0001558370-20-013768 | 10-Q | XBRL Viewer

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Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Sep. 30, 2020	Nov. 10, 2020
Document Information:
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Entity Registrant Name	Vertex, Inc.
Title of 12(b) Security	Class A Common Stock, Par Value $0.001 Per Share
Trading Symbol	VERX
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Central Index Key	0001806837
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false
Class A
Document Information:
Entity Common Stock, Shares Outstanding		25,687,503
Class B
Document Information:
Entity Common Stock, Shares Outstanding		120,417,000

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 270,271	$ 75,903
Funds held for customers	8,745	7,592
Accounts receivable, net of allowance of $7,567 (unaudited), and $7,515, respectively	66,789	70,367
Advances to stockholders	2	283
Prepaid expenses and other current assets	16,001	11,412
Total current assets	361,808	165,557
Property and equipment, net of accumulated depreciation	55,935	54,727
Capitalized software, net of accumulated amortization	32,619	32,075
Goodwill	18,667
Deferred commissions	10,372	11,196
Deferred income tax asset	32,440	219
Deposits and other assets	3,093	849
Total assets	514,934	264,623
Current liabilities:
Current portion of long-term debt	1,179	50,804
Accounts payable	11,828	10,729
Accrued expenses	15,014	13,308
Distributions payable		13,183
Customer funds obligations	8,711	7,553
Accrued salaries and benefits	20,276	15,195
Accrued variable compensation	16,154	22,237
Deferred compensation, current	3,220	8,935
Deferred revenue	185,445	191,745
Deferred rent and other	908	840
Future acquisition commitment, current	780
Total current liabilities	263,515	334,529
Deferred compensation, net of current portion	2,156	18,530
Deferred revenue, net of current portion	12,095	14,046
Long-term debt, net of current portion	329	682
Future acquisition commitment, net of current portion	9,485
Deferred other liabilities	8,793	9,268
Total liabilities	296,373	377,055
Commitments and contingencies (Note 11)
Options for redeemable shares		17,344
Stockholders' equity (deficit)
Additional paid in capital	200,722
Retained earnings (accumulated deficit)	21,696	(90,701)
Accumulated other comprehensive loss	(4,003)	(491)
Treasury stock		(38,638)
Total stockholders' equity (deficit)	218,561	(129,776)
Total liabilities and equity	514,934	264,623
Former Class A
Stockholders' equity (deficit)
Common Stock, Value, Issued
Former Class B
Stockholders' equity (deficit)
Common Stock, Value, Issued		$ 54
Class A
Stockholders' equity (deficit)
Common Stock, Value, Issued	26
Class B
Stockholders' equity (deficit)
Common Stock, Value, Issued	$ 120

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Allowance for accounts receivable	$ 7,567	$ 7,515
Preferred Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	30,000	0
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Former Class A
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	0	600
Common Stock, Shares, Issued	0	300
Common Stock, Shares, Outstanding	0	147
Former Class B
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	0	299,400
Common Stock, Shares, Issued	0	162,297
Common Stock, Shares, Outstanding	0	120,270
Class A
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	300,000	0
Common Stock, Shares, Issued	25,688	0
Common Stock, Shares, Outstanding	25,688	0
Class B
Common Stock, Par or Stated Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	150,000	0
Common Stock, Shares, Issued	120,417	0
Common Stock, Shares, Outstanding	120,417	0

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Total revenues	$ 94,605	$ 82,439	$ 275,121	$ 235,428
Cost of revenues:
Total cost of revenues	47,968	27,433	129,175	80,106
Gross profit	46,637	55,006	145,946	155,322
Operating expenses:
Research and development	16,501	7,271	43,197	22,049
Selling and marketing	29,423	15,830	78,300	49,164
General and administrative	48,043	17,263	123,437	49,358
Depreciation and amortization	2,735	2,311	8,109	6,528
Other operating (income) expense, net	(60)	4	154	472
Total operating expenses	96,642	42,679	253,197	127,571
Income (loss) from operations	(50,005)	12,327	(107,251)	27,751
Other (income) expense:
Interest income	(79)	(251)	(535)	(775)
Interest expense	1,875	503	3,959	1,579
Total other expense, net	1,796	252	3,424	804
Income (loss) before income taxes	(51,801)	12,075	(110,675)	26,947
Income tax (benefit) expense	(30,773)	175	(31,508)	600
Net (loss) income	(21,028)	11,900	(79,167)	26,347
Other comprehensive loss from foreign currency translation adjustments and revaluations, net of tax	(238)	(174)	(3,512)	(176)
Total comprehensive income (loss)	(21,266)	11,726	(82,679)	26,171
Loss before income taxes	(51,801)	12,075	(110,675)	26,947
Pro forma provision for income tax benefit	(13,106)		(28,001)
Proforma net loss	(38,695)		(82,674)
Software subscriptions
Revenues:
Total revenues	79,778	71,041	232,844	202,692
Cost of revenues:
Total cost of revenues	29,161	18,647	79,846	56,490
Services
Revenues:
Total revenues	14,827	11,398	42,277	32,736
Cost of revenues:
Total cost of revenues	18,807	8,786	49,329	23,616
Class A
Other (income) expense:
Net (loss) income attributable to stockholders, basic	$ (2,751)	$ 22	$ (2,427)	$ 21
Net income (loss) per share, basic	$ (0.15)	$ 0.10	$ (0.40)	$ 0.16
Weighted average common stock outstanding, basic	18,124	225	6,129	134
Net (loss) income attributable to stockholders, diluted	$ (2,751)	$ 373	$ (2,427)	$ 826
Net income (loss) per share, diluted	$ (0.15)	$ 0.10	$ (0.40)	$ 0.21
Weighted average common stock outstanding, diluted	18,124	3,893	6,129	3,898
Weighted average common stock, basic and diluted	18,124		6,129
Proforma net loss	$ (5,062)		$ (4,004)
Pro forma net loss per share, basic and diluted	$ (0.28)		$ (0.65)
Class B
Other (income) expense:
Net (loss) income	$ (18,277)	$ 11,878	$ (76,740)	$ 26,326
Net (loss) income attributable to stockholders, basic	$ (18,277)	$ 11,878	$ (76,740)	$ 26,326
Net income (loss) per share, basic	$ (0.15)	$ 0.10	$ (0.64)	$ 0.22
Weighted average common stock outstanding, basic	120,417	120,417	120,417	120,417
Net (loss) income attributable to stockholders, diluted	$ (18,277)	$ 11,527	$ (76,740)	$ 25,521
Net income (loss) per share, diluted	$ (0.15)	$ 0.10	$ (0.64)	$ 0.21
Weighted average common stock outstanding, diluted	120,417	120,417	120,417	120,417
Weighted average common stock, basic and diluted	120,417		120,417
Proforma net loss	$ (33,633)		$ (78,670)
Pro forma net loss per share, basic and diluted	$ (0.28)		$ (0.65)

Condensed Consolidated Statements of Changes in Equity - USD ($) shares in Thousands, $ in Thousands	Former Class A Common Stock	Former Class A	Former Class B Common Stock	Former Class B Family	Former Class B	Class A Common Stock Family	Class A Common Stock	Class A	Class B Common Stock	Class B	Additional paid in capital. Family	Additional paid in capital.	Retained Earnings (Accumulated Deficit).	Accumulated Other Comprehensive Loss	Treasury Stock	Family	Total
Balance at Dec. 31, 2018			$ 54										$ (88,038)	$ (496)	$ (37,797)		$ (126,277)
Balance (in shares) at Dec. 31, 2018	147		120,270												41,685
Remeasurement of options for redeemable shares													(607)				(607)
Distributions declared													(5,255)				(5,255)
Foreign currency translation adjustments and revaluations														21			21
Net (loss) income													7,325				7,325
Balance at Mar. 31, 2019			$ 54										(86,575)	(475)	$ (37,797)		(124,793)
Balance (in shares) at Mar. 31, 2019	147		120,270												41,685
Balance at Dec. 31, 2018			$ 54										(88,038)	(496)	$ (37,797)		(126,277)
Balance (in shares) at Dec. 31, 2018	147		120,270												41,685
Foreign currency translation adjustments and revaluations																	(176)
Net (loss) income										$ 26,326							26,347
Balance at Sep. 30, 2019			$ 54										(73,929)	(672)	$ (37,797)		(112,344)
Balance (in shares) at Sep. 30, 2019	147		120,495												41,685
Balance at Dec. 31, 2018			$ 54										(88,038)	(496)	$ (37,797)		(126,277)
Balance (in shares) at Dec. 31, 2018	147		120,270												41,685
Balance at Dec. 31, 2019			$ 54										(90,701)	(491)	$ (38,638)		(129,776)
Balance (in shares) at Dec. 31, 2019	147	147	120,270		120,270			0		0					41,910
Balance at Mar. 31, 2019			$ 54										(86,575)	(475)	$ (37,797)		(124,793)
Balance (in shares) at Mar. 31, 2019	147		120,270												41,685
Remeasurement of options for redeemable shares													424				424
Exercise of stock options, net													(116)				(116)
Exercised			225
Distributions declared													(6,105)				(6,105)
Foreign currency translation adjustments and revaluations														(23)			(23)
Net (loss) income													7,122				7,122
Balance at Jun. 30, 2019			$ 54										(85,250)	(498)	$ (37,797)		(123,491)
Balance (in shares) at Jun. 30, 2019	147		120,495												41,685
Remeasurement of options for redeemable shares													(579)				(579)
Distributions declared																	0
Foreign currency translation adjustments and revaluations														(174)			(174)
Net (loss) income										$ 11,878			11,900				11,900
Balance at Sep. 30, 2019			$ 54										(73,929)	(672)	$ (37,797)		(112,344)
Balance (in shares) at Sep. 30, 2019	147		120,495												41,685
Balance at Dec. 31, 2019			$ 54										(90,701)	(491)	$ (38,638)		(129,776)
Balance (in shares) at Dec. 31, 2019	147	147	120,270		120,270			0		0					41,910
Remeasurement of options for redeemable shares													(15,242)				(15,242)
Distributions declared													(4,010)				(4,010)
Foreign currency translation adjustments and revaluations														(2,998)			(2,998)
Net (loss) income													(29,064)				(29,064)
Balance at Mar. 31, 2020			$ 54										(139,017)	(3,489)	$ (38,638)		(181,090)
Balance (in shares) at Mar. 31, 2020	147		120,270												41,910
Balance at Dec. 31, 2019			$ 54										(90,701)	(491)	$ (38,638)		(129,776)
Balance (in shares) at Dec. 31, 2019	147	147	120,270		120,270			0		0					41,910
Balance at Jun. 30, 2020			$ 54										(305,861)	(3,765)	$ (38,638)		(348,210)
Balance (in shares) at Jun. 30, 2020	147		120,443	120,270	120,443										41,910
Balance at Dec. 31, 2019			$ 54										(90,701)	(491)	$ (38,638)		(129,776)
Balance (in shares) at Dec. 31, 2019	147	147	120,270		120,270			0		0					41,910
Foreign currency translation adjustments and revaluations																	(3,512)
Net (loss) income										$ (76,740)							(79,167)
Balance at Sep. 30, 2020							$ 26		$ 120			$ 200,722	21,696	(4,003)			218,561
Balance (in shares) at Sep. 30, 2020		0			0		25,688	25,688	120,417	120,417
Balance at Mar. 31, 2020			$ 54										(139,017)	(3,489)	$ (38,638)		(181,090)
Balance (in shares) at Mar. 31, 2020	147		120,270												41,910
Remeasurement of options for redeemable shares													(14,637)				(14,637)
Exercise of stock options, net													53				53
Exercised			173
Distributions declared													(123,185)				(123,185)
Foreign currency translation adjustments and revaluations														(276)			(276)
Net (loss) income													(29,075)				(29,075)
Balance at Jun. 30, 2020			$ 54										(305,861)	(3,765)	$ (38,638)		(348,210)
Balance (in shares) at Jun. 30, 2020	147		120,443	120,270	120,443										41,910
Reclassification of accumulated S Corporation earnings												(354,291)	354,291
Remeasurement of options for redeemable shares												(21,954)					(21,954)
Reclassification of options for redeemable shares												69,177					69,177
Recapitalization prior to Offering			$ (54)						$ 120			(38,704)			$ 38,638
Recapitalization prior to Offering (in shares)	(147)		(120,443)				173		120,417						(41,910)
Reclassification of SAR liability to equity in connection with the Offering												143,519					143,519
Auto-exercised options in connection with Offering							$ 1					(13,809)					(13,808)
Auto-exercised options in connection with Offering (in shares)							564	564
Shares issued in connection with Offering, net of Offering costs							$ 24					416,778					416,802
Shares issued in connection with Offering (in shares)							23,812
Exercise of stock options, net							$ 1				$ (7,023)	$ 1,007				$ (7,023)	$ 1,008
Exercised						510	610	610
Vested restricted stock issued in connection with Offering							19	19				361					361
Distributions declared													(5,706)				$ (5,706)
Stock-based compensation expense												$ 5,661					5,661
Foreign currency translation adjustments and revaluations														(238)			(238)
Net (loss) income										$ (18,277)			(21,028)				(21,028)
Balance at Sep. 30, 2020							$ 26		$ 120			$ 200,722	$ 21,696	$ (4,003)			$ 218,561
Balance (in shares) at Sep. 30, 2020		0			0		25,688	25,688	120,417	120,417

Condensed Consolidated Statements of Changes in Equity (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019
Condensed Consolidated Statements of Changes in Equity
Options for redeemable shares, bgn	$ 47,223	$ 32,586	$ 17,344	$ 14,764	$ 15,188	$ 14,581
Remeasurement of redeemable shares	21,954	14,637	15,242	579	(424)	607
Reclassification of options for redeemable shares	$ (69,177)
Options for redeemable shares, end		$ 47,223	$ 32,586	$ 15,343	$ 14,764	$ 15,188

- Definition

Carrying amount, attributable to parent and noncontrolling interests, of an entity's issued and outstanding stock which is not included within permanent equity. Temporary equity is a security with redemption features that are outside the control of the issuer, is not classified as an asset or liability in conformity with GAAP, and is not mandatorily redeemable. Includes any type of security that is redeemable at a fixed or determinable price or on a fixed or determinable date or dates, is redeemable at the option of the holder, or has conditions for redemption which are not solely within the control of the issuer. Includes stock with a put option held by an ESOP and stock redeemable by a holder only in the event of a change in control of the issuer.

+ References + Details

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash flows from operating activities:
Net (loss) income	$ (79,167)	$ 26,347
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization	23,586	18,152
Provision for subscription cancellations and non-renewals	52	(27)
Amortization of deferred financing costs	356	199
Write-off deferred financing costs	1,351
Stock-based compensation expense	140,890	3,930
Deferred income taxes	(32,004)
Redemption of Converted SARs	(22,889)
Other	86	51
Changes in operating assets and liabilities:
Accounts receivable	4,143	3,010
Advances to stockholders	281	115
Prepaid expenses and other current assets	(4,613)	(1,379)
Deferred commissions	824	(253)
Accounts payable	1,193	128
Accrued expenses	1,382	(1,767)
Accrued and deferred compensation	(5,399)	(4,197)
Deferred revenue	(8,251)	1,053
Other	(1,777)	437
Net cash provided by operating activities	20,044	45,799
Cash flows from investing activities:
Acquisition of business, net of cash acquired	(12,318)
Property and equipment additions	(14,982)	(13,315)
Capitalized software additions	(9,246)	(12,345)
Net cash used in investing activities	(36,546)	(25,660)
Cash flows from financing activities:
Net increase in customer funds obligations	1,158	1,223
Proceeds from line of credit	12,500
Principal payments on line of credit	(12,500)
Proceeds from long-term debt	175,000
Principal payments on long-term debt	(226,029)	(4,339)
Payments for deferred financing costs, net	(2,436)
Proceeds from issuance of shares in connection with Offering	423,024
Payments for offering costs	(6,222)
Payment for taxes on exercised options	(11,999)	(184)
Proceeds from exercise of stock options	6,023	68
Distributions to stockholders	(146,084)	(22,252)
Net cash provided by (used in) financing activities	212,435	(25,484)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(412)	(176)
Net increase (decrease) in cash, cash equivalents and restricted cash	195,521	(5,521)
Cash, cash equivalents and restricted cash, beginning of period	83,495	59,174
Cash, cash equivalents and restricted cash, end of period	$ 279,016	$ 53,653

Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Reconciliation of cash, cash equivalents and restricted cash to the Consolidated Balance Sheets, end of period:
Cash and cash equivalents	$ 270,271	$ 75,903	$ 49,094
Restricted cash—funds held for customers	8,745	7,592	4,559
Total cash, cash equivalents and restricted cash, end of period	$ 279,016	$ 83,495	$ 53,653	$ 59,174

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Vertex, Inc. (“Vertex”) and its direct and indirect wholly-owned subsidiaries (collectively, the “Company”) operate as solutions providers of state, local and value added tax calculation, compliance and analytics, offering software products which are sold through software license and software as a service (“cloud”) subscriptions. The Company also provides implementation and training services in connection with its software license and cloud subscriptions, transaction tax returns outsourcing, and other tax-related services. The Company sells to customers located throughout the United States of America (“U.S.”) and internationally.

Effective January 7, 2020, the Company acquired a 60% controlling interest in Systax Sistemas Fiscais LTDA (“Systax”), a provider of Brazilian transaction tax content and software. Systax is considered a Variable Interest Entity (“VIE”) and its accounts have been included in the consolidated financial statements from the acquisition date. Systax was determined to be a VIE as the Company is the primary beneficiary of the equity interests in Systax and participates significantly in the variability in the fair value of Systax’s net assets. Although the Company does not have full decision-making authority as it is shared with the minority interest owners, as the minority interest owners are considered related parties, the Company is considered the most closely associated party to Systax and is required to consolidate. Systax’s assets may only be used to settle its own obligations and this will continue until such time as the Company owns 100% of the VIE. As of September 30, 2020, the net assets of Systax were $20,556 (unaudited). The Company is at risk to the extent of its current 60% ownership of Systax, which risk will increase over time in proportion to increases in percentage ownership as the Company exercises its future share purchase commitment through 2024. See Note 2.

