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Certara Reports Second Quarter 2022 Financial Results

·24 min read
Certara
Certara

Biosimulation software and services fuel second quarter growth

PRINCETON, N.J., Aug. 09, 2022 (GLOBE NEWSWIRE) -- Certara, Inc. (Nasdaq: CERT), a global leader in biosimulation, today reported its financial results for the second quarter of fiscal year 2022 and adjusted its full year guidance.

Second Quarter Highlights:

  • Revenue was $82.8 million, compared to $70.1 million in the second quarter of 2021, representing growth of 18% over the second quarter of 2021 on a reported basis and 21% at constant currency.

  • Excluding Pinnacle 21, revenue was $75.8 million, representing growth of 8% over the second quarter of 2021 on a reported basis and 11% at constant currency.

  • Net loss was $0.6 million, compared to net loss of $2.9 million in the second quarter of 2021, an increase of $2.3 million in income over the second quarter of 2021.

  • Adjusted EBITDA was $28.0 million, compared to $25.5 million in the second quarter of 2021, representing growth of 9% over the second quarter of 2021.

  • Full-year 2022 guidance has been adjusted for foreign currency exchange rates and a slow recovery in the regulatory services market.

“Certara delivered double-digit growth in bookings and biosimulation revenue but faced headwinds from foreign exchange rates and slow growth in the regulatory services business,” said William F. Feehery, chief executive officer. “We are excited about the recent introduction of two new software solutions, Simcyp Discovery Simulator and the Pinnacle 21 Data Exchange product.”

Second Quarter 2022 Results

“With our strong balance sheet and operating cash flow growth, we remain well-positioned to execute on our strategy, and we are confident in the long-term growth and profitability profile of Certara. We expect foreign exchange impact and softness in regulatory services to continue in the back half of the year, and we are adjusting our 2022 full year guidance accordingly.” said Andrew Schemick, chief financial officer.

Total revenue for the second quarter of 2022 was $82.8 million, representing growth of 18% over the second quarter of 2021. Excluding $7.0 million revenue from Pinnacle 21, which was acquired in late 2021, revenue increased $5.7 million, or 8%. The increase in revenue was primarily due to growth in our technology-driven services and software product offerings from strong renewal rates, client expansion, and new customers. The increase was partially offset by the negative impact on our revenue from fluctuation in the foreign currency exchange rates.

On a constant currency basis, total revenue for the second quarter of 2022 was $84.8 million, representing growth of 21% over the second quarter of 2021. Excluding $7.0 million of revenue from Pinnacle 21, the revenue on a constant currency basis increased $7.7 million, or 11%. Please see note (1) in the section A Note on Non-GAAP Financial Measures below for more information on constant currency revenue.

Total cost of revenue for the second quarter of 2022 was $35.2 million, an increase of $7.7 million from $27.5 million in the second quarter of 2021, primarily due to a $4.2 million increase in employee-related costs resulting from billable headcount growth, a $1.7 million increase in intangible assets amortization, a $1.2 million increase in stock-based compensation cost, and a $0.5 million increase related to cost of licenses.

Total operating expenses for the second quarter of 2022 were $43.4 million, an increase of $6.1 million from $37.3 million in the second quarter of 2021, primarily due to a $5.2 million increase in employee related costs, a $0.8 million increase in stock-based compensation costs, a $0.7 million increase in professional costs, and a $0.9 million increase in amortization of intangible assets, partially offset by a $0.7 million decrease in transaction cost related to public stock offering costs, and a $0.8 million increase in capitalized research and development costs.

Net loss for the second quarter of 2022 was $0.6 million, compared to a net loss of $2.9 million in the second quarter of 2021. The $2.3 million increase in net income was primarily due to a $12.7 million increase in total revenue, a $2.7 million increase in foreign currency gain, and a $2.5 million decrease in interest expense, partially offset by a $7.7 million increase in cost of revenue, a $6.1 million increase in operating expenses, and a $1.9 million increase in tax expense.

Diluted earnings per share for the second quarter 2022 was $0.00, as compared to $(0.02) in the second quarter of 2021.

