices generally require payment due upon receipt of invoice.

generally does not charge interest on past due payments, although the Company's contracts with its customers usually allow it to do so.

The Company generally does not charge interest on past due payments, although the Company's contracts with its customers usually allow it to do so.

To manage accounts receivable credit risk, the Company performs periodic credit evaluations of its customers and maintains current expected credit losses which considers such factors as historical loss information, geographic location of customers, current market conditions, and reasonable and supportable forecasts.

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Balance at beginning of year $ 1,158 $ 1,107 $ 1,465

Cumulative adjustment related to adoption of ASU 2016-13 — — 108

Provision for credit losses ( 569 ) 556 694

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In the event a holdback is reduced subsequent to the finalization of purchase accounting, the reduction is recorded as a gain in Acquisition-related expenses or Other income (expense), net on our consolidated statements of operations based on management’s assessment of the nature of the liability.

Goodwill and Other Intangibles

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.

Goodwill Intangible Assets and Impairment Assessments

Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired.

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

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.

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See “ Note 5.

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

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

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

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

Each period the Company evaluates the estimated remaining useful lives of purchased intangible assets and whether events or changes in circumstances warrant a revision to the remaining periods of amortization.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of intangible assets may not be recoverable.

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Software Development Costs

Software development costs are expensed as incurred until the point the Company establishes technological feasibility.

Software development costs for software to be sold are expensed as incurred until the point the Company establishes technological feasibility.

Technological feasibility is established upon the completion of a working model.

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operating activity).

As of December 31, 2022 and 2021, the net carrying value of capitalized implementation costs related to hosting arrangements that were incurred during the application development stage were $ 0.1 million and $ 0.3 million, respectively.

These costs related primarily to the implementation of a new ERP system.

These capitalized implementation costs will be amortized over the expected term of the arrangement and are amortized in the same line item on our consolidated statements of operations as the expense for fees for the associated hosting arrangement.

As of December 31, 2023 and 2022, the net carrying value of capitalized implementation costs related to hosting arrangements that were incurred during the application development stage were not material.

Capitalized implementation costs are amortized over the expected term of the arrangement and are amortized in the same line item on our consolidated statements of operations as the expense for fees for the associated hosting arrangement.

Debt Issuance Costs

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In 2023 and 2022, the Company had no write offs of debt issuance costs.

The Company 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 2019, the Company entered into floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to our debt.

Until the termination of a portion of the interest rate swaps as described in “ Note 7.

Debt” , these interest rate swaps effectively converted $ 258.5 million and $ 522.5 million of our term loans as of December 31, 2023 and 2022, respectively, from variable interest payments to fixed interest rate payments, based on an annualized fixed rate of 5.4 %, for the remaining term of the debt.

ASC 815, Derivatives and Hedging , requires entities to recognize derivative instruments as either assets or liabilities in the statement of financial position at fair value.

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As of December 31, 2023, the fair value of interest rate swaps included in Interest rate swap assets on our consolidated balance sheets was $ 14.3 million.

As of December 31, 2021, the fair value of interest rate swaps included in Interest rate swap liabilities was $ 8.4 million.

The change in the fair value of the hedging instruments is recorded in Unrealized gain (loss) on interest rate swaps on our consolidated stateme nts of comprehensive income.

Amounts deferred in Unrealized gain (loss) on interest rate swaps in our consolidated statements of comprehensive income will be reclassified to Interest expense, net on our consolidated statements of operations in the period in which the hedged item affects earnings.

As of December 31, 2022, the fair value of interest rate swaps included in Interest rate swap assets was $ 41.2 million.

The change in the fair value of the hedging instruments is recorded in Interest Rate Swaps on our consolidated stateme nts of comprehensive loss.

Amounts deferred on interest rate swaps in our consolidated statements of comprehensive income will be reclassified to Interest expense, net on our consolidated statements of operations in the period in which the hedged item affects earnings.

Cash flows from hedging instruments are classified in the same category as the cash flows for the underlying item being hedged within "Net cash provided by operating activities" on the consolidated statements of cash flows.

Fair Value of Financial Instruments

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and Level 3, defined as unobservable inputs in which little or no market data exists, therefore, requiring an entity to develop its own assumptions.

The Company adopted ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement , in the first quarter of 2020.

Under ASU 2018-13, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public business entities will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements.

The Company’s financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, and long–term debt.

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value, primarily due to short maturities.

The carrying values of the Company’s debt instruments approximated their fair value based on rates currently available to the Company.

Preferred Stock

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See “ Note 12.

Series A Preferred Stock—Series A Convertible Preferred Stock” for further details.

Series A Convertible Preferred Stock—Series A Convertible Preferred Stock” for further details.

The Series A Preferred Stock and cumulative preferred dividends, net of preferred issuance costs, is presented as Mezzanine Equity of $ 117.6 million as of December 31, 2023 in the Company’s consolidated balance sheets.

The Series A Preferred Stock is classified as Mezzanine Equity because it is redeemable at the option of its holders (upon a deemed liquidation event as defined in “ Note 12.

Series A Preferred Stock—Series A Convertible Preferred Stock—Deemed Liquidation Event Redemption” ) and has a condition for redemption that is not solely within the control of the issuer.

Series A Convertible Preferred Stock—Series A Convertible Preferred Stock—Deemed Liquidation Event Redemption” ) and has a condition for redemption that is not solely within the control of the issuer.

Revenue Recognition

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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.

Significant assumptions used in the Monte Carlo simulation model for the PRSUs granted during the year ended December 31, 2022 and 2021 are as follows.

Year Ended December 31,

Expected volatility 49.5 % 53.6 %

Risk-free interest rate 0.7 % 0.1 %

Remaining performance period (in years) 1.46 1.35

Dividend yield — —

Comprehensive Loss

The Company utilizes the guidance in ASC 220, Income Statement—Reporting Comprehensive Income , for the reporting and display of comprehensive loss and its components in the consolidated financial statements.

Comprehensive loss consists of net loss, foreign currency translation adjustments for subsidiaries with functional currencies other than the United States dollar (“USD”), unrealized translation gains (losses) on foreign currency denominated intercompany loans, and unrealized gains (losses) on interest rate swaps.

Comprehensive Income (Loss)

The Company utilizes the guidance in ASC 220, Income Statement—Reporting Comprehensive Income , for the reporting and display of comprehensive income (loss) and its components in the consolidated financial statements.

Comprehensive income (loss) consists of net loss, foreign currency translation adjustments for subsidiaries with functional currencies other than the United States dollar (“USD”), unrealized translation gains (losses) on foreign currency denominated intercompany loans, and unrealized gains (losses) on interest rate swaps.

Refer to “ Note 13.

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The assets and liabilities of those subsidiaries are translated into USD using the exchange rates in effect at the balance sheet date.

The related translation adjustments are recorded as a separate component of the Company’s consolidated statements of stockholders' equity in accumulated other comprehensive income (loss).

The related translation adjustments are recorded as a separate component of the Company’s consolidated statements of stockholders' equity in accumulated other comprehensive loss.

Assets and liabilities denominated in currencies other than the functional currency are remeasured using the current exchange rate for monetary accounts and historical exchange rates for non-monetary accounts, with exchange differences on remeasurement included in other expense, net in the accompanying statements of operations.

For the year ended December 31, 2022, net losses related to remeasurement of foreign currency transactions of $ 1.0 million were recorded in Other expense, net on our consolidated statements of operations.

For the years ended December 31, 2021 and 2020, net gains of $ 48.6 thousand and $ 0.2 million, respectively, were recorded in Other expense, net on our consolidated statements of operations.

For the years ended December 31, 2023, 2022 and 2021, net gains of $ 0.3 million, net losses of $ 1.0 million and net gains of $ 48.6 thousand, respectively, were recorded in Other expense, net on our consolidated statements of operations, related to remeasurement of foreign currency transactions.