Registration of Company Stock and Initial Public Offering

On July 28, 2020, the Company filed its amended and restated certificate of incorporation with the Delaware Secretary of State to: (i) effect a three-for-one forward stock split (the “Stock Split”); (ii) establish a new capital structure for the Company (the “New Capital Structure”); and (iii) effect a share exchange (the “Share Exchange”) (collectively, the “Recapitalization”). The Stock Split resulted in each one share owned by a stockholder being exchanged for three shares of common stock, and the number of shares of the Company’s common stock issued and outstanding was increased proportionately based on the Stock Split. After the Stock Split, the Share Exchange occurred, resulting in stockholders of record exchanging their existing Class A and Class B common stock (“former Class A” and “former Class B”, respectively) for newly created shares of Class A and Class B common stock (“Class A” and “Class B”, respectively) issued in connection with the New Capital Structure. The effect of the Stock Split and the Share Exchange are recognized retrospectively in the Consolidated Financial Statements.

The Company’s Registration Statement on Form S-1 (the “S-1”) with the Securities and Exchange Commission (“SEC”) was declared effective on July 28, 2020, resulting in the Class A shares being registered and available for trading on the NASDAQ exchange (the “Offering”).

The Company received $423,024 in proceeds from the sale of 23,812 shares of Class A at a public offering price of $19.00 per share on July 28, 2020, net of underwriting fees, and used a portion of the proceeds to pay off $175,000 in outstanding debt. The net proceeds remaining after payment of Offering costs will be used for working capital and other corporate purposes as described in the S-1.

Unaudited Interim Financial Information

The accompanying unaudited condensed consolidated balance sheet as of December 31, 2019, which has been derived from audited financial statements, and the unaudited interim condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC for interim financial information and include the accounts of the Company. All intercompany transactions have been eliminated in consolidation. Certain information and disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been condensed or omitted. Accordingly, these consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the related notes for the year ended December 31, 2019 included in the Company’s final S-1 dated July 28, 2020 and filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, (the “Securities Act”), on July 30, 2020 (the “Prospectus”). The accompanying interim condensed consolidated balance sheet as of September 30, 2020, the interim condensed consolidated statement of comprehensive income (loss) for the three and nine months ended September 30, 2020 and 2019, and the interim condensed consolidated statements of changes in equity (deficit) and cash flows for the nine months ended September 30, 2020 and 2019 are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on a basis consistent with that used to prepare the annual audited consolidated financial statements and include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the consolidated financial statements. The operating results for the three and nine months ended September 30, 2020 and 2019 are not necessarily indicative of the results expected for the full year periods ending December 31, 2020 and 2019, respectively.

Segments

The Company operates its business as one operating segment. Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker (“CODM”), the Company’s Chief Executive Officer, in deciding how to allocate resources and assess performance. The Company’s CODM allocates resources and assesses performance based upon discrete financial information at the consolidated level. For the three and nine months ended September 30, 2020 and 2019, approximately 3% of the Company’s revenues were generated outside the U.S. in each respective period. As of December 31, 2019, none of the Company’s long-lived assets were held outside of the U.S. As of September 30, 2020, 18%, or $18,870, of the Company’s long-lived assets were held outside of the U.S. (unaudited) and consists primarily of goodwill of $18,667 (unaudited) at September 30, 2020 related to the acquisition of the controlling interest in Systax, which is located in Brazil. See Note 2.

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy (the “Fair Value Hierarchy”) prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2: Inputs are quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

Level 3: Inputs are unobservable inputs based on the Company’s assumptions and valuation techniques used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation.

The Company’s assessment of the significance of an input to the fair value measurement requires judgment, which may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels.

The Company has investments in money market accounts, which are included in cash and cash equivalents on the consolidated balance sheets. Fair value inputs for these investments are considered Level 1 measurements within the Fair Value Hierarchy since money market account fair values are known and observable through daily published floating net asset values. The fair value of the Company’s investments in money market accounts were $159,851 and $38,520 at September 30, 2020 and December 31, 2019, respectively.

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents, funds held for customers, accounts receivable, accounts payable, accrued expenses and debt approximate their related fair values.

Use of Estimates

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, equity, revenues and expenses during the reporting period. Significant estimates used in preparing these consolidated financial statements include: (i) the estimated allowance for subscription cancellations, (ii) the reserve for self-insurance, (iii) assumptions related to achievement of technological feasibility for software developed for sale, (iv) product life cycles, (v) estimated useful lives and potential impairment of long-lived assets, intangible assets and goodwill, (vi) determination of the fair value of tangible and intangible assets acquired, liabilities assumed and consideration transferred in an acquisition, (vii) amortization period of material rights and deferred commissions (viii) valuation of the Company’s stock used to determine the intrinsic value of stock-based compensation awards, (iv) Black-Scholes-Merton option pricing model (“Black-Scholes model”) input assumptions used to determine the fair value of stock-based compensation awards and (x) the potential outcome of future tax consequences of events that have been recognized in the consolidated financial statements or tax returns. Actual results may differ from these estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an initial maturity date of three months or less to be cash equivalents. Funds held as investments in money market funds are included within cash and cash equivalents.

Funds Held for Customers

Funds held for customers in the consolidated balance sheets represents customer funds advanced for transaction tax returns outsourcing. Funds held for customers are restricted for the sole purpose of remitting such funds to satisfy obligations on behalf of such customers and are deposited at FDIC-insured institutions. Customer funds obligations are included in current liabilities in the consolidated balance sheets, as the obligations are expected to be settled within one year.

Property and Equipment

Property and equipment are stated at cost or fair value when acquired in a business combination and presented net of accumulated depreciation. Normal maintenance and repairs are charged to expense, while major renewals and betterments are capitalized. Assets under capital leases are recorded at the lower of the present value of the minimum lease payments or the fair value of the assets and are depreciated over the shorter of the asset’s useful life or lease term.

Depreciation and amortization are computed straight-line over the estimated useful lives of the assets, as follows:


Leasehold improvements		1 - 12 years
Internal-use software developed		3 - 5 years
Computer software		3 - 7 years
Equipment		3 - 10 years
Automobiles		5 years
Furniture and fixtures		7 - 10 years

Software Development Costs

Internal-Use Software

The Company follows Accounting Standard Codification (“ASC”) 350‑40, Goodwill and Other, Internal-Use Software, to account for development costs incurred for the costs of computer software developed or obtained for internal use. ASC 350‑40 requires such costs to be capitalized once certain criteria are met. Capitalized internal-use software costs are primarily comprised of direct labor, related expenses and initial software licenses. ASC 350‑40 includes specific guidance on costs not to be capitalized, such as overhead, general and administrative and training costs. Internal-use software includes software utilized for cloud-based solutions as well as software for internal systems and tools. Costs are capitalized once the project is defined, funding is committed and it is confirmed the software will be used for its intended purpose. Capitalization of these costs concludes once the project is substantially complete and the software is ready for its intended purpose. Post-configuration training and maintenance costs are expensed as incurred. Internal-use software is included in internal-use software developed in property and equipment in the consolidated balance sheets once available for its intended use and is depreciated over periods between 3 to 5 years. Depreciation expense for internal-use software utilized for cloud-based solutions and for software for internal systems and tools is included in cost of revenues, software subscriptions and depreciation and amortization expense, respectively, in the consolidated statements of comprehensive income (loss).

Software Developed for Sale

The costs incurred for the development of computer software to be sold, leased, or otherwise marketed are capitalized in accordance with ASC 985‑20, Costs of Software to be Sold, Leased or Marketed, when technological feasibility has been established. Technological feasibility generally occurs when all planning, design, coding and testing activities are completed that are necessary to establish that the product can be produced to meet its design specifications, including functions, features and technical performance requirements. The establishment of technological feasibility is an ongoing assessment of judgment by management with respect to certain external factors, including, but not limited to, anticipated future revenues, estimated economic life and changes in technology. Capitalized software includes direct labor and related expenses for software development for new products and enhancements to existing products and acquired software.

Amortization of capitalized software development costs begins when the product is available for general release. Amortization is provided on a product-by-product basis using the straight-line method over periods between 3 to 5 years. Unamortized capitalized software development costs determined to be in excess of the net realizable value of the product are expensed immediately.

Capitalized software costs are subject to an ongoing assessment of recoverability based on anticipated future revenues and changes in software technologies at least annually at December 31, and whenever events or circumstances make it more likely than not that impairment may have occurred. In event of an impairment, unamortized capitalized software costs are compared to the net realizable value of the related product and the carrying value of the related assets are written down to the net realizable value to the extent the unamortized capitalized costs exceed such value. The net realizable value is the estimated future gross revenues from the related product reduced by the estimated future costs of completing and disposing of such product, including the costs of providing related maintenance and customer support.

Assessment of Long-Lived Assets

The Company reviews the carrying value of long-lived assets, including internal-use software, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. Whenever such events or circumstances are present, an impairment loss equal to the excess of the asset carrying value over its fair value, if any, is recorded.

Business Combinations

Upon acquisition of a company, the Company determines if the transaction is a business combination, which is accounted for using the acquisition method of accounting. Under the acquisition method, once control is obtained of a business, the assets acquired, liabilities assumed, consideration transferred and amounts attributed to noncontrolling interests, are recorded at fair value. The Company uses its best estimates and assumptions to assign fair value to the tangible and intangible assets acquired, liabilities assumed, consideration transferred, and amounts attributed to noncontrolling interests at the acquisition date. One of the most significant estimates relates to the determination of the fair value of these amounts. The determination of the fair values is based on estimates and judgments made by management. The Company’s estimates of fair value are based upon assumptions it believes to be reasonable, but which are inherently uncertain and unpredictable. Measurement period adjustments to these values as of the acquisition date are reflected at the time identified, up through the conclusion of the measurement period, which is the time at which all information for determination of the values of assets acquired, liabilities assumed, consideration transferred and noncontrolling interests is received, and is not to exceed one year from the acquisition date (the “Measurement Period”). Thus the Company may record adjustments to the fair value of these tangible and intangible assets acquired, liabilities assumed, consideration transferred and noncontrolling interests, with the corresponding offset to goodwill during this Measurement Period. Additionally, uncertain tax positions and tax-related valuation allowances are initially recorded in connection with a business combination as of the acquisition date. The Company continues to collect information and reevaluate these estimates and assumptions periodically and record any adjustments to preliminary estimates to goodwill, provided the Company is within the Measurement Period, with any adjustments to amortization of new or previously recorded identifiable intangibles being recorded to the consolidated statements of comprehensive income (loss) in the period in which they arise. In addition, if outside of the Measurement Period, any subsequent adjustments to the acquisition date fair values are reflected in the consolidated statements of comprehensive income (loss) in the period in which they arise.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of net tangible and intangible assets acquired in a business combination. The Company evaluates goodwill for impairment annually at December 31 and whenever events or circumstances make it more likely than not that impairment may have occurred. The Company has determined that its business comprises one reporting unit. The Company has the option to first assess qualitative factors to determine whether events or circumstances indicate it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, in which case a quantitative impairment test is not required.

The quantitative goodwill impairment test is performed by comparing the fair value of the reporting unit with its carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill is not impaired. An impairment loss is recognized for any excess of the carrying amount of the reporting unit’s goodwill over the fair value up to the amount of goodwill allocated to the reporting unit. Income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit are considered when measuring the goodwill impairment loss, if applicable.

Deferred Financing Costs

The Company capitalizes costs related to obtaining, renewing or extending loan agreements and amortizes these costs on a straight-line basis, which approximates the interest method, over the life of the loan. Deferred financing costs related to outstanding borrowings under bank debt are reflected as a reduction of current portion of long-term debt and long-term debt, net of current portion. Deferred financing costs related to undrawn debt are reflected in deposits and other assets in the consolidated balance sheets in accordance with ASC 835‑30, Interest—Imputation of Interest.

Accounting for Stock-Based Compensation

On the effective date of the Offering, the Company adopted the 2020 Incentive Award Plan (the “2020 Plan”) and the 2020 Employee Stock Purchase Plan (the “ESPP”), which provides for the award of stock appreciation rights (“SARs”) stock options (“options”), restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and participation in the ESPP (collectively, the "awards"), which are subject to guidance set forth in ASC 718, Compensation—Stock Compensation, for the award of equity-based instruments.

The provisions of ASC 718 require a company to measure the fair value of stock-based compensation as of the grant date of the award. Stock-based compensation expense reflects the cost of employee services received in exchange for the awards.

SARs are accounted for as liabilities under ASC 718 and, as such, the Company recognizes stock-based compensation expense by remeasuring the value of the SARs at the end of each reporting period and accruing the portion of the requisite service rendered at that date. Prior to July 2, 2020, the date management determined the Company was considered to have become a public entity, the Company measured SARs based on their intrinsic value which reflected the difference between the fair value of the Company’s former Class B common stock less the grant date fair value of the underlying shares as this was the value the SAR participant could derive from exercise of the SAR award. Prior to the Offering, the fair value of the Company’s common stock was determined periodically by the Board with the assistance of management and a third-party valuation firm. Upon becoming a public entity, and up to the effective date of the Offering, management remeasured outstanding SARs using the fair value-based method under ASC 718. See Note 9 for discussion of the impact of the resulting change in accounting policy. Outstanding SARs are included in deferred compensation, current and deferred compensation, net of current portion in the consolidated balance sheets.

Stock-based compensation expense for new options issued under the 2020 Plan after the Offering is measured based on the grant date fair value of the award and is estimated using the Black-Scholes model. Compensation cost is recognized on a straight-line basis over the requisite service or performance period associated with the award.

Stock-based compensation expense for RSAs and RSUs is based on the the fair value of the Company’s underlying common stock on the date of grant. Compensation cost is recognized on a straight-line basis over the requisite service or performance period associated with the award.

The ESPP permits participants to purchase Class A common stock through payroll deductions up to a specified percentage of their eligible compensation, or a lump sum contribution amount for the initial offering period (July 28 to November 30, 2020), subject to the plan’s maximum purchase provisions during the specified offering periods. The plan is a compensatory plan as it allows participants to purchase stock at a 15% discount from the lower of the fair value of the Class A common on the first or last day of the ESPP offering period (the “ESPP discount”). The ESPP is accounted for as an equity-classified award. Stock-based compensation expense for the ESPP is measured based on the fair value of the ESPP award at the start of the offering period. The fair value is comprised of the value of the ESPP discount and the value associated with the variability in the Class A common stock price during the offering period (the “Call”), which is estimated using the Black-Scholes model. Compensation cost is recognized on a straight-line basis over the respective offering period.

The Company has elected to recognize award forfeitures as they occur.

Operating Leases and Deferred Rent

Rent expense for operating leases is recognized on a straight-line basis over the period of the related lease. For lease agreements that include future specific rent increases, rent concessions and/or tenant improvement allowances, the difference between the rent payments and the straight-line rent expense is included in deferred rent liability in the consolidated balance sheets.

Self-insurance

The Company is self-insured for the majority of its health insurance costs, including medical claims subject to certain stop-loss provisions. Management periodically reviews the adequacy of the Company’s stop-loss insurance coverage. The Company records an estimate of claims incurred but not reported, based on management’s judgment and historical experience. Self-insurance accruals are $1,473 and $2,068 at December 31, 2019 and September 30, 2020 (unaudited), respectively, and are reflected in accrued salaries and benefits in the consolidated balance sheets. Material differences may result in the amount and timing of insurance expense if actual experience differs significantly from management’s estimates.

Revenue Recognition

Revenue from contracts with customers

The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014‑09, Revenue from Contracts with Customers, (“ASC 606”). Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration expected to be received in exchange for those products or services. The Company enters into contracts that can include various combinations of products and services, which are generally capable of being distinct, and accounted for as separate performance obligations. Revenue is recognized net of allowance for subscription and non-renewal cancellations and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Nature of goods and services

Licenses for on-premise software subscriptions provide the customer with a right to use the software as it exists when made available to the customer. Customers purchase a subscription to these licenses, which includes the related software and tax content updates (collectively “updates”) and product support. The updates and support, which are part of the subscription agreement, are essential to the continued utility of the software; therefore, the Company has determined the software and the related updates and support to be a single performance obligation. Accordingly, when on-premise software is licensed, the revenue associated with this combined performance obligation is recognized ratably over the license term as these subscriptions are provided for the duration of the license term. Revenue recognition begins on the later of the beginning of the subscription period or the date the software is made available to the customer to download. The Company’s on-premise software subscription prices in the initial subscription year are higher than standard renewal prices. The excess initial year price over the renewal price (“new sale premium”) is a material right that provides customers with the right to this reduced renewal price. The Company recognizes revenue associated with this material right over the estimated period of benefit to the customer, which is generally three years.

Cloud-based subscriptions allow customers to use Company-hosted software over the contract period without taking possession of the software. The cloud-based offerings also include related updates and support. Cloud-based contracts consistently provide a benefit to the customer during the subscription period, thus the associated revenue is recognized ratably over the related subscription period. Revenue recognition begins on the later of the beginning of the subscription period or the date the customer is provided access to the cloud-based solutions.

Revenue from deliverable-based services is recognized as services are delivered. Revenue from fixed fee services is recognized as services are performed using the percentage of completion input method.

The Company has elected the "right to invoice" practical expedient for revenue related to services that are billed on an hourly basis, which enables revenue to be recognized as the services are performed.

The Company has determined that the methods applied to measuring its progress toward complete satisfaction of performance obligations recognized over time are a faithful depiction of the transfer of control of software subscriptions and services to customers.

Significant Judgments

Contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may require significant judgment. Identification of the amortization periods of material rights and contract costs requires significant judgement by management.

Disaggregation of revenue

The table reflects revenue by major source for the following periods:


	For the three months ended				For the nine months ended
	September 30,				September 30,
		2020	2019			2020	2019
	(unaudited)				(unaudited)
Sources of revenue:
Software subscriptions	$	79,778	$	71,041	$	232,844	$	202,692
Services		14,827		11,398		42,277		32,736
Total revenue	$	94,605	$	82,439	$	275,121	$	235,428

Contract balances

Timing of revenue recognition may differ from the timing of invoicing customers. A receivable is recorded in the consolidated balance sheets when customers are billed related to revenue to be collected and recognized for subscription agreements as there is an unconditional right to invoice and receive payment in the future related to these subscriptions. A receivable and related revenue may also be recorded in advance of billings to the extent services have been performed and the Company has a right under the contract to bill and collect for such performance. Subscription-based customers are generally invoiced annually at the beginning of each annual subscription period. Accounts receivable is presented net of an allowance for potentially uncollectible accounts and estimated cancellations of software license and cloud-based subscriptions (the “allowance”) of $7,515 and $7,567 at December 31, 2019 and September 30, 2020 (unaudited), respectively. The allowance is based on management’s assessment of uncollectible accounts on a specific identification basis, with the estimate of potential cancellations being determined based on management’s review of historical cancellation rates.