Adjusted EBITDA for the second quarter of 2022 was $28.0 million compared to $25.5 million for the second quarter of 2021, representing 9% growth. See note (2) in the section A Note on Non-GAAP Financial Measures below for more information on adjusted EBITDA.

Adjusted net income for the second quarter of 2022 was $14.6 million compared to $11.8 million for the second quarter of 2021. Adjusted diluted earnings per share for the second quarter 2022 was $0.09 compared to $0.07 for the second quarter of 2021. See note (3) in the section A Note on Non-GAAP Financial Measures below for more information on adjusted net income and adjusted diluted earnings per share.

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 

 

Six Months Ended June 30, 

 

    

2022

 

    

2021

 

    

2022

    

2021

 

Key Financials (in millions, except per share data)

 

 

  

 

 

  

 

 

  

 

 

  

Revenue

 

$

82.8

 

 

$

70.1

 

 

$

164.3

 

$

136.8

 

Net income (loss)

 

$

(0.6

)

 

$

(2.9

)

 

$

1.6

 

$

(1.8

)

Diluted earnings per share

 

$

(0.00

)

 

$

(0.02

)

 

$

0.01

 

$

(0.01

)

Adjusted EBITDA

 

$

28.0

 

 

$

25.5

 

 

$

55.6

 

$

49.4

 

Adjusted net income

 

$

14.6

 

 

$

11.8

 

 

$

31.5

 

$

26.3

 

Adjusted diluted earnings per share

 

$

0.09

 

 

$

0.07

 

 

$

0.20

 

$

0.17

 

Cash and cash equivalents

 

 

 

 

 

 

 

$

194.8

 

$

267.8

 

   

2022 Financial Outlook

Certara is adjusting its previously reported guidance for full year 2022 to a new full year guidance of $325 million to $335 million for revenue, $112 million to $117 million for adjusted EBITDA, and $0.43-$0.48 for adjusted diluted earnings per share. The revised guidance assumes foreign currency exchange rates remain substantially unchanged from the rates as of June 30, 2022, and a slow recovery in the regulatory services market, and continued strong performance in our bio simulation and Pinnacle 21 businesses. The Company expects the following:

 

 

 

 

 

FY 2022 Guidance 

In millions, except per share data

 

 

Revenue

$

325 - $335

Adjusted EBITDA

$

112- $117

Adjusted diluted earnings per share

$

0.43 - $0.48

Fully diluted shares for 2022 to be in the range of 159 million to 161 million.

GAAP tax rate for 2022 to be in the range of 40% to 45%; and

Cash tax rate for 2022 to be in the range of 20% to 25%.

Webcast and Conference Call Details

Certara will host a conference call today, August 9, 2022, at 5:00 p.m. ET to discuss its second quarter 2022 financial results. Investors interested in listening to the conference call are required to register online in advance of the call. A live and archived webcast of the event will be available on the “Investors” section of the Certara website at https://ir.certara.com/.

About Certara

Certara accelerates medicines using proprietary biosimulation software, technology and services to transform traditional drug discovery and development. Its clients include more than 2,000 biopharmaceutical companies, academic institutions, and regulatory agencies across 62 countries.

Please visit our website at www.certara.com. We intend to use our website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD.

Such disclosures will be included in the Investor Relations section of our website at https://ir.certara.com. Accordingly, investors should monitor such portion of our website, in addition to following our press releases, Securities and Exchange Commission filings and public conference calls and webcasts.

