BUMBLE INC. 
You should read the following discussion and analysis of the financial condition
and results of operations of
Overview
We provide online dating and social networking platforms through subscription
and in-app purchases of dating products servicing
Year-to-Date
For the three months ended
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Total Revenue of
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Bumble App Revenue of
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Net earnings of
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Adjusted EBITDA of
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Net cash provided by (used in) operating activities of
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Free cash flow of
For a reconciliation of Adjusted EBITDA, Adjusted EBITDA margin, free cash flow and free cash flow conversion, which are all non-GAAP measures, to the most directly comparable GAAP financial measures, information about why we consider Adjusted EBITDA, Adjusted EBITDA margin, free cash flow and free cash flow conversion useful and a discussion of the material risks and limitations of these measures, please see "-Non-GAAP Financial Measures."
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Key Operating and Financial Metrics
We regularly review a number of metrics, including the following key operating and financial metrics, to evaluate our business, measure our performance, identify trends in our business, prepare financial projections and make strategic decisions. We believe these non-GAAP and operational measures are useful in evaluating our performance, in addition to our financial results prepared in accordance with GAAP. See "-Non-GAAP Financial Measures" for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.
The following metrics were calculated excluding paying users and revenue
generated from Fruitz:
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except ARPPU) 2022 2021
Key Operating Metrics
Bumble App Paying Users 1,775.2 1,352.8
Badoo App and Other Paying Users 1,232.0 1,450.5
Total Paying Users 3,007.2 2,803.3
Bumble App Average Revenue per Paying User $ 29.18 $ 27.75 $ 22.76 $ 19.99 Three Months Three Months Ended Ended
(In thousands, except per share / unit data and
2022 2021
Condensed Consolidated Statements of Operations
Data:
Revenue $ 211,199 $ 170,713
Net earnings (loss) 23,938 323,442
Net earnings (loss) attributable to Bumble Inc.
shareholders / Buzz Holdings L.P. owners 16,395 341,790
Net earnings (loss) per unit attributable to
Bumble Inc. shareholders / Buzz Holdings L.P.
owners
Basic earnings (loss) per share / unit $ 0.13 $ 1.74
Diluted earnings (loss) per share / unit $ 0.13 $ 1.69
March 31, December 31,
(In thousands) 2022 2021
Condensed Consolidated Balance Sheets Data:
Total assets $ 3,795,402 $ 3,775,820
Cash and cash equivalents 308,788 369,175
Long-term debt, net including current maturities 622,292 622,939
Profitability and Liquidity
We use net earnings (loss) and net cash provided by (used in) operating activities to assess our profitability and liquidity, respectively. In addition to net earnings (loss) and net cash provided by (used in) operating activities, we also use the following measures:
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Adjusted EBITDA. We define Adjusted EBITDA as net earnings (loss) excluding income tax (benefit) provision, interest (income) expense, depreciation and amortization, stock-based compensation expense, employer costs related to stock-based compensation, foreign exchange (gain) loss, changes in fair value of contingent earn-out liability, interest rate swaps and investments, transaction and other costs, litigation costs net of insurance reimbursements that arise outside of the ordinary course of business and tax receivable agreement liability remeasurement benefit. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of revenue.
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Free cash flow. We define free cash flow as net cash provided by (used in) operating activities less capital expenditures. Free cash flow conversion represents free cash flow as a percentage of Adjusted EBITDA.
Adjusted EBITDA, Adjusted EBITDA margin, free cash flow and free cash flow conversion are key measures we use to assess our financial performance and are also used for internal planning and forecasting purposes. We believe Adjusted EBITDA, Adjusted EBITDA margin, free cash flow and free cash flow conversion are helpful to investors, analysts and other interested parties because
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they can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition, these measures are frequently used by analysts, investors and other interested parties to evaluate and assess performance.
See "-Non-GAAP Financial Measures" for additional information and a reconciliation of net earnings (loss) to Adjusted EBITDA and Adjusted EBITDA margin and net cash provided by (used in) operating activities to free cash flow.
