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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2023
Retirement Benefits [Abstract]  
Employee Benefit Plans
13. Employee Benefit Plans
The Company sponsors a U.S. defined contribution 401(k), which allows eligible U.S.-based employees to defer a portion of their compensation. The Company, at its discretion, may make matching contributions. With the acquisition of Voxbone S.A. on November 1, 2020, the Company assumed sponsorship for Voxbone S.A.’s U.S. defined contribution 401(k). In connection with that acquisition, the Company also assumed sponsorship for a non-U.S. defined contribution plan for which it pays fixed contributions into a separate entity. The Company has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current or prior periods. The contributions are recognized as employee benefit expense when they are due. The Company made matching contributions for the defined contribution plans of $4.8 million, $4.6 million, and $3.8 million for the years ended December 31, 2023, 2022 and 2021, respectively.
In addition, as a result of the acquisition of Voxbone S.A., the Company assumed sponsorship for Voxbone S.A.’s non-U.S. defined benefit pension plans. The liability recognized is the present value of the defined benefit obligation at the end of the reporting period less the fair value of the plan assets and is included in other liabilities in the accompanying consolidated balance sheets. The defined benefit obligation is calculated annually by an independent actuary using the Projected Unit Credit Method.
The following table summarizes information for the pension plans:
As of December 31,
20232022
(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year$3,502 $3,874 
Service cost264 268 
Interest cost146 35 
Actuarial loss (gain)13 (418)
Benefits paid(41)— 
Taxes, insurance premiums and administrative expenses(61)(50)
Impact of foreign currency translation104 (207)
Benefit obligation at end of year$3,927 $3,502 
Change in plan assets:
Fair value of plan assets at beginning of year$3,181 $2,958 
Return on plan assets41 26 
Actuarial gain— 72 
Employer contribution393 332 
Benefits paid(41)— 
Taxes, insurance premiums and administrative expenses(61)(50)
Impact of foreign currency translation94 (157)
Fair value of plan assets at end of year3,607 3,181 
Funded status, net liability$320 $321 
The Company’s pension liability for the Company’s non-U.S. defined benefit pension plans was $0.3 million as of December 31, 2023 and 2022, which is included in other liabilities on the accompanying consolidated balance sheets.
The following table summarizes information for the Company’s pension plans with an accumulated benefit obligation in excess of plan assets:
As of December 31,
20232022
(In thousands)
Projected benefit obligation$3,927 $3,502 
Accumulated benefit obligation3,623 3,265 
Fair value of plan assets3,607 3,181 
The Company reports the service cost component of net periodic benefit cost in the same line item as other compensation costs arising from the services rendered by the employee and records the other components of net periodic benefit cost in other income (expense), net.
Pretax amounts for net periodic benefit cost and other amounts for the defined benefit pension plans consisted of the following components:
Year ended December 31,
202320222021
(In thousands)
Service cost$264 $268 $396 
Interest cost146 35 21 
Return on plan assets(41)(26)(14)
Amortization of actuarial gain(27)— — 
Net periodic pension cost342 277 403 
Changes in plan assets and benefit obligations included in other comprehensive loss:
Unrecognized net actuarial (gain) loss beginning of year(705)(227)17 
Actuarial gain recognized during year27 — — 
Actuarial loss (gain) on benefit obligation13 (418)(237)
Actuarial gain on fair value of plan assets— (72)(6)
Impact of foreign currency translation(118)12 (1)
Total included in other comprehensive loss (before tax effect)(783)(705)(227)
Total recognized in net periodic benefit cost and included in other comprehensive loss$(441)$(428)$176 
The Company uses significant judgment to determine the measurement of their non-U.S. defined benefit pension plans’ assets and liabilities. These amounts are calculated by an independent actuary. The present value of the defined benefit obligation depends on a number of factors that are determined on an actuarial basis using a number of assumptions. Any change in these assumptions will impact the present value of the defined benefit obligation.
The actuarial gains and losses recognized in the pension expense are determined using the so-called “10% corridor” method, i.e. actuarial gains and losses which exceed 10% of the higher of the plan assets and the projected benefit obligation are amortized on a straight line basis over the average remaining service period of the active plan participants. Any prior service costs are amortized on a straight line basis over the average remaining service period of the active plan participants.
The Company determines the appropriate discount rate at the end of each year. This is the interest rate that should be used to determine the present value of estimated future cash outflows expected to be required to settle the pension obligations. In determining the appropriate discount rate, the Company considers the interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms to maturity approximating the terms of the related obligation. The other assumptions for pension obligations are based in part on market conditions.
Significant assumptions used in determining benefit obligations and net periodic benefit cost are as follows:
Year ended December 31,
202320222021
Defined benefit obligations:
Discount rate3.25 %3.80 %0.90 %
Rate of salary increase2.70 %4.67 %4.27 %
Inflation1.80 %2.30 %1.80 %
Defined benefit cost:
Discount rate3.25 %3.80 %0.90 %
Rate of salary increase2.70 %4.67 %4.27 %
Rate of return on plan assets1.80 %1.20 %0.90 %
Inflation1.80 %2.30 %1.80 %
Plan Assets
The Company’s non-U.S. defined benefit plans are insured by a third party. The investments are governed by the insurer, who oversees all investment decisions. The insurance contracts are classified as Level 2 because a portion of the underlying funds are valued using significant other observable inputs. The insurance contracts provide for a guaranteed interest credit and a profit-sharing adjustment based on the actual performance of the underlying investment assets of the insurer. The fair value of the contract is determined by the insurer based on the premiums paid by the Company plus interest credits plus the profit-sharing adjustment less benefit payments.
The major categories of plan assets are as follows:
As of December 31,
20232022
(In thousands)
Assets held by:
Insurance companies (collective and individual)$3,607 $3,181 
Expected Cash Flows
The Company expects to contribute $0.4 million to its non-U.S. defined benefit pension plans during 2024.