Forward-Looking Statements

This press release contains certain statements that constitute forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, with respect to the Company’s future business and financial performance, revenue, margin, and bookings. These statements typically contain words such as “believe,” “may,” “potential,” “will,” “plan,” “could,” “estimate,” “expects” and “anticipates” or the negative of these words or other similar terms or expressions. Any statement in this press release that is not a statement of historical fact is a forward-looking statement and involves significant risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot provide any assurance that these expectations will prove to be correct. You should not rely upon forward-looking statements as predictions of future events and actual results, events, or circumstances. Actual results may differ materially from those described in the forward-looking statements and are subject to a variety of assumptions, uncertainties, risks and factors that are beyond our control, including the Company’s ability to compete within its market; any deceleration in, or resistance to, the acceptance of model-informed biopharmaceutical discovery; changes or delays in relevant government regulation; increasing competition, regulation and other cost pressures within the pharmaceutical and biotechnology industries; economic conditions, including inflation, recession and currency exchange fluctuation; trends in research and development (R&D) spending; delays or cancellations in projects due to supply chain interruptions or disruptions or delays to pipeline development and clinical trials experienced by our customers due to COVID-19 or other external factors, consolidation within the biopharmaceutical industry; reduction in the use of the Company’s products by academic institutions; pricing pressures; the Company’s ability to successfully enter new markets, increase its customer base and expand its relationships with existing customers; the impact of the Pinnacle 21 acquisition and any future acquisitions and our ability to successfully integrate such acquisitions; the occurrence of natural disasters and epidemic diseases, such as the recent COVID-19 pandemic; the occurrence of global conflicts, such as the conflict between Russian and Ukraine; any delays or defects in the release of new or enhanced software or other biosimulation tools; failure of our existing customers to renew their software licenses or any delays or terminations of contracts or reductions in scope of work by its existing customers; our ability to accurately estimate costs associated with its fixed-fee contracts; our ability to retain key personnel or recruit additional qualified personnel; lower utilization rates by our employees as a result of natural disasters and epidemic diseases, such as COVID-19; risks related to our contracts with government customers; our ability to sustain recent growth rates; our ability to successfully operate a global business; our ability to comply with applicable laws and regulations; risks related to litigation; the adequacy of its insurance coverage and ability to obtain adequate insurance coverage in the future; our ability to perform in accordance with contractual requirements, regulatory standards and ethical considerations; the loss of more than one of our major customers; future capital needs; the ability of our bookings to accurately predict future revenue and our ability to realize revenue on backlog; disruptions in the operations of the third-party providers who host our software solutions or any limitations on their capacity; our ability to reliably meet data storage and management requirements, or the experience of any failures or interruptions in the delivery of our services over the internet; our ability to comply with the terms of any licenses governing use of third-party open source software; any breach of its security measures or unauthorized access to customer data; our ability to adequately enforce or defend ownership and use of our intellectual property and other proprietary rights; any allegations of infringement, misappropriation or violations of a third party’s intellectual property rights; our ability to meet obligations under indebtedness and have sufficient capital to operate our business; any limitations on our ability to pursue business strategies due to restrictions under our current or future indebtedness; any impairment of goodwill or other intangible assets; our ability to use our net operating losses and R&D tax credit carryforwards; the accuracy of management’s estimates and judgments relating to critical accounting policies and changes in financial reporting standards or interpretations; any inability to design, implement, and maintain effective internal controls or inability to remediate any internal controls deemed ineffective; the costs and management time associated with operating as a publicly traded company; and the other factors detailed under the captions “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and elsewhere in our Securities and Exchange Commission (“SEC”) filings, and reports, including the Form 10-K filed by the Company with the Securities and Exchange Commission on March 1, 2022, and subsequent reports filed with the SEC. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, we expressly disclaim any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. Factors that may materially affect our results and those risks listed in filings with the SEC.

A Note on Non-GAAP Financial Measures

This press release contains “non-GAAP measures” that are financial measures that either exclude or include amounts that are not excluded or included in the most directly comparable measures calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). Specifically, the Company makes use of the non-GAAP financial measures adjusted EBITDA, adjusted net income (loss), adjusted diluted earnings per share, and constant currency (“CC”) revenue, which are not recognized terms under GAAP. These measures should not be considered as alternatives to net income (loss) or GAAP diluted earnings per share or revenue as measures of financial performance or any other performance measure derived in accordance with GAAP and should not be considered a measure of discretionary cash available to the Company to invest in the growth of its business. The presentation of these measures has limitations as an analytical tool and should not be considered in isolation, or as a substitute for the Company’s results as reported under GAAP. Because not all companies use identical calculations, the presentations of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.

You should refer to the footnotes below as well as the “Non-GAAP Financial Measures” section in this press release below for a further explanation of these measures and reconciliations of these non-GAAP measures in specific periods to their most directly comparable financial measure calculated and presented in accordance with GAAP for those periods.