The beginning and ending balances of accounts receivable, net of allowance, are as follows:


	For the year ended		For the nine months ended
	December 31,		September 30,
	2019		2020
			(unaudited)
Balance, beginning of period	$	62,235	$	70,367
Balance, end of period		70,367		66,789
Increase (decrease), net	$	8,132	$	(3,578)

A contract liability is recorded as deferred revenue on the consolidated balance sheets when customers are billed in advance of performance obligations being satisfied, and revenue is recognized ratably over the subscription period or over the amortization period of material rights. Deferred revenue is reflected net of a related deferred allowance for subscription cancellations (the “deferred allowance”) of $5,614 and $5,170 at December 31, 2019 and September 30, 2020 (unaudited), respectively. The deferred allowance represents the portion of the allowance for subscription cancellations associated with deferred revenue.

The beginning and ending balances of and changes to the allowance and the deferred allowance are as follows:


	For the three months ended
	September 30, 2020
	(unaudited)
	Balance		Net Change
Allowance balance, July 1	$	(7,669)
Allowance balance, September 30		(7,567)
Change in allowance			$	(102)
Deferred allowance balance, July 1		5,335
Deferred allowance balance, September 30		5,170
Change in deferred allowance				165
Net amount charged to revenue			$	63


	For the three months ended
	September 30, 2019
	(unaudited)
	Balance			Net Change
Allowance balance. July 1	$	(4,845)
Allowance balance, September 30		(5,500)
Change in allowance			$	655
Deferred allowance balance, July 1		3,720
Deferred allowance balance, September 30		4,198
Change in deferred allowance				(478)
Net amount charged to revenue			$	177


	For the nine months ended
	September 30, 2020
	(unaudited)
	Balance			Net Change
Allowance balance. January 1	$	(7,515)
Allowance balance, September 30		(7,567)
Change in allowance			$	52
Deferred allowance balance, January 1		5,614
Deferred allowance balance, September 30		5,170
Change in deferred allowance				444
Net amount charged to revenue			$	496


	For the nine months ended
	September 30, 2019
	(unaudited)
	Balance			Net Change
Allowance balance. January 1	$	(5,527)
Allowance balance, September 30		(5,500)
Change in allowance			$	(27)
Deferred allowance balance, January 1		4,858
Deferred allowance balance, September 30		4,198
Change in deferred allowance				660
Net amount charged to revenue			$	633

The table provides information about the balances of and changes to deferred revenue for the following periods:


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Deferred revenue, current	$	191,745	$	185,445
Deferred revenue, non-current		14,046		12,095
Total	$	205,791	$	197,540


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Changes to deferred revenue:
Beginning balance	$	198,437	$	179,351	$	205,791	$	178,703
Additional amounts deferred		93,708		82,844		266,870		236,481
Revenue recognized		(94,605)		(82,439)		(275,121)		(235,428)
Ending balance	$	197,540	$	179,756	$	197,540	$	179,756

Contract costs

Deferred sales commissions earned by the Company’s sales force and certain sales incentive programs and vendor referral agreements are considered incremental and recoverable costs of obtaining a contract with a customer. An asset is recognized for these incremental contract costs and reflected as deferred commissions in the consolidated balance sheets. These contract costs are amortized on a straight-line basis over a period consistent with the transfer of the associated product and services to the customer, which is generally three years. Amortization of these costs are included in selling and marketing expense in the consolidated statements of comprehensive income (loss). The Company periodically reviews these contract assets to determine whether events or changes in circumstances have occurred that could impact the period of benefit of these assets. There were no impairment losses recorded for the periods presented.

The table provides information about the changes to contract cost balances as of and for the following periods:


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Deferred commissions:
Beginning balance	$	10,390	$	8,760	$	11,196	$	8,830
Additions		1,876		1,884		4,570		4,950
Amortization		(1,894)		(1,560)		(5,394)		(4,696)
Ending balance	$	10,372	$	9,084	$	10,372	$	9,084

Payment terms

Payment terms and conditions vary by contract, although the Company’s terms generally include a requirement of payment within 30 days. In instances where the timing of revenue recognition differs from the timing of payment, the Company has determined that its contracts do not include a significant financing component. The primary purpose of invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, not to receive financing from customers or to provide customers with financing.

Cost of Revenues

Cost of revenues, software subscriptions includes the direct cost to develop, host and distribute software products, the direct cost to provide customer support, and amortization of costs capitalized for software developed for sale and for internal-use software utilized for cloud-based subscriptions. Cost of revenues, services includes the direct costs of implementation, training, transaction tax returns outsourcing and other tax-related services.

Reimbursable Costs

Reimbursable costs passed through and invoiced to customers of the Company are recorded as services revenues with the associated expenses recorded as cost of revenues, services in the consolidated statements of comprehensive income (loss).

Research and Development

Research and development costs consist primarily of personnel and related expenses for research and development activities including salaries, benefits and other compensation. Research and development costs are expensed as incurred in accordance with ASC 730, Research and Development, and are included in the consolidated statements of comprehensive income (loss).

Foreign Currency

The Company transacts business in various foreign currencies. Management has concluded that the local country’s currency is the functional currency of its foreign operations. Consequently, operating activities outside the U.S. are translated into U.S. Dollars using average exchange rates, while assets and liabilities of operations outside the U.S. are translated into U.S. Dollars using exchange rates at the balance sheet date. The effects of foreign currency translation adjustments are included in stockholders’ (equity) deficit as a component of accumulated other comprehensive loss in the consolidated balance sheets. Related periodic movements in exchange rates are included in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss).

Income Taxes

On July 27, 2020, the Company’s S-corporation election (the “S election”) was terminated by the Company’s stockholders in connection with the Offering. As a result, Vertex will now be taxed at the corporate level as a C-corporation for U.S federal and state income tax purposes. In connection with the S election termination, the Company entered into an agreement with the S-corporation stockholders pursuant to which the Company has indemnified them for unpaid income tax liabilities and may be required to make future payments in material amounts to them attributable to incremental income taxes resulting from an adjustment to S-corporation related taxable income that arises after the effective date of the S election termination (the “Tax Sharing Agreement”). In addition, the Tax Sharing Agreement indemnifies the S-corporation stockholders for any interest, penalties, losses, costs or expenses arising out of any claim under the agreement. Correspondingly, the S-corporation stockholders have indemnified the Company with respect to unpaid tax liabilities (including interest and penalties) to the extent that such unpaid tax liabilities are attributable to a decrease in S-corporation stockholders’ taxable income for any period and a corresponding increase in our taxable income for any period.

Prior to July 27, 2020, as Vertex was taxed as an S-corporation for U.S. federal income tax purposes and for most states, net income or loss was allocated to the stockholders and was included on their individual income tax returns. Historically the Company distributed amounts to the stockholders to satisfy their tax liabilities resulting from allocated net income or loss. In certain states, Vertex was taxed at the corporate level. Accordingly, the income tax provision or benefit was based on taxable income allocated to these states. In certain foreign jurisdictions, Vertex subsidiaries were taxed at the corporate level. Similar to states, the income tax provision or benefit is based on taxable income sourced to these foreign jurisdictions.

Certain foreign subsidiaries in which we own greater than 50% of the equity by measure of vote or value are treated as controlled foreign companies (“CFCs”) for U.S. federal income tax purposes and most states under the IRS foreign tax regulations. The income and loss from these entities is reported on the Company’s U.S. federal and some state income tax returns when the foreign earnings are repatriated or deemed to be repatriated to the U.S. In conjunction with the termination of the S election, certain direct and indirect wholly-owned foreign subsidiaries that were previously treated as disregarded entities for U.S. federal income tax purposes and most states under the Internal Revenue Service (“IRS”) “check-the-box” regulations, “unchecked-the-box” to become regarded entities and as a result, became CFCs. Prior to these elections, the income and loss from these entities was reported on the Company’s U.S. federal and most state income tax returns in addition to being reported on a foreign jurisdiction tax return regardless of whether or not the earnings were repatriated.

The Company records deferred income taxes using the liability method. The Company recognizes deferred tax assets and liabilities for future tax consequences of events that have been previously recognized in the Company’s consolidated financial statements and tax returns. The measurement of deferred tax assets and liabilities is based on provisions of the enacted tax law. The effects of future changes in tax laws or rates are not anticipated. A valuation allowance is recorded when it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company records uncertain tax positions in accordance with ASC 740, Income Taxes, on the basis of a two-step process whereby: (i) management determines whether it is more likely than not that the tax positions will be sustained based on the technical merits of the position, and (ii) for those tax positions that meet the more likely than not recognition threshold, management recognizes the largest amount of tax benefit that is greater than 50 percent likely to be realized upon ultimate settlement with the related tax authority. The impact as a result of the application of ASC 740 is reflected in the consolidated financial statements. The Company assesses its income tax positions and records tax benefits or expense based upon management’s evaluation of the facts, circumstances, and information available at the reporting date.

The Company recorded a $32,440 deferred tax asset during the three months ended September 30, 2020 as a result of the conversion from an S-corporation to a C-corporation. The deferred tax asset is primarily due to future stock-based compensation deductions for tax purposes resulting from SARs that were previously issued by the Company, converted to options and immediately exercised upon the effective date of the Offering. The exercise of these options is projected to result in a net operating loss for the C-corporation short tax year beginning July 27, 2020 and ending December 31, 2020, for which it is more likely than not the Company will realize this benefit within the next several tax years. Based on Management’s evaluation of the positive and negative evidence, it is more likely than not that the Company will realize these benefits on future U.S. tax returns.

Total Comprehensive Income (Loss)

Total comprehensive income (loss) consists of net (loss) income and other comprehensive income (loss). Other comprehensive income (loss) refers to revenues, expenses, gains and losses that under U.S. GAAP are recorded as elements of stockholders’ equity (deficit) but are excluded from net income. Other comprehensive income (loss) is comprised solely of foreign currency translation adjustments and revaluations.

Earnings Per Share (“EPS”)

The Company has two classes of common stock outstanding and thus calculates EPS following the two-class method. This method allocates earnings for the respective periods between the two classes of common stock in proportion to the weighted average shares outstanding for each class of common stock as a percentage of total weighted average shares of both classes of common stock outstanding. Neither the Class A nor Class B common stock has any liquidity or dividend preferences and are both considered to be participating securities. Basic and diluted net (loss) income per share attributable to common stockholders is calculated using the treasury stock method. The basic net (loss) income per share attributable to Class A common stockholders includes RSAs, RSUs and ESPP shares once vesting or purchase contingencies are resolved and the related shares are deemed to be outstanding. The diluted net (loss) income per share attributable to Class A common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase shares of Class A common stock, RSAs and RSUs, and ESPP shares for which the Company has received payments for are considered common stock equivalents.

In accordance with ASC 260, Earnings Per Share, the historical EPS was retrospectively restated similar to the treatment of a stock split to reflect the Share Exchange for all periods presented prior to the Offering as management concluded that there was no economic value attributable to the exchange of shares in connection with the Recapitalization. Class A common stock issued in connection with the Offering are reflected in the weighted average share calculation from their issuance date.

Unaudited Pro Forma Income Taxes

Effective July 27, 2020, the Company converted to and will be taxed as a C-corporation for U.S. income tax purposes. Accordingly, a pro forma income tax provision has been disclosed as if the Company was a taxable corporation for the three and nine months ended September 30, 2020. The Company has computed pro forma entity level income tax expense using an estimated effective tax rate of approximately 25% for these periods, inclusive of all applicable U.S. federal, state, local and foreign income taxes.

Unaudited Pro Forma Earnings Per Share

The Company has presented pro forma earnings per share for the three and nine months ended September 30, 2020 to reflect the pro forma adjustment to income taxes resulting from the conversion to a C-corporation effective July 27, 2020.


	For the three months ended			For the nine months ended
	September 30,			September 30,
Class A common stock:	2020			2020
	(unaudited)
Numerator:
Pro forma net loss attributable to all stockholders	$	(38,695)		$	(82,674)
Class A stock as a percentage of total shares outstanding		13.08	%		4.84	%
Pro forma net loss attributable to Class A stockholders	$	(5,062)		$	(4,004)

Denominator:
Weighted average Class A common stock, basic and diluted		18,124			6,129

Pro forma net loss per Class A share, basic and diluted	$	(0.28)		$	(0.65)


	For the three months ended			For the nine months ended
	September 30,			September 30,
Class B common stock:	2020			2020
	(unaudited)
Numerator:
Pro forma net loss attributable to all stockholders	$	(38,695)		$	(82,674)
Class B stock as a percentage of total shares outstanding		86.92	%		95.16	%
Pro forma net loss attributable to Class B stockholders	$	(33,633)		$	(78,670)

Denominator:
Weighted average Class B common stock outstanding, basic and diluted		120,417			120,417

Pro forma net loss per Class B share, basic and diluted	$	(0.28)		$	(0.65)

Supplemental Cash Flow Disclosures

Supplemental cash flow disclosures are as follows for the respective periods:


	For the nine months ended
	September 30,
	2020		2019
	(unaudited)
Cash paid for:
Interest	$	1,912	$	1,388
Income taxes	$	522	$	526
Non-cash investing and financing activities:
Acquisition purchase commitment liability at acquisition date	$	14,344	$	—
Equipment acquired through capital leases	$	826	$	1,904
Remeasurement of options for redeemable shares	$	51,833	$	762
Conversions of SAR's in connection with the Offering	$	128,870	$	—
Exchange of Amended Options in connection with the Offering	$	69,177	$	—

Recently Issued Accounting Pronouncements

As an "emerging growth company," the Jumpstart Our Business Startups Act (the “JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to delay adoption of certain new or revised accounting standards. As a result, the Company’s financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective date for new or revised accounting standards that are applicable to public companies.

In February 2016, the FASB issued ASU No. 2016‑02, Leases. This standard amends several of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one year on their balance sheet as a right-of-use asset, and a corresponding lease liability, measured at the present value of the future minimum lease payments. The standard is effective for public entities for fiscal years and interim periods beginning after December 15, 2018, and after December 15, 2020 for all other companies, with early adoption permitted. The Company intends to adopt this standard effective January 1, 2021 using the modified retrospective transition method and therefore will not restate comparative periods. The Company expects to elect the "package of three" practical expedients permitted under the transition guidance, which allows (i) a carry forward of the historical lease classification conclusions, (ii) management’s assessment on whether a contract is or contains a lease, and (iii) the initial direct costs for any leases that exist prior to adoption of the new standard. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. While the Company has not yet quantified the impact, resulting adjustments are expected to materially increase total assets and total liabilities relative to such amounts reported prior to adoption, but not have a material impact on the consolidated statements of comprehensive income (loss) or consolidated statements of cash flows.

In June 2016, the FASB issued ASU 2016‑13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, (“ASU 2016‑13”) which replaces the existing incurred loss impairment model with an expected credit loss model and requires financial assets, including trade receivables, to be measured at amortized cost to be presented at the net amount expected to be collected. ASU 2016‑13 is effective for annual periods, and interim periods within those years, beginning after December 15, 2019, for business entities that are public and meet the definition of an SEC filer (excluding smaller reporting companies), and after December 15, 2022 for all other entities. The Company has elected to delay adoption of this guidance until January 1, 2021. The implementation of ASU 2016‑13 is not expected to have a material impact on the Company’s financial position.

In January 2017, the FASB issued ASU 2017‑04, Simplifying the Test for Goodwill Impairment, (“ASU 2017‑04”) to eliminate step two of the goodwill impairment test requiring a hypothetical purchase price allocation. Goodwill impairment, if any, is determined by comparing the reporting unit’s fair value to its carrying value. An impairment loss is recognized in an amount equal to the excess of the reporting unit’s carrying value over its fair value, up to the amount of goodwill allocated to the reporting unit. In addition, income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit should be considered when measuring the goodwill impairment loss, if applicable. ASU 2017‑04 is effective for annual periods, and interim periods within those years, beginning after December 15, 2019, for business entities that are public and meet the definition of an SEC filer (excluding smaller reporting companies), and after December 15, 2022 for all other entities. The Company has adopted this guidance effective as of January 1, 2020.

In December 2019, the FASB issued ASU Update No. 2019‑12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, (“ASU 2019‑12”) which simplifies the accounting for income taxes. The guidance in ASU 2019‑12 is required for annual reporting periods, including interim periods within those annual periods, beginning after December 15, 2020, for business entities that are public, and after December 15, 2021, including interim periods within those annual periods for all other entities, with early adoption permitted. The Company will adopt this guidance on January 1, 2021. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements.

Risks and Uncertainties

In December 2019, a novel strain of coronavirus (“COVID-19”) appeared. In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic. The COVID-19 pandemic is having widespread, rapidly evolving and unpredictable impacts on global society, economies, financial markets and business practices. To protect the health and well-being of Company employees and customers, substantial modifications were made to employee travel policies, our offices were closed and employees advised to work from home, and conferences and other marketing events were cancelled or shifted to virtual-only. The COVID-19 pandemic has impacted and may continue to impact Company operations, including employees, customers and partners, and there is substantial uncertainty in the nature and degree of its continued effects over time.

The Company did not experience any significant reductions in sales, revenues or collections through September 30, 2020 as a result of COVID-19. The uncertainty caused by the COVID-19 pandemic could, however, impact Company billings to new customers for the remainder of 2020, and may also negatively impact Company efforts to expand revenues from existing customers as they continue to evaluate certain long-term projects and budget constraints. In addition to the potential impact on sales, the Company may see delays in collections over the coming months. However, these delays are not expected to materially impact the business, and thus the Company has not recorded an additional allowance for doubtful accounts in connection with any delays. The Company believes it has ample liquidity and capital resources to continue to meet its operating needs, and to service debt and other financial obligations.

The extent to which the COVID-19 pandemic impacts the business going forward will depend on numerous evolving factors that cannot reliably be predicted, including the duration and scope of the pandemic; governmental, business, and individuals’ actions in response to the pandemic; and the impact on economic activity, including the possibility of recession or financial market instability. These factors may adversely impact consumer, business and government spending on technology as well as customers’ ability to pay for Company products and services on an ongoing basis. This uncertainty also affects management’s accounting estimates and assumptions, which could result in greater variability in a variety of areas that depend on these estimates and assumptions, including estimated allowance for subscription cancellations, product life cycles and estimated lives of long-lived assets.