We have foreign currency denominated intercompany loans that were used to fund the acquisition of foreign subsidiaries.

Due to the long-term nature of the loans, the foreign currency gains (losses) resulting from remeasurement are recognized as a separate component of the Company’s consolidated statements of stockholders' equity in accumulated other comprehensive loss.

During the year ended December 31, 2020, the balances of these intercompany loans were converted to USD.

During the years ended December 31, 2022, 2021 and 2020, a translation loss of $ 10.0 million, loss of $ 0.6 million, and gain of $ 2.3 million, respectively, were recognized as a component of accumulated other comprehensive loss in the Company’s statements of stockholders’ equity, related to long-term intercompany loans.

During the years ended December 31, 2023, 2022 and 2021, a translation gain of $ 4.1 million, loss of $ 10.0 million, and loss of $ 0.6 million, respectively, were recognized as a component of accumulated other comprehensive income (loss) in the Company’s statements of stockholders’ equity, related to long-term intercompany loans.

Recent Accounting Pronouncements

Recently issued accounting pronouncements - Adopted

In August 2020, the Financial Standards Accounting Board (“FASB”) issued accounting standards update ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

In March 2020, the Financial Standards Accounting Board (“FASB”) issued accounting standards update (“ASU”) 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform.

The new guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

The amendments apply only to contracts and hedging relationships that reference the London Interbank Offer Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform.

These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

We adopted ASU 2020-04 during the first quarter of 2023.

On February 21, 2023, the Company entered into an amended and restated credit agreement to, among other things, provide for the replacement of LIBOR with the Secured Overnight Financing Rate (“SOFR”), an index measuring the cost of borrowing cash overnight collateralized by Treasury securities.

The Company elected to apply the debt agreement modification expedients related to changes to the reference rate from LIBOR to SOFR in the Company's Credit Agreement, which it completed during the three months ended March 31, 2023.

Application of these expedients allowed the Company to account for the modification as not substantial.

As a result, the debt agreement modification was accounted for by prospectively adjusting the Credit Agreement’s effective interest rate, any existing unamortized debt discount was carried forward and continued to be amortized and no remeasurement of the Credit Agreement at the modification date was required.

The Company has also elected to apply the hedge accounting expedients and exceptions related to changes to the reference rate from LIBOR to SOFR in the Company's interest rate swaps, which it completed during the three months ended March 31, 2023.

Application of these exceptions preserves the cash flow hedge designation of the interest rate swaps and the related accounting and presentation consistent with past presentation.

The replacement of LIBOR with SOFR in the credit agreement did not have a material impact on the Company’s consolidated financial statements and related disclosures.

See “ Note—7.

Debt ” for additional information.

In August 2020, the FASB issued accounting standards update ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (the “ASU 2020-06).

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The Company adopted this guidance in the first quarter of fiscal 2022 with an immaterial impact to the consolidated financial statements.

Recently issued accounting pronouncements - Not yet adopted

In March 2020, the FASB issued Accounting Standards Update ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional guidance for a limited time to ease the potential burden in accounting for reference rate reform.

The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate expected to be discontinued due to reference rate reform.

These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

We will adopt Topic 848 when our relevant contracts are modified upon transition to alternative reference rates.

We do not expect our adoption of Topic 848 to have a material impact on our consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

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These amendments are effective for fiscal years beginning after December 15, 2022 , with early adoption permitted.

The Company is evaluating the impact of this standard on our consolidated financial statements.

We adopted ASU 2021-08 on January 1, 2023 and our adoption did not have a material impact on our consolidated financial statements.

Recently issued accounting pronouncements - Not Adopted

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which requires public entities to disclose information about their reportable segments' significant expenses and other segment items on an interim and annual basis.

Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires public entities, on an annual basis, to provide disclosure of specific categories in the rate reconciliation, as well as disclosure of income taxes paid disaggregated by jurisdiction.

ASU 2023-09 is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

The Company is currently evaluating the impact of adopting ASU 2023-09.

The Company performs quantitative and qualitative analyses to determine the significance of each acquisition to its consolidated financial statements.

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2023 Acquisitions

The Company had no acquisitions during the year ended December 31, 2023.

2022 Acquisitions

Acquisitions completed during the year ended December 31, 2022 include the following:

• 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 07, 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”), cloud-based document workflow product.

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

We determined that disclosing the amount of BA Insight and Objectif Lune related earnings included in the consolidated statements of operations is impracticable, as certain operations of BA Insight and Objectif Lune were integrated into the operations of the Company from the date of acquisition.

2021 Acquisitions

The acquisition completed during the year ended December 31, 2021 include the following:

Acquisitions completed during the year ended December 31, 2021 include the following:

• Panviva - On June 24, 2021, the Company entered into an agreement to purchase the shares comprising the entire issued share capital of Panviva Pty Ltd, an Australian proprietary company (“Panviva”), a cloud-based enterprise knowledge management solution.

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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

The acquisition completed during the year ended December 31, 2020 include the following:

• 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 solution.

Consideration

The following table summarizes the consideration transferred for the acquisitions described above (in thousands):

BA Insight Objectif Lune Panviva BlueVenn Second Street Localytics

BA Insight Objectif Lune Panviva BlueVenn Second Street

Cash $ 33,355 $ 29,750 $ 19,931 $ 53,535 $ 25,436

5 unchanged sentences

Total consideration $ 35,587 $ 35,644 $ 23,827 $ 57,962 $ 30,721

(1) Represents cash holdbacks subject to indemnification claims that are payable 12 months from closing for Objectif Lune, Panviva, Second Street and Localytics, 15 months following closing for BA Insight and 18 months following the closing of BlueVenn.

(1) Represents cash holdbacks subject to indemnification claims that are payable 12 months from closing for Objectif Lune, Panviva, and Second Street, 15 months following closing for BA Insight and 18 months following the closing of BlueVenn.

As of December 31, 2023, all of the holdbacks had been paid.

(2) Represents the acquisition date fair value of anticipated earnout payments which are based on the estimated probability of attainment of the underlying future performance-based conditions at the time of acquisition.

The maximum potential payout for the BlueVenn, Second Street and Localytics were $ 21.7 million, $ 3.0 million and $ 1.0 million, respectively.

The maximum potential payout for the BlueVenn and Second Street were $ 21.7 million and $ 3.0 million, respectively.

As of March 31, 2022, the earnout payments for BlueVenn and Second Street were finalized resulting in no payments made.

The earnout for Localytics was paid in full during the year ended December 31, 2020 based on an ending fair value of $ 1.0 million.

Refer to “ Note 4.

Fair Value Measurements ” for further discussion regarding the calculation of fair value of acquisition related earnouts and subsequent payouts.

(3) Working capital and other adjustments includes a $ 5.2 million reduction in total consideration for Localytics related to a representation and warranty insurance settlement which is included in Prepaids and other on our consolidated balance sheets as of December 31, 2020 and a $ 1.4 million reduction in total consideration for Second Street related to an indemnification claim which was charged to Liabilities due to sellers of businesses (Holdback) on our consolidated balance sheets during 2021.

Fair Value of Assets Acquired and Liabilities Assumed

The Company recorded the purchase of the acquisitions described above using the acquisition method of accounting, and has recognized the assets acquired and liabilities assumed at their fair values as of the date of the acquisition.

The purchase accounting for the 2022 acquisition of Objectif Lune is preliminary as the Company has not finalized the overall impact of this acquisition.

Management has recorded the purchase price allocations based upon acquired company information that is currently available.

Management expects to complete the purchase accounting for Objectif Lune no later than the first quarter of 2023.

The following condensed table presents the finalized acquisition-date fair value of the assets acquired and liabilities assumed for the acquisitions closed in 2022 and 2021 (in thousands):

Final Preliminary Final

BA Insight Objectif Lune Panviva BlueVenn Second Street

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Developed technology and trade names are valued using the relief-from-royalty method.

