Acquisitions

9 Months Ended

Sep. 30, 2022

Business Combination and Asset Acquisition [Abstract]

AcquisitionsFor the nine months ended September 30, 2022 and the year ended December 31, 2021, the Company completed a number of acquisitions, for an aggregate purchase price of $738,814 and $1,269,844, respectively. On January 31, 2022, the Company completed the acquisition of Power Line Systems, a leader in software for the design of overhead electric power transmission lines and their structures, for $695,968 in cash, net of cash acquired. On June 17, 2021, the Company completed the acquisition of Seequent, a leader in software for geological and geophysical modeling, geotechnical stability, and cloud services for geodata management and collaboration, for $883,336 in cash, net of cash acquired, plus 3,141,342 shares of the Company’s Class B Common Stock. The operating results of the acquired businesses, except for Seequent, were not material, individually or in the aggregate, to the Company’s consolidated statements of operations.

The aggregate details of the Company’s acquisition activity are as follows:


	Acquisitions Completed in
	Nine Months Ended		Year Ended
	September 30, 2022		December 31, 2021


Number of acquisitions	4		13
Cash paid at closing (1)	$	738,810	$	1,072,820
Cash acquired	(19,271)		(37,837)
Net cash paid	$	719,539	$	1,034,983

(1)Of the cash paid at closing for the nine months ended September 30, 2022 and year ended December 31, 2021, $3,000 and $8,701, respectively, was deposited into an escrow account to secure any potential indemnification and other obligations of the seller.

The fair value of the contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	September 30, 2022		December 31, 2021


Accruals and other current liabilities	$	1,244	$	5,382
Other liabilities	—		1,231
Contingent consideration from acquisitions	$	1,244	$	6,613

The fair value of non-contingent consideration from acquisitions is included in the consolidated balance sheets as follows:


	September 30, 2022		December 31, 2021


Accruals and other current liabilities	$	2,923	$	4,751
Other liabilities	2,995		6,177
Non-contingent consideration from acquisitions	$	5,918	$	10,928

The operating results of the acquired businesses are included in the Company’s consolidated financial statements from the closing date of each respective acquisition. The purchase price for each acquisition has been allocated to the net tangible and intangible assets and liabilities based on their estimated fair values at the respective acquisition date.

The Company is in the process of finalizing the purchase accounting for four acquisitions completed during the nine months ended September 30, 2022. Identifiable assets acquired and liabilities assumed were provisionally recorded at their estimated fair values on the respective acquisition date. The initial accounting for these business combinations is not complete because the evaluation necessary to assess the fair values of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified from the date of the acquisition as more information is obtained about the fair values of assets acquired and liabilities assumed, however, such measurement period cannot exceed one year.Acquisition costs are expensed as incurred and are recorded in General and administrative in the consolidated statements of operations. For the three months ended September 30, 2022 and 2021, the Company’s acquisition expenses were insignificant, and for the nine months ended September 30, 2022 and 2021 were $10,824 and $18,037, respectively, which include costs related to legal, accounting, valuation, insurance, general administrative, and other consulting fees. For the three and nine months ended September 30, 2022, $350 and $10,149, respectively, of the Company’s acquisition expenses related to the acquisition of Power Line Systems. For the three and nine months ended September 30, 2021, $389 and $16,285, respectively, of the Company’s acquisition expenses related to the acquisition of Seequent.

The following summarizes the fair values of the assets acquired and liabilities assumed, as well as the weighted average useful lives assigned to acquired intangible assets at the respective date of each acquisition (including contingent consideration):


	Acquisitions Completed in
	Nine Months Ended		Year Ended
	September 30, 2022		December 31, 2021
Consideration:
Cash paid at closing	$	738,810	$	1,072,820
Shares issued at closing (1)(2)	—		182,390
Contingent consideration	—		4,544
Deferred, non-contingent consideration, net	157		10,090
Other	(153)		—
Total consideration	$	738,814	$	1,269,844
Assets acquired and liabilities assumed:
Cash	$	19,271	$	37,837
Accounts receivable and other current assets	1,798		24,174
Operating lease right-of-use assets	1,237		12,095
Property and equipment	963		4,383
Other assets	—		874
Software and technology (weighted average useful life of 5 years)	10,557		43,560
Customer relationships (weighted average useful life of 10 and 9 years, respectively)	80,328		158,555
Trademarks (weighted average useful life of 9 and 10 years, respectively)	5,734		38,256

In-process research and development	—		3,700
Total identifiable assets acquired excluding goodwill	119,888		323,434
Accruals and other current liabilities	(918)		(27,649)
Deferred revenues	(11,563)		(26,245)
Operating lease liabilities	(1,237)		(11,988)
Deferred income taxes	(6,865)		(53,342)
Other liabilities	—		(716)
Total liabilities assumed	(20,583)		(119,940)
Net identifiable assets acquired excluding goodwill	99,305		203,494
Goodwill	639,509		1,066,350
Net assets acquired	$	738,814	$	1,269,844

(1)Of the total 3,141,342 shares issued at closing, 83,627 shares are subject to forfeiture if post‑closing employment service conditions are not met and accordingly are being recorded as stock‑based compensation expense over the related forfeiture period of two years (see Note 15).

(2)A fair value adjustment of $16,943 was applied to the stock consideration due to restrictions on the transfer of securities.

The fair values of the working capital, other assets (liabilities), and property and equipment approximated their respective carrying values as of the acquisition date.

Deferred revenues were determined in accordance with the Company’s revenue recognition policies (see Note 3).

The fair values of the intangible assets were primarily determined using the income approach. When applying the income approach, indications of fair values were developed by discounting future net cash flows to their present values at market‑based rates of return. The cash flows were based on estimates used to price the acquisitions and the discount rates applied were benchmarked with reference to the implied rate of return from the Company’s pricing model and the weighted average cost of capital.

Goodwill recorded in connection with the acquisitions was attributable to synergies expected to arise from cost saving opportunities, as well as future expected cash flows. The Company expects $524,360 of the goodwill recorded relating to the 2022 acquisitions will be deductible for income tax purposes.

Unaudited Pro Forma Financial Information

Had the acquisition of Seequent been made at the beginning of 2020, unaudited pro forma total revenues for the nine months ended September 30, 2021 would have been $749,923. Net (loss) income, net (loss) income per share, basic, and net (loss) income per share, diluted for the nine months ended September 30, 2021 would not have been materially different than the amounts reported primarily due to the pro forma adjustments to reflect the amortization of purchased intangibles and the cost to finance the transaction, net of the related tax effects.

The unaudited pro forma financial information is for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of 2021. The unaudited pro forma financial information combines the historical results of the Company, the adjusted historical results of Seequent considering the date the Company completed the acquisition of Seequent, and the effects of the pro forma adjustments described above.