XML 22 R10.htm IDEA: XBRL DOCUMENT
v3.22.4

BUSINESS COMBINATIONS | 12 Months Ended
--- | ---
Dec. 31, 2022
BUSINESS COMBINATIONS |
BUSINESS COMBINATIONS | 3.BUSINESS COMBINATIONS LCR-Dixon On September 22, 2021, the Company executed a stock purchase agreement to acquire 100% of the stock of LCR-Dixon Corporation (“LCR-Dixon”), a provider of SAP technologies and tax intelligence solutions. LCR-Dixon’s solutions were specifically developed to improve functionality and performance for SAP indirect tax processes and are integrated with the Company’s tax determination software. The LCR-Dixon acquisition was accounted for as a business combination. The transaction costs associated with the acquisition were not significant. The purchase price was $99,062 as of the acquisition date consisting of (i) $59,720 of cash paid at closing, partially offset by $1,899 of LCR-Dixon cash received in the acquisition, resulting in net cash consideration at closing of $57,821, (ii) $474 cash paid related to the final determination of LCR-Dixon’s cash and net working capital as of the acquisition date (the “Post-closing Adjustment”) paid in January 2022, (iii) non-interest bearing deferred payments aggregating $40,000 to be paid in four equal installments of $10,000 every six-months beginning March 2022 and ending September 2023, net of a discount of $976 (the “deferred purchase consideration”), and (iv) other adjustments associated with income tax amounts that exceed the estimated amount calculated at closing of $156. Cash paid was funded from available cash on hand. The discount recorded as a reduction of the deferred purchase consideration will be recorded as interest expense over the payment period using the effective interest method. The deferred purchase consideration, net of discount, at December 31, 2022 is $19,824, and is included in current liabilities in the consolidated balance sheet. The deferred purchase consideration, net of discount, at December 31, 2021 of $19,805 and $19,419, is included in current liabilities and long-term liabilities, respectively, in the consolidated balance sheets. The following table summarizes the purchase price for LCR-Dixon: ​
​ | ​ | ​ | ​
​ | ​ | As of Acquisition Date
Cash consideration | ​ | $ | 60,038
Fair value of deferred purchase consideration | ​ | ​ | 39,024
Total | ​ | $ | 99,062
​ The purchase price was allocated to the net assets acquired based on management’s determination of their estimated fair values using available information as of the acquisition date. The excess of purchase consideration over the net assets acquired is recorded as goodwill, which primarily reflects the existence of intangible assets not recognized under U.S. GAAP such as the value of expected future synergies, the value of the assembled workforce and other market factors. Goodwill associated with the LCR-Dixon acquisition is not deductible for tax purposes. The fair values of these amounts on the acquisition date, which are reflected in the table below, were finalized during the second quarter of 2022 and include Measurement Period adjustments resulting in an increase to capitalized software of $7,700, an increase to other intangibles of $6,500 and various other adjustments resulting in a net reduction to goodwill of $11,178. Any subsequent adjustments to these values will be recorded in the consolidated statements of comprehensive loss in the period in which the adjustment is identified. ​ The Company and LCR-Dixon had a pre-existing relationship in the form of a royalty agreement at the acquisition date. The Company owed LCR-Dixon royalties in connection with licenses sold by the Company to end users when collected by the Company from end users (the “Royalty Agreement”). The Royalty Agreement terminated upon consummation of the acquisition and the Company wrote-off $252 of royalties payable to LCR-Dixon with an offset to goodwill. ​ The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed as recorded in the Company’s consolidated balance sheet as of the acquisition date: ​
​ | ​ | ​ | ​
​ | ​ | As of Acquisition Date
Cash and cash equivalents | ​ | $ | 1,899
Accounts receivable | ​ | ​ | 1,586
Prepaid expenses and other current assets | ​ | ​ | 150
Property and equipment | ​ | ​ | 4
Capitalized software | ​ | ​ | 7,700
Goodwill | ​ | ​ | 86,639
Other intangibles | ​ | ​ | 6,500
Accounts payable | ​ | ​ | (19)
Accrued expenses | ​ | ​ | (202)
Accrued compensation | ​ | ​ | (1,746)
Deferred income tax liability | ​ | ​ | (3,630)
Deferred revenue | ​ | ​ | (71)
Total | ​ | $ | 98,810