Impact of Russia-Ukraine Conflict
The ongoing conflict between
As of
For additional information, see "Risk Factors-Risks Related to Our Brand,
Products and Operations-Our operations may be adversely affected by ongoing
developments in
Impact of COVID-19
In
We continue to follow the COVID-19 situation closely as it evolves and monitor guidance from international and domestic authorities, including federal, state and local public health authorities, and there may be developments outside our control requiring us to adjust our operating plan. As such, given the unprecedented uncertainty around the duration and severity of the impact on market conditions and the business environment, we cannot reasonably estimate the full impacts of the COVID-19 pandemic on our business, financial condition and results of operations in the future.
For additional information, see "Risk Factors-General Risk Factors-Our business and results of operations may be materially adversely affected by the ongoing COVID-19 outbreak or other similar outbreaks" in Part I, Item 1A. of our 2021 Form 10-K.
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Factors Affecting the Comparability of Our Results of Operations
As a result of a number of factors, our historical results of operations may not be comparable from period to period or going forward. Set forth below is a brief discussion of the key factors impacting the comparability of our results of operations.
Initial Public Offering and Offering Transactions
On
Secondary Offering
On
Bumble did not sell any shares of Class A common stock in the offering and did not receive any of the proceeds from the sale. Bumble paid the costs associated with the sale of shares by the Selling Stockholders, net of the underwriting discounts.
Reorganization Transactions
Prior to the completion of the IPO, we undertook certain reorganization
transactions (the "Reorganization Transactions") such that
In addition, in connection with the Reorganization Transactions and our IPO, we entered into the tax receivable agreement as described under "-Tax Receivable Agreement."
Tax Receivable Agreement
In connection with the Reorganization Transactions and our IPO, we entered into
a tax receivable agreement with certain of our pre-IPO owners that provides for
the payment by the Company to such pre-IPO owners of 85% of the benefits that
the Company realizes, or is deemed to realize, as a result of the Company's
allocable share of existing tax basis acquired in our IPO, increases in our
share of existing tax basis and adjustments to the tax basis of the assets of
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Blocker Companies (including the Blocker Companies' allocable share of existing tax basis) and certain other tax benefits related to entering into the tax receivable agreement.
We estimate the amount of existing tax basis with respect to which our pre-IPO
owners will be entitled to receive payments under the tax receivable agreement
(assuming all Pre-IPO Common Unitholders exchanged their Common Units for shares
of Class A common stock on the date of the IPO, and assuming all vested
Incentive Units were converted to Common Units and immediately exchanged for
shares of Class A common stock at the IPO prices of
We have determined that it is more likely than not that we will be unable to
realize certain tax benefits that were received in connection with the
Reorganization Transactions and our IPO. As a result of this determination, we
have not recorded the benefit of these deferred tax assets as of
Employee Equity Plans
In connection with the Reorganization Transactions and our IPO, we undertook a
number of modifications to existing employee equity plans such that awards under
the Founder Plan,
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The Time-Vesting and Exit-Vesting Class
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The Time-Vesting and Exit-Vesting Class
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The Time-Vesting and Exit-Vesting Phantom Class
In all cases of respective reclassifications, the Post-IPO awards retained the
same terms and conditions (including applicable vesting requirement). Each
Post-IPO award was converted to reflect the
In connection with the IPO, we adopted the 2021 Omnibus Incentive Plan (the "2021 Omnibus Plan), which became effective on the date immediately prior to the effective date of the IPO. Under the 2021 Omnibus Plan, we granted equity awards as follows:
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Stock options with the underlying equity being shares of the Company's Class A common stock. These stock options are inclusive of both Time-Vesting stock options and Exit-Vesting stock options.
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Time-Vesting Restricted Stock Units with the underlying equity being shares of the Company's Class A common stock.
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Time-Vesting and Exit-Vesting Incentive Units in
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At the IPO date, we concluded that our public offering represented a qualifying
liquidity event that would cause the Exit-Vesting awards' performance conditions
to be probable. As such, we started to recognize stock-based compensation
expense for the Exit-Vesting awards. During the three months ended
For additional information, see Note 14, Stock-based Compensation, to our unaudited condensed consolidated financial statements included in Part I, "Item 1 - Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q.
Components of Results of Operations
Our business is organized into a single reportable segment.
Revenue
We monetize the Bumble, Badoo and Fruitz apps via a freemium model where the use of our service is free and a subset of our users pay for subscriptions or in-app purchases to access premium features. Subscription revenue is presented net of taxes, refunds and credit card chargebacks. This revenue is initially deferred and is recognized using the straight-line method over the term of the applicable subscription period. Revenue from lifetime subscriptions is deferred over the average estimated expected period of the subscriber relationship, which is currently estimated to be twelve months. Revenue from the purchase of in-app features is recognized based on usage.