Management uses various financial metrics, including total revenues, income (loss) from operations, net income (loss), and certain non-GAAP measures, including those discussed above, to measure and assess the performance of the Company’s business, to evaluate the effectiveness of its business strategies, to make budgeting decisions, to make certain compensation decisions, and to compare the Company’s performance against that of other peer companies using similar measures. In addition, management believes these metrics provide useful measures for period-to-period comparisons of the Company’s business, as they remove the effect of certain non-cash expenses and other items not indicative of its ongoing operating performance.

Management believes that adjusted EBITDA, adjusted net income (loss), adjusted diluted earnings per share, and CC revenue are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical periods. In addition, each of these measures is frequently used by analysts, investors, and other interested parties to evaluate and assess performance. Furthermore, our business has operations outside the United States that are conducted in local currencies. As a result, the comparability of the financial results reported in U.S. dollars is affected by changes in foreign currency exchange rates. We adjust revenues for constant currency to provide a framework for assessing how our business performed excluding the effect of foreign currency rate fluctuations. and we believe it is helpful for investors to present operating results on a comparable basis period over period to evaluate its underlying performance.

Please note that the Company has not reconciled the adjusted EBITDA or adjusted diluted earnings per share forward-looking guidance included in this press release to the most directly comparable GAAP measures because this cannot be done without unreasonable effort due to the variability and low visibility with respect to costs related to acquisitions, financings, and employee stock compensation programs, which are potential adjustments to future earnings. We expect the variability of these items to have a potentially unpredictable, and a potentially significant, impact on our future GAAP financial results.

(1) CC revenue excludes the effects of foreign currency exchange rate fluctuations by assuming constant foreign currency exchange rates used for translation. Current periods revenue reported in currencies other than U.S. Dollars are converted into USD at the average exchange rates in effect for the comparable prior periods.

(2) Adjusted EBITDA represents net income excluding interest expense, provision (benefit) for income taxes, depreciation and amortization expense, intangible asset amortization, equity-based compensation expense, acquisition and integration expense and other items not indicative of our ongoing operating performance.

(3) Adjusted net income and adjusted diluted earnings per share exclude the effect of equity-based compensation expense, amortization of acquisition-related intangible assets, acquisition and integration expense, and other items not indicative of our ongoing operating performance as well as income tax provision adjustment for such charges.

In evaluating adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share, you should be aware that in the future the Company may incur expenses similar to those eliminated in this presentation and this presentation should not be construed as an inference that future results will be unaffected by unusual items.

Contacts:

Investor Relations Contact:
David Deuchler
Gilmartin Group
ir@certara.com

Media Contact:
Daniel Yunger
Kekst CNC
daniel.yunger@kekstcnc.com

CERTARA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THREE MONTHS ENDED

 

SIX MONTHS ENDED

 

 

JUNE 30,

    

JUNE 30,

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

    

2022

 

    

2021

 

    

2022

 

    

2021

 

    

Revenues

 

$

82,760

 

 

$

70,096

 

 

$

164,311

 

 

$

136,814

 

 

Cost of revenues

 

 

35,194

 

 

 

27,542

 

 

 

67,983

 

 

 

53,558

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

 

7,121

 

 

 

4,589

 

 

 

13,232

 

 

 

8,341

 

 

Research and development

 

 

7,741

 

 

 

4,626

 

 

 

15,289

 

 

 

9,332

 

 

General and administrative

 

 

17,778

 

 

 

18,034

 

 

 

36,117

 

 

 

34,596

 

 

Intangible asset amortization

 

 

10,355

 

 

 

9,479

 

 

 

20,504

 

 

 

18,935

 

 

Depreciation and amortization expense

 

 

422

 

 

 

552

 

 

 

904

 

 

 

1,154

 

 

Total operating expenses

 

 

43,417

 

 

 

37,280

 

 

 

86,046

 

 

 

72,358

 

 

Income from operations

 

 

4,149

 

 

 

5,274

 

 

 

10,282

 

 

 

10,898

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(3,879

)