The following table summarizes the weighted-average useful lives, by major finite-lived intangible asset class, for intangibles acquired during the years ended December 31, 2022 and 2021 (in years):

December 31, 2022 December 31, 2021

The following table summarizes the weighted-average useful lives, by major finite-lived intangible asset class, for intangibles acquired during the year ended December 31, 2022 (in years):

Customer relationships 7.0

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During the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill based on changes to management’s estimates and assumptions.

The change in the preliminary acquisition-date fair value of assets and liabilities for BlueVenn and Panviva during the year ended December 31, 2021 was related primarily to an increase in identified intangible assets.

The change in the preliminary acquisition-date fair value of assets and liabilities during the year ended December 31, 2022 for Objectif Lune was related primarily to an increase in identified intangible assets.

We expect to finalize our analysis of certain tax-related considerations during the first quarter of 2023.

The goodwill of $ 127.0 million for the above acquisitions is primarily attributable to the synergies expected to arise after the acquisition.

The $ 127.4 million goodwill for the above acquisitions is primarily attributable to the synergies expected to arise after the acquisition.

Goodwill deductible for tax purposes related to the above acquisitions was $ 6.6 million.

Total transaction costs incurred with respect to acquisition activity in the years ended December 31, 2022, 2021 and 2020 were $ 4.6 million , $ 6.6 million and $ 4.3 million, respectively.

Total transaction costs incurred with respect to acquisition activity in the years ended December 31, 2023, 2022 and 2021 were nil , $ 4.6 million and $ 6.6 million, respectively.

These costs are included in Acquisition-related expenses on our consolidated statement of operations.

Other Acquisitions and Divestitures

From time to time we may purchase or sell customer relationships that meet certain criteria.

We had no purchase or sale of customer relationships during the years ended December 31, 2022 and 2021.

Fair Value Measurements

Fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date.

GAAP sets forth a three–tier fair value hierarchy, which prioritizes the inputs used in measuring fair value.

The three tiers are Level 1, defined as observable inputs, such as quoted market prices in active markets;

Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable;

and Level 3, defined as unobservable inputs in which little or no market data exists, which therefore requires an entity to develop its own assumptions.

As of December 31, 2022, the Company had no contingent accrued earnout business acquisition consideration liabilities for which fair values are measured as Level 3 instruments.

As of December 31, 2021, the Company had contingent accrued earnout business acquisition consideration liabilities for which fair values are measured as Level 3 instruments.

These contingent consideration liabilities were recorded at fair value on the acquisition date and are remeasured periodically based on the then assessed fair value and adjusted, if necessary.

The increases or decreases in the fair value of contingent consideration payable can result from changes in anticipated revenue levels or changes in assumed discount periods and rates.

As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3.

Any gain (loss) related to subsequent changes in the fair value of contingent consideration is recorded in Acquisition-related expense or Other income (expense), net on our consolidated statements of operations based on management's assessment of the nature of the liability.

Earnout consideration liabilities are included in Liabilities due to sellers of businesses on our consolidated balance sheets.

In connection with entering into, and expanding, the Company's credit facility, as discussed further in “ Note 7.

Debt ”, the Company entered into interest rate swaps for the full 7 year term of the Company’s term loans, effectively fixing our interest rate at 5.4 % for the full value of the Company’s term loans.

The fair value of this swap is measured at the end of each interim reporting period based on the then assessed fair value and adjusted if necessary.

As the fair value measure is based on the market approach, they are categorized as Level 2.

As of December 31, 2022, the fair value of the interest rate swaps is included in the “ Interest rate swap assets ” section compared to December 31, 2021 in which the fair value of the interest rate swaps included in the liabilities section on the Company's consolidated balance sheets.

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

The amendment amended the interest rate benchmark from LIBOR to Secured Overnight Financing Rate (“SOFR”).

See “ Note 18.

Subsequent Events ” for further details.

Liabilities measured at fair value on a recurring basis are summarized below (in thousands):

Assets measured at fair value on a recurring basis are summarized below (in thousands):

Fair Value Measurements at December 31, 2023

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Cash equivalents - money market funds $ 211,661 $ — $ — $ 211,661

Interest rate swap asset $ — $ 41,168 $ — $ 41,168

$ 172,849 $ 41,168 $ — $ 214,017

Interest rate swaps $ — $ 14,270 $ — $ 14,270

Total $ 211,661 $ 14,270 $ — $ 225,931

Fair Value Measurements at December 31, 2022

Level 1 Level 2 Level 3 Total

Interest rate swap liability $ — $ 8,409 $ — $ 8,409

The following table presents additional information about earnout consideration liabilities measured at fair value on a recurring basis and for which we have utilized significant unobservable (Level 3) inputs to determine fair value:

Beginning balance $ — $ —

Remeasurement adjustments:

(Gain) loss included in earnings — ( 4,169 )

Foreign currency translation adjustments — ( 16 )

Acquisitions and settlements:

Acquisitions — 4,185

Settlements — —

Ending balance $ — $ —

Sensitivity to Changes in Significant Unobservable Inputs

As presented in the table above, the significant unobservable inputs used in the fair value measurement of contingent consideration related to business acquisitions are forecasts of expected future annual revenues as developed by the Company's management and the probability of achievement of those revenue forecast.

Significant increases (decreases) in these unobservable inputs in isolation would likely result in a significantly (lower) higher fair value measurement.

The Company believes the carrying value of its long-term debt at December 31, 2022 approximates its fair value based on the variable interest rate feature or based upon interest rates currently available to the Company.

Cash equivalents - money market funds $ 172,849 $ — $ — $ 172,849

Interest rate swaps — 41,168 — 41,168

Total $ 172,849 $ 41,168 $ — $ 214,017

The Company’s cash equivalents - money market funds are measured at fair value using quoted market prices and active markets, therefore are categorized as Level 1.

In connection with entering into, and expanding, the Company's credit facility, as discussed further in “ Note 7.

Debt ”, the Company entered into interest rate swaps.

The fair value of these swaps are measured at the end of each interim reporting period based on the then assessed fair value and adjusted if necessary.

As the fair value measure is based on the market approach, they are categorized as Level 2.

As of December 31, 2023, the fair value of the interest rate swaps is included in the “ Interest rate swap assets ” on the Company's consolidated balance sheets.

The Company’s other financial instruments consist principally of cash and cash equivalents, accounts receivable, accounts payable, and long–term debt.

The carrying value of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value, primarily due to short maturities.

The Company believes the carrying value of its long-term debt at December 31, 2023 approximates its fair value based on its variable interest rate feature and interest rates currently available to the Company.

The estimated fair value and carrying value of the Company's debt, before debt discount, at December 31, 2023 and December 31, 2022 are $ 482.1 million and $ 522.5 million, respectively, based on valuation methodologies using interest rates currently available to the Company which are Level 2 inputs.

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Changes in the Company’s Goodwill balance for each of the two years in the period ended December 31, 2023 are summarized in the table below (in thousands):

Goodwill Adjustments

Balance at December 31, 2021 $ 457,472

Acquired in business combinations 48,768

Adjustment related to finalization of business combinations ( 7,266 )

Adjustment related to prior year business combinations

Adjustment related to finalization of current year business combinations 109

Impairment of goodwill

Foreign currency translation adjustment ( 18,272 )

Balance at December 31, 2022 $ 477,043

Acquired in business combinations 48,768

Adjustment related to prior year business combinations 415

Adjustment related to finalization of current year business combinations 109

Impairment of goodwill

Foreign currency translation adjustment and other ( 18,272 )

Foreign currency translation adjustment 5,075

Balance at December 31, 2023 $ 353,778

(1) Refer to discussion herein and in Note 2.

Basis of Presentation and Summary of Significant Accounting Policies—Goodwill and Other Intangible s.

We performed the annual goodwill impairment test and did not identify an impairment.