We also earn revenue from online advertising and partnerships, which are not a significant part of our business. Online advertising revenue is recognized when an advertisement is displayed. Revenue from partnerships is recognized according to the contractual terms of the partnership.
Cost of revenue
Cost of revenue consists primarily of in-app purchase fees due on payments
processed through the
Cost of revenue also includes data center expenses such as rent, power and bandwidth for running servers, employee compensation (including stock-based compensation) and, other employee related costs and restructuring charges. Expenses relating to customer care functions such as customer service, moderators and other auxiliary costs associated with providing services to customers such as fraud prevention are also included within cost of revenue.
Selling and marketing expense
Selling and marketing expense consists primarily of brand marketing, digital and social media spend, field marketing, restructuring charges, compensation expense (including stock-based compensation) and other employee-related costs for personnel engaged in sales and marketing functions.
General and administrative expense
General and administrative expense consists primarily of compensation (including stock-based compensation) and other employee-related costs for personnel engaged in executive management, finance, legal, tax and human resources. General and administrative expense also consists of transaction costs, changes in fair value of contingent earn-out liability, expenses associated with facilities, information technology, external professional services, legal costs, settlement of legal claims, restructuring charges and other administrative expenses.
Product development expense
Product development expense consists primarily of compensation (including stock-based compensation) and other employee-related costs for personnel engaged in the design, development, testing and enhancement of product offerings and related technology, as well as restructuring charges.
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Depreciation and amortization expense
Depreciation and amortization expense is primarily related to computer equipment, leasehold improvements, furniture and fixtures, developed technology, user base, white label contracts, trademarks and other definite-lived intangible assets.
Interest income (expense)
Interest income (expense) consists of interest income received on related party loans receivables and interest expense incurred in connection with our long-term debt.
Other income (expense), net
Other income (expense), net consists of insurance reimbursement proceeds, impacts from foreign exchange transactions, tax receivable agreement liability remeasurement (benefit) expense and fair value changes in derivatives and investments.
Income tax benefit (provision)
Income tax benefit (provision) represents the income tax benefit or expense
associated with our operations based on the tax laws of the jurisdictions in
which we operate. These foreign jurisdictions have different statutory tax rates
than
Results of Operations
The following table sets forth our unaudited condensed consolidated statement of operations information for the periods presented:
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands) 2022 2021
Revenue $ 211,199 $ 170,713
Operating costs and expenses:
Cost of revenue 56,781 47,747
Selling and marketing expense 56,829 46,838
General and administrative expense 26,446 126,524
Product development expense 25,195 35,045
Depreciation and amortization expense 26,929 26,955
Total operating costs and expenses 192,180 283,109
Operating earnings (loss) 19,019 (112,396 )
Interest income (expense) (5,883 ) (7,729 )
Other income (expense), net 13,230 6,991
Income (loss) before income taxes 26,366 (113,134 )
Income tax benefit (provision) (2,428 ) 436,576
Net earnings (loss) 23,938 323,442
Net earnings (loss) attributable to noncontrolling interests
7,543 (18,348 )
Net earnings (loss) attributable to Bumble Inc.
shareholders / Buzz Holdings L.P. owners $ 16,395 $ 341,790
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The following table sets forth our unaudited condensed consolidated statement of operations information as a percentage of revenue for the periods presented:
Three Months Three Months
Ended Ended
March 31, March 31,
2022 2021
Revenue 100.0 % 100.0 %
Operating costs and expenses:
Cost of revenue 26.9 % 28.0 %
Selling and marketing expense 26.9 % 27.4 %
General and administrative expense 12.5 % 74.1 %
Product development expense 11.9 % 20.5 %
Depreciation and amortization expense 12.8 % 15.8 %
Total operating costs and expenses 91.0 % 165.8 %
Operating earnings (loss) 9.0 % (65.8 )%
Interest income (expense) (2.8 )% (4.5 )%
Other income (expense), net 6.3 % 4.1 %
Income (loss) before income taxes 12.5 % (66.3 )%
Income tax benefit (provision) (1.1 )% 255.7 %
Net earnings (loss) 11.3 % 189.5 %
Net earnings (loss) attributable to noncontrolling interests
3.6 % (10.7 )%
Net earnings (loss) attributable to Bumble Inc.
