10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-38531

 

 

https://cdn.kscope.io/fd0ebf58f7e3b0402cc839c17ca21118-img47475223_0.jpg 

 

Repay Holdings Corporation

(Exact name of Registrant as specified in its Charter)

 

 

 

Delaware

98-1496050

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

3 West Paces Ferry Road,

Suite 200

Atlanta, GA

30305

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (404) 504-7472

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol(s)

 

Name of each exchange on which registered

Class A Common Stock, par value $0.0001 per share

 

RPAY

 

The NASDAQ Stock Market LLC

 

Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

 

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes No

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of May 4, 2023, there are 92,745,684 shares of the registrant’s Class A Common Stock, par value $0.0001 per share, outstanding (which number includes 4,055,299 shares of unvested restricted stock that have voting rights) and 100 shares of the registrant’s Class V Common Stock, par value of $0.0001 per share, outstanding. As of May 4, 2023, the holders of such outstanding shares of Class V common stock also hold 7,861,271 units in a subsidiary of the registrant and such units are exchangeable into shares of the registrant’s Class A common stock on a one-for-one basis.

 

 

 

 


 

REPAY HOLDINGS CORPORATION

Quarterly Report on Form 10‑Q

For the quarter ended March 31, 2023

 

TABLE OF CONTENTS

 

 

 

Page

 

 

 

 

PART I – FINANCIAL INFORMATION

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements

1

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

20

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

 

 

 

Item 4.

Controls and Procedures

32

 

 

 

 

PART II – OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings

33

 

 

 

Item 1A.

Risk Factors

33

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

34

 

 

 

Item 3.

Defaults Upon Senior Securities

34

 

 

 

Item 4.

Mine Safety Disclosures

34

 

 

 

Item 5.

Other Information

34

 

 

 

Item 6.

Exhibits

35

 

 

 

 

Signatures

36

 

 

 

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements reflect our current views with respect to, among other things, anticipated benefits from our recent acquisitions, expected demand on our product offerings, including further implementation of electronic payment options and statements regarding our market and growth opportunities, and our business strategy and the plans and objectives of management for future operations. You generally can identify these statements by the use of words such as “outlook,” “potential,” “continue,” “may,” “seek,” “approximately,” “predict,” “believe,” “expect,” “plan,” “intend,” “estimate” or “anticipate” and similar expressions or the negative versions of these words or comparable words, as well as future or conditional verbs such as “will,” “should,” “would,” “likely” and “could.” These statements may be found under Part I, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere, and are subject to certain risks and uncertainties that could cause actual results to differ materially from those included in the forward-looking statements. These risks and uncertainties include, but are not limited to: exposure to economic conditions and political risk affecting the consumer loan market, the receivables management industry and consumer and commercial spending, including bank failures or other adverse events affecting financial institutions, inflationary pressures, general economic slowdown or recession; changes in the payment processing market in which we compete, including with respect to its competitive landscape, technology evolution or regulatory changes; changes in the vertical markets that we target, including the regulatory environment applicable to our clients; the ability to retain, develop and hire key personnel; risks relating to our relationships within the payment ecosystem; risk that we may not be able to execute our growth strategies, including identifying and executing acquisitions; risks relating to data security; changes in accounting policies applicable to us; the risk that we may not be able to maintain effective internal controls; and those risks described under Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022 and under Part II, Item 1A “Risk Factors” herein. The forward-looking statements speak only as of the date on which they are made, and, except to the extent required by federal securities laws, we disclaim any obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. In light of these risks and uncertainties, there is no assurance that the events or results suggested by the forward-looking statements will in fact occur, and you should not place undue reliance on these forward-looking statements.