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

This quantitative goodwill impairment analysis applied two methodologies to estimate the Company’s fair value which were:

We performed a qualitative annual goodwill impairment test in October 2023 and concluded there was no impairment of Goodwill.

As a result of the decline of our stock price impacting our market capitalization during the quarters ended March 31, 2023 and December 31, 2022, we performed quantitative impairment evaluations, which resulted in a goodwill impairments of $ 128.8 million and $ 12.5 million during the quarters ended March 31, 2023 and December 31, 2022, respectively.

Our quantitative goodwill impairment analysis applied two methodologies to estimate the Company’s fair value which were:

a) a discounted cash flow method and b) a guideline public company method.

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Under the guideline public company method, we estimate fair value based on a market multiple of revenues and earnings derived for comparable publicly traded companies with similar operating characteristics as the Company.

We did not record a goodwill impairment charge for the years ended December 31, 2021 or 2020.

We did not record a goodwill impairment charge for the year ended December 31, 2021.

Intangible assets, net, include the estimated acquisition-date fair values of customer relationships, marketing-related assets and developed technology that the Company recorded as part of its business acquisitions purchases and from acquisitions of customer relationships.

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92,585 56,240 36,345

Non-compete agreements 3

1,148 1,148 —

Favorable leases 6.3 273 43 230

Total intangible assets $ 474,857 $ 226,006 $ 248,851

1 unchanged sentence

Total amortization expense was $ 70.6 million, $ 54.6 million, and $ 50.9 million for the years ended December 31, 2023, 2022 and 2021, respectively.

There were no material changes in the useful life of our intangible assets during the years ended December 31, 2022, 2021 and 2020.

During the fourth quarter of 2022, the Company reduced the estimated useful life for certain product offerings, which will result in higher estimated amortization expense in 2023.

No impairment of intangible assets were recorded during the years ended December 31, 2023, 2022 and 2021.

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Year ending December 31:

2024 $ 54,232

Thereafter 5,708

Total $ 182,349

The Company's loss from continuing operations before income taxes for the year ended December 31, was as follows (in thousands):

The Company's loss from continuing operations before income taxes was as follows (in thousands):

Year Ended December 31,

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As of December 31, 2023 the Company had total net operating loss carryforwards of approximately $ 304.2 million consisting of $ 256.0 million and $ 48.2 million related to the U.S federal and foreign net operating loss carryforwards, respectively.

In addition, as of December 31, 2022, the Company had research and development credit carryforwards of approximately $ 4.1 million.

federal net operating loss and credit carryforwards will expire beginning in 2023, if not utilized.

$ 200.0 million of the U.S.

federal net operating loss carryforwards are related to year prior to 2018 and begin to expire in 2024.

The remaining $ 56.0 million carryforward indefinitely.

In addition, $ 48.0 million of foreign net operating loss carryforwards carry forward indefinitely, and the remainder will expire beginning in 2041.

In addition, as of December 31, 2023, the Company had research and development credit carryforwards of approximately $ 4.0 million which will expire beginning in 2024, if not utilized.

Utilization of the U.S.

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The annual limitation will result in the expiration of approximately $ 155.0 million of U.S.

federal net operating losses and $ 4.1 million of credit carryforwards before utilization.$ 50.3 million of foreign net operating loss carryforwards carry forward indefinitely, and the remainder will expire beginning in 2041.

federal net operating losses and $ 4.0 million of credit carryforwards before utilization.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Significant components of the Company’s deferred taxes as of December 31 are as follows (in thousands):

Significant components of the Company’s deferred taxes are as follows (in thousands):

As of December 31,

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Net deferred taxes $ ( 15,970 ) $ ( 18,416 ) $ ( 22,793 )

Due to the uncertainty surrounding the timing of realizing the benefits of its domestic favorable tax attributes in future tax returns, the Company has placed a valuation allowance against its domestic net deferred tax assets, exclusive of goodwill.

During the years ended December 31, 2022 and 2021, the valuation allowance decreased by approximately $ 8.1 million and $ 7.1 million, respectively.

The valuation allowance for the year ended December 31, 2022 decreased by approximately $ 13.0 million due to the tax effect of items recorded in other comprehensive income with the remaining increase of approximately $ 4.9 million related primarily to current operations.

The valuation allowance for the year ended December 31, 2021 decreased by approximately $ 5.7 million due to the tax effect of items recorded in other comprehensive income and approximately $ 6.4 million due to acquired net deferred tax liabilities as a result of domestic business combinations, which was recorded as an income tax benefit, which is partially offset with the remaining increase of approximately $ 5.0 million related primarily to current operations.

Due to the uncertainty surrounding the timing of realizing the benefits of its favorable tax attributes in future tax returns, the Company has placed a valuation allowance against its net deferred tax assets, exclusive of goodwill.

During the year ended December 31, 2023, the valuation allowance increased by $ 20.8 million and during the year ended December 31, 2022 the valuation allowance decreased by $ 8.1 million.

The valuation allowance for the year ended December 31, 2023 increased $ 7.1 million due to the tax effect of items recorded in other comprehensive income with the remaining increase of $ 13.7 million related primarily to current U.S., U.K.

and Australia operations, which have current year losses.

The valuation allowance for the year ended December 31, 2022 decreased by $ 13.0 million due to the tax effect of items recorded in other comprehensive income which is partially offset with the remaining increase of approximately $ 4.9 million related primarily to current operations.

At December 31, 2023, we did not provide deferred income taxes on temporary differences resulting from earnings of certain foreign subsidiaries which are indefinitely reinvested.

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The Company uses a “more likely than not” criterion for recognizing an asset for unrecognized income tax benefits or a liability for uncertain tax positions.

The Company has determined it has the following unrecognized assets or liabilities related to uncertain tax positions as of December 31, 2022.

It is reasonably possible that a reduction of $0.8 million of unrecognized tax benefits may occur within the next 12 months due to the expiration of statutes of limitation, affecting our net income tax provision and therefore benefit the resulting tax rate.

The actual amount could vary depending on any actual settlement prior to the expiration of statutes of limitation.

To the extent the Company is required to recognize interest and penalties related to unrecognized tax liabilities, this amount will be recorded as an accrued liability, (in thousands).

The Company has determined it has an immaterial exposure related to uncertain tax positions as of December 31, 2023.

The $ 0.8 million exposure at December 31, 2022 was released in 2023 due to a lapse in the statute of limitations for a Canadian exposure.

To the extent the Company is required to recognize interest and penalties related to unrecognized tax liabilities, this amount will be recorded as an accrued liability.

A reconciliation of the beginning and ending amount of unrecognized tax exposure is as follows (in thousands):

Balance at December 31, 2021 $ 772

Additional based on tax positions related to the current year —

Additions for tax positions of prior years 45

Reductions for tax positions of prior years —

Settlements —

Balance at December 31, 2022 $ 817

Additional based on tax positions related to the current year —

Additions for tax positions of prior years 45

Reductions for tax positions of prior years ( 817 )

Settlements —

Balance at December 31, 2023 $ —

If the Company were to recognize unrecognized tax benefits as of December 31, 2022, $ 0.8 million would impact the effective tax rate.

The Company’s assessment of its unrecognized tax benefits is subject to change as a function of the Company’s financial statement audit.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

As of December 31, 2022, the Company had accrued $ 0.4 million of interest or penalties related to uncertain tax positions, which is reasonably possible to reverse in the next 12 months.

As of December 31, 2023, the Company has not accrued any interest or penalties related to uncertain tax positions.

The Company and its subsidiaries file tax returns in the U.S.

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Credit Facility

On August 6, 2019, the Company 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 the Company's 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 “Closing Date”), 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 in an aggregate principal amount of $ 190.0 million (the “2019 Incremental Term Loan”), which is in addition to the existing $ 350 million term loans outstanding under the Credit Facility and the $ 60 million Revolver under the Credit Facility.