​ The fair value, valuation methodologies, estimated useful lives, and significant assumptions of the identifiable intangibles acquired in the LCR-Dixon acquisition are summarized in the table below: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | September 22, 2021
LCR-Dixon Identifiable Intangibles | ​ | Balance Sheet Location | ​ | ​ | Fair Value | ​ | Valuation Methodology | ​ | Estimated Useful Life | ​ | Discount Rate | ​
Trade name | ​ | Goodwill and other intangible assets (Note 9) | ​ | $ | 200 | ​ | Relief from royalty method - income approach | ​ | 6 months | ​ | 20.0 | %
Customer relationships | ​ | Goodwill and other intangible assets (Note 9) | ​ | $ | 6,300 | ​ | Excess earnings method - income approach | ​ | 3 years | ​ | 20.0 | %
Developed technology | ​ | Property and equipment, net (Note 6) | ​ | $ | 7,700 | ​ | Relief from royalty method - income approach | ​ | 3 years | ​ | 20.0 | %
​ ​ Taxamo ​ On May 12, 2021, the Company acquired 95% of the outstanding equity of EVAT Solutions Limited (“EVAT”) and its wholly owned subsidiaries (collectively “Taxamo”), a cloud-based provider of tax and payment automation for global eCommerce and marketplaces. This acquisition supports the Company’s growth strategies across eCommerce platforms and marketplaces in Europe and North America. Included in the acquisition agreement is an option to purchase from and an option for the remaining shareholder to sell the remaining 5% of the outstanding equity of EVAT (the “Option”) at a fixed amount between August and December 2021 for an estimated fair value of $10,034. ​ The purchase price for the Taxamo acquisition was $200,689, consisting of (i) $190,153 of cash paid at closing, partially offset by $2,662 of acquired cash, including $221 of restricted cash, received in the acquisition resulting in net cash consideration at closing of $187,491, (ii) an acquisition holdback with an estimated fair value upon acquisition of $502, and (iii) the Option. The Company recorded the estimated fair value of the Option payment amount in purchase commitment and contingent consideration liabilities, current, on the consolidated balance sheet as of the acquisition date. Cash consideration was funded from available cash on hand. ​ The following table summarizes the purchase price for Taxamo: ​
​ | ​ | ​ | ​
​ | ​ | May 12, 2021
Cash paid at closing | ​ | $ | 190,153
Fair value of acquisition holdback | ​ |  | 502
Fair value of the Option | ​ | ​ | 10,034
Total | ​ | $ | 200,689
​ On August 19, 2021, the Company acquired the remaining 5% equity interest of EVAT for $10,034 through exercise of the Option, giving the Company 100% of the outstanding equity interest of EVAT. The acquisition holdback was fixed in Euros and approximated $468, which amount was included in purchase commitment and contingent consideration liabilities, current in the consolidated balance sheet as of December 31, 2021, and was paid during 2022. ​ The Taxamo acquisition was accounted for as a business combination. The purchase price was allocated to the net assets acquired based on management’s determination of their estimated fair values using available information as of the acquisition date. The excess of purchase consideration over the net assets acquired was recorded as goodwill, which reflects the value of intangible assets not recognized under U.S. GAAP such as the value of expected future synergies, the value of the assembled workforce and other market factors. The Company expects that goodwill associated with the Taxamo acquisition will not be deductible for tax purposes. Taxamo’s business and product offerings are being integrated into the Company’s one operating segment. ​ The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed as recorded in the Company’s consolidated balance sheet as of the acquisition date: ​
​ | ​ | ​ | ​
​ | ​ | May 12, 2021
Cash and cash equivalents | ​ | $ | 2,441
Funds held for customers | ​ | ​ | 221
Accounts receivable | ​ | ​ | 2,657
Prepaid expenses and other current assets | ​ | ​ | 908
Property and equipment | ​ |  | 40,792
Goodwill | ​ | ​ | 164,199
Other intangibles | ​ | ​ | 1,581
Accounts payable | ​ | ​ | (304)
Accrued expenses | ​ | ​ | (1,395)
Accrued compensation | ​ | ​ | (3,939)
Deferred revenue | ​ | ​ | (2,196)
Deferred other income | ​ | ​ | —
Deferred other liabilities | ​ | ​ | (4,276)
Total | ​ | $ | 200,689
​ The fair value, valuation methodologies, estimated useful lives, and significant assumptions of the identifiable intangibles acquired in the Taxamo acquisition are summarized in the table below: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | May 12, 2021