shareholders / Buzz Holdings L.P. owners 7.8 % 200.2 %
The following table sets forth the stock-based compensation expense, net of forfeitures, included in operating costs and expenses:
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands) 2022 2021
Cost of revenue $ 948 $ 1,607
Selling and marketing expense (1,322 ) 5,141
General and administrative expense 10,398 19,908
Product development expense 7,533 19,167
Total stock-based compensation expense
Comparison of the Three Months Ended
Revenue
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands) 2022 2021
Bumble App $ 155,420 $ 112,637
Badoo App and Other 55,779 58,076
Total Revenue $ 211,199 $ 170,713 Total Revenue for the three months ended
Bumble App Revenue for the three months ended
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The decline in
In addition, other revenue of
Cost of revenue
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
Cost of revenue $ 56,781 $ 47,747
Percentage of revenue 26.9 % 28.0 %
Cost of revenue for the three months ended
Selling and marketing expense
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
Selling and marketing expense
26.9 % 27.4 %
Selling and marketing expense for the three months ended
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General and administrative expense
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
General and administrative expense
12.5 % 74.1 %
General and administrative expense for the three months ended
Product development expense
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
Product development expense $ 25,195 $ 35,045
Percentage of revenue 11.9 % 20.5 %
Product development expense in the three months ended
Depreciation and amortization expense
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
Depreciation and amortization expense
12.8 % 15.8 %
Depreciation and amortization expense for the three months ended
Interest income (expense)
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
Interest income (expense) $ (5,883 ) $ (7,729 )
Percentage of revenue (2.8 )% (4.5 )%
Interest expense for the three months ended
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Other income (expense), net
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
Other income (expense), net $ 13,230 $ 6,991
Percentage of revenue 6.3 % 4.1 %
Other income (expense), net in the three months ended
Income tax benefit (provision)
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
Income tax benefit (provision)
(9.2 )% (385.9 )%
Income tax provision was
Non-GAAP Financial Measures
We report our financial results in accordance with GAAP, however, management believes that certain non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance across periods. We believe Adjusted EBITDA provides visibility to the underlying continuing operating performance by excluding the impact of certain expenses, including income tax (benefit) provision, interest (income) expense, depreciation and amortization, stock-based compensation expenses, employer costs related to stock-based compensation, foreign exchange (gain) loss, changes in fair value of contingent earn-out liability, interest rate swaps and investments, transaction and other costs, litigation costs net of insurance reimbursements that arise outside of the ordinary course of business and tax receivable agreement liability remeasurement (benefit) expense, as management does not believe these expenses are representative of our core earnings. We also provide Adjusted EBITDA margin, which is calculated as Adjusted EBITDA divided by revenue. In addition to Adjusted EBITDA and Adjusted EBITDA margin, we believe free cash flow and free cash flow conversion provide useful information regarding how cash provided by (used in) operating activities compares to the capital expenditures required to maintain and grow our business, and our available liquidity, after funding such capital expenditures, to service our debt, fund strategic initiatives and strengthen our balance sheet, as well as our ability to convert our earnings to cash. Additionally, we believe such metrics are widely used by investors, securities analysis, ratings agencies and other parties in evaluating liquidity and debt-service capabilities. We calculate free cash flow and free cash flow conversion using methodologies that we believe can provide useful supplemental information to help investors better understand underlying trends in our business.
Our non-GAAP financial measures may not be comparable to similarly titled measures used by other companies, have limitations as analytical tools and should not be considered in isolation, or as substitutes for analysis of our operating results as reported under GAAP. Additionally, we do not consider our non-GAAP financial measures as superior to, or a substitute for, the equivalent measures calculated and presented in accordance with GAAP. Some of the limitations are:
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Adjusted EBITDA and Adjusted EBITDA margin exclude the recurring, non-cash expenses of depreciation and amortization of property and equipment and definite-lived intangible assets and, although these are non-cash expenses, the assets being depreciated and amortized may have to be replaced in the future;
•
Adjusted EBITDA and Adjusted EBITDA margin do not reflect changes in, or cash requirements for, our working capital needs;
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Adjusted EBITDA and Adjusted EBITDA margin exclude stock-based compensation expense and employer costs related to stock-based compensation, which has been, and will continue to be for the foreseeable future, an important part of how we attract and retain our employees and a significant recurring expense in our business;
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Adjusted EBITDA and Adjusted EBITDA margin do not reflect the interest (income) expense or the cash requirements to service interest or principal payments on our indebtedness, and free cash flow does not reflect the cash requirements to service principal payments on our indebtedness;
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Adjusted EBITDA and Adjusted EBITDA margin do not reflect income tax (benefit) provision we are required to make; and
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Free cash flow and free cash flow conversion do not represent our residual cash flow available for discretionary purposes and does not reflect our future contractual commitments.
Adjusted EBITDA is not a liquidity measure and should not be considered as discretionary cash available to us to reinvest in the growth of our business or to distribute to stockholders or as a measure of cash that will be available to us to meet our obligations.
To properly and prudently evaluate our business, we encourage you to review the financial statements included elsewhere in this report, and not rely on a single financial measure to evaluate our business. We also strongly urge you to review the reconciliation of net earnings (loss) to Adjusted EBITDA, the computation of Adjusted EBITDA margin as compared to net earnings (loss) margin which is net earnings (loss) as a percentage of revenue, the reconciliation of net cash provided by (used in) operating activities to free cash flow, and the computation of free cash flow conversion as compared to operating cash flow conversion, which is net cash provided by (used in) operating activities as a percentage of net earnings (loss) in each case set forth below.
We define Adjusted EBITDA as net earnings (loss) excluding income tax (benefit) provision, interest (income) expense, depreciation and amortization, stock-based compensation expense, employer costs related to stock-based compensation, foreign exchange (gain) loss, changes in fair value of contingent earn-out liability, interest rate swaps and investments, transaction and other costs, litigation
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costs net of insurance reimbursements that arise outside of the ordinary course of business and tax receivable agreement liability remeasurement (benefit) expense. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of revenue.
We define free cash flow as net cash provided by (used in) operating activities less capital expenditures. Free cash flow conversion represents free cash flow as a percentage of Adjusted EBITDA. Operating cash flow conversion represents net cash provided by (used in) operating activities as a percentage of net earnings (loss).
The following table reconciles our non-GAAP financial measures to the most comparable GAAP financial measures for the periods presented:
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands, except percentages) 2022 2021
Net earnings (loss) $ 23,938 $ 323,442
Add back:
Income tax (benefit) provision 2,428 (436,576 )
Interest (income) expense 5,883 7,729
Depreciation and amortization 26,929 26,955
Stock-based compensation expense 17,557 45,823
Employer costs related to stock-based compensation (1) 1,072 -
Litigation costs, net of insurance reimbursements (2) 2,817 234
Foreign exchange (gain) loss (3) (2,395 ) (3,843 )
Changes in fair value of interest rate swaps(4) (10,817 ) (2,944 )
Transaction and other costs(5) 3,108 13,502
Changes in fair value of contingent earn-out liability (20,709 ) 71,954
Changes in fair value of investments - (196 )
Adjusted EBITDA $ 49,811 $ 46,080
Net earnings (loss) margin(6) 11.3 % 189.5 %
Adjusted EBITDA margin 23.6 % 27.0 %
Net cash provided by (used in) operating activities
(4,996 ) (2,712 )
Free cash flow $ 14,362 $ (48,294 )
Operating cash flow conversion 80.9 % (14.1 )%
Free cash flow conversion 28.8 % (104.8 )%
(1)
Represents employer portion of
(2)
Represents certain litigation costs and insurance proceeds associated with pending litigations or settlements of litigation.
(3)
Represents foreign exchange (gain) loss due to foreign currency transactions.
(4)
Represents fair value gain on interest rate swaps.
(5)
Represents transaction costs related to acquisitions and our offerings (IPO, the
Reorganization and the secondary offering) such as legal, accounting, advisory
fees and other related costs. Amount also includes employee-related
restructuring costs directly associated with our decision to discontinue our
operations in
(6)
Net earnings margin for the three months ended
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Liquidity and Capital Resources
Overview
The Company's principal sources of liquidity are our cash and cash equivalents
and cash generated from operations. Our primary uses of liquidity are operating
expenses and capital expenditures. As of
In connection with our IPO, we used the proceeds (net of underwriting discounts)
from the issuance of 9.0 million shares of Class A common stock (
Cash Flow Information
The following table summarizes our unaudited condensed consolidated cash flow information for the periods presented:
Three Months Three Months
Ended Ended
March 31, March 31,
(In thousands) 2022 2021
Net cash provided by (used in):
Operating activities $ 19,358 $ (45,582 )
Investing activities (74,716 ) (2,743 )
Financing activities (7,146 ) 166,717
Operating activities
Net cash provided by (used in) operating activities was
The changes in assets and liabilities for the three months ended
Investing activities
Net cash used in investing activities was
Financing activities
Net cash provided by (used in) financing activities was
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Indebtedness
Senior Secured Credit Facilities
In connection with the Sponsor Acquisition, in
Borrowings under the Senior Secured Credit Facilities bear interest at a rate
equal to, at the Borrower's option, either (i) LIBOR for the relevant interest
period, adjusted for statutory reserve requirements (subject to a floor of 0.0%
on the Initial Term Loan and 0.50% on the Incremental Term Loan), plus an
applicable margin or (ii) a base rate equal to the highest of (a) the rate of
interest in effect as last quoted by the
In addition to paying interest on the outstanding principal under the Senior Secured Credit Facilities, the Borrower is required to pay a commitment fee of 0.50% per annum (which is subject to a decrease to 0.375% per annum based upon the consolidated first lien net leverage ratio of the Borrower and its restricted subsidiaries) to the lenders under the Revolving Credit Facility in respect of the unutilized commitments thereunder. The Borrower must also pay customary letter of credit fees and an annual administrative agency fee.
The Initial Term Loan Facility amortizes in equal quarterly installments in
aggregate annual amounts equal to 1.00% of the principal amount of the Initial
Term Loan Facility outstanding as of the date of the closing of the Initial Term
Loan Facility, with the balance being payable at maturity on
In
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Tax Receivable Agreement
In connection with the IPO, in
We estimate the amount of existing tax basis with respect to which our pre-IPO
owners will be entitled to receive payments under the tax receivable agreement
(assuming all Pre-IPO Common Unitholders exchanged their Common Units for shares
of Class A common stock on the date of the initial public offering, and assuming
all vested Incentive Units were converted to Common Units and subsequently
exchanged for shares of Class A common stock at the initial public offering
price of
Contractual Obligations and Contingencies
The following table summarizes our contractual obligations as of
Payments due by period
Less than 1 to 3 3 to 5 More than
(In thousands) 1 year years years 5 years Total
Long-term debt
6,992 29,205
Other 1,269 5,870 - - 7,139
Total $ 11,710 $ 24,851 $ 629,916 $ 6,992 $ 673,469 The payments that we may be required to make under the tax receivable agreement
to the pre-IPO owners may be significant and are not reflected in the
contractual obligations table set forth above as they are dependent upon future
taxable income. Assuming no material changes in the relevant tax law, and that
we earn sufficient taxable income to realize all tax benefits that are subject
to the tax receivable agreement, we expect future payments under the tax
receivable agreement related to the Offering Transactions to aggregate to
In connection with the Sponsor Acquisition in
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Critical Accounting Policies and Estimates
We have discussed the estimates and assumptions that we believe are critical
because they involve a higher degree of judgment in their application and are
based on information that is inherently uncertain in our Annual Report on Form
10-K for the year ended
Restructuring charges, associated with office closure or exiting a market, consist primarily of severance, relocation and other related costs. The Company evaluates the nature of these costs to determine if they relate to ongoing benefit arrangements which are accounted for under ASC 712, Compensation - Nonretirement Postemployment Benefits, or one-time benefit arrangements which are accounted for under ASC 420, Exit or Disposal Cost Obligations. The Company records a liability for ongoing employee termination benefits when it is probable that an employee is entitled to them and the amount of the benefits can be reasonably estimated. One-time employee termination costs are recognized when management has communicated the termination plan to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. All other related costs are recognized when incurred. See Note 8, Restructuring, for additional information.
Related Party Transactions For discussions of related party transactions, see Note 15, Related Party Transactions, to the condensed consolidated financial statements included in "Item 1 - Financial Statements (Unaudited)".
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