In 2019, the Company entered into a credit agreement (the “Credit Facility”) which provided for (i) a fully-drawn $ 350 million, 7 year, senior secured term loan facility (the “Term Loan”) and (ii) a term loan facility to be established under the Credit Facility in an aggregate principal amount of $ 190.0 million (the “2019 Incremental Term Loan” and together with the Term Loan, the “Term Loans”) and (iii) a $ 60 million, 5 year, revolving credit facility (the “Revolver”) that was fully available as of December 31, 2023.

Loans under the Revolver are available up to $ 60 million, of which none is currently outstanding.

The Revolver provides a sub facility whereby the Company may request letters of credit (the “Letters of Credit”) in an aggregate amount not to exceed, at any one time outstanding, $ 10.0 million for the Company.

The aggregate amount of outstanding Letters of Credit are reserved against the credit availability under the Maximum Revolver Amount.

The Company incurs a 0.50 % per annum unused line fee on the unborrowed balance of the Revolver which is paid quarterly.

Loans under the Revolver may be borrowed, repaid and reborrowed until August 6, 2024 (the “Maturity Date”), at which time all amounts borrowed under the Revolver must be repaid.

As of December 31, 2023, the Company had no borrowings outstanding under the Revolver or related sub facility.

Payment terms

The Term Loans (including the 2019 Incremental Term Loan) are repayable on a quarterly basis beginning on December 31, 2019 by an amount equal to 0.25 % ( 1.00 % per annum) of the aggregate principal amount of such loan.

The Term Loans are repayable on a quarterly basis beginning on December 31, 2019 by an amount equal to 0.25 % ( 1.00 % per annum) of the aggregate principal amount of such loan.

Any amount remaining unpaid is due and payable in full on August 6, 2026 (the “Term Loan Maturity Date”).

At the option of the Company, the Term Loans (including the 2019 Incremental Term Loan) accrue interest at a per annum rate based on (i) the Base Rate plus a margin of 2.75 % or (ii) the rate (not less than 0.00 %) for Eurodollar deposits quoted on the LIBOR01 or LIBOR02 pages on the Reuters Screen, or as otherwise determined in accordance with the Credit Facility (based on a period equal to 1, 2, 3 or 6 months or, if available and agreed to by all relevant Lenders and the Agent, 12 months or such period of less than 1 month) plus a margin of 3.75 %.

The Base Rate for any day is a rate per annum equal to the greatest of (i) the prime rate in effect on such day, (ii) the federal funds effective rate (not less than 0.00 %) in effect on such day plus ½ of 1.00%, and (ii) the Eurodollar rate for a one month interest period beginning on such day plus 1.00 %.

Initially, at the option of the Company, the Term Loans (including the 2019 Incremental Term Loan) accrued interest at a per annum rate based on (i) the Base Rate plus a margin of 2.75 % or (ii) the rate (not less than 0.00 %) for Eurodollar deposits quoted on the LIBOR01 or LIBOR02 pages on the Reuters Screen, or as otherwise determined in accordance with the Credit Facility (based on a period equal to 1, 2, 3 or 6 months or, if available and agreed to by all relevant Lenders and the Agent, 12 months or such period of less than 1 month) plus a margin of 3.75 %.

The Base Rate for any day was a rate per annum equal to the greatest of (i) the prime rate in effect on such day, (ii) the federal funds effective rate (not less than 0.00 %) in effect on such day plus ½ of 1.00%, and (ii) the Eurodollar rate for a one month interest period beginning on such day plus 1.00 %.

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.

See “ Note 18.

Subsequent Events ” for further details.

Accrued interest on the loans will be paid quarterly or, with respect to loans that are accruing interest based on the Eurodollar rate, at the end of the applicable interest rate period.

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

After giving effect to the interest rate swaps described below, $ 258.5 million of the Term Loans has an effective annualized fixed interest rate of 5.4 %, and the remaining principal outstanding at December 31, 2023 has a floating interest rate of 9.2 %

Accrued interest is paid quarterly or, with respect to Term Loans that are accruing interest based on the Federal Funds Effective Rate, at the end of the applicable interest rate period.

On August 31, 2023, the Company prepaid $ 35.0 million of the Term Loans.

Interest rate swaps

On August 6, 2019, the Company entered into an interest rate hedge instrument for the full 7 year term, effectively fixing our interest rate at 5.4 % for the Term Loan.

In addition, on November 26, 2019, the Company entered into interest rate swap agreements to hedge the interest rate risk associated with the Company’s floating rate obligations under the 2019 Incremental Term Loan.

These interest rate swaps fix the Company's interest rate (including the hedge premium) at 5.4 % for the term of the Credit Facility.

The interest rate associated with our new $ 60 million, 5 year, Revolver remains floating.

The interest rate swap has been designated as a cash flow hedge and is valued using a market approach, which is a Level 2 valuation technique.

At December 31, 2022, the fair value of the interest rate swap was a $ 41.2 million asset as a result of an increase in short term interest rates from 2021 to 2022.

In 2019, the Company entered into floating-to-fixed interest rate swap agreements to limit exposure to interest rate risk related to our debt.

Until the termination of a portion of the interest rate swaps as described below, these interest rate swaps effectively converted the entire balance of the Company's $ 540.0 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 debt.

The interest rate associated with our undrawn $ 60 million Revolver remains floating.

In August 2023, the Company sold $ 259.9 million of the notional amount of its interest rate swap assets back to the counterparties for $ 20.5 million , reducing the total notional amount of the interest rate swap assets to $ 259.9 million .

The $ 20.5 million gain in accumulated other comprehensive income related to the $ 259.9 million amount sold is being released to interest expense, net as interest is accrued on the Company’s variable-rate debt over the remaining term of the Term Loans as a decrease to interest expense, net, the amortization of which totaled $ 2.5 million for the year ended December 31, 2023.

As discussed above, on September 1, 2023, the Company prepaid $ 35.0 million of the Term Loans.

As a result of this prepayment, $ 2.8 million of the deferred gain in accumulated comprehensive income was released immediately into earnings as interest expense, net.

In the next twelve months, the Company estimates that $ 5.9 million will be reclassified from Accumulated other comprehensive income (loss) to Interest expense, net on our consolidated statement of operations.

Amounts reported in accumulated other comprehensive income related to the Company's derivatives are reclassified to interest expense, net as interest is accrued on the Company’s variable-rate debt.

The impact of the Company’s derivative financial instruments on its consolidated statements of comprehensive loss was as follows (in thousands):

Year Ended December 31

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Unrealized gain (loss) recognized in Other comprehensive income (loss) on interest rate swaps $ ( 6,434 ) $ 49,577 $ 21,623

Gain (loss) on interest rate swap (included in Interest expense, net on our consolidated statement of operations) $ 283 $ ( 8,250 ) $ ( 5,500 )

Loans under the Revolver are available up to $ 60 million, of which none is currently outstanding.

The aggregate amount of outstanding Letters of Credit are reserved against the credit availability under the Maximum Revolver Amount.

The Company incurs a 0.50 % per annum unused line fee on the unborrowed balance of the Revolver which is paid quarterly.

Loans under the Revolver may be borrowed, repaid and reborrowed until August 6, 2024 (the “Maturity Date”), at which time all amounts borrowed under the Revolver must be repaid.

As of December 31, 2022, the Company had no borrowings outstanding under the Revolver or related sub facility.

Amounts reclassified from Accumulated other comprehensive income (loss) to interest expense, net ( 5,289 ) — —

Total Other comprehensive income (loss) on interest rate swaps

$ ( 11,723 ) $ 49,577 $ 21,623

Cash interest costs averaged 7.2 %, 5.4 %, and 5.4 % for the years ended December 31, 2023, 2022, and 2021, respectively.

As of December 31, 2023, the Company had $ 5.4 million of unamortized debt issuance costs associated with the Credit Facility.