 


 

PART I

FINANCIAL INFORMATION

 

Item 1. Condensed Consolidated Financial Statements

 

REPAY HOLDINGS CORPORATION

Condensed Consolidated Balance Sheets

 

($ in thousands)

March 31, 2023 (Unaudited)

 

 

December 31, 2022

 

Assets

 

 

 

 

 

Cash and cash equivalents

$

91,739

 

 

$

64,895

 

Accounts receivable

 

34,572

 

 

 

33,544

 

Prepaid expenses and other

 

14,223

 

 

 

18,213

 

Total current assets

 

140,534

 

 

 

116,652

 

 

 

 

 

 

 

Property, plant and equipment, net

 

4,117

 

 

 

4,375

 

Restricted cash

 

27,090

 

 

 

28,668

 

Intangible assets, net

 

473,308

 

 

 

500,575

 

Goodwill

 

792,543

 

 

 

827,813

 

Operating lease right-of-use assets, net

 

9,302

 

 

 

9,847

 

Deferred tax assets

 

132,044

 

 

 

136,370

 

Other assets

 

2,500

 

 

 

2,500

 

Total noncurrent assets

 

1,440,904

 

 

 

1,510,148

 

Total assets

$

1,581,438

 

 

$

1,626,800

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

Accounts payable

$

21,303

 

 

$

21,781

 

Related party payable

 

435

 

 

 

1,000

 

Accrued expenses

 

27,300

 

 

 

29,016

 

Current operating lease liabilities

 

2,264

 

 

 

2,263

 

Current tax receivable agreement

 

 

 

 

24,454

 

Other current liabilities

 

1,681

 

 

 

3,593

 

Total current liabilities

 

52,983

 

 

 

82,107

 

 

 

 

 

 

 

Long-term debt

 

432,031

 

 

 

451,319

 

Noncurrent operating lease liabilities

 

7,737

 

 

 

8,295

 

Tax receivable agreement, net of current portion

 

183,696

 

 

 

154,673

 

Other liabilities

 

1,836

 

 

 

2,113

 

Total noncurrent liabilities

 

625,300

 

 

 

616,400

 

Total liabilities

$

678,283

 

 

$

698,507

 

 

 

 

 

 

 

Commitments and contingencies (Note 10)

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

Class A common stock, $0.0001 par value; 2,000,000,000 shares authorized; 89,750,330 issued and 88,672,189 outstanding as of March 31, 2023; 89,354,754 issued and 88,276,613 outstanding as of December 31, 2022

 

9

 

 

 

9

 

Class V common stock, $0.0001 par value; 1,000 shares authorized and 100 shares issued and outstanding as of March 31, 2023 and December 31, 2022

 

 

 

 

 

Additional paid-in capital

 

1,120,721

 

 

 

1,117,736

 

Treasury stock, 1,078,141 shares as of March 31, 2023 and December 31, 2022

 

(10,000

)

 

 

(10,000

)

Accumulated other comprehensive loss

 

(3

)

 

 

(3

)

Accumulated deficit

 

(239,572

)

 

 

(213,180

)

Total Repay stockholders' equity

$

871,155

 

 

$

894,562

 

Non-controlling interests

 

32,000

 

 

 

33,731

 

Total equity

$

903,155

 

 

$

928,293

 

Total liabilities and equity

$

1,581,438

 

 

$

1,626,800

 

 

See accompanying notes to condensed consolidated financial statements.

1


 

REPAY HOLDINGS CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

Three Months Ended March 31,

 

($ in thousands, except per share data)

2023

 

 

2022

 

Revenue

$

74,537

 

 

$

67,564

 

Operating expenses

 

 

 

 

 

Costs of services (exclusive of depreciation and amortization shown separately below)

 

17,965

 

 

 

16,565

 

Selling, general and administrative

 

38,518

 

 

 

32,218

 

Depreciation and amortization

 

26,140

 

 

 

28,589

 

Change in fair value of contingent consideration

 

 

 

 

(2,900

)

Loss on business disposition

 

9,878

 

 

 

 

Total operating expenses

 

92,501

 

 

 

74,472

 

Loss from operations

 

(17,964

)

 

 

(6,908

)

Other income (expense)

 

 

 

 

 

Interest expense

 

(1,160

)

 

 

(988

)

Change in fair value of tax receivable liability

 

(4,538

)

 

 

24,619

 

Other income

 

87

 

 

 

6

 

Total other income (expense)

 

(5,611

)

 

 

23,637

 

Income (loss) before income tax expense

 