ACQUISITION

9 Months Ended

Sep. 30, 2020

ACQUISITION

ACQUISITION

2. ACQUISITION

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 and was funded through borrowings under the revolving line of credit (the “Line of Credit”). This acquisition provides 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. The Company has a contractual purchase commitment to acquire the remaining 40% equity interest from the original Systax Quotaholders incrementally between 2021 through 2024. Future purchase commitment payments for these incremental acquisition amounts are based on a multiple of Systax revenue and earnings before interest, depreciation, amortization and income taxes (“EBITDA”) performance at the end of 2020, 2022 and 2023, whereby the Company will have full ownership after the final payment in 2024. Management has determined these future purchase commitments to be a forward contract, resulting in the Company being required to estimate and record an estimated future purchase commitment amount (the “Purchase Commitment Liability”) in connection with recording the initial purchase. The Purchase Commitment Liability is estimated to be $14,344 at the acquisition date based on information available at that time. This amount will fluctuate as a result of foreign currency translation adjustments and is reflected in future acquisition commitment in the consolidated balance sheet at September 30, 2020. Any adjustments to the acquisition date fair value of this commitment will be adjusted to goodwill during the Measurement Period. Adjustments to the settlement date value that arise as a result of remeasurement after the acquisition date 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.

The acquisition was accounted for as a business combination and the total preliminary purchase price was allocated to the net tangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition date, with the excess being recorded as goodwill. The net tangible assets acquired and liabilities assumed were valued at their respective carrying amounts as of the acquisition date pending the receipt of additional information during the Measurement Period. The contractual value of accounts receivable was $867 at acquisition date. The excess of the purchase consideration over the net tangible assets is recorded as goodwill and primarily reflects the value of the tax content database, the customer list, the assembled workforce and expected future synergies. Goodwill is deductible for tax purposes. The preliminary values recorded will be adjusted during the Measurement Period as more detailed analyses are performed and further information becomes available regarding the fair values of these amounts as of the acquisition date. Any such adjustments may be material. Subsequent adjustments to these values not associated with determination of their fair values on the acquisition date would be recorded in the consolidated statements of comprehensive income (loss) in the period the change is identified.

The following table presents the preliminary purchase price allocation recorded in the Company’s consolidated balance sheet as of the acquisition date (unaudited):


	Initial Purchase
Net Assets and Assumed Liabilities	Price Allocation
	(unaudited)
Cash and cash equivalents	$	56
Accounts receivable		867
Property and equipment		48
Other assets		18
Goodwill		26,124
Accounts payable and accrued expenses		(228)
Accrued compensation		(162)
Other liabilities		(5)
Total consideration at acquisition date	$	26,718

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. Systax revenue and net loss for the three months ended September 30, 2020 (unaudited) reflected in the consolidated statement of comprehensive income (loss), after elimination of intercompany activity, were $915 and $(242), respectively. Systax revenue and net loss for the nine months ended September 30, 2020 (unaudited) reflected in the consolidated statement of comprehensive income (loss), after elimination of intercompany activity, were $3,002 and $(523), respectively. As the Systax acquisition did not have a material impact on the Company’s reported revenue or net loss for the three and nine months ended September 30, 2020, pro forma financial information has not been presented. The transaction costs associated with the acquisition were approximately $504 and were recorded in general and administrative expense in the year ending December 31, 2019.

PROPERTY AND EQUIPMENT

9 Months Ended

Sep. 30, 2020

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT

3. PROPERTY AND EQUIPMENT

The major components of property and equipment are as follows:


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Leasehold improvements	$	20,887	$	20,890
Equipment		40,598		41,918
Computer software acquired		11,232		11,391
Internal-use software developed
Cloud-based services		51,442		59,518
Internal systems and tools		23,957		25,083
Furniture and fixtures		7,451		7,670
Automobiles		27		58
In-process internal-use software		809		4,164
		156,403		170,692
Less accumulated depreciation		(101,676)		(114,757)
Property and equipment, net	$	54,727	$	55,935

Depreciation expense for property and equipment, excluding all internal-use software and capital leases, was $1,970 and $1,707 for the three months ended September 30, 2020 and 2019 (unaudited), respectively, and $5,918 and $4,495 for the nine months ended September 30, 2020 and 2019 (unaudited), respectively. Depreciation for property and equipment, excluding cloud-based internal-use software, is reflected in depreciation and amortization in the consolidated statements of comprehensive income (loss).

Assets under capital leases of $1,455 and $1,769, net of accumulated depreciation of $627 and $1,140, at December 31, 2019 and September 30, 2020 (unaudited), respectively, are included in property and equipment in the consolidated balance sheets. Depreciation expense for assets held under capital leases was $178 and $168 for the three months ended September 30, 2020 and 2019 (unaudited), respectively, and $513 and $397 for the nine months ended September 30, 2020 and 2019 (unaudited), respectively. Depreciation expense for assets held under capital leases is included in depreciation and amortization expense in the consolidated statements of comprehensive income (loss).

The major components of internal-use software are as follows:


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Internal-use software developed	$	75,399	$	84,601
Less accumulated depreciation		(53,852)		(62,028)
		21,547		22,573
In-process internal-use software		809		4,164
Internal-use software developed, net	$	22,356	$	26,737

Amounts capitalized for internal-use software and included in property and equipment additions on the consolidated statements of cash flows are as follows:


	For the nine months ended September 30,
	2020		2019
	(unaudited)
Cloud-based solutions	$	12,574	$	7,041
Internal systems and tools		1,463		2,971
Total	$	14,037	$	10,012

In-process internal-use software is not depreciated until it is available for its intended use. Depreciation expense for internal-use software used for cloud-based solutions for the three months ended September 30, 2020 and 2019 (unaudited) was $2,183 and $1,899, respectively, and $6,647 and $6,118 for the nine months ended September 30, 2020 and 2019 (unaudited), respectively. Depreciation expense for internal-use software used for cloud-based solutions is included in cost of revenues, software subscriptions in the consolidated statements of comprehensive income (loss).

Depreciation expense for internal-use software utilized for internal systems and tools for the three months ended September 30, 2020 and 2019 (unaudited) was $587 and $436, respectively, and $1,678 and $1,636 for the nine months ended September 30, 2020 and 2019 (unaudited), respectively. Depreciation expense for internal-use software utilized for internal systems and tools is included in depreciation and amortization in the consolidated statements of comprehensive income (loss).

Research and development costs associated with internal-use software were $3,119 and $2,778 for the three months ended September 30, 2020 and 2019 (unaudited), respectively, and $7,119 and $8,639 for the nine months ended September 30, 2020 and 2019 (unaudited), respectively.

CAPITALIZED SOFTWARE

9 Months Ended

Sep. 30, 2020

CAPITALIZED SOFTWARE

CAPITALIZED SOFTWARE

4. CAPITALIZED SOFTWARE

Capitalized software includes acquired software and direct labor and related expenses for software developed for sale for new products and enhancements to existing products. Software development costs capitalized for the three months ended September 30, 2020 and 2019 (unaudited) were $2,591 and $4,244, respectively, and $9,246 and $12,345 for the nine months ended September 30, 2020 and 2019 (audited), respectively.

The major components of capitalized software are as follows:


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Capitalized software	$	47,862	$	60,557
Less accumulated amortization		20,281		28,983
		27,581		31,574
In-process capitalized software		4,494		1,045
Capitalized software, net	$	32,075	$	32,619

Capitalized software amortization expense for the three months ended September 30, 2020 and 2019 was $3,124 and $1,788, respectively, and $8,702 and $5,506 for the nine months ended September 30, 2020 and 2019, respectively, and is included in cost of revenues, software subscriptions in the consolidated statements of comprehensive income (loss).

GOODWILL

9 Months Ended

Sep. 30, 2020

GOODWILL

GOODWILL

5. GOODWILL

The changes in the carrying amount of goodwill for the nine months ended September 30, 2020 are as follows:


	2020
	(unaudited)
Balance, January 1	$	—
Acquisition of Systax, January		26,124
Foreign currency translation adjustment for the three months ended March 30		(5,893)
Foreign currency translation adjustment for the three months ended June 30		(876)
Foreign currency translation adjustment for the three months ended September 30		(688)
Balance, September 30	$	18,667

DEBT	9 Months Ended
DEBT	Sep. 30, 2020
DEBT
DEBT	6. DEBT New Credit Agreement (unaudited) On March 31, 2020, the Company entered into a new credit agreement with a bank, which was subsequently amended on April 3, 2020 to permit another bank to be a party to the agreement, consisting of a $175,000 term loan (the “New Term Loan”) and a $100,000 committed line of credit (the “New Line of Credit”) (collectively, the “New Credit Agreement”). Net proceeds from the New Term Loan after payment of financing fees of $2,904 and repayment of aggregate amounts outstanding at March 31, 2020 under the previous credit agreement term loan and line of credit of $61,656, were used to fund a portion of the $123,185 distribution made to the stockholders on May 29, 2020. A portion of the Offering proceeds was used to repay the $175,000 New Term Loan in full on July 31, 2020. The Company received a refund of $468 of financing fees as a result of repayment of the New Term Loan within 90 days of execution of the New Credit Agreement, which was recorded as a reduction of deferred financing costs associated with the New Term Loan. The Company wrote off the remaining balance of deferred financing costs associated with the New Term Loan of $1,174, which was recorded as interest expense in the consolidated statement of comprehensive income (loss) for the three and nine months ended September 30, 2020. The New Line of Credit matures in March 2025 and had no outstanding borrowings at closing or at September 30, 2020. The Company has the option to select an applicable interest rate at either the bank base rate plus an applicable margin (the “New Base Rate Option”) or the LIBOR plus an applicable margin (the “New LIBOR Option”). The applicable margins are determined by certain financial covenant performance as defined in the New Credit Agreement. At September 30, 2020, the New Base Rate Option and New LIBOR Option were 3.75% and 2.50%, respectively. The New Credit Agreement is collateralized by certain assets of the Company and contains financial and operating covenants. The Company was in compliance with these covenants at September 30, 2020. Credit Agreement At December 31, 2019, the Company had a credit agreement (the “Credit Agreement”) consisting of a term loan (the “Term Loan”) with an outstanding principal balance of $50,375 and a $40,000 committed Line of Credit with no outstanding borrowings. The Company had the option to select an applicable interest rate at either the bank base rate plus an applicable margin (the "Base Rate Option") or the London Interbank Offered Rate (“LIBOR”) plus an applicable margin (the “LIBOR Option”). The applicable margins were determined by certain financial covenant performance as defined in the Credit Agreement. At December 31, 2019, the Base Rate Option and LIBOR Option resulted in rates of 4.75% and 2.69%, respectively. The Credit Agreement was collateralized by certain assets of the Company and contained financial and operating covenants, which included limitations on the amount of dividends payable in a given period. The Company was in compliance with these covenants at December 31, 2019. The Term Loan required quarterly principal payments over five years, with a balloon payment in November 2020. The interest rate on the Term Loan was 2.69% at December 31, 2019 as the Company selected the LIBOR Option. Term Loan outstanding amounts are reported in current portion of long-term debt and long-term debt, net of current portion, in the consolidated balance sheets. As a result of the Term Loan becoming due in November 2020, the balance outstanding of $50,375 was included in current portion of long-term debt on the consolidated balance sheet at December 31, 2019. The Line of Credit was due to expire on November 1, 2020. The Company was required to pay a quarterly fee on the difference between the $40,000 maximum borrowings allowed under the Line of Credit and the unpaid principal balance outstanding under the line at an applicable rate. The applicable rate, determined by certain financial covenant performance as defined in the Credit Agreement, was 0.20%. Unamortized deferred financing costs of $221 at December 31, 2019 are included as a reduction in current portion of long-term debt in the consolidated balance sheets. Amortization expense of deferred financing costs on the Term Loan was $44 for the nine months ended September 30, 2020. The Company wrote off the remaining unamortized deferred financing costs associated with the Term Loan of $177, which was recorded as interest expense in the consolidated statement of comprehensive income for the three and nine months ended September 30, 2020. Capital Leases Capital lease obligations were $1,333 and $1,509 at December 31, 2019 and September 30, 2020 (unaudited), respectively, and are included in current portion of long-term debt and long-term debt, net of current portion in the consolidated balance sheets.

STOCKHOLDERS’ EQUITY (DEFICIT)	9 Months Ended
STOCKHOLDERS’ EQUITY (DEFICIT)	Sep. 30, 2020
STOCKHOLDERS’ EQUITY (DEFICIT).
STOCKHOLDERS’ EQUITY (DEFICIT)	7. STOCKHOLDERS’ EQUITY (DEFICIT) Termination of S-Corporation status In connection with termination of the Company’s S-corporation status effective July 27, 2020, the Company had an accumulated deficit of $354,291 pertaining to the S-corporation shareholders which was reclassified to additional paid in capital upon such termination. Common Stock In connection with the Recapitalization, the Company: (i) effected the three-for-one Stock Split, which is reflected retrospectively in the condensed consolidated financial statements; (ii) established the New Capital Structure; and (iii) effected the Share Exchange. Prior to the Share Exchange, the Company had 147 shares of former Class A common stock and 120,443 shares of former Class B common stock outstanding. Members of a family (the “Family”) owned 99.9% of all outstanding shares of both former classes of common stock, which was comprised of 100% of the former Class A common stock and 120,270 shares of the former Class B common stock. The remaining 173 shares of former Class B common stock were owned by non-Family members. There were no dividend or liquidation preference differences between the former Class A and former Class B shares. In connection with establishing the New Capital Structure, the shareholders authorized 450,000 shares of common stock, par value $0.001 per share, and 30,000 shares of preferred stock, par value $0.001 per share. Common stock is divided into two classes, Class A with one vote per share, and Class B with ten votes per share. The rights of the holders of Class A and Class B are identical, except with respect to voting and conversion rights. Upon transfer of Class B shares to a non-Family member, such shares will automatically convert to an equivalent number of Class A shares with the respective voting rights attributable to such new shares. Authorized Class A and Class B shares are 300,000 and 150,000 shares, respectively. There are no dividend or liquidation preference differences between Class A and Class B. In connection with the Share Exchange, the Family members exchanged each share of former Class A and former Class B for the equivalent number of Class B shares established as part of the New Capital Structure. In addition, the non-Family members exchanged their former Class B shares for an equivalent number of Class A shares established as part of the New Capital Structure. No funds were exchanged in connection with the Share Exchange and the aggregate number of shares outstanding both immediately prior to and after the Share Exchange remained the same at 120,590. In addition, common stock equivalents, all of which were held by non-Family members and which were previously exercisable into former Class B shares, became exercisable into Class A shares established as part of the New Capital Structure. In April 2020, Vertex issued 173 shares of former Class B common stock in connection with the exercise of stock options by option holders for cash of $53. These shares were exchanged for Class A common stock in connection with the Recapitalization on July 28, 2020. Also on July 28, 2020, the Company sold 23,812 shares of Class A in connection with the Offering for $423,024, net of underwriting fees. Offering costs paid from these proceeds aggregated $6,222 and are reflected as a reduction of additional paid in capital in stockholders’ equity. In addition, the company issued 510 shares of Class A in connection with the exercise of stock options by option holders, net of 381 shares returned to the Company in lieu of payment of the exercise price and taxes due on these exercises. In connection with the Offering, the Company also issued an aggregate 564 shares of Class A related to the conversion of SARs into options and the immediate exercise of these options into shares, net of 860 shares returned to the Company in lieu of payment of the exercise price and taxes due on these exercises. The Company also issued 610 Class A shares in connection with the exercise of outstanding options and 19 Class A shares in connection with RSAs granted at the Offering, which vested immediately. In April 2019, Vertex issued 225 shares of former Class B common stock in connection with the exercise of stock options by option holders for cash of $68, net of 51 shares that were immediately returned to Vertex upon exercise in lieu of payment of income taxes payable by the option holders. At December 31, 2019 the Company repurchased shares (“Treasury Stock”) aggregating 41,910 which are carried at cost and included in Treasury Stock in the consolidated balance sheet. Such amount is comprised of 41,757 shares of former Class B common stock and 153 shares of former Class A common stock. In connection with the Recapitalization, the Treasury Stock was retired and amounts associated with the Treasury Stock were reclassified to additional paid in capital. At September 30, 2020, there was no Treasury Stock outstanding. The Board declared distributions of $4,010 ($0.03 per share) and $123,185 ($1.02 per share) during the three months ended March 31 and June 30, 2020, respectively, and $5,706 ($0.05 per share) through July 25, 2020, pro rata to stockholders of former Class A and former Class B common stock. No distributions were declared subsequent to the termination of the S election. The Board declared distributions of $5,255 ($0.04 per share) and $6,105 ($0.05 per share) during the three months ended March 31 and June 30, 2019, respectively, pro rata to stockholders of former Class A and former Class B common stock. No distributions were declared during the three months ended September 30, 2019.

EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2020

EARNINGS PER SHARE

EARNINGS PER SHARE

8. EARNINGS PER SHARE

The table below illustrates the calculation of basic and diluted net (loss) income per common share for the Class A common and Class B common for the periods reflected below. The weighted average shares outstanding have been retrospectively restated to reflect the Share Exchange for all periods prior to the Offering, resulting in the Class A shares representing non-Family owned shares and Class B representing Family-owned shares for all periods presented. See Note 7 for further information on the Share Exchange.


	For the three months ended						For the nine months ended
	September 30,						September 30,
Class A common stock:	2020			2019			2020			2019
	(unaudited)
Numerator, basic:
Net (loss) income attributable to all stockholders	$	(21,028)		$	11,900		$	(79,167)		$	26,347
Class A stock as a percentage of total shares outstanding, basic		13.08	%		0.19	%		3.07	%		0.08	%
Net (loss) income attributable to Class A stockholders, basic	$	(2,751)		$	22		$	(2,427)		$	21

Numerator, diluted:
Net (loss) income attributable to all stockholders	$	(21,028)		$	11,900		$	(79,167)		$	26,347
Class A stock as a percentage of total shares outstanding, diluted		13.08	%		3.13	%		3.07	%		3.14	%
Net (loss) income attributable to Class A stockholders, diluted	$	(2,751)		$	373		$	(2,427)		$	826

Denominator, basic and diluted:
Weighted average Class A common stock, basic		18,124			225			6,129			134
Dilutive effect of common stock equivalents		—			3,668			—			3,764
Weighted average Class A common stock, diluted		18,124			3,893			6,129			3,898

Net (loss) income per Class A share, basic	$	(0.15)		$	0.10		$	(0.40)		$	0.16

Net (loss) income per Class A share, diluted	$	(0.15)		$	0.10		$	(0.40)		$	0.21


	For the three months ended						For the nine months ended
	September 30,						September 30,
Class B common stock:	2020			2019			2020			2019
	(unaudited)
Numerator, basic:
Net (loss) income attributable to all stockholders	$	(21,028)		$	11,900		$	(79,167)		$	26,347
Class B stock as a percentage of total shares outstanding, basic		86.92	%		99.81	%		96.93	%		99.92	%
Net (loss) income attributable to Class B stockholders, basic	$	(18,277)		$	11,878		$	(76,740)		$	26,326

Numerator, diluted:
Net (loss) income attributable to all stockholders	$	(21,028)		$	11,900		$	(79,167)		$	26,347
Class B stock as a percentage of total shares outstanding, diluted		86.92	%		96.87	%		96.93	%		96.86	%
Net (loss) income attributable to Class B stockholders, diluted	$	(18,277)		$	11,527		$	(76,740)		$	25,521

Denominator, basic and diluted:
Weighted average Class B common stock, basic		120,417			120,417			120,417			120,417
Dilutive effect of common stock equivalents		—			—			—			—
Weighted average Class B common stock, diluted		120,417			120,417			120,417			120,417

Net (loss) income per Class B share, basic	$	(0.15)		$	0.10		$	(0.64)		$	0.22

Net (loss) income per Class B share, diluted	$	(0.15)		$	0.10		$	(0.64)		$	0.21

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS

9 Months Ended

Sep. 30, 2020

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS

9. EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS

401(k) Plan

The Company maintains a 401(k) plan that covers eligible employees subject to certain age and length of service requirements. The Company matches up to 3% of eligible compensation during the period in which an eligible participant contributes to the plan. Matching contributions were $913 and $818 for the three months ended September 30, 2020 and 2019 (unaudited), respectively, and $3,003 and $2,747 for the nine months ended September 30, 2020 and 2019 (unaudited), respectively. In addition, a discretionary profit-sharing contribution of 3% of eligible compensation for eligible employees was approved and aggregated $3,363 for the year ended December 31, 2019 and is reflected in accrued salaries and benefits in the consolidated balance sheet. Accrued salaries and benefits includes $981 and $2,923 for the three and nine months ended September 30, 2020 (unaudited), respectively, for an estimated discretionary profit-sharing contribution for 2020.

Long-Term Rewards Plan

The Company has a long-term rewards (“LTR”) plan for certain key employees which provides for compensation related to growth in certain financial measures over a three-year period (the “Reward Performance Period’), subject to achieving an annual minimum net income target (the “Net Income Target”) during each year of the Reward Performance Period. Each year, eligible LTR plan participants receive an individual target award opportunity (“Award Opportunity”) for a new three-year Reward Performance Period (i.e. target award grant made in 2018 is for years 2018 through 2020). For Reward Performance Periods prior to 2018, compensation earned for growth in the financial measures over each Reward Performance Period is paid in cash in the year following the end of the respective Reward Performance Period, assuming the Net Income Target was achieved for each year of the respective Reward Performance Period. Starting in 2018, the Net Income Target is only required to be achieved in the final year of the Reward Performance Period. Estimated compensation is recorded during each year of a Reward Performance Period (“accrued LTR Award Opportunities”).

Compensation expense included $732 and $817 for the three months ended September 30, 2020 and 2019 (unaudited), respectively, and $2,329 and $1,802 for the nine months ended September 30, 2020 and 2019 (unaudited), respectively, for open Reward Performance Periods. Amounts paid to participants in 2020 for the Reward Performance Period starting in 2017 of $2,717 is reflected in deferred compensation, current in the consolidated balance sheet as of December 31, 2019. Amounts estimated to be paid in 2021 for performance through September 30, 2020 for the Reward Performance Period starting in 2018 of $2,096 (unaudited) is reflected in deferred compensation, current in the consolidated balance sheet as of September 30, 2020. The remaining balances of accrued LTR Award Opportunities for open Reward Performance Periods of $1,812 and $1,965 at December 31, 2019 and September 30, 2020 (unaudited) are reflected in deferred compensation, net of current portion, in the consolidated balance sheets.

Stock-Based Award Plans

On the effective date of the Offering, the Company adopted the 2020 Plan and the ESPP. The 2020 Plan provides the ability to grant cash and equity-based incentive awards to eligible employees, directors and service providers in order to attract, retain and motivate those that make important contributions to the Company. The 2020 Plan provides for the award of stock options, RSAs, RSUs, SARs and other cash compensation. The Company granted 694 RSAs and 10 RSUs on the effective date of the Offering.

The ESPP provides eligible employees with rights during each six-month ESPP offering period to purchase shares of the Company’s Class A common at the ESPP discount through payroll deductions, or through lump sum payments during the initial offering period (July 28 to November 30, 2020). Amounts withheld or received from participants are reflected in accrued salaries and benefits in the consolidated balance sheet until such shares are purchased. Lump sum payments from ESPP participants for the initial offering period will be due prior to the end of the offering period, and none were received by September 30, 2020.

Stock-based award plan events and related activity are described further below.

Prior to the adoption of the 2020 Plan, the Company had a SAR plan for the purpose of providing incentives to key members of management and consultants to contribute to the growth and financial success of the Company. As a result of the Offering, SAR participants were offered the option to either redeem their SARs upon the occurrence of the Offering or amend their SARs pursuant to which, upon effectiveness of the 2020 Plan, such SARs would become options to purchase shares of Class A common stock under the 2020 Plan (the “SAR Exchange Offer”). All SAR participants eligible to receive the SAR Exchange Offer accepted and had their outstanding SARs, which aggregated 12,038, converted to stock options with equivalent terms under the 2020 Plan at the Offering effective date (the “Converted SARs”). This was considered a modification of these SAR awards as described further below. The SAR plan was retired (“Retired SAR Plan”) and any future SARs will be granted under the 2020 Plan. This activity is described further below.

Prior to the adoption of the 2020 Plan, the Company had options outstanding to purchase 3,676 shares of former Class B common stock. Upon the effectiveness of the Offering, these options were amended and exchanged for options to purchase an equivalent number of Class A shares at the same exercise price and vesting, subject to many of the terms of the 2020 Plan. These options remain subject to expiration in connection with a Triggering Event under the terms of the original option agreements (the “Amended Options”). This activity is described further below.

The following table reflects the exchanges and new issuances of stock-based awards in connection with the Offering:


	Units outstanding July 27, 2020	Units (exchanged) issued in connection with Offering	Units outstanding July 28, 2020 (prior to exercises)
	(unaudited)
SARs	12,086	(12,038)	48
Amended Options	3,676	(3,676)	—
2020 Plan options	—	15,714	15,714
RSA's	—	694	694
RSU's	—	10	10

Compensation expense and additional information pertaining to stock-based awards is described further below.

2020 Plan

An aggregate of 16,500 shares of our Class A common stock was initially available for issuance under the 2020 Plan. The number of shares initially available for issuance will be increased annually on January 1 of each calendar year beginning in 2021 and ending in and including 2030, equal to the lesser of (i) 4% of the shares of Class A and Class B common stock outstanding on the final day of the immediately preceding calendar year and (ii) a smaller number of shares as determined by the Board. No more than 3,000 shares of Class A common may be issued under the 2020 Plan upon the exercise of incentive stock options. Shares available under the 2020 Plan may consist of authorized but unissued shares, shares purchased on the open market, or treasury shares. If an award under the 2020 Plan expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, or canceled without having been fully exercised or forfeited, any unused shares subject to the award will again be available for new grants under the 2020 Plan. Awards granted under the 2020 Plan in substitution for any options or other stock or stock‑based awards granted by an entity before the entity’s merger or consolidation with or acquisition by the Company of the entity’s property or stock will not reduce the shares available for grant under the 2020 Plan, but will count against the maximum number of shares that may be issued upon the exercise of incentive stock options.

Awards issued under the 2020 Plan vest based on service criteria established by the Board. The company has elected to account for forfeitures as they occur rather than estimate forfeitures at date of grant.

Amended and Retired SAR Plan

The Retired SAR Plan enabled the Company to grant awards (“SAR Awards”) as a fixed number of shares of former Class B common stock (“SAR Units”). SAR Units outstanding aggregated 12,276 at December 31, 2019. SAR Units were issued at the equivalent of the fair value of the equivalent number of shares of the Company’s former Class B common stock on the grant date (“Base Value”), as determined by the Board with assistance from management and an independent third-party valuation provider, and compensation recorded based upon the appreciation of the SAR Units in excess of the Base Value over the requisite service period. SAR Awards were exercisable upon 50% vesting or upon the occurrence of a triggering event.

Prior to the SAR Exchange Offer being made, vested SAR Units were redeemable upon the occurrence of a triggering event which included: (i) expiration of the term of the SAR; (ii) a change of control of the Company whereby stockholders holding at least 50% of the voting stock of the company sell their shares; (iii) a merger of the Company with an unrelated third-party; (iv) an initial public offering; and (v) death, disability or retirement of a SAR participant.

SAR participants were limited to exercising no more than 25% of their vested SAR Units in any given year. SAR Awards generally vested 50% and 100% after two years and five years, respectively, from the grant date, or as determined by the Board. Maximum contractual terms ranged from ten years to term of employment of the participant. SAR Awards were settled in cash only, not through the issuance of shares. SAR Award exercises were limited each year to the proportion of the vested SAR Units to the total units outstanding multiplied by adjusted net cash from operating activities (the “Liquidity Pool”), which was defined as cash from operating activities less cash paid for property and equipment and capitalized software for a given period.

The SAR Exchange Offer resulted in eligible SAR participants amending their SARs pursuant to which, upon effectiveness of the Company’s 2020 Plan, such SARs were exchanged for options under the 2020 Plan. Effective July 13, 2020, the SAR Exchange Offer period ended and all SAR participants eligible to receive the offer accepted and had their outstanding SARs converted to stock options with equivalent terms under the 2020 Plan on the effective date of the plan upon the Offering. This was considered a modification of these SAR Awards.

Converted SARs with either no expiration date or that expired during calendar year 2020 were converted to options and automatically exercised into shares (the “Auto Exercise New Options”) on the effective date of the Offering. Shares issued in connection with the Auto Exercise New Options were net of the number of shares of common stock necessary to satisfy the aggregate exercise price and the tax withholding obligation of such options of $13,835. The Auto Exercise New Option participants also had the ability to require the Company to repurchase all or a portion of these on the Offering effective date for cash based on the Offering price of $19, which aggregated $9,054 (unaudited). The aggregate of these amounts of $22,889 is reflected as a reduction of cash provided by operating activities as these payment requirements arose when the original SARs were liability-classified prior to their conversion and exercise.

Management continued to record changes in the intrinsic value of the SARs in 2020 up to July 2, 2020, the date on which management determined the Company was considered to have become a public entity. Management recorded the change in accounting policy of $2,422 in accordance with ASC 718 during the three months ended September 30, 2020, which included $1,299 of vested Converted SARs that was recognized as compensation expense during this period, with the remaining $1,122 of unvested Converted SARs being recognized as compensation expense over the remaining service period of one to five years through 2025. The additional incremental increase in fair value of the Converted SARs after July 2, 2020 and up to the time of the exchange on the Offering effective date resulting from the modification was recorded as compensation expense. The fair value of the Converted SARs, estimated using the Black-Scholes model, was $197,708 (unaudited), of which $153,366 (unaudited) is vested. Management recorded additional compensation expense of $57,079 (unaudited) for vested Converted SARs from July 1 to the Offering effective date, which included the $1,299 impact of the change in accounting of vested Converted SARs. The remaining $44,342 (unaudited) of unvested Converted SAR liability, which includes the $1,122 of unvested Converted SARs in connection with the change in accounting policy on July 2, 2020, will be recognized as compensation expense over the remaining service period of one to five years through 2025. Upon modification, the Converted SARs are no longer being recorded as a liability under ASC 718 and the accumulated liability balance, net of amounts for paymentof taxwithholding and redemption, was reclassified to stockholders’ equity. No incremental compensation expense arose in connection with the SAR modification.

The assumptions used in the Black-Scholes model to determine the fair value of the Converted SARs on the modification date are as follows:


Fair market value of common stock	$	19.00
Volatility		36.7%
Expected term (years)		6.5
Expected dividend yield		-
Risk-free interest rate		0.4%

The Company lacks sufficient historical data on the volatility of its stock price. Selected volatility is representative of expected future volatility and was based on the historical and implied volatility of comparable publicly traded companies over a similar expected term. The expected term represents the term of the Converted SARs, which ranges from within one year to ten years. The Company does not expect to pay dividends after the Offering. The risk-free interest rate was based on the rate for a U.S. Treasury zero-coupon issue with a term that closely approximates the expected term of the SAR grants.

Prior to the Offering, the fair value of the common stock underlying the SAR Awards was determined by the Board with assistance from management and an independent third-party valuation firm. The determination of value used the market and income approaches, with an adjustment for marketability discount pertinent to private company entities in arriving at the per share fair value (the “valuation methodology”). Under the market approach, the guideline public company method is used, which estimates the fair value of the Company based on market prices of stock of guideline public companies. The income approach involves projecting the future benefits of owning an asset and estimating the present value of those future benefits by discounting them based upon the time value of money and the investment risks associated with ownership. At the end of 2019, due to the consideration by the Board of pursuing the Offering, the valuation methodology began to consider the impact of such an event on the value of the Company’s common stock underlying the awards. As the Company approached the Offering effective date, this resulted in increases in the value of the SAR Awards which resulted in corresponding increases to compensation expense for the three and nine months ended September 30, 2020 which exceeded historical results.

The below table represents SAR activity for the following periods:


	Units			Range of
	Vested	Nonvested	Total	grant values
	(unaudited)
Balance, January 1, 2019	5,889	4,782	10,671	$	0.92–$3.17
Granted	297	2,112	2,409	$	3.73
Exercised	(609)	—	(609)	$	1.31–$2.50
Forfeited	—	(195)	(195)	$	2.13–$2.50
Vested	630	(630)	—
Balance, December 31, 2019	6,207	6,069	12,276	$	0.92–$3.73
Granted	21	681	702	$	4.70
Exercised	(829)	—	(829)	$	1.31–$2.50
Forfeited	—	(63)	(63)	$	2.50
Vested	1,410	(1,410)	—
Converted	(6,761)	(5,277)	(12,038)	$	0.92–$4.70
Balance September 30, 2020	48	—	48	$	2.50

Prior to July 2, 2020, the weighted average grant date intrinsic value of the SARs on grant date was zero as the Company’s Board granted all awards at a price per share not less than the per share fair value of the Company’s former Class B common stock underlying such awards on the date of grant.

Accrued SAR Awards of $5,790 and $1,051 at December 31, 2019 and September 30, 2020 (unaudited), respectively, representing SAR Units scheduled for redemption and 25% of the vested SAR Units eligible for exercise within 12‑months of the balance sheet date are reflected in deferred compensation, current in the consolidated balance sheets. The remaining balance of accrued SAR Awards of $16,506 at December 31, 2019 is reflected as deferred compensation, net of current portion, in the consolidated balance sheet. We had approximately $3,900 of total unrecognized compensation expense for unvested SAR Awards at December 31, 2019 which we expect to recognize over the respective service periods of one to five years.

At the Offering effective date, the total unrecognized compensation for unvested SAR Awards of $44,342 was reclassified to additional paid in capital as these awards were reclassified to equity-based awards on this date subject to the terms of the 2020 Plan. This amount will be recognized as compensation expense under the 2020 Plan over the respective service periods of one to five years.

Amended Options

On July 20, 2020, the Amended Options resulted from the Board amending the outstanding options to provide for their exchange for options to purchase an equivalent number of Class A shares available under the 2020 Plan at the same exercise price, vesting and term. The amendment of the options was deemed a modification. No incremental compensation was recorded in connection with this modification as it was determined that the value of the Amended Options was the same both before and after the modification. The Amended Options remain exercisable upon: (i) the option holder no longer serving as an employee of the Company or a member of the Board; (ii) the Grantee’s death or disability; (iii) the occurrence of a Partial Triggering Event (as defined below); or (iv) the occurrence of a Triggering Event (as defined below). Prior to being amended, the option agreements provided employee option holders with the ability to exercise a portion of their options between April 15 and April 30 of each year based upon the fair value of the Class B common stock as of December 31 of the prior calendar year, provided that certain Company performance is achieved. Upon amendment, the options are instead now subject to restrictions on trading during certain periods (“blackout dates”). Option holders are permitted to satisfy tax withholding obligations incurred in connection with the exercise by exchanging exercised options in lieu of payment of income taxes paid by the Company on their behalf.

In the event of the sale of at least 50% of the Company’s stock or all the assets of the Company (“Triggering Event”) in a single or multiple transactions, the option holders have the right to exercise their options and sell their related shares in connection with the transactions. Unexercised options expire after a Triggering Event. In the event of a sale of at least 25% of the Company’s assets to an unrelated third-party in a single or multiple transactions (“Partial Triggering Event”), the option holders have the right to exercise a portion of their options pro rata based on the sales price and sell their related shares in connection with the transaction. Unexercised options remaining after a Partial Triggering Event remain outstanding. In addition, in the event stockholders owning at least 51% of the outstanding stock of the Company (the “selling stockholders”) sell a portion of their stock to an unrelated third-party, the option holders have the right to exercise and sell an amount of options in the same proportion as the selling stockholders (a “tag-along right”). The option holders may also be required to exercise all their outstanding options and sell all related shares in the event the selling stockholders sell at least 51% of their ownership to an unrelated third-party (a “drag-along right”).

Prior to the amendment, the options permitted holders to put their exercised shares back to the Company, thus the options were classified as temporary equity and included in “Options for Redeemable Shares” on the consolidated balance sheets. The Company recorded increases in the value of Options for Redeemable Shares of $21,954 and $579 for the three months ended September 30, 2020 and 2019 (unaudited), respectively, and $69,177 and $762 for the nine months ended September 20, 2020 and 2019 (unaudited), respectively. The option holders’ ability to put the exercised Amended Option shares to the Company in order to attain liquidity was exchanged for the right by the holders to exercise these options and sell the related shares on the NASDAQ exchange. As a result of this put right no longer being applicable, the options were no longer considered temporary equity and were reclassified to stockholders’ equity in the amount of $69,177 during the three months ended September 30, 2020.