These issuance costs will be amortized to Interest expense, net on our consolidated statement of operations, over the term of the Credit Facility.

The Credit Facility contains customary affirmative and negative covenants.

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As of December 31, 2023 the Company was in compliance with all covenants under the Credit Facility.

Cash interest costs averaged 5.4 % for both the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022, the Company had $ 7.5 million of unamortized debt issuance costs associated with the Credit Facility.

These issuance costs will be amortized to Interest expense, net on our consolidated statement of operations, over the term of the Credit Facility.

Debt Maturities

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We consider our Series A Preferred Stock to be a participating security, as its holders are entitled to fully participate in any dividends or other distributions declared or paid on our Common Stock on an as-converted basis.

The following table sets for the computations of loss per share:

The following table sets for the computations of net loss per share:

Year Ended December 31,

14 unchanged sentences

Stock options 149,914 154,321 227,605

Restricted stock awards (1)

Restricted stock units 1,758,847 1,509,273 1,379,747

3 unchanged sentences

Total anti–dilutive common share equivalents 8,991,254 8,434,267 1,670,889

(1) All outstanding restricted stock awards became fully vested as of December 31, 2021.

(1) Per ASU 2020-06, the Company is applying the if-converted method to calculated diluted earnings per share.

1 unchanged sentence

The Series A Preferred Stock has a conversion price of $ 17.50 per share, as detailed in “ Note 12.

Series A Preferred Stock”

Series A Convertible Preferred Stock”

Operating Leases

4 unchanged sentences

The current and long-term portion of finance lease obligations are included in Accrued expenses and other current liabilities and Other long-term liabilities line items on the consolidated balance sheet, respectively.

The Company had no finance lease agreements since December 31, 2021.

The Company has had no finance lease agreements since December 31, 2021.

Lease Expense

9 unchanged sentences

Operating lease cost $ 3,243 3,959

Finance lease costs:

Amortization of right-of-use assets

Interest on lease liabilities

Sublease income ( 1,762 ) ( 1,428 )

5 unchanged sentences

$ 3,908 $ 4,658

Financing cash flows from finance leases

Right-of-use assets obtained in exchange for lease obligations (in thousands):

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In the normal course of business, the Company may become involved in various lawsuits and legal proceedings.

As of December 31, 2022, the Company is not involved in any current or pending legal proceedings, and does not anticipate any legal proceedings, that may have a material adverse effect on its consolidated financial position or results of operations.

As of December 31, 2023, the Company is not involved in any current or pending legal proceedings that it believes may have a material adverse effect on its consolidated financial position or results of operations.

In addition, when we acquire companies, we require that the sellers provide industry standard indemnification for breaches of representations and warranties contained in the acquisition agreement and we will withhold payment of a portion of the purchase price for a period of time in order to satisfy any claims that we may make for indemnification.

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The Company recorded no impairment of property and equipment during the years ended December 31, 2023, 2022 and 2021.

During the years ended December 31, 2022, 2021 and 2020, we recognized a $ 0.1 million,$ 0.0 million and $ 0.6 million loss on disposal of assets related primarily to leasehold improvements associated with the consolidation and integration of prior year acquisitions.

Series A Preferred Stock

During the years ended December 31, 2023, 2022 and 2021, we recognized a $ 47.0 thousand, $ 79.0 thousand and nil losses on disposal of assets related primarily to leasehold improvements associated with the consolidation and integration of prior year acquisitions.

Series A Convertible Preferred Stock

On July 14, 2022, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Ulysses Aggregator, LP (the “Purchaser”), an affiliate of HGGC, LLC, to issue and sell at closing 115,000 shares of Series A Preferred Stock of the Company, par value $ 0.0001 per share, at a price of $ 1,000 per share (the “Initial Liquidation Preference”) for an aggregate purchase price of $ 115.0 million (the “Investment”).

The Company will use the proceeds of the Investment (a) for general corporate purposes and (b) for transaction-related fees and expenses.

The Company is using the proceeds of the Investment for general corporate purposes and transaction-related fees and expenses.

On August 23, 2022 (the “Closing Date”), the closing of the Investment (the “Closing”) occurred, and the Series A Preferred Stock was issued to the Purchaser.

In connection with the issuance of the Series A Preferred Stock, the Company incurred direct and incremental expenses comprised of transaction fees, and financial advisory and legal expenses (the “Series A Preferred Stock Issuance Costs”), which reduced the carrying value of the Series A Preferred Stock.

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

Cumulative preferred dividends accrue quarterly on the Series A Preferred Stock at a rate of 4.5 % per year within the first seven years after the Closing Date regardless of whether declared or assets are legally available for the payment.

Such dividends shall accrue and compound quarterly in arrears from the date of issuance of the shares.

The dividend rate will increase to 7.0 % on the seven-year anniversary of the Closing Date.

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

Total Series A Preferred Stock Issuance Costs totaled $ 4.6 million.

Contemporaneous with the Closing Date, the Company and the Purchaser entered into a Registration Rights Agreement (the “Registration Rights Agreement”) and the Company filed a Certificate of Designation (the “Certificate of Designation”) setting out the powers, designations, preferences, and other rights of the Series A Preferred Stock with the Secretary of State of the State of Delaware in connection with the Closing.

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The dividend can be paid, in the Company’s sole discretion, in cash or dividend in kind by adding to the Liquidation Preference of each share of Series A Preferred Stock outstanding.

provided that, until the stockholder approvals contemplated by Nasdaq Global Market Listing Standard Rules 5635(a), (b) and (d) are obtained, as applicable, the Company may not pay in kind if doing so would cause the common shares issuable upon conversion of the Preferred Stock to exceed 19.9 % of the total outstanding common stock as of the Closing Date.

On June 7, 2023, the stockholders of the Company authorized, for purposes of complying with Nasdaq Listing Rules 5635(b) and (d), the issuance of shares of Common Stock underlying shares of Series A Preferred Stock in an amount equal to or in excess of 20% of the Common Stock outstanding immediately prior to the issuance of such Series A Preferred Stock (including upon the operation of anti-dilution provisions contained in the Certificate of Designation designating the terms of such Series A Preferred Stock).

The Series A Preferred Stock is also entitled to fully participate in any dividends paid to the holders of common stock in cash, in stock or otherwise, on an as-converted basis.

The Series A Preferred Stock had accrued unpaid dividends of $ 7.2 million as of December 31, 2023.

Liquidation Rights

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Common and Preferred Stock

Our certificate of incorporation authorizes shares of stock as follows:

50,000,000 shares of common stock and 5,000,000 shares of preferred stock.

The common and preferred stock has a par value of $ 0.0001 per share.

See “ Note 12.

Series A Preferred Stock ” for a description of our Series A Preferred Stock, which is the only class of preferred stock outstanding.

At the Company’s annual meeting on June 7, 2023, the stockholders of the Company adopted a Certificate of Amendment (the “Certificate of Amendment”) to the Amended and Restated Certificate of Incorporation of the Company (the “Certificate of Incorporation”).

Among other things, the Certificate of Amendment amended the Certificate of Incorporation to increase the number of authorized shares of the Company’s Common Stock, from 50,000,000 to 75,000,000 .

The common stock has a par value of $ 0.0001 per share.

Each share of common stock is entitled to one vote at all meetings of stockholders.

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The holders of common stock are also entitled to receive dividends, when, if and as declared by our board of directors, whenever funds are legally available therefore, subject to the priority rights of any outstanding preferred stock.

See “ Note 12.

Series A Convertible Preferred Stock ” for a description of our Series A Preferred Stock, which is the only class of preferred stock outstanding.

Registration Statements

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See “ Note 12.

Series A Preferred Stock ” for further details.

Series A Convertible Preferred Stock ” for further details.

Share repurchase program

On September 1, 2023, the Board of Directors authorized a stock repurchase program (the “Share Repurchase Plan”) in the aggregate amount of up to $ 15.0 million.

In October 2023, the Board of Directors authorized an increase to the Share Repurchase Plan to allow the Company to repurchase up to an additional $ 10 million of shares.

The Share Repurchase Plan allows the Company to repurchase shares of its issued and outstanding Common Stock, from time to time in the open market or otherwise (including in negotiated transactions, open market transactions, through accelerated share repurchase, through indirect purchases of Common Stock such as by using derivatives or in other transactions) in each case in accordance with applicable securities laws, so long as the aggregate purchase price paid for such transactions does not exceed $ 25 million for all such purchases.

The Share Repurchase Plan does not have a specified expiration date.

Accordingly, unless terminated earlier by resolution of the Board, the Share Repurchase Plan will expire when the Company has repurchased all shares authorized for repurchase.

In fiscal year 2024, the Company’s net stock repurchases are subject to a 1 percent excise tax under the Inflation Reduction Act.

The excise tax is included as a reduction to accumulated deficit in the consolidated statements of stockholders equity.

Total accrued excise tax of $ 0.1 million is included in total cost of shares repurchases, excluded from average cost per share and excluded from total cash paid during the year ended December 31, 2023 as amounts were unpaid at year end.

During the year ended December 31, 2023, the Company repurchased and subsequently retired 3,245,100 shares of Common Stock, for a total of $ 14.2 million under the Share Repurchase Plan, inclusive of excise tax and other costs directly related to the repurchased shares.

As of December 31, 2023, approximately $ 10.8 million remained available for additional share repurchases.

The Company is not obligated to acquire any particular amount of Common Stock and may modify or suspend the repurchases at any time in the Company’s discretion.

Tax Benefit Preservation Plan and Preferred Stock Purchase Rights

On May 2, 2023, our Board of Directors authorized and declared a dividend of one preferred stock purchase right (a “Right”) for each outstanding share of Common Stock of the Company as of May 12, 2023 (the “Record Date”).

32,441,010 Rights were issued to the holders of record of shares of Common Stock.

The description and terms of the Rights are set forth in a Tax Benefit Preservation Plan, dated as of May 2, 2023, as the same may be amended from time to time (the “Plan”), between the Company and Broadridge Corporate Issuer Solutions, LLC, as Rights Agent.

By adopting the Plan, the Board of Directors is seeking to protect the Company’s ability to use its net operating loss carryforwards (“NOLs”) and other tax attributes to offset potential future income tax liabilities.

The Company’s ability to use such NOLs and other tax attributes would be substantially limited if the Company experiences an “ownership change,” as defined in Section 382 of the Internal Revenue Code (the “Code”).

Generally, an “ownership change” occurs if the percentage of the Company’s stock owned by one or more “five percent stockholders” increases by more than fifty percentage points over the lowest percentage of stock owned by such stockholders at any time during the prior three-year period or, if sooner, since the last “ownership change” experienced by the Company.

The Plan is intended to make it more difficult for the Company to undergo an ownership change by deterring any person from acquiring 4.9 % or more of the outstanding shares of stock without the approval of the Board of Directors.

The Board of Directors believes it is in the best interest of the Company and its stockholders to reduce the likelihood of an ownership change, which could harm the Company’s future operating results by effectively increasing the Company future tax liabilities.

The Rights trade with, and are inseparable from, the Common Stock, and the record holders of shares of Common Stock are the record holders of the Rights.

The Rights are evidenced only by certificates (or, in the case of uncertificated shares, by notations in the book-entry account system) that represent shares of Common Stock.

Rights will also be issued in respect of any shares of Common Stock that shall become outstanding after the Record Date (including upon conversion of any shares of Series A Preferred Stock of the Company) and, subject to certain exceptions specified in the Plan, prior to the earlier of the Distribution Date (as defined below) and the Expiration Date (as defined below).

The Rights are not exercisable until the Distribution Date.

After the Distribution Date, each Right will be exercisable to purchase from the Company one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $ 0.0001 per share, of the Company (the “Series B Preferred”), at a purchase price of $18.00 per one one-thousandth of a share of Series B Preferred (the “Purchase Price”), subject to adjustment as provided in the Plan.

The “Distribution Date” is the earlier of (i) the close of business on the tenth day after the public announcement that a person or group has become an Acquiring Person (as defined below) or that discloses information which reveals the existence of an Acquiring Person or such earlier date as a majority of the Board shall become aware of the existence of an Acquiring Person (the date described in this clause (i), the “Stock Acquisition Date”) and (ii) the close of business on the tenth business day (or such later date as the Board of Directors shall determine prior to such time as any person or group becomes an Acquiring Person) after the date that a tender or exchange offer by any person is commenced, the consummation of which would result in such person becoming an Acquiring Person.

A person or group becomes an “Acquiring Person” upon acquiring beneficial ownership of 4.9 % or more of the outstanding shares of Common Stock, except in certain situations specified in the Plan.

The Rights will expire on the earliest of (a) the close of business on May 1, 2024, (b) the time at which the Rights are redeemed or exchanged pursuant to the Plan, or (c) the time at which the Board of Directors determines that the Tax Benefits are utilized in all material respects or that an ownership change under Section 382 of the Code would not adversely impact in any material respect the time period in which the Company could use the Tax Benefits, or materially impair the amount of the Tax Benefits that could be used by the Company in any particular time period, for applicable tax purposes (such earliest date, the “Expiration Date”).

Until a Right is exercised or exchanged, the holder thereof, as such, will have no rights as a stockholder of the Company by virtue of holding such Right, including, without limitation, the right to vote and to receive dividends.

The Board of Directors may adjust the Purchase Price, the number of shares of Series B Preferred issuable and the number of outstanding Rights to prevent dilution that may occur from a stock dividend, a stock split, a reclassification of the Series B Preferred or Common Stock or certain other specified transactions.

No adjustments to the Purchase Price of less than 1 % are required to be made.

In connection with the adoption of the Plan, the Board of Directors approved a Certificate of Designations of the Series B Junior Participating Preferred Stock (the “Certificate of Designations”).

The Certificate of Designations was filed with the Secretary of State of the State of Delaware on May 2, 2023.

Each one one-thousandth of a share of Series B Preferred, if issued:

• Will not be redeemable.

• Will entitle holders to quarterly dividend payments of $ 0.001 per one one-thousandth of a share of Series B Preferred, or an amount equal to the dividend paid on one share of Common Stock, whichever is greater.

• Will entitle holders upon liquidation either to receive $ 0.001 per one one-thousandth of a share of Series B Preferred, or an amount equal to the payment made on one share of Common Stock, whichever is greater.

• Will have the same voting power as one share of Common Stock.

• If shares of Common Stock are exchanged as a result of a merger, consolidation, or a similar transaction, will entitle holders to a per share payment equal to the payment made on one share of Common Stock.

Accumulated Other Comprehensive Income (Loss)

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Foreign currency translation adjustment $ ( 19,947 ) $ ( 22,632 )

Unrealized translation gain on intercompany loans with foreign subsidiaries ( 7,426 ) 2,552

Unrealized gain (loss) on interest rate swaps 41,168 ( 8,409 )

Unrealized translation loss on intercompany loans with foreign subsidiaries, net of taxes ( 3,330 ) ( 7,426 )

Unrealized gain on interest rate swaps 14,270 41,168

Realized gain on interest rate swap sale, net of amounts reclassified into interest expense, net

Total accumulated other comprehensive income (loss) $ 6,168 $ 11,110

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The 2014 Plan also provides for the automatic grant of option awards to our non-employee directors.

As of December 31, 2022, there were 121,975 options outstanding under the 2014 Plan, and shares of common stock reserved for issuance under the 2014 Plan consist of 631,776 shares.

In addition, the number of shares available for issuance under the 2014 Plan will be increased annually in an amount equal to the least of (i) 4 % of the outstanding Shares on the last day of the immediately preceding Fiscal Year or (ii) such number of Shares determined by the Board.