 

 

(6,332

)

 

 

(7,107

)

 

 

(10,260

)

 

Miscellaneous, net

 

 

2,521

 

 

 

(346

)

 

 

3,362

 

 

 

(463

)

 

Total other expenses

 

 

(1,358

)

 

 

(6,678

)

 

 

(3,745

)

 

 

(10,723

)

 

Income (loss) before income taxes

 

 

2,791

 

 

 

(1,404

)

 

 

6,537

 

 

 

175

 

 

Provision of income taxes

 

 

3,380

 

 

 

1,453

 

 

 

4,916

 

 

 

1,980

 

 

Net Income (loss)

 

 

(589

)

 

 

(2,857

)

 

 

1,621

 

 

 

(1,805

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.00

)

 

$

(0.02

)

 

$

0.01

 

 

$

(0.01

)

 

Diluted

 

$

(0.00

)

 

$

(0.02

)

 

$

0.01

 

 

$

(0.01

)

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

156,478,724

 

 

 

147,485,566

 

 

 

156,209,335

 

 

 

147,323,724

 

 

Diluted

 

 

156,478,724

 

 

 

147,485,566

 

 

 

159,293,362

 

 

 

147,323,724

 

 

CERTARA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

    

June 30,

 

December 31,

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA)

    

2022

 

    

2021

 

Assets

 

 

  

 

 

  

Current assets:

 

 

  

 

 

  

Cash and cash equivalents

 

$

194,755

 

 

$

185,797

 

Accounts receivable, net of allowance for credit losses of $474 and $262, respectively

 

 

73,873

 

 

 

69,555

 

Restricted cash

 

 

3,495

 

 

 

827

 

Prepaid expenses and other current assets

 

 

13,896

 

 

 

18,548

 

Total current assets

 

 

286,019

 

 

 

274,727

 

Other assets:

 

 

  

 

 

  

Property and equipment, net

 

 

2,749

 

 

 

2,935

 

Operating lease right-of-use assets

 

 

12,303

 

 

 

12,634

 

Goodwill

 

 

700,800

 

 

 

703,371

 

Intangible assets, net of accumulated amortization of $191,994 and $169,329, respectively

 

 

493,051

 

 

 

511,823

 

Deferred income taxes

 

 

4,146

 

 

 

4,073

 

Other long-term assets

 

 

2,681

 

 

 

2,167

 

Total assets

 

$

1,501,749

 

 

$

1,511,730

 

Liabilities and stockholders’ equity

 

 

  

 

 

  

Current liabilities:

 

 

  

 

 

  

Accounts payable

 

$

5,243

 

 

$

7,458

 

Accrued expenses

 

 

22,387

 

 

 

29,830

 

Current portion of deferred revenue

 

 

46,122

 

 

 

45,496

 

Current portion of long-term debt

 

 

3,020

 

 

 

3,020

 

Current operating lease liabilities

 

 

4,599

 

 

 

5,040

 

Other current liabilities

 

 

174

 

 

 

1,381

 

Total current liabilities

 

 

81,545

 

 

 

92,225

 

Long-term liabilities:

 

 

  

 

 

  

Deferred revenue, net of current portion

 

 

2,282

 

 

 

1,531

 

Deferred income taxes

 

 

70,378

 

 

 

76,098

 

Operating lease liabilities, net of current portion

 

 

8,295

 

 

 

8,256

 

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

 

 

290,868

 

 

 

291,746

 

Non-current finance lease liabilities

 

 

 

 

 

25

 

Total liabilities

 

 

453,368

 

 

 

469,881

 

Commitments and contingencies

 

 

  

 

 

  

Stockholders' equity:

 

 

  

 

 

  

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

 

 

 

 

 

 

Common shares, $0.01 par value, 600,000,000 shares authorized, 159,991,357 and 159,660,048 shares issued as of June 30, 2022 and December 31, 2021, respectively; 159,882,362 and 159,658,948 shares outstanding as of June 30, 2022 and December 31, 2021, respectively

 

 

1,600

 

 

 

1,596

 

Additional paid-in capital

 

 

1,136,831

 

 

 