Taxamo Identifiable Intangibles | ​ | Balance Sheet Location | ​ | ​ | Fair Value | ​ | Valuation Methodology | ​ | Estimated Useful Life | ​ | Discount Rate | ​
Developed technology | ​ | Property and equipment, net (Note 6) | ​ | $ | 40,746 | ​ | Multi-period excess earnings method - income approach | ​ | 3 years | ​ | 16.5 | %
Trade name | ​ | Goodwill and other intangible assets (Note 9) | ​ | $ | 608 | ​ | Relief from royalty method - income approach | ​ | 2 years | ​ | 16.5 | %
Customer relationships | ​ | Goodwill and other intangible assets (Note 9) | ​ | $ | 973 | ​ | Distributor method - income approach | ​ | 2 years | ​ | 16.5 | %
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ The Company has included the financial results of Taxamo in the consolidated statement of comprehensive income (loss) from the date of acquisition. The transaction costs associated with the acquisition were $4,269 and are recorded in other operating expense, net, for the year ended December 31, 2021. ​ The Company assumed certain liabilities in the acquisition of Taxamo, including deferred revenue with a fair value of $2,196, using a cost-plus profit approach. The Company is amortizing the acquired deferred revenue at its fair value over the period for which it is incurring costs to support the assumed customer obligations. ​ Tellutax ​ On January 25, 2021, the Company executed an Asset Purchase Agreement with Tellutax LLC, a Portland, Oregon based edge computing technology startup (“Tellutax”), to acquire substantially all of Tellutax’s assets (the “Tellutax acquisition”). Cash consideration paid for the acquisition was $6,100, funded through cash on hand, and serves to strengthen the Company’s technology roadmap and hybrid cloud strategy enabling it to better serve customers in an increasingly hyper-connected environment. The Tellutax acquisition entitles the sellers to contingent consideration if sales targets are met during a period of time following the acquisition. ​ The Tellutax acquisition was accounted for as a business combination. The total purchase price was allocated to the net assets acquired based on management’s determination of their estimated fair values using available information as of the acquisition date. The excess of purchase consideration over the net assets acquired is recorded as goodwill, which primarily reflects the value of expected future synergies, the existence of intangible assets not recognized under U.S. GAAP such as the value of the assembled workforce and other market factors. The Company expects that goodwill associated with the Tellutax acquisition will be deductible for tax purposes. The fair values of these amounts on the acquisition date, which are reflected in the table below, have been finalized. Any subsequent adjustments to these values will be recorded in the consolidated statements of comprehensive income (loss) in the period in which the adjustment is identified. ​ The purchase price for the Tellutax acquisition included cash paid at closing plus an estimated fair value of contingent consideration of $2,200 (the “Tellutax Contingent Consideration”) as of January 25, 2021. The following table presents the final purchase price allocation recorded in the consolidated balance sheet as of the acquisition date: ​
​ | ​ | ​ | ​
​ | ​ | January 25, 2021
Capitalized software - developed technology | ​ | $ | 3,600
Goodwill | ​ |  | 4,700
Total | ​ | $ | 8,300
​ The Company has included the financial results of Tellutax in the consolidated statement of comprehensive income (loss) from the date of acquisition. ​ The fair value of developed technology was valued using the multi-period excess earnings method, which is a variation of the income approach. This method estimates an intangible asset’s value based on the present value of the incremental after-tax cash flows attributable to the intangible asset. The significant assumptions used in the developed technology valuation included an estimated linear obsolescence factor of 20% per year and a discount rate of 28.5%. ​ The fair value of Tellutax Contingent Consideration is estimated using a Monte Carlo Simulation to compute the expected cash flows from earnout payments specified in the purchase agreement. The Tellutax Contingent Consideration is based on three potential earn-out payments determined by periodic revenue achievements over a thirty-month period. Earnout payments have no maximum limit, but if certain targets are not met, there will be no earn-out payment for the applicable measurement period. The estimated fair value of the Tellutax Contingent Consideration recorded as of the acquisition date was $2,200. See Note 5 for information on recurring fair value