The following table summarizes activity for the Amended Options from January 1, 2019:


				Weighted
			Weighted	average	Aggregate
			average	remaining	intrinsic
			exercise	contractual	value
Amended Option Activity	Units		price	life (years)	(in thousands)
	(unaudited)
Outstanding at January 1, 2019	4,125	$	0.20	*	$	14,581
Exercised	(276)	$	0.25		$	957
Outstanding at December 31, 2019	3,849	$	0.19	*	$	17,344
Exercised through June 30	(173)	$	0.30		$	759
Amendment and exchange of options	(3,676)	$	0.19	*	$	69,177
Outstanding at September 30, 2020	—
*Options have indefinite contractual lives

Options under 2020 Plan

The Company issued no options under the 2020 Plan through September 30, 2020 other than those associated with the Converted SARs and the Amended Options previously discussed. The following table summarizes activity for options outstanding under the 2020 Plan:


				Weighted
			Weighted	average	Aggregate
			average	remaining	intrinsic
			exercise	contractual	value
2020 Plan Option Activity	Units		price	life (years)	(in thousands)
	(unaudited)
Outstanding at January 1, 2020	—		—
Issued in connection with Converted SARs	12,038	$	2.18
Issued in connection with Amended Options	3,676	$	0.19	*
Exercised	(3,402)	$	1.11		$	63,295
2020 Plan options outstanding as of September 30, 2020	12,312	$	2.45	7.47	$	253,006
2020 Plan options exercisable as of September 30, 2020	7,224	$	1.76	7.14	$	153,414
*Amended Options have indefinite contractual lives

The detail of options outstanding, vested and exercisable under the 2020 Plan as of September 30, 2020 is as follows:


	Options outstanding		Options vested and exercisable
		Weighted		Weighted
		average		average
Exercise Prices	Units	life (years)	Units	life (years)
	(unaudited)
$0.15 to $0.71	2,552	9.4	2,552	9.4
$2.15	1,295	4.4	1,295	4.4
$2.50	2,816	5.7	1,808	5.6
$2.67	901	6.4	430	6.4
$3.17	1,674	7.5	861	7.5
$3.73	2,392	9.0	278	8.9
$4.70	682	9.4	—	—
	12,312		7,224

The Board intends all options granted to be exercisable at a price per share not less than the per share fair market value of the Company’s Class A common stock underlying the options on the date of grant. Compensation expense for new option awards issued subsequent to the Offering to participants under the 2020 Plan are measured based on the grant date fair value of the awards and recognized in the consolidated statements of operations over the period during which the participant is required to perform the requisite services. The vesting period is generally one to four years. The grant date fair value of options is estimated using the Black-Scholes model. No new options were granted subsequent to the Offering through September 30, 2020. Unrecognized compensation expense associated with the Converted SARs was $40,434 at September 30, 2020 (unaudited), which will be recognized over the respective remaining service periods of one to five years.

Restricted Stock Units

The Company issued RSUs to eligible participants during the quarter ended September 30, 2020. The following table summarizes RSU activity for the nine months ended September 30, 2020:


		Weighted
		average
		grant date fair
	Units	value per share
	(Unaudited)
Outstanding at January 1, 2020	—	$	—
Granted	88		22.36
Outstanding at September 30, 2020	88	$	22.36

Stock-based compensation cost for RSUs is measured based on the fair value of the Company’s underlying common stock on the date of grant and aggregated $1,958. This cost will be recognized on a straight-line basis in the consolidated statements of operations over the period during which the participant is required to perform services in exchange for the award, which is generally one to four years. During the three and nine months ended September 30, 2020, the Company recorded stock-based compensation expense of $18 related to these awards. At September 30, 2020, $1,940 of unrecognized compensation cost is expected to be recognized over a weighted average period of approximately 4.0 years.

Restricted Stock Awards

The Company issued RSAs to eligible participants during the quarter ended September 30, 2020. The following table summarizes RSA activity for the nine months ended September 30, 2020:


		Weighted
		average
		grant date fair
	Units	value per share
	(unaudited)
Outstanding at January 1, 2020	—	$	—
Granted	694		19.00
Vested	(21)		19.00
Forfeited	(1)		19.00
Outstanding at September 30, 2020	672	$	19.00

Stock-based compensation cost for RSAs is measured based on the fair value of the Company’s underlying common stock on the date of grant and aggregated $13,190 during the three months ended September 30, 2020. This cost will be recognized on a straight-line basis in the consolidated statements of operations over the period during which the participants are required to perform services in exchange for the award, which is generally one to four years. During the three and nine months ended September 30, 2020, the Company recorded stock-based compensation expense of $2,014, net of forfeitures, related to these awards. At September 30, 2020, $11,158 of unrecognized compensation cost is expected to be recognized over a weighted average period of approximately 2.2 years.

Employee Stock Purchase Plan

The ESPP permits participants to purchase Class A common stock through payroll deductions of up to a specified percentage of their eligible compensation, provided that participants will be permitted to make lump sum contributions to the ESPP during the initial offering period (July 28 to November 30, 2020). The maximum number of shares that may be purchased by a participant during any offering period is determined by the plan adminstrator in advance of each offering period.

On the first trading day of each offering period, each participant will automatically be granted an option to purchase shares of Class A common. The option will expire at the end of the applicable offering period and will be exercised at that time to the extent of the payroll deductions accumulated or contributions made during such offering period. The purchase price of the shares, in the absence of a contrary designation, is 85% of the lower of the fair value of the Class A common on the first or last day of the ESPP offering period. Participants may voluntarily end their participation in the plan at any time during a specified period prior to the end of the applicable offering period, and will be paid their accrued payroll deductions and related contributions, if applicable, that have not yet been used to purchase shares of Class A common. If a participant withdraws from the plan during an offering period, the participant cannot rejoin until the next offering period. Participation ends automatically upon a participant's termination of employment.

A total of 1,000 shares of Class A common were initially reserved for issuance under the ESPP. The number of shares available for issuance under the ESPP will be increased annually on January 1 of each calendar year beginning in 2021 and ending in and including 2030, by an amount equal to the lesser of (i) 1% of the shares of Class A and Class B common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the Board, provided that no more than 16,000 shares of Class A common stock may be issued. The ESPP is administered by a committee of the Board.

During the three and nine months ended September 30, 2020, the Company recorded stock-based compensation expense of $121 related to the ESPP initial offering period. No shares of Class A common stock were purchased under the ESPP as no amounts were withheld through payroll or contributed by participants through this date. As of September 30, 2020, there was approximately $116 of unrecognized stock-based compensation cost related to the ESPP’s initial offering period that is expected to be recognized on a straight-line basis over the remaining term of the offering period that ends on November 30, 2020.

For the periods presented, the fair value of ESPP purchase rights is comprised of the value of the 15% ESPP discount and the value associated with the the Call over the ESPP offering period. The value of the Call was estimated using the Black-Scholes model with the following assumptions:


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Fair market value of common stock	$	19.00		n/a	$	19.00	$	n/a
Volatility		35%		n/a		35%		n/a
Expected term (years)		0.33		n/a		0.33		n/a
Expected dividend yield		-		n/a		-		n/a
Risk-free interest rate		0.11%		n/a		0.11%		n/a

The Company lacks sufficient historical data on the volatility of its stock price. Selected volatility is representative of expected future volatility and was based on the historical and implied volatility of comparable publicly traded companies over a similar expected term. The expected term represents the term of the ESPP offering period, which is generally six months except for the initial offering period which is from July 28 to November 30, 2020. The Company does not expect to pay dividends after the Offering. The risk-free interest rate was based on the rate for a U.S. Treasury zero-coupon issue with a term that closely approximates the expected term of the award at the date nearest the offering term.

Stock-Based Compensation

The Company recognized total stock-based compensation cost related to incentive awards as follows:


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Stock-based compensation cost:
SARs	$	62,141	$	1,310	$	138,737	$	3,930
Stock options		-		-		-		-
RSUs		18		-		18		-
RSAs		2,014		-		2,014		-
ESPP		121		-		121		-
Total stock-based compensation cost	$	64,294	$	1,310	$	140,890	$	3,930

The Company recognized stock-based compensation cost in the condensed consolidated statements of comprehensive income (loss) as follows:


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Cost of revenues, software subscriptions	$	6,342	$	131	$	14,002	$	393
Cost of revenues, services		9,230		197		20,719		591
Research and development		6,340		131		14,000		393
Selling and marketing		12,821		261		28,140		784
General and administrative		29,561		590		64,029		1,769
Total stock-based compensation	$	64,294	$	1,310	$	140,890	$	3,930

- Definition

The entire disclosure for retirement benefits.

+ References

Reference 1: http://www.xbrl.org/2003/role/exampleRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 20
-Section 55
-Paragraph 17
-URI http://asc.fasb.org/extlink&oid=118257860&loc=d3e4179-114921

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-URI http://asc.fasb.org/extlink&oid=118255775&loc=d3e1928-114920

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-URI http://asc.fasb.org/extlink&oid=49170846&loc=d3e28014-114942

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI http://asc.fasb.org/topic&trid=2235017

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 60
-Section 50
-Paragraph 3
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=6414203&loc=d3e39689-114964

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (d)(iv)(03)
-URI http://asc.fasb.org/extlink&oid=118255775&loc=d3e1928-114920

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (q)
-URI http://asc.fasb.org/extlink&oid=118255775&loc=d3e1928-114920

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (r)(1)
-URI http://asc.fasb.org/extlink&oid=118255775&loc=d3e1928-114920

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (d)(iii)
-URI http://asc.fasb.org/extlink&oid=118255775&loc=d3e1928-114920

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (l)
-URI http://asc.fasb.org/extlink&oid=118255775&loc=d3e1928-114920

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 715
-SubTopic 20
-Section 50
-Paragraph 1
-Subparagraph (r)(2)
-URI http://asc.fasb.org/extlink&oid=118255775&loc=d3e1928-114920

+ Details

RELATED PARTIES	9 Months Ended
RELATED PARTIES	Sep. 30, 2020
RELATED PARTIES
RELATED PARTIES	10. RELATED PARTIES The Company advanced amounts to certain stockholders of the Company of $283 and $2 at December 31, 2019 and September 30, 2020 (unaudited), respectively. The 2019 amounts are short-term in nature and repaid within three months. The amounts in 2020 are related to settlement of S-Corporation tax obligations as permitted under the Tax Sharing Agreement. These amounts are included in advances to stockholders in the consolidated balance sheets.

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2020
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	11. COMMITMENTS AND CONTINGENCIES The Company leases office space under operating leases that expire at various dates through September 2028. Rent expense under all property operating leases was $1,736 and $1,628 for the three months ended September 30, 2020 and 2019 (unaudited), respectively, and $5,187 and $4,720 for the nine months ended September 30, 2020 and 2019 (unaudited), respectively. These amounts are reflected in general and administrative expense in the consolidated statements of comprehensive income (loss). The Company may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. The Company is not aware of any such legal proceedings or claims that management believes will have a material adverse effect on our business, financial condition, or operating results.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

Registration of Company Stock and Initial Public Offering

Unaudited Interim Financial Information

Segments

Fair Value Measurement

Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Use of Estimates

Cash and Cash Equivalents

Funds Held for Customers

Property and Equipment

Depreciation and amortization are computed straight-line over the estimated useful lives of the assets, as follows:


Leasehold improvements		1 - 12 years
Internal-use software developed		3 - 5 years
Computer software		3 - 7 years
Equipment		3 - 10 years
Automobiles		5 years
Furniture and fixtures		7 - 10 years

Software Development Costs

Internal-Use Software

Software Developed for Sale

Assessment of Long-Lived Assets

Business Combinations

Goodwill

Deferred Financing Costs

Accounting for Stock-Based Compensation

The Company has elected to recognize award forfeitures as they occur.

Operating Leases and Deferred Rent

Self-insurance

Revenue Recognition

Revenue from contracts with customers

Nature of goods and services

Significant Judgments

Disaggregation of revenue

The table reflects revenue by major source for the following periods:


	For the three months ended				For the nine months ended
	September 30,				September 30,
		2020	2019			2020	2019
	(unaudited)				(unaudited)
Sources of revenue:
Software subscriptions	$	79,778	$	71,041	$	232,844	$	202,692
Services		14,827		11,398		42,277		32,736
Total revenue	$	94,605	$	82,439	$	275,121	$	235,428

Contract balances

The beginning and ending balances of accounts receivable, net of allowance, are as follows:


	For the year ended		For the nine months ended
	December 31,		September 30,
	2019		2020
			(unaudited)
Balance, beginning of period	$	62,235	$	70,367
Balance, end of period		70,367		66,789
Increase (decrease), net	$	8,132	$	(3,578)

The beginning and ending balances of and changes to the allowance and the deferred allowance are as follows:


	For the three months ended
	September 30, 2020
	(unaudited)
	Balance		Net Change
Allowance balance, July 1	$	(7,669)
Allowance balance, September 30		(7,567)
Change in allowance			$	(102)
Deferred allowance balance, July 1		5,335
Deferred allowance balance, September 30		5,170
Change in deferred allowance				165
Net amount charged to revenue			$	63


	For the three months ended
	September 30, 2019
	(unaudited)
	Balance			Net Change
Allowance balance. July 1	$	(4,845)
Allowance balance, September 30		(5,500)
Change in allowance			$	655
Deferred allowance balance, July 1		3,720
Deferred allowance balance, September 30		4,198
Change in deferred allowance				(478)
Net amount charged to revenue			$	177


	For the nine months ended
	September 30, 2020
	(unaudited)
	Balance			Net Change
Allowance balance. January 1	$	(7,515)
Allowance balance, September 30		(7,567)
Change in allowance			$	52
Deferred allowance balance, January 1		5,614
Deferred allowance balance, September 30		5,170
Change in deferred allowance				444
Net amount charged to revenue			$	496


	For the nine months ended
	September 30, 2019
	(unaudited)
	Balance			Net Change
Allowance balance. January 1	$	(5,527)
Allowance balance, September 30		(5,500)
Change in allowance			$	(27)
Deferred allowance balance, January 1		4,858
Deferred allowance balance, September 30		4,198
Change in deferred allowance				660
Net amount charged to revenue			$	633

The table provides information about the balances of and changes to deferred revenue for the following periods:


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Deferred revenue, current	$	191,745	$	185,445
Deferred revenue, non-current		14,046		12,095
Total	$	205,791	$	197,540


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Changes to deferred revenue:
Beginning balance	$	198,437	$	179,351	$	205,791	$	178,703
Additional amounts deferred		93,708		82,844		266,870		236,481
Revenue recognized		(94,605)		(82,439)		(275,121)		(235,428)
Ending balance	$	197,540	$	179,756	$	197,540	$	179,756

Contract costs

The table provides information about the changes to contract cost balances as of and for the following periods:


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Deferred commissions:
Beginning balance	$	10,390	$	8,760	$	11,196	$	8,830
Additions		1,876		1,884		4,570		4,950
Amortization		(1,894)		(1,560)		(5,394)		(4,696)
Ending balance	$	10,372	$	9,084	$	10,372	$	9,084

Payment terms

Cost of Revenues

Reimbursable Costs

Research and Development

Foreign Currency

Income Taxes

Total Comprehensive Income (Loss)

Earnings Per Share (“EPS”)

Unaudited Pro Forma Income Taxes

Unaudited Pro Forma Earnings Per Share


	For the three months ended			For the nine months ended
	September 30,			September 30,
Class A common stock:	2020			2020
	(unaudited)
Numerator:
Pro forma net loss attributable to all stockholders	$	(38,695)		$	(82,674)
Class A stock as a percentage of total shares outstanding		13.08	%		4.84	%
Pro forma net loss attributable to Class A stockholders	$	(5,062)		$	(4,004)

Denominator:
Weighted average Class A common stock, basic and diluted		18,124			6,129

Pro forma net loss per Class A share, basic and diluted	$	(0.28)		$	(0.65)


	For the three months ended			For the nine months ended
	September 30,			September 30,
Class B common stock:	2020			2020
	(unaudited)
Numerator:
Pro forma net loss attributable to all stockholders	$	(38,695)		$	(82,674)
Class B stock as a percentage of total shares outstanding		86.92	%		95.16	%
Pro forma net loss attributable to Class B stockholders	$	(33,633)		$	(78,670)

Denominator:
Weighted average Class B common stock outstanding, basic and diluted		120,417			120,417

Pro forma net loss per Class B share, basic and diluted	$	(0.28)		$	(0.65)

Supplemental Cash Flow Disclosures

Supplemental cash flow disclosures are as follows for the respective periods:


	For the nine months ended
	September 30,
	2020		2019
	(unaudited)
Cash paid for:
Interest	$	1,912	$	1,388
Income taxes	$	522	$	526
Non-cash investing and financing activities:
Acquisition purchase commitment liability at acquisition date	$	14,344	$	—
Equipment acquired through capital leases	$	826	$	1,904
Remeasurement of options for redeemable shares	$	51,833	$	762
Conversions of SAR's in connection with the Offering	$	128,870	$	—
Exchange of Amended Options in connection with the Offering	$	69,177	$	—

Recently Issued Accounting Pronouncements

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2020

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of estimated useful lives property and equipment


Leasehold improvements		1 - 12 years
Internal-use software developed		3 - 5 years
Computer software		3 - 7 years
Equipment		3 - 10 years
Automobiles		5 years
Furniture and fixtures		7 - 10 years

Schedule of disaggregation of revenue


	For the three months ended				For the nine months ended
	September 30,				September 30,
		2020	2019			2020	2019
	(unaudited)				(unaudited)
Sources of revenue:
Software subscriptions	$	79,778	$	71,041	$	232,844	$	202,692
Services		14,827		11,398		42,277		32,736
Total revenue	$	94,605	$	82,439	$	275,121	$	235,428

Schedule of beginning and ending balances of accounts receivable, net of allowance


	For the year ended		For the nine months ended
	December 31,		September 30,
	2019		2020
			(unaudited)
Balance, beginning of period	$	62,235	$	70,367
Balance, end of period		70,367		66,789
Increase (decrease), net	$	8,132	$	(3,578)

Schedule of beginning and ending balances of and changes to the allowance and the deferred allowance

The beginning and ending balances of and changes to the allowance and the deferred allowance are as follows:


	For the three months ended
	September 30, 2020
	(unaudited)
	Balance		Net Change
Allowance balance, July 1	$	(7,669)
Allowance balance, September 30		(7,567)
Change in allowance			$	(102)
Deferred allowance balance, July 1		5,335
Deferred allowance balance, September 30		5,170
Change in deferred allowance				165
Net amount charged to revenue			$	63