As of December 31, 2023, there were 121,975 options outstanding under the 2014 Plan, and 737,581 shares of common stock reserved for issuance under the 2014 Plan.

The number of shares available for issuance under the 2014 Plan will be increased annually through 2024 in an amount equal to the least of (i) 4 % of the outstanding Shares on the last day of the immediately preceding Fiscal Year or (ii) such number of Shares determined by the Board.

At December 31, 2023, there were 1,758,847 restricted stock units and 100,000 performance based restricted stock units outstanding under the 2014 Plan.

Under both the 2010 Plan and 2014 Plan, options granted to date generally vest over a three or four year period, with a maximum term of ten years .

The Company also grants restricted stock awards (“RSAs”) which generally vest over a three or four year period.

Shares issued upon any stock option exercise and restricted under the 2010 Plan or 2014 Plan will be issued from the Company's authorized but unissued shares.

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In 2023 and 2022, fifty percent of the awards granted to our Chief Executive Officer were PRSUs.

The 2022 and 2021 PRSU agreements provide that the quantity of units subject to vesting may range from 0% to 300% of the units granted per the table below based on the Company's absolute total shareholder return (“TSR”) at the end of the eighteen month performance periods.

The 2023 and 2022 PRSU agreements provide that the quantity of units subject to vesting may range from 0 % to 300 % of the units granted per the table below based on the Company's absolute total shareholder return (“TSR”) at the end of the thirty-six and eighteen month performance periods, respectively.

At the end of the performance period, the 2022 PRSU resulted in no units granted.

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The total fair value of the RSUs vested during the years ended December 31, 2023, 2022 and 2021 was approximately $ 5.0 million, $ 13.9 million and $ 28.2 million, respectively.

As of December 31, 2022, $ 29.5 million of unrecognized compensation cost related to unvested restricted stock awards and restricted stock units (including performance based awards) is expected to be recognized over a weighted-average period of 1.1 years.

As of December 31, 2023, $ 16.0 million of unrecognized compensation cost related to unvested restricted stock units (including performance based awards) is expected to be recognized over a weighted-average period of 1.77 years.

The PRSU and RSU activity table above includes PRSU units granted that are based on a 100 % target payout.

Compensation expense is recognized over the required service period of the grant.

The fair value of the RSUs is determined based on the grant date fair value of the award.

The fair value of the PRSUs is determined using the Monte Carlo simulation model and is not subject to fluctuation due to achievement of the underlying market-based target.

The total fair value of PRSUs vested during the years ended December 31, 2022, 2021 and 2020 was $ 0.0 million , $ 5.6 million and $ 0.0 million , respectively.

The total fair value of PRSUs vested during the years ended December 31, 2023, 2022 and 2021 was nil , nil and $ 5.6 million, respectively.

Significant assumptions used in the Monte Carlo simulation model for the PRSUs granted during the year ended December 31, 2023 and year ended December 31, 2022 are as follows:

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Outstanding at December 31, 2022 154,321 $ 11.19

Options granted — —

Options exercised ( 3,026 ) 1.78

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Options vested and exercisable at December 31, 2023 149,914 $ 11.44 2.38 $ —

The aggregate intrinsic value of options exercised at December 31, 2022, 2021 and 2020, was approximately $ 0.6 million, $ 1.1 million and $ 2.3 million, respectively.

The aggregate intrinsic value of options exercised at December 31, 2023, 2022, and 2021, was approximately nil , $ 0.6 million, and $ 1.1 million, respectively.

All of the Company’s outstanding stock options were fully vested as of December 31, 2019.

As of December 31, 2022, there was no remaining unrecognized compensation cost related to stock options.

The Company received approximately $ 0.2 million in cash from option exercises under the respective Plans in 2022.

The Company issued shares from amounts reserved under the respective Plans upon the exercise of these stock options.

The Company does not currently expect to repurchase shares from any source to satisfy such obligation under any of the Company’s stock option Plans.

Revenue Recognition

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Revenue for consumption-based services are generally recognized as the services are performed.

Significant Judgments

Performance Obligations and Standalone Selling Price

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of accounting.

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

The Company has contracts with customers that often include multiple performance obligations, usually including professional services sold with either individual or multiple subscriptions or perpetual licenses.

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We only include estimated amounts of variable consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.

Judgment is required to determine the SSP for each distinct performance obligation.

A residual approach is only applied in limited circumstances when a particular performance obligation has highly variable and uncertain SSP and is bundled with other performance obligations that have observable SSP.

A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

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Basis of Presentation and Summary of Significant Accounting Policies ”.

No indicators of impairment of deferred commissions were identified during the year ended December 31, 2022.

No indicators of impairment of deferred commissions were identified during the years ended December 31, 2023, 2022 or 2021.

The following table presents the activity impacting deferred commissions for the year ended December 31, 2023 (in thousands):

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Deferred commissions balance at December 31, 2023 $ 22,997

Commissions capitalized in excess of amortization of deferred commissions for the year ended December 31, 2022 were $ 0.1 million.

Amortization of deferred commissions in excess of amounts capitalized for the year ended December 31, 2023 was $ 1.8 million.

Deferred Revenue

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During the year ended December 31, 2023, we recognized $ 102.3 million and $ 3.7 million of subscription services and professional services revenue, respectively, that was included in the deferred revenue balances at the beginning of the period.

In addition, during the year ended December 31, 2022 we recognized $ 10.9 million in revenue that was included in the acquired deferred revenue balance of our 2022 acquisitions as disclosed in “ Note 3.

Acquisitions ”.

Remaining Performance Obligations

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Our CODM manages the business as a multi-product business that utilizes its model to deliver software products to customers regardless of their geography or IT environment.

Operating results are reviewed by the CODM primarily at the consolidated entity level, with the exception of recurring product level revenue, for purposes of making resource allocation decisions and for evaluating financial performance.

Operating results are reviewed by the CODM primarily at the consolidated entity level for purposes of making resource allocation decisions and for evaluating financial performance.

Accordingly, we considered ourselves to be in a single operating and reporting segment structure.

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Total identifiable long-lived assets $ 1,932 $ 1,830

Related Party Transactions

The Company does not have any material related party transactions to report for the year ended December 31, 2022.

We are a party to two agreements, as detailed below, with companies controlled by ESW Capital LLC (“ESW”), a non-management investor in the Company which historically held more than 5 % of the Company's capital stock.

As of July 9, 2021, ESW’s ownership in Upland was reduced to 4.8 % at which point DevFactory and Crossover (as hereinafter defined) were no longer considered related parties.

• On March 28, 2017, the Company and DevFactory FZ-LLC (“DevFactory”) executed an amendment to the agreement to extend the initial term to December 31, 2021.

Additionally, the Company amended the option for either party to renew annually for one additional year.

The effective date of the amendment was January 1, 2017.

During the years ended December 31, 2021 and 2020, the Company purchased software development services pursuant to a technology services agreement with DevFactory, in the amount of $ 9.6 million and $ 7.4 million, respectively.

At December 31, 2021, amounts included in accounts payable owed to this company totaled $ 0.0 million .

• The Company purchased services from Crossover, Inc.

(“Crossover”), a company controlled by ESW Capital, LLC (a non-management investor) of approximately $ 4.0 million and $ 4.8 million during the years ended December 31, 2021 and 2020.

Crossover provides a proprietary technology system to help the Company identify, screen, select, assign, and connect with necessary resources from time to time to perform technology software development and other services throughout the Company, and track productivity of such resources.

As of December 31, 2021, amounts included in accounts payable and accrued liabilities owed to this company totaled $ 0.9 million.

Subsequent Events

On February 21, 2023, the Company entered into that certain Amendment No.1 to the Credit Facility (the “Amendment”), which amends the Credit Facility.

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

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

Changes in and Disagreements with Accountants on Accounting and Financial 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-K

Item 8. Financial Statements and Supplementary Data