(23,575

)

 

 

16,729

 

Income tax expense

 

(4,357

)

 

 

(3,843

)

Net income (loss)

$

(27,932

)

 

$

12,886

 

Less: Net loss attributable to
   non-controlling interests

 

(1,540

)

 

 

(767

)

Net income (loss) attributable to the Company

$

(26,392

)

 

$

13,653

 

 

 

 

 

 

 

Income (loss) per Class A share attributable to the Company:

 

 

 

 

 

Basic

$

(0.30

)

 

$

0.15

 

Diluted

$

(0.30

)

 

$

0.12

 

Weighted-average shares outstanding:

 

 

 

 

 

Basic

 

88,615,760

 

 

 

88,607,655

 

Diluted

 

88,615,760

 

 

 

113,015,159

 

 

See accompanying notes to condensed consolidated financial statements.

 

2


 

REPAY HOLDINGS CORPORATION

Condensed Consolidated Statements of Changes in Equity

(Unaudited)

 

 

 

Repay Stockholders

 

 

 

 

 

 

 

 

Class A Common
Stock

 

 

Class V Common
Stock

 

 

Additional
Paid-In

 

 

Treasury

 

 

Accumulated

 

 

Accumulated Other Comprehensive

 

 

Non-controlling

 

 

Total

 

($ in thousands)

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Stock

 

 

Deficit

 

 

Loss

 

 

Interests

 

 

Equity

 

Balance at December 31, 2021

 

 

88,502,621

 

 

$

9

 

 

 

100

 

 

$

-

 

 

$

1,100,012

 

 

$

-

 

 

$

(226,016

)

 

$

(2

)

 

$

39,033

 

 

$

913,036

 

Release of share awards vested under Incentive Plan

 

 

427,755

 

 

 

-

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Shares repurchased under Incentive Plan

 

 

(113,265

)

 

 

-

 

 

 

 

 

 

-

 

 

 

(1,703

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

(1,698

)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

3,123

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(29

)

 

 

3,094

 

Net income (loss)

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13,653

 

 

 

-

 

 

 

(767

)

 

 

12,886

 

Balance at March 31, 2022

 

 

88,817,111

 

 

$

9

 

 

 

100

 

 

$

-

 

 

$

1,101,432

 

 

$

-

 

 

$

(212,363

)

 

$

(2

)

 

$

38,242

 

 

$

927,318

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

 

 

88,276,613

 

 

$

9

 

 

 

100

 

 

$

-

 

 

$

1,117,736

 

 

$

(10,000

)

 

$

(213,180

)

 

$

(3

)

 

$

33,731

 

 

$

928,293

 

Exchange of Post-Merger Repay Units

 

 

14,460

 

 

 

-

 

 

 

 

 

 

-

 

 

 

61

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(61

)

 

 

-

 

Release of share awards vested under Incentive Plan

 

 

528,843

 

 

 

-

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Shares repurchased under Incentive Plan

 

 

(147,727

)

 

 

-

 

 

 

 

 

 

-

 

 

 

(1,210

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

5

 

 

 

(1,205

)

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

4,134

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(81

)

 

 

4,053

 

Tax distribution from Hawk Parent

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(54

)

 

 

(54

)

Net loss

 

 

-

 

 

 

-

 

 

 

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(26,392

)

 

 

-

 

 

 

(1,540

)

 

 

(27,932

)

Balance at March 31, 2023

 

 

88,672,189

 

 

$

9

 

 

 

100

 

 

$

-

 

 

$

1,120,721

 

 

$

(10,000

)

 

$

(239,572

)

 

$

(3

)

 

$

32,000

 

 

$

903,155

 

 

See accompanying notes to condensed consolidated financial statements.