	For the three months ended
	September 30, 2019
	(unaudited)
	Balance			Net Change
Allowance balance. July 1	$	(4,845)
Allowance balance, September 30		(5,500)
Change in allowance			$	655
Deferred allowance balance, July 1		3,720
Deferred allowance balance, September 30		4,198
Change in deferred allowance				(478)
Net amount charged to revenue			$	177


	For the nine months ended
	September 30, 2020
	(unaudited)
	Balance			Net Change
Allowance balance. January 1	$	(7,515)
Allowance balance, September 30		(7,567)
Change in allowance			$	52
Deferred allowance balance, January 1		5,614
Deferred allowance balance, September 30		5,170
Change in deferred allowance				444
Net amount charged to revenue			$	496


	For the nine months ended
	September 30, 2019
	(unaudited)
	Balance			Net Change
Allowance balance. January 1	$	(5,527)
Allowance balance, September 30		(5,500)
Change in allowance			$	(27)
Deferred allowance balance, January 1		4,858
Deferred allowance balance, September 30		4,198
Change in deferred allowance				660
Net amount charged to revenue			$	633

Schedule of information about the balances of and changes to deferred revenue

The table provides information about the balances of and changes to deferred revenue for the following periods:


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Deferred revenue, current	$	191,745	$	185,445
Deferred revenue, non-current		14,046		12,095
Total	$	205,791	$	197,540


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Changes to deferred revenue:
Beginning balance	$	198,437	$	179,351	$	205,791	$	178,703
Additional amounts deferred		93,708		82,844		266,870		236,481
Revenue recognized		(94,605)		(82,439)		(275,121)		(235,428)
Ending balance	$	197,540	$	179,756	$	197,540	$	179,756

Schedule of information about the changes to contract cost balances

The table provides information about the changes to contract cost balances as of and for the following periods:


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Deferred commissions:
Beginning balance	$	10,390	$	8,760	$	11,196	$	8,830
Additions		1,876		1,884		4,570		4,950
Amortization		(1,894)		(1,560)		(5,394)		(4,696)
Ending balance	$	10,372	$	9,084	$	10,372	$	9,084

Schedule of unaudited proforma earnings per share


	For the three months ended			For the nine months ended
	September 30,			September 30,
Class A common stock:	2020			2020
	(unaudited)
Numerator:
Pro forma net loss attributable to all stockholders	$	(38,695)		$	(82,674)
Class A stock as a percentage of total shares outstanding		13.08	%		4.84	%
Pro forma net loss attributable to Class A stockholders	$	(5,062)		$	(4,004)

Denominator:
Weighted average Class A common stock, basic and diluted		18,124			6,129

Pro forma net loss per Class A share, basic and diluted	$	(0.28)		$	(0.65)


	For the three months ended			For the nine months ended
	September 30,			September 30,
Class B common stock:	2020			2020
	(unaudited)
Numerator:
Pro forma net loss attributable to all stockholders	$	(38,695)		$	(82,674)
Class B stock as a percentage of total shares outstanding		86.92	%		95.16	%
Pro forma net loss attributable to Class B stockholders	$	(33,633)		$	(78,670)

Denominator:
Weighted average Class B common stock outstanding, basic and diluted		120,417			120,417

Pro forma net loss per Class B share, basic and diluted	$	(0.28)		$	(0.65)

Schedule of supplemental cash flow disclosures

Supplemental cash flow disclosures are as follows for the respective periods:


	For the nine months ended
	September 30,
	2020		2019
	(unaudited)
Cash paid for:
Interest	$	1,912	$	1,388
Income taxes	$	522	$	526
Non-cash investing and financing activities:
Acquisition purchase commitment liability at acquisition date	$	14,344	$	—
Equipment acquired through capital leases	$	826	$	1,904
Remeasurement of options for redeemable shares	$	51,833	$	762
Conversions of SAR's in connection with the Offering	$	128,870	$	—
Exchange of Amended Options in connection with the Offering	$	69,177	$	—

ACQUISITION (Tables)

9 Months Ended

Sep. 30, 2020

ACQUISITION

Schedule of preliminary purchase price allocation recorded in the Company's consolidated balance sheet as of the acquisition date


	Initial Purchase
Net Assets and Assumed Liabilities	Price Allocation
	(unaudited)
Cash and cash equivalents	$	56
Accounts receivable		867
Property and equipment		48
Other assets		18
Goodwill		26,124
Accounts payable and accrued expenses		(228)
Accrued compensation		(162)
Other liabilities		(5)
Total consideration at acquisition date	$	26,718

PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Sep. 30, 2020

PROPERTY AND EQUIPMENT

Schedule of major components of property and equipment


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Leasehold improvements	$	20,887	$	20,890
Equipment		40,598		41,918
Computer software acquired		11,232		11,391
Internal-use software developed
Cloud-based services		51,442		59,518
Internal systems and tools		23,957		25,083
Furniture and fixtures		7,451		7,670
Automobiles		27		58
In-process internal-use software		809		4,164
		156,403		170,692
Less accumulated depreciation		(101,676)		(114,757)
Property and equipment, net	$	54,727	$	55,935

Schedule of major components of internal-use software


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Internal-use software developed	$	75,399	$	84,601
Less accumulated depreciation		(53,852)		(62,028)
		21,547		22,573
In-process internal-use software		809		4,164
Internal-use software developed, net	$	22,356	$	26,737

Schedule of amounts capitalized for internal-use software and included in property and equipment additions on the consolidated statements of cash flows


	For the nine months ended September 30,
	2020		2019
	(unaudited)
Cloud-based solutions	$	12,574	$	7,041
Internal systems and tools		1,463		2,971
Total	$	14,037	$	10,012

CAPITALIZED SOFTWARE (Tables)

9 Months Ended

Sep. 30, 2020

CAPITALIZED SOFTWARE

Schedule of major components of capitalized software


	As of December 31,		As of September 30,
	2019		2020
			(unaudited)
Capitalized software	$	47,862	$	60,557
Less accumulated amortization		20,281		28,983
		27,581		31,574
In-process capitalized software		4,494		1,045
Capitalized software, net	$	32,075	$	32,619

GOODWILL (Tables)

9 Months Ended

Sep. 30, 2020

GOODWILL

Schedule of changes in the carrying amount of goodwill


	2020
	(unaudited)
Balance, January 1	$	—
Acquisition of Systax, January		26,124
Foreign currency translation adjustment for the three months ended March 30		(5,893)
Foreign currency translation adjustment for the three months ended June 30		(876)
Foreign currency translation adjustment for the three months ended September 30		(688)
Balance, September 30	$	18,667

EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2020

EARNINGS PER SHARE

Schedule of earnings per share basic and diluted


	For the three months ended						For the nine months ended
	September 30,						September 30,
Class A common stock:	2020			2019			2020			2019
	(unaudited)
Numerator, basic:
Net (loss) income attributable to all stockholders	$	(21,028)		$	11,900		$	(79,167)		$	26,347
Class A stock as a percentage of total shares outstanding, basic		13.08	%		0.19	%		3.07	%		0.08	%
Net (loss) income attributable to Class A stockholders, basic	$	(2,751)		$	22		$	(2,427)		$	21

Numerator, diluted:
Net (loss) income attributable to all stockholders	$	(21,028)		$	11,900		$	(79,167)		$	26,347
Class A stock as a percentage of total shares outstanding, diluted		13.08	%		3.13	%		3.07	%		3.14	%
Net (loss) income attributable to Class A stockholders, diluted	$	(2,751)		$	373		$	(2,427)		$	826

Denominator, basic and diluted:
Weighted average Class A common stock, basic		18,124			225			6,129			134
Dilutive effect of common stock equivalents		—			3,668			—			3,764
Weighted average Class A common stock, diluted		18,124			3,893			6,129			3,898

Net (loss) income per Class A share, basic	$	(0.15)		$	0.10		$	(0.40)		$	0.16

Net (loss) income per Class A share, diluted	$	(0.15)		$	0.10		$	(0.40)		$	0.21


	For the three months ended						For the nine months ended
	September 30,						September 30,
Class B common stock:	2020			2019			2020			2019
	(unaudited)
Numerator, basic:
Net (loss) income attributable to all stockholders	$	(21,028)		$	11,900		$	(79,167)		$	26,347
Class B stock as a percentage of total shares outstanding, basic		86.92	%		99.81	%		96.93	%		99.92	%
Net (loss) income attributable to Class B stockholders, basic	$	(18,277)		$	11,878		$	(76,740)		$	26,326

Numerator, diluted:
Net (loss) income attributable to all stockholders	$	(21,028)		$	11,900		$	(79,167)		$	26,347
Class B stock as a percentage of total shares outstanding, diluted		86.92	%		96.87	%		96.93	%		96.86	%
Net (loss) income attributable to Class B stockholders, diluted	$	(18,277)		$	11,527		$	(76,740)		$	25,521

Denominator, basic and diluted:
Weighted average Class B common stock, basic		120,417			120,417			120,417			120,417
Dilutive effect of common stock equivalents		—			—			—			—
Weighted average Class B common stock, diluted		120,417			120,417			120,417			120,417

Net (loss) income per Class B share, basic	$	(0.15)		$	0.10		$	(0.64)		$	0.22

Net (loss) income per Class B share, diluted	$	(0.15)		$	0.10		$	(0.64)		$	0.21

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS (Tables)

9 Months Ended

Sep. 30, 2020

Compensation plans:

Schedule of exchanges and new issuance of stock-based awards in connection with the offering


	Units outstanding July 27, 2020	Units (exchanged) issued in connection with Offering	Units outstanding July 28, 2020 (prior to exercises)
	(unaudited)
SARs	12,086	(12,038)	48
Amended Options	3,676	(3,676)	—
2020 Plan options	—	15,714	15,714
RSA's	—	694	694
RSU's	—	10	10

Schedule of stock appreciation rights activity


	Units			Range of
	Vested	Nonvested	Total	grant values
	(unaudited)
Balance, January 1, 2019	5,889	4,782	10,671	$	0.92–$3.17
Granted	297	2,112	2,409	$	3.73
Exercised	(609)	—	(609)	$	1.31–$2.50
Forfeited	—	(195)	(195)	$	2.13–$2.50
Vested	630	(630)	—
Balance, December 31, 2019	6,207	6,069	12,276	$	0.92–$3.73
Granted	21	681	702	$	4.70
Exercised	(829)	—	(829)	$	1.31–$2.50
Forfeited	—	(63)	(63)	$	2.50
Vested	1,410	(1,410)	—
Converted	(6,761)	(5,277)	(12,038)	$	0.92–$4.70
Balance September 30, 2020	48	—	48	$	2.50

Schedule of outstanding, vested and exercisable


	Options outstanding		Options vested and exercisable
		Weighted		Weighted
		average		average
Exercise Prices	Units	life (years)	Units	life (years)
	(unaudited)
$0.15 to $0.71	2,552	9.4	2,552	9.4
$2.15	1,295	4.4	1,295	4.4
$2.50	2,816	5.7	1,808	5.6
$2.67	901	6.4	430	6.4
$3.17	1,674	7.5	861	7.5
$3.73	2,392	9.0	278	8.9
$4.70	682	9.4	—	—
	12,312		7,224

Schedule of ESPP valuation assumptions


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
Fair market value of common stock	$	19.00		n/a	$	19.00	$	n/a
Volatility		35%		n/a		35%		n/a
Expected term (years)		0.33		n/a		0.33		n/a
Expected dividend yield		-		n/a		-		n/a
Risk-free interest rate		0.11%		n/a		0.11%		n/a

Schedule of stock-based compensation cost related to incentive awards


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Stock-based compensation cost:
SARs	$	62,141	$	1,310	$	138,737	$	3,930
Stock options		-		-		-		-
RSUs		18		-		18		-
RSAs		2,014		-		2,014		-
ESPP		121		-		121		-
Total stock-based compensation cost	$	64,294	$	1,310	$	140,890	$	3,930

Schedule of stock based compensation cost in consolidated statement of operations


	For the three months ended				For the nine months ended
	September 30,				September 30,
	2020		2019		2020		2019
	(unaudited)
Cost of revenues, software subscriptions	$	6,342	$	131	$	14,002	$	393
Cost of revenues, services		9,230		197		20,719		591
Research and development		6,340		131		14,000		393
Selling and marketing		12,821		261		28,140		784
General and administrative		29,561		590		64,029		1,769
Total stock-based compensation	$	64,294	$	1,310	$	140,890	$	3,930

SAR

Compensation plans:

Schedule of valuation assumptions


Fair market value of common stock	$	19.00
Volatility		36.7%
Expected term (years)		6.5
Expected dividend yield		-
Risk-free interest rate		0.4%

Amended Options

Compensation plans:

Schedule of Option activity


				Weighted
			Weighted	average	Aggregate
			average	remaining	intrinsic
			exercise	contractual	value
Amended Option Activity	Units		price	life (years)	(in thousands)
	(unaudited)
Outstanding at January 1, 2019	4,125	$	0.20	*	$	14,581
Exercised	(276)	$	0.25		$	957
Outstanding at December 31, 2019	3,849	$	0.19	*	$	17,344
Exercised through June 30	(173)	$	0.30		$	759
Amendment and exchange of options	(3,676)	$	0.19	*	$	69,177
Outstanding at September 30, 2020	—
*Options have indefinite contractual lives

2020 Plan

Compensation plans:

Schedule of Option activity


				Weighted
			Weighted	average	Aggregate
			average	remaining	intrinsic
			exercise	contractual	value
2020 Plan Option Activity	Units		price	life (years)	(in thousands)
	(unaudited)
Outstanding at January 1, 2020	—		—
Issued in connection with Converted SARs	12,038	$	2.18
Issued in connection with Amended Options	3,676	$	0.19	*
Exercised	(3,402)	$	1.11		$	63,295
2020 Plan options outstanding as of September 30, 2020	12,312	$	2.45	7.47	$	253,006
2020 Plan options exercisable as of September 30, 2020	7,224	$	1.76	7.14	$	153,414
*Amended Options have indefinite contractual lives

Restricted Stock Units

Compensation plans:

Schedule of restricted activity


		Weighted
		average
		grant date fair
	Units	value per share
	(Unaudited)
Outstanding at January 1, 2020	—	$	—
Granted	88		22.36
Outstanding at September 30, 2020	88	$	22.36

Restricted Stock Awards

Compensation plans:

Schedule of restricted activity


		Weighted
		average
		grant date fair
	Units	value per share
	(unaudited)
Outstanding at January 1, 2020	—	$	—
Granted	694		19.00
Vested	(21)		19.00
Forfeited	(1)		19.00
Outstanding at September 30, 2020	672	$	19.00

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Nature of Business (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jan. 07, 2020
Systax
Summary of significant accounting policies
Ownership (as a percent)	60.00%
Net assets	$ 20,556
Systax
Summary of significant accounting policies
Interest acquired (as a percent)		60.00%
Ownership percentage of VIE to settle obligations	100.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Registration of Company Stock and Initial Public Offering (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands			9 Months Ended
	Jul. 31, 2020	Jul. 28, 2020	Sep. 30, 2020	Sep. 30, 2019
Initial Public Offering
Forward Stock Split		three-for-one
Proceeds from issuance of shares in connection with Offering			$ 423,024
Principal payments on long-term debt			$ 226,029	$ 4,339
Initial Public Offering
Initial Public Offering
Principal payments on long-term debt	$ 175,000
Class A \| Initial Public Offering
Initial Public Offering
Proceeds from issuance of shares in connection with Offering		$ 423,024
Stock issued during the period		23,812
Price (per share)		$ 19.00

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Segments and Fair Value Measurements (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019	Sep. 30, 2020 USD ($) segment	Sep. 30, 2019	Dec. 31, 2019 USD ($)
Segments:
Operating segments \| segment			1
Property and equipment, net	$ 55,935		$ 55,935		$ 54,727
Goodwill	18,667		18,667
Fair value of investment in money market	159,851		159,851		38,520
Outside United States \| Systax
Segments:
Goodwill	$ 18,667		$ 18,667
Revenue \| Geographic Concentration Risk \| Outside United States
Segments:
Concentration risk percentage	3.00%	3.00%	3.00%	3.00%
Long Lived Assets \| Geographic Concentration Risk \| Outside United States
Segments:
Concentration risk percentage			18.00%
Property and equipment, net	$ 18,870		$ 18,870		$ 0

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and Equipment (Details)	9 Months Ended
	Sep. 30, 2020
Leasehold improvements \| Minimum
Estimated useful lives:
Useful lives (in years)	1 year
Leasehold improvements \| Maximum
Estimated useful lives:
Useful lives (in years)	12 years
Internal-use software developed \| Minimum
Estimated useful lives:
Useful lives (in years)	3 years
Internal-use software developed \| Maximum
Estimated useful lives:
Useful lives (in years)	5 years
Computer software acquired \| Minimum
Estimated useful lives:
Useful lives (in years)	3 years
Computer software acquired \| Maximum
Estimated useful lives:
Useful lives (in years)	7 years
Equipment \| Minimum
Estimated useful lives:
Useful lives (in years)	3 years
Equipment \| Maximum
Estimated useful lives:
Useful lives (in years)	10 years
Automobiles
Estimated useful lives:
Useful lives (in years)	5 years
Furniture and fixtures \| Minimum
Estimated useful lives:
Useful lives (in years)	7 years
Furniture and fixtures \| Maximum
Estimated useful lives:
Useful lives (in years)	10 years

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Goodwill and Accounting for Stock-Based Compensation (Details) - item	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Compensation plans:
Reporting units			1
ESPP
Compensation plans:
Discount	15.00%	15.00%	15.00%	15.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Self-insurance (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Self-insurance accruals	$ 2,068	$ 1,473

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Nature of goods and services (Details)	9 Months Ended
	Sep. 30, 2020
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Term	30 days
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2020-09-30
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue recognition period	3 years

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of revenue:
Total revenue	$ 94,605	$ 82,439	$ 275,121	$ 235,428
Software subscriptions
Disaggregation of revenue:
Total revenue	79,778	71,041	232,844	202,692
Services
Disaggregation of revenue:
Total revenue	$ 14,827	$ 11,398	$ 42,277	$ 32,736

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contract balances (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019	Jun. 30, 2020	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Allowance for accounts receivable	$ 7,567	$ 7,515	$ 7,669	$ 5,500	$ 4,845	$ 5,527
Accounts receivable rollforward:
Balance, beginning of period	70,367	62,235
Balance, end of period	66,789	70,367
Increase (decrease), net	$ (3,578)	$ 8,132