adjustments after the acquisition date. ​ Systax ​ On January 7, 2020, the Company acquired a 60% controlling interest in Systax, a provider of Brazilian transaction tax content and software. Cash consideration for the purchase was $12,374, which was funded through borrowings under a revolving line of credit. This acquisition provided the Company with full access to a sizeable database of Brazilian tax content that is critical to supporting its global multi-national customers’ business expansion into Brazil. ​ On the acquisition date, the Company had a contractual purchase commitment to acquire the remaining 40% equity interest from the original Systax Quotaholders incrementally between 2021 through 2024. This contractual purchase commitment was deemed to be a forward contract, for which the Company was required to estimate and record a future purchase commitment liability (the “Purchase Commitment Liability”). The Purchase Commitment Liability was recorded at the acquisition date fair value of $12,592. Subsequent adjustments will be recorded based on settlement value. This amount will fluctuate as a result of changes in foreign currency exchange rates and is reflected in Purchase Commitment Liability in the consolidated balance sheet at December 31, 2022 and 2021. Adjustments to the settlement value that arise as a result of remeasurement at future balance sheet dates will be recorded as interest expense related to financing costs in the consolidated statements of comprehensive income (loss) in the period the change is identified. During 2022, the Company recorded an increase in interest expense of $990 associated with recording an increase in the settlement value. ​ The acquisition was accounted for as a business combination and the total purchase price was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the excess being recorded as goodwill. The fair values of assets acquired and liabilities assumed as of the acquisition date are reflected in the tables below. Any adjustments to these values will be recorded in the consolidated statements of comprehensive income (loss) in the period the change is identified. ​ The following table reflects the purchase price for Systax: ​
​ | ​ | ​ | ​
​ | ​ | January 7, 2020
Cash paid to Systax Quotaholders at closing | ​ | $ | 11,626
Cash held in escrow for benefit of Systax Quotaholders | ​ |  | 748
Initial cash consideration | ​ | ​ | 12,374
Purchase Commitment Liability | ​ |  | 12,592
Total | ​ | $ | 24,966
​ The following table presents the allocation of the purchase price to the assets acquired and liabilities assumed as recorded in the Company’s consolidated balance sheet as of the acquisition date: ​
​ | ​ | ​ | ​
​ | ​ | January 7, 2020
Cash | ​ | $ | 56
Accounts receivable | ​ | ​ | 495
Property and equipment | ​ |  | 112
Other current assets | ​ |  | 14
Goodwill | ​ |  | 21,089
Other intangible assets | ​ | ​ | 3,650
Accounts payable | ​ |  | (358)
Accrued expenses | ​ | ​ | (92)
Total | ​ | $ | 24,966
​ The excess of the purchase consideration over the net assets acquired is recorded as goodwill and primarily reflects the value of expected future synergies, the existence of intangible assets not recognized under U.S. GAAP such as the value of the assembled workforce and other market factors. Goodwill is deductible for tax purposes. ​ The Company has included the financial results of Systax in the consolidated statement of comprehensive income (loss) from the date of acquisition in accordance with ASC 810 due to the Company having a controlling financial interest in Systax. ​ The Company acquired an additional 5% equity interest of Systax in April 2021 for $788, increasing the Company’s equity interest in Systax to 65%. The Purchase Commitment Liability included in purchase commitment and contingent consideration liabilities, current portion in the consolidated balance sheet on December 31, 2022, was $4,749. The Purchase Commitment Liability included in purchase commitment and contingent consideration liabilities, net of current portion in the consolidated balance sheets on December 31, 2022 and 2021, was $5,012 and $8,329, respectively. ​ Unaudited Pro Forma Financial Information Unaudited proforma financial information has not been presented, as the information from the acquired companies would not have had a material impact individually or in the aggregate for the current and prior year periods.

X
- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
Name: | us-gaap_BusinessCombinationDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_BusinessCombinationsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration