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BUSINESS COMBINATIONS | 3 Months Ended
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Mar. 31, 2023
Business Combinations [Abstract] |
BUSINESS COMBINATIONS | BUSINESS COMBINATIONS Acquisition of Bridg On May 5, 2021, we completed the acquisition of Bridg for purchase consideration of $578.9 million. The purchase consideration consisted of a $350.0 million cash purchase price, subject to $2.8 million of adjustments and escrows, and contingent consideration with an initial fair value of $230.9 million related to additional potential future payments. Under the Merger Agreement, the potential payment to be paid within approximately 2 business days of the determination or agreement of the first payment amount (the "First Anniversary Payment") is to be equal to 20 times the difference between the U.S. annualized recurring revenue ("ARR"), based on revenue in April 2022, and $12.5 million. The potential payment to be paid within approximately 2 business days of the determination of the second payment amount (the “Second Anniversary Payment”) will be equal to 15 times the difference between the ARR for customers as of the first anniversary, based on the April 2023 revenue, and the prior ARR at the first anniversary. At least 30% of each of the First Anniversary Payment and the Second Anniversary Payment will be paid in cash, with the remainder to be paid in cash or our common stock, at our option. If we choose to pay a portion of the First Anniversary Payment or Second Anniversary Payment in our common stock, the number of shares will be determined by dividing the amount of the payment by the trailing 20-day volume-weighted average price ending on the first anniversary date or second anniversary date, as applicable. We also assumed unvested options to purchase Bridg’s common stock and attributed $0.8 million of their fair value to the pre-combination service period. ARR is a performance metric defined within Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations". Refer to Note 8—Fair Value Measurements and Note 12—Subsequent events for further information. As of March 31, 2023, the First Anniversary Payment has not been made. Per the terms of the Merger Agreement, we delivered the First Earnout Statement within 30 days of the first anniversary of the acquisition. We subsequently agreed to extend the Bridg stockholder representative's review period. During the third quarter of 2022, we received an objection from the Bridg stockholder representative that alleges a material understatement of the First Anniversary Payment amount. We followed the dispute resolution process specific to the First Anniversary Payment outlined in the Merger Agreement and referred the matter to an independent accountant. On April 28, 2023, the independent accountant made its determination of the appropriate amount of ARR at the first anniversary and as a result the Company was able to calculate the amount of the First Anniversary Payment. Refer to Note 12—Subsequent events for further information. During the three months ended March 31, 2022 and 2023, we incurred a $4.6 million benefit and a $1.7 million of expense, respectively, in connection with our acquisition of Bridg due to the changes in the estimated brokerage fees and transaction bonuses and accounting for all true-ups and credits related to the acquisition of Bridg. These benefits and costs are included in acquisition and integration benefit (cost) on our condensed consolidated statements of operations. Acquisition of Entertainment On January 7, 2022, we completed the acquisition of Entertainment for purchase consideration of $14.6 million, as presented below (in thousands):
| January 7, 2022
Fair value of common stock transferred | $ | 11,937 |
Cash paid to extinguish acquiree debt | 2,053 |
Cash paid to settle pre-acquisition liabilities and acquiree deal-related costs | 624 |
Cash paid to membership interest holders | 24 |
Cash receivable from membership interest holders pursuant to finalization of net working capital | (61) |
Total purchase consideration | $ | 14,577 |
The following table presents the preliminary purchase consideration allocation recorded on our condensed consolidated balance sheet as of the acquisition date (in thousands):
| January 7, 2022
Cash and cash equivalents | $ | 376 |
Accounts receivable and other assets | 1,259 |
Intangible assets | 9,800 |
Goodwill | 5,002 |
Accounts payable and other liabilities | (1,860) |
Total purchase consideration | $ | 14,577 |
The goodwill was primarily attributed to the value of future synergies created with our current and future offerings. Goodwill is not expected to be deductible for income tax purposes. The following table presents the components of identifiable intangible assets acquired and their estimated useful lives as of the date of acquisition (dollars in thousands):
| Fair Value |  | Useful life (in years)
Trade name | $ | 800 |  |  | 3.0
Developed technology | 700 |  |  | 3.0
Merchant relationships | 8,300 |  |  | 4.0
The results of Entertainment have been included in the consolidated financial statements since its date of acquisition. For each of the three months ended March 31, 2022 and 2023, Entertainment's combined revenue included in the consolidated statement of operations was approximately 3% of consolidated revenue. Due to the continued integration of the combined businesses, it was impractical to determine the earnings. Pro forma consolidated results of operations The following unaudited pro forma financial information presents combined results of operations for the period presented as if the acquisition of Entertainment had been completed on January 1, 2022. The pro forma information includes adjustments to depreciation expense for property and equipment acquired, to amortize expense for the intangible assets acquired and to eliminate the acquisition transaction expenses recognized in the period. The pro forma financial information is for informational purposes only and is not necessarily indicative of the consolidated results of operations of the combined business had the acquisition actually occurred on January 1, 2022 or the results of future operations of the combined business. For instance, planned or expected operational synergies following the acquisition are not reflected in the pro forma information. Consequently, actual results will differ from the unaudited pro forma information presented below.
| Three Months Ended March 31, 2022
| (in thousands)
Revenue | $ | 67,949 |
Net income | $ | 32,766 |

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- 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 https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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