3


 

REPAY HOLDINGS CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Three Months Ended March 31,

 

($ in thousands)

 

2023

 

 

2022

 

Cash flows from operating activities

 

 

 

 

 

 

Net income (loss)

 

$

(27,932

)

 

$

12,886

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

26,140

 

 

 

28,589

 

Stock based compensation

 

 

4,054

 

 

 

3,094

 

Amortization of debt issuance costs

 

 

712

 

 

 

702

 

Loss on business disposition

 

 

9,878

 

 

 

 

Fair value change in tax receivable agreement liability

 

 

4,538

 

 

 

(24,619

)

Fair value change in contingent consideration

 

 

 

 

 

(2,900

)

Deferred tax expense

 

 

4,357

 

 

 

3,842

 

Change in accounts receivable

 

 

(2,541

)

 

 

(1,076

)

Change in prepaid expenses and other

 

 

3,921

 

 

 

(362

)

Change in operating lease ROU assets

 

 

270

 

 

 

(973

)

Change in accounts payable

 

 

(916

)

 

 

1,656

 

Change in related party payable

 

 

435

 

 

 

(170

)

Change in accrued expenses and other

 

 

(1,716

)

 

 

(7,266

)

Change in operating lease liabilities

 

 

(264

)

 

 

1,030

 

Change in other liabilities

 

 

(105

)

 

 

(679

)

Net cash provided by operating activities

 

 

20,831

 

 

 

13,754

 

Cash flows from investing activities

 

 

 

 

 

 

Purchases of property and equipment

 

 

(528

)

 

 

(553

)

Purchases of intangible assets

 

 

(13,201

)

 

 

(7,013

)

Proceeds from sale of business, net of cash retained

 

 

40,423

 

 

 

 

Net cash provided by (used in) investing activities

 

 

26,694

 

 

 

(7,566

)

Cash flows from financing activities

 

 

 

 

 

 

Payments on long-term debt

 

 

(20,000

)

 

 

 

Shares repurchased under Incentive Plan

 

 

(1,205

)

 

 

(1,698

)

Distributions to Members

 

 

(54

)

 

 

 

Payment of contingent consideration liability up to acquisition-date fair value

 

 

(1,000

)

 

 

 

Net cash used in financing activities

 

 

(22,259

)

 

 

(1,698

)

Increase in cash, cash equivalents and restricted cash

 

 

25,266

 

 

 

4,490

 

Cash, cash equivalents and restricted cash at beginning of period

 

$

93,563

 

 

$

76,340

 

Cash, cash equivalents and restricted cash at end of period

 

$

118,829

 

 

$

80,830

 

 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

 

 

Cash paid during the year for:

 

 

 

 

 

 

Interest

 

$

449

 

 

$

286

 

 

 

 

 

 

 

 

 

See accompanying notes to condensed consolidated financial statements.

4


REPAY HOLDINGS CORPORATION

Notes to the Unaudited Condensed Consolidated Financial Statements

 

1. Organizational Structure and Corporate Information

Repay Holdings Corporation was incorporated as a Delaware corporation on July 11, 2019 in connection with the closing of a transaction (the “Business Combination”) pursuant to which Thunder Bridge Acquisition Ltd., a special purpose acquisition company organized under the laws of the Cayman Islands (“Thunder Bridge”), (a) domesticated into a Delaware corporation and changed its name to “Repay Holdings Corporation” and (b) consummated the merger of a wholly owned subsidiary of Thunder Bridge with and into Hawk Parent Holdings, LLC, a Delaware limited liability company (“Hawk Parent”).

Throughout this section, unless otherwise noted or unless the context otherwise requires, the terms “we”, “us”, “Repay” and the “Company” and similar references refer to Repay Holdings Corporation and its consolidated subsidiaries.

The Company is headquartered in Atlanta, Georgia.

On February 15, 2023, the Company sold Blue Cow Software, LLC and a related entity (“BCS”) for cash proceeds of $41.9 million. The Company recognized a loss of $9.9 million associated with the sale, comprised of the difference between the consideration received and the net carrying amount of the assets and liabilities of the business. See Note 5. Business Combinations and Dispositions for further discussion.

2. Basis of Presentation and Summary of Significant Accounting Policies

Unaudited Interim Condensed Consolidated Financial Statements

These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited condensed consolidated financial statements and accompanying notes, which are included in the Annual Report on Form 10-K for the year ended December 31, 2022.

The accompanying unaudited condensed consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and with instructions to Form 10-Q and Rule 10-01 of SEC Regulation S-X as they apply to interim financial information. Accordingly, the interim condensed consolidated financial statements do not include all of the information and notes required by GAAP for complete financial statements, although the Company believes that the disclosures made are adequate to make the information not misleading.

The interim condensed consolidated financial statements are unaudited, but in the Company’s opinion include all adjustments of a normal recurring nature or a description of the nature and amount of any adjustments other than normal recurring adjustments, operations and cash flows as of and for the periods presented. The interim financial results are not necessarily indicative of results that may be expected for any other interim period or the fiscal year.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of Repay Holdings Corporation and its (i) wholly owned subsidiary, BT Intermediate, LLC, and (ii) majority-owned subsidiary, Hawk Parent Holdings LLC, along with Hawk Parent Holdings LLC's wholly owned subsidiaries: Hawk Intermediate Holdings, LLC, Hawk Buyer Holdings, LLC, Repay Holdings, LLC, M&A Ventures, LLC, Repay Management Holdco Inc., Repay Management Services LLC, Sigma Acquisition, LLC, Wildcat Acquisition, LLC, Marlin Acquirer, LLC, REPAY International LLC, REPAY Canada Solutions ULC, TriSource Solutions, LLC (“TriSource”), Mesa Acquirer, LLC, CDT Technologies LTD (“Ventanex”), Viking GP Holdings, LLC, cPayPlus, LLC (“cPayPlus”), CPS Payment Services, LLC, Media Payments, LLC (“MPI”), Custom Payment Systems, LLC, Electronic Payment Providers, LLC, Internet Payment Exchange, LLC, Stratus Payment Solutions, LLC, Clear Payment Solutions, LLC, Harbor Acquisition LLC, Payix Holdings Incorporated and Payix Incorporated. All significant intercompany accounts and transactions have been eliminated in consolidation.

Basis of Financial Statement Presentation

The accompanying interim condensed consolidated financial statements of the Company were prepared in accordance with GAAP. The Company uses the accrual basis of accounting whereby revenues are recognized when earned, usually upon the date services are rendered, and expenses are recognized at the date services are rendered or goods are received.

5


REPAY HOLDINGS CORPORATION

Notes to the Unaudited Consolidated Financial Statements

 

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported Condensed Consolidated Statements of Operations during the reporting period. Actual results could differ materially from those estimates.

Segment Reporting

Effective December 31, 2022, the Company revised the presentation of segment information to reflect changes in the way the Company manages and evaluates the business. Therefore, the Company reports operating results through two reportable segments: (1) Consumer Payments and (2) Business Payments, as further discussed in Note 14. Segments. Accordingly, segment information for the comparable prior year periods has been revised.

Recently Adopted Accounting Pronouncements

Reference Rate Reform

In March 2020, the FASB issued Accounting Standards Update (“ASU”) 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”)”, which provides optional expedients and exceptions to contracts, hedging relationships and other transactions affected by the transition away from LIBOR to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform (Topic 848): Scope”, to expand the scope of this guidance to include derivatives. The guidance was effective upon issuance and may be applied prospectively to contract modifications made and hedging relationships entered into on or before December 31, 2022. In December 2022, the FASB issued ASU 2022-06, “Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848”, which extends the period of time entities can utilize the reference rate reform relief guidance under ASU 2020-04 from December 31, 2022, to December 31, 2024.

The Company adopted these ASUs as of February 9, 2023. The adoption of these standards does not have a material impact on the Company’s Consolidated Financial Statements.

Business Combinations

In August 2021, the FASB issued Accounting Standards Update No. 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 requires an entity (acquirer) to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Revenue (Topic 606), and is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2022, with early adoption permitted. Amendments within ASU 2021-08 are required to be applied prospectively to business combinations occurring on or after the effective date of the amendments.

The Company adopted ASU 2021-08 as of January 1, 2023. The adoption of this standard does not have a material impact on the Company’s Consolidated Financial Statements.

3. Revenue

Disaggregation of revenue

 

The Company’s revenue is from two types of relationships: (i) direct relationships and (ii) indirect relationships.