1,119,821

 

Accumulated deficit

 

 

(73,983

)

 

 

(75,604

)

Accumulated other comprehensive loss

 

 

(13,718

)

 

 

(3,926

)

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

 

 

(2,349

)

 

 

(38

)

Total stockholders’ equity

 

 

1,048,381

 

 

 

1,041,849

 

Total liabilities and stockholders’ equity

 

$

1,501,749

 

 

$

1,511,730

 

CERTARA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

SIX MONTHS ENDED JUNE 30

 

(IN THOUSANDS)

    

2022

 

    

2021

 

    

Cash flows from operating activities:

 

 

  

 

 

  

 

Net income (loss)

 

$

1,621

 

 

$

(1,805

)

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization of property and equipment

 

 

904

 

 

 

1,154

 

 

Amortization of intangible assets

 

 

25,161

 

 

 

20,227

 

 

Amortization of debt issuance costs

 

 

771

 

 

 

747

 

 

Provision for (recovery of) credit losses

 

 

217

 

 

 

(61

)

 

Loss on retirement of assets

 

 

7

 

 

 

282

 

 

Equity-based compensation expense

 

 

17,014

 

 

 

12,681

 

 

Unrealized loss on interest rate swap

 

 

 

 

 

2,390

 

 

Deferred income taxes

 

 

(5,607

)

 

 

(1,971

)

 

Changes in assets and liabilities

 

 

 

 

 

 

 

Accounts receivable

 

 

(5,706

)

 

 

620

 

 

Prepaid expenses and other assets

 

 

4,586

 

 

 

197

 

 

Accounts payable and other liabilities

 

 

(7,934

)

 

 

(13,848

)

 

Deferred revenue

 

 

3,186

 

 

 

(1,057

)

 

Other current liabilities

 

 

(1,529

)

 

 

155

 

 

Changes in operating lease assets and liabilities, net

 

 

371

 

 

 

(155

)

 

Net cash provided by operating activities

 

 

33,062

 

 

 

19,556

 

 

Cash flows from investing activities:

 

 

  

 

 

  

 

Capital expenditures

 

 

(859

)

 

 

(511

)

 

Capitalized development costs

 

 

(5,172

)

 

 

(3,374

)

 

Business acquisitions, net of cash acquired

 

 

(5,883

)

 

 

(14,114

)

 

Net cash used in investing activities

 

 

(11,914

)

 

 

(17,999

)

 

Cash flows from financing activities:

 

 

  

 

 

  

 

Proceeds from borrowings on long-term debt

 

 

 

 

 

89

 

 

Payment on long term debt and finance lease obligations

 

 

(1,654

)

 

 

(2,323

)

 

Payment of debt issuance costs

 

 

 

 

 

(2,931

)

 

Payments on financing component of interest rate swap

 

 

(1,085

)

 

 

 

 

Payment of taxes on shares withheld for employee taxes

 

 

(2,312

)

 

 

 

 

Net cash used in financing activities

 

 

(5,051

)

 

 

(5,165

)

 

Effect of foreign exchange rate changes on cash and cash equivalents, and restricted cash

 

 

(4,471

)

 

 

(88

)

 

Net (decrease) increase in cash and cash equivalents, and restricted cash

 

 

11,626

 

 

 

(3,696

)

 

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

 

 

186,624

 

 

 

273,291

 

 

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

 

$

198,250

 

 

$

269,595

 

 

NON-GAAP FINANCIAL MEASURES

The following table reconciles net income (loss) to adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

THREE MONTHS ENDED JUNE 30

 

SIX MONTHS ENDED JUNE 30

 

    

2022

 

    

2021

 

   

2022

 

    

2021

 

 

 

(in thousands)

Net income (loss)(a)

 

$

(589

)

 

$

(2,857

)

 

$

1,621

 

 

$

(1,805

)

Interest expense(a)

 

 

3,879

 

 

 

6,332

 

 

 

7,107

 

 

 

10,260

 

Interest income(a)

 

 

(14

)

 

 

(100

)

 

 

(25

)

 

 

(171

)

Provision for income taxes(a)

 

 

3,380

 

 

 

1,453

 

 

 

4,916

 

 

 

1,980

 

Depreciation and amortization expense(a)

 

 

422

 

 

 

552

 

 

 

904

 

 

 

1,154

 

Intangible asset amortization(a)

 

 

12,711

 

 

 

10,125

 

 

 

25,161

 

 

 

20,227

 

Currency (gain) loss(a)

 

 

(2,558

)

 

 

164

 

 

 

(3,263

)

 

 

356

 

Equity-based compensation expense(b)

 

 

9,501

 

 

 

7,530

 

 

 

17,014

 

 

 

12,681

 

Acquisition-related expenses(d)

 

 

806

 

 

 

556

 

 

 

1,078

 

 

 

2,152

 

Transaction-related expenses(e)

 

 

111

 

 

 

937

 

 

 

128

 

 

 

1,622

 

Loss on disposal of fixed assets(f)

 

 

2

 

 

 

282

 

 

 

7

 

 

 

282

 

Executive recruiting expense(g)

 

 

 

 

 

327

 

 

 

 

 

 

327

 

First-year Sarbanes-Oxley implementation costs(h)

 

 

308

 

 

 

233

 

 

 

961

 

 

 

340

 

Adjusted EBITDA

 

$

27,959

 

 

$

25,534

 

 

$

55,609

 

 

$

49,405

 

The following table reconciles net income (loss) to adjusted net income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

THREE MONTHS ENDED JUNE 30

 

SIX MONTHS ENDED JUNE 30

 

    

2022

 

    

2021

 

    

2022

 

    

2021

 

 

 

(in thousands)

Net income (loss)(a)

 

$

(589

)

 

$

(2,857

)

 

$

1,621

 

 

$

(1,805

)

Currency gain (loss)(a)

 

 

(2,558

)

 

 

164

 

 

 

(3,263

)

 

 

356

 

Equity-based compensation expense(b)

 

 

9,501

 

 

 

7,530

 

 

 

17,014

 

 

 

12,681

 

Amortization of acquisition-related intangible assets(c)

 

 

11,099

 

 

 

8,475

 

 

 

21,979

 

 

 

16,903

 

Acquisition-related expenses(d)

 

 

806

 

 

 

556

 

 

 

1,078

 

 

 

2,152

 

Transaction-related expenses(e)

 

 

111

 

 

 

937

 

 

 

128

 

 

 

1,622

 

Loss on disposal of fixed assets(f)

 

 

2

 

 

 

282

 

 

 

7

 

 

 

282

 

Executive recruiting expense(g)

 

 

 

 

 

327

 

 

 

 

 

 

327

 

First-year Sarbanes-Oxley implementation costs(h)

 

 

308

 

 

 

233

 

 

 

961

 

 

 

340

 

Income tax expense impact of adjustments(i)

 

 

(4,063

)

 

 

(3,821

)

 

 

(7,979

)

 

 

(6,607

)

Adjusted Net Income

 

$

14,617

 

 

$

11,826

 

 

$

31,546

 

 

$

26,251

 

The following table reconciles diluted earnings per share to adjusted diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THREE MONTHS ENDED JUNE 30

 

SIX MONTHS ENDED JUNE 30

 

 

2022

 

    

2021

 

 

2022

 

 

2021

 

 

 

(in thousands)

Diluted earnings per share(a)

    

$

 

    

$

(0.02

)

    

$

0.01

 

    

$

(0.01

)

Currency (gain) loss(a)

 

 

(0.02

)

 

 

 

 

 

(0.02

)

 

 

 

Equity-based compensation expense(b)

 

 

0.06

 

 

 

0.05

 

 

 

0.11

 

 

 

0.08

 

Amortization of acquisition-related intangible assets(c)

 

 

0.06

 

 

 

0.06

 

 

 

0.13

 

 

 

0.11

 

Acquisition-related expenses(d)

 

 

0.01

 

 

 

 

 

 

0.01

 

 

 

0.01

 

Transaction-related expenses(e)

 

 

 

 

 

0.01

 

 

 

 

 

 

0.02

 

Loss on disposal of fixed assets(f)

 

 

 

 

 

 

 

 

 

 

 

 

Executive recruiting expense(g)

 

 

 

 

 

 

 

 

 

 

 

 

First-year Sarbanes-Oxley implementation costs(h)

 

 

0.01

 

 

 

 

 

 

0.01

 

 

 

 

Income tax expense impact of adjustments(i)

 

 

(0.03

)

 

 

(0.03

)

 

 

(0.05

)

 

 

(0.04

)

Adjusted Diluted Earnings Per Share

 

$

0.09

 

 

$

0.07

 

 

$

0.20

 

 

$

0.17

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

 

156,478,724

 

 

 

147,485,566

 

 

 

156,209,335

 

 

 

147,323,724

 

Effect of potentially dilutive shares outstanding (j)

 

 

2,946,216

 

 

 

4,979,042

 

 

 

3,084,027

 

 

 

4,952,002

 

Diluted weighted average common shares outstanding

 

 

159,424,940

 

 

 

152,464,608

 

 

 

159,293,362

 

 

 

152,275,726

 

The following tables reconcile revenues to the revenues adjusted for constant currency:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THREE MONTHS ENDED JUNE 30, 

 

CHANGE

 

    

2022

 

2022

    

2021

 

 

$

    

 

%

 

 

$

 

%

 

 

 

Actual

 

 

CC

 

 

Actual

 

 

Actual

 

 

Actual

 

 

CC Impact

 

Adjust for CC

 

 

 

(GAAP)

 

 

(non-GAAP)

 

 

(GAAP)

 

 

(GAAP)

 

 

(GAAP)

 

 

(non-GAAP)

 

 

(non-GAAP)

 

 

(in thousands)

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

$

28,724

 

$

29,737

 

$

20,112

 

$

8,612

 

 

43

%

 

$

1,013

 

 

48

%

Services

 

 

54,036

 

 

55,061

 

 

49,984

 

 

4,052

 

 

8

%

 

 

1,025

 

 

10

%

Total Revenue

 

$

82,760

 

$

84,798

 

$

70,096

 

$

12,664

 

 

18

%

 

$

2,038

 

 

21

%


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIX MONTHS ENDED JUNE 30, 

 

CHANGE

 

    

2022

 

2022

    

2021

 

 

$

    

 

%

 

 

$

 

%

 

 

 

Actual

 

 

CC

 

 

Actual

 

 

Actual

 

 

Actual

 

 

CC Impact

 

Adjust for CC

 

 

 

(GAAP)

 

 

(non-GAAP)

 

 

(GAAP)

 

 

(GAAP)

 

 

(GAAP)

 

 

(non-GAAP)

 

 

(non-GAAP)

 

 

(in thousands)

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Software

 

$

57,917

 

$

59,311

 

$

42,016

 

$

15,901

 

 

38

%

 

$

1,394

 

 

41

%

Services

 

 

106,394

 

 

107,856

 

 

94,798

 

 

11,596

 

 

12

%

 

 

1,462

 

 

14

%

Total Revenue

 

$

164,311

 

$

167,167

 

$

136,814

 

$

27,497

 

 

20

%

 

$

2,856

 

 

22

%

(a)   Represents amounts as determined under GAAP.

(b)   Represents expense related to equity-based compensation. Equity-based compensation has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy.

(c)   Represents amortization costs associated with acquired intangible assets in connection with business acquisitions.

(d)   Represents costs associated with mergers and acquisitions and any retention bonuses pursuant to the acquisitions.

(e)   Represents costs associated with our public offerings that are not capitalized.

(f)   Represents the gain/loss related to disposal of fixed assets.

(g)   Represents recruiting and relocation expenses related to hiring senior executives.

(h)   Represents the first-year Sarbanes-Oxley costs for accounting and consulting fees related to the Company's preparation to comply with Section 404 of the Sarbanes-Oxley Act in 2021, as well as implementing cost of ASC 842.

(i)   Represents the income tax effect of the non-GAAP adjustments calculated using the applicable statutory rate by jurisdiction.

(j)   Represents potentially dilutive shares that were included from our GAAP diluted weighted average common shares outstanding.