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Allowance and deferred allowance (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Allowance for credit loss
Allowance balance, beginning period	$ (7,669)	$ (4,845)	$ (7,515)	$ (5,527)
Allowance balance, ending period	(7,567)	(5,500)	(7,567)	(5,500)
Change in allowance	(102)	655	52	(27)
Deferred allowance balance, beginning period	5,335	3,720	5,614	4,858
Deferred allowance balance, ending period	5,170	4,198	5,170	4,198
Change in deferred allowance	165	(478)	444	660
Net amount charged to revenue	$ 63	$ 177	$ 496	$ 633

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred revenue (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Deferred revenue, current	$ 185,445		$ 191,745
Deferred revenue, non-current	12,095		14,046
Total	$ 197,540	$ 198,437	$ 205,791	$ 179,756	$ 179,351	$ 178,703

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Deferred revenue, changes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Changes to deferred revenue:
Beginning balance	$ 198,437	$ 179,351	$ 205,791	$ 178,703
Additional amounts deferred	93,708	82,844	266,870	236,481
Revenue recognized	(94,605)	(82,439)	(275,121)	(235,428)
Ending balance	$ 197,540	$ 179,756	$ 197,540	$ 179,756

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contract costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Impairment loss			$ 0
Changes to contract cost balances
Beginning balance	$ 10,390	$ 8,760	11,196	$ 8,830
Additions	1,876	1,884	4,570	4,950
Amortization	(1,894)	(1,560)	(5,394)	(4,696)
Ending balance	$ 10,372	$ 9,084	$ 10,372	$ 9,084

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Payment terms and Unaudited Pro Forma Income Taxes (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Term	30 days
Deferred income tax asset	$ 32,440	$ 219
Effective tax rate (as a percent)	25.00%

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Unaudited Pro Forma Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Numerator:
Pro forma net loss attributable to all stockholders	$ (38,695)	$ (82,674)
Class A
Numerator:
Pro forma net loss attributable to all stockholders	$ (5,062)	$ (4,004)
Stock as a percentage of total shares outstanding	13.08%	4.84%
Denominator:
Weighted average common stock, basic and diluted	18,124	6,129
Pro forma net loss per share, basic and diluted	$ (0.28)	$ (0.65)
Class B
Numerator:
Pro forma net loss attributable to all stockholders	$ (33,633)	$ (78,670)
Stock as a percentage of total shares outstanding	86.92%	95.16%
Denominator:
Weighted average common stock, basic and diluted	120,417	120,417
Pro forma net loss per share, basic and diluted	$ (0.28)	$ (0.65)

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Supplemental Cash Flow Disclosures (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Cash paid for:
Interest	$ 1,912	$ 1,388
Income taxes	522	526
Non-cash investing and financing activities:
Acquisition purchase commitment liability	14,344
Equipment acquired through capital leases	826	1,904
Remeasurement of options for redeemable shares	51,833	$ 762
Conversions of SAR's in connection with the Offering	128,870
Exchange of amended options in connection with the offering	$ 69,177

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Recently Issued Accounting Pronouncements (Details)	1 Months Ended
	Feb. 29, 2016
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Lease, Practical Expedients, Package [true false]	true

ACQUISITION (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended		12 Months Ended
ACQUISITION (Details) - USD ($) $ in Thousands	Jan. 07, 2020	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Acquisition
Acquisition purchase commitment liability			$ 14,344
Systax
Acquisition
Interest acquired (as a percent)	60.00%
Cash consideration	$ 12,374
Remaining interest (as a percent)	40.00%
Acquisition purchase commitment liability	$ 14,344
Accounts receivable	$ 867
Revenue		$ 915	3,002
Net loss		$ (242)	$ (523)
Systax \| General and administrative
Acquisition
Transaction costs					$ 504

ACQUISITION - Net Assets and Assumed Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jan. 07, 2020
Acquisition
Goodwill	$ 18,667
Systax
Acquisition
Cash and cash equivalents		$ 56
Accounts receivable		867
Property and equipment		48
Other assets		18
Goodwill		26,124
Accounts payable and accrued expenses		(228)
Accrued compensation		(162)
Other liabilities		(5)
Total consideration at acquisition date		$ 26,718

PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Property and equipment
Property and equipment, gross	$ 170,692	$ 156,403
Less accumulated depreciation	(114,757)	(101,676)
Property and equipment, net	55,935	54,727
Leasehold improvements
Property and equipment
Property and equipment, gross	20,890	20,887
Equipment
Property and equipment
Property and equipment, gross	41,918	40,598
Computer software acquired
Property and equipment
Property and equipment, gross	11,391	11,232
Internal-use software developed
Property and equipment
Property and equipment, gross	84,601	75,399
Less accumulated depreciation	(62,028)	(53,852)
Property and equipment, net	26,737	22,356
Internal-use software developed, Cloud-based services
Property and equipment
Property and equipment, gross	59,518	51,442
Internal-use software developed, Internal systems and tools
Property and equipment
Property and equipment, gross	25,083	23,957
Furniture and fixtures
Property and equipment
Property and equipment, gross	7,670	7,451
Automobiles
Property and equipment
Property and equipment, gross	58	27
In-process internal-use software
Property and equipment
Property and equipment, gross	$ 4,164	$ 809

PROPERTY AND EQUIPMENT - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Property and equipment
Depreciation and amortization	$ 2,735	$ 2,311	$ 8,109	$ 6,528
Property and equipment, net	55,935		55,935		$ 54,727
Accumulated depreciation	114,757		114,757		101,676
Excluding internal-use software and capital leases
Property and equipment
Depreciation and amortization	1,970	1,707	5,918	4,495
Assets under capital leases
Property and equipment
Depreciation and amortization	178	168	513	397
Property and equipment, net	1,769		1,769		1,455
Accumulated depreciation	1,140		1,140		$ 627
Internal-use software developed, Internal systems and tools
Property and equipment
Depreciation and amortization	$ 587	$ 436	$ 1,678	$ 1,636

PROPERTY AND EQUIPMENT - Major components of internal-use software (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Property and equipment
Property and equipment, gross	$ 170,692	$ 156,403
Less accumulated depreciation	(114,757)	(101,676)
Property and equipment, net	55,935	54,727
Internal-use software developed
Property and equipment
Property and equipment, gross	84,601	75,399
Less accumulated depreciation	(62,028)	(53,852)
Property and equipment, net excluding in-process internal-use software	22,573	21,547
Property and equipment, net	26,737	22,356
In-process internal-use software
Property and equipment
Property and equipment, gross	$ 4,164	$ 809

PROPERTY AND EQUIPMENT - Amounts capitalized for internal-use software and included in property and equipment additions on the consolidated statements of cash flows (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Property and equipment
Capitalized internal-use software			$ 14,982	$ 13,315
Research and development	$ 16,501	$ 7,271	43,197	22,049
Internal-use software developed
Property and equipment
Capitalized internal-use software			14,037	10,012
Research and development	3,119	2,778	7,119	8,639
Internal-use software developed, Cloud-based services
Property and equipment
Capitalized internal-use software			12,574	7,041
Depreciation expense	$ 2,183	$ 1,899	6,647	6,118
Internal-use software developed, Internal systems and tools
Property and equipment
Capitalized internal-use software			$ 1,463	$ 2,971

CAPITALIZED SOFTWARE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
CAPITALIZED SOFTWARE (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
CAPITALIZED SOFTWARE
Software development costs capitalized	$ 2,591	$ 4,244	$ 9,246	$ 12,345
Capitalized software	60,557		60,557		$ 47,862
Less accumulated amortization	28,983		28,983		20,281
Capitalized software, net excluding in-process capitalized software	31,574		31,574		27,581
In-process capitalized software	1,045		1,045		4,494
Capitalized software, net	32,619		32,619		$ 32,075
Capitalized software amortization expense	$ 3,124	$ 1,788	$ 8,702	$ 5,506

GOODWILL (Details) - USD ($) $ in Thousands	3 Months Ended
GOODWILL (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020
GOODWILL
Acquisition of Systax, January			$ 26,124
Foreign currency translation adjustment	$ (688)	$ (876)	$ (5,893)
Closing balance	$ 18,667

DEBT (Details) - USD ($) $ in Thousands				3 Months Ended		9 Months Ended		12 Months Ended
DEBT (Details) - USD ($) $ in Thousands	Jul. 31, 2020	May 29, 2020	Apr. 03, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Debt
Distribution paid		$ 123,185				$ 146,084	$ 22,252
Proceeds from long-term debt						175,000
Payments for deferred financing costs						2,436
Refund on payments for deferred finanancing costs						468
Principal payments on long-term debt						226,029	4,339
Current portion of long-term debt				$ 1,179		1,179		$ 50,804
Unamortized deferred financing costs								221
Amortization of deferred financing costs						356	199
Interest Expense				1,875	$ 503	3,959	$ 1,579
Capital lease obligations				$ 1,509		$ 1,509		$ 1,333
Initial Public Offering
Debt
Principal payments on long-term debt	$ 175,000
Base rate
Debt
Interest rate				3.75%		3.75%		4.75%
LIBOR
Debt
Interest rate				2.50%		2.50%		2.69%
Term Loan
Debt
Face amount			$ 175,000
Payments for deferred financing costs			2,904
Write off deferred financing costs				$ 1,174		$ 1,174
Principal payments on long-term debt			$ 61,656
Current portion of long-term debt								$ 50,375
Term of debt			5 years
Amortization of deferred financing costs						44
Interest Expense				$ 177		$ 177
Term Loan \| LIBOR
Debt
Interest rate								2.69%
Line of Credit
Debt
Borrowing capacity			$ 100,000					$ 40,000
Outstanding borrowings			$ 0					$ 0
Applicable rate								0.20%

STOCKHOLDERS’ EQUITY (DEFICIT) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		1 Months Ended			3 Months Ended						9 Months Ended		12 Months Ended
	Jul. 28, 2020	Jul. 25, 2020	Apr. 30, 2020	Apr. 30, 2019	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Jul. 27, 2020
Common Stock
Stockholders' Equity (Deficit)					$ 218,561						$ 218,561		$ (129,776)
Forward Stock Split	three-for-one
Proceeds from common stock share exchange	$ 0
Liquidation preferences	$ 0					$ 0
Common Stock, Shares Authorized	450,000
Common Stock, Par or Stated Value Per Share	$ 0.001
Preferred Stock, Shares Authorized	30,000				30,000						30,000		0
Preferred Stock, Par or Stated Value Per Share	$ 0.001				$ 0.001						$ 0.001		$ 0.001
Proceeds from exercise of stock option											$ 6,023	$ 68
Proceeds from issuance of shares in connection with Offering											$ 423,024
New issues vested restricted stock					361
Treasury stock acquired													41,910
Treasury stock					0						0
Distributions declared		$ 5,706			$ 5,706	$ 123,185	$ 4,010	$ 0	$ 6,105	$ 5,255
Distributions declared per share		$ 0.05				$ 1.02	$ 0.03		$ 0.05	$ 0.04
Termination of S election
Common Stock
Distributions declared											$ 0
Family
Common Stock
Ownership (as a percent)						99.90%
Former Class A
Common Stock
Common Stock, Shares, Outstanding					0						0		147
Common Stock, Shares Authorized					0						0		600
Common Stock, Par or Stated Value Per Share					$ 0.001						$ 0.001		$ 0.001
Shares retired													153
Former Class A \| Family
Common Stock
Ownership (as a percent)						100.00%
Former Class B
Common Stock
Common Stock, Shares, Outstanding					0	120,443					0		120,270
Common Stock, Shares Authorized					0						0		299,400
Common Stock, Par or Stated Value Per Share					$ 0.001						$ 0.001		$ 0.001
Stock issued during the period			173
Proceeds from exercise of stock option			$ 53
Shares retired													41,757
Former Class B \| Family
Common Stock
Common Stock, Shares, Outstanding						120,270
Former Class B \| Selling stockholders
Common Stock
Common Stock, Shares, Outstanding						173
Class A
Common Stock
Common Stock, Shares, Outstanding					25,688						25,688		0
Common Stock, Shares Authorized	300,000				300,000						300,000		0
Common Stock, Par or Stated Value Per Share					$ 0.001						$ 0.001		$ 0.001
Common Stock, Voting Rights	one
Auto exercised options in connection with offering shares issued					564
Shares exchanged in lieu					860
Exercised					610
New issues vested restricted stock					19
Class A \| Initial Public Offering
Common Stock
Offering costs	$ 6,222
Stock issued during the period	23,812
Proceeds from issuance of shares in connection with Offering	$ 423,024
Class A \| Selling stockholders
Common Stock
Stock issued during the period					510
Shares exchanged in lieu					381
Class B
Common Stock
Common Stock, Shares, Outstanding					120,417						120,417		0
Common Stock, Shares Authorized	150,000				150,000						150,000		0
Common Stock, Par or Stated Value Per Share					$ 0.001						$ 0.001		$ 0.001
Common Stock, Voting Rights	ten
Stock issued during the period				225
Proceeds from exercise of stock option				$ 68
Shares exchanged in lieu				51
Common Stock
Common Stock
Common Stock, Shares, Outstanding	120,590													120,590
S Corporation
Common Stock
Stockholders' Equity (Deficit)														$ 354,291

EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Numerator:
Net income (loss) attributable to all stockholders	$ (21,028)	$ (29,075)	$ (29,064)	$ 11,900	$ 7,122	$ 7,325	$ (79,167)	$ 26,347
Shares (as a percentage of total outstanding, diluted)	13.08%			3.13%			3.07%	3.14%
Class A
Numerator:
Shares (as a percentage of total outstanding, basic)	13.08%			0.19%			3.07%	0.08%
Net (loss) income attributable to stockholders, basic	$ (2,751)			$ 22			$ (2,427)	$ 21
Net (loss) income attributable to stockholders, diluted	$ (2,751)			$ 373			$ (2,427)	$ 826
Denominator:
Weighted average common stock outstanding, basic	18,124			225			6,129	134
Dilutive effect of stock equivalents				3,668				3,764
Weighted average common stock outstanding, diluted	18,124			3,893			6,129	3,898
Net income (loss) per share, basic	$ (0.15)			$ 0.10			$ (0.40)	$ 0.16
Net income (loss) per share, diluted	$ (0.15)			$ 0.10			$ (0.40)	$ 0.21
Class B
Numerator:
Net income (loss) attributable to all stockholders	$ (18,277)			$ 11,878			$ (76,740)	$ 26,326
Shares (as a percentage of total outstanding, basic)	86.92%			99.81%			96.93%	99.92%
Net (loss) income attributable to stockholders, basic	$ (18,277)			$ 11,878			$ (76,740)	$ 26,326
Shares (as a percentage of total outstanding, diluted)	86.92%			96.87%			96.93%	96.86%
Net (loss) income attributable to stockholders, diluted	$ (18,277)			$ 11,527			$ (76,740)	$ 25,521
Denominator:
Weighted average common stock outstanding, basic	120,417			120,417			120,417	120,417
Weighted average common stock outstanding, diluted	120,417			120,417			120,417	120,417
Net income (loss) per share, basic	$ (0.15)			$ 0.10			$ (0.64)	$ 0.22
Net income (loss) per share, diluted	$ (0.15)			$ 0.10			$ (0.64)	$ 0.21

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - 401K Plan (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Compensation plans:
Accrued salaries and benefits	$ 20,276		$ 20,276		$ 15,195
401(k) Plan
Compensation plans:
Contribution (as a percent)			3.00%
401(k) matching contributions	913	$ 818	$ 3,003	$ 2,747
Discretionary profit-sharing \| 401(k) Plan
Compensation plans:
Contribution (as a percent)					3.00%
401(k) discretionary contributions	$ 981		$ 2,923		$ 3,363

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Long-Term Rewards Plan (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Compensation plans:
Deferred compensation, current	$ 3,220		$ 3,220		$ 8,935
Deferred compensation, net of current portion	2,156		$ 2,156		18,530
Long-Term Rewards Plan
Compensation plans:
Performance period (in years)			P3Y
Compensation expense	732	$ 817	$ 2,329	$ 1,802
Deferred compensation, current	2,096		2,096		2,717
Deferred compensation, net of current portion	$ 1,965		$ 1,965		$ 1,812

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Stock-Based Award Plans (Details) - USD ($) shares in Thousands, $ in Thousands		9 Months Ended	12 Months Ended
	Jul. 28, 2020	Sep. 30, 2020	Dec. 31, 2019	Jul. 27, 2020	Sep. 30, 2019	Dec. 31, 2018
Restricted Stock Awards
Compensation plans:
Granted	694
Outstanding (in shares)	694				672
Restricted Stock Units
Compensation plans:
Granted	10	88
Shares converted	10
Outstanding (in shares)	10	88
ESPP
Compensation plans:
Offering Period		6 months
Lump sum payments		$ 0
SAR
Compensation plans:
Granted		702	2,409
Shares converted	12,038
Outstanding (in shares)		48	6,207			5,889
Outstanding vested and expected to vest (in shares)	48	48	12,276	12,086		10,671
Amended Options
Compensation plans:
Shares converted	3,676
Outstanding (in shares)			3,849	3,676		4,125
2020 Plan
Compensation plans:
Shares converted	15,714
Outstanding (in shares)	15,714	12,312

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - 2020 Plan (Details) - 2020 Plan - shares shares in Thousands	9 Months Ended
	Sep. 30, 2020	Jul. 28, 2020
Compensation plans:
Available for issuance (in shares)		16,500
Maximum issuance (as a percentage of outstanding)	4.00%
Maximum issuance (in shares)	3,000

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Amended and Retired SAR Plan (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		9 Months Ended
	Jul. 28, 2020	Sep. 30, 2020	Sep. 30, 2019	Jul. 27, 2020	Dec. 31, 2019	Dec. 31, 2018
Compensation plans:
Redemption of Converted SARs		$ (22,889)
Unrecognized compensation expense	$ 44,342
Deferred compensation, current		3,220			$ 8,935
Deferred compensation, net of current portion		2,156			$ 18,530
Stock-based compensation expense		$ 140,890	$ 3,930
SAR
Compensation plans:
Outstanding (in shares)		48			6,207	5,889
Percentage of vesting to exercise		50.00%
Triggering event ownership percentage		50.00%
Outstanding vested and expected to vest (in shares)	48	48		12,086	12,276	10,671
Service requirement (in years)		10 years
Exercised options exchanged in lieu of income taxes	$ 13,835
Offering price	$ 19
Aggregate intrinsic value	$ 9,054
Unrecognized compensation expense					$ 3,900
Deferred compensation, current	1,299	$ 1,051	1,299		5,790
Deferred compensation, net of current portion		$ 1,122	1,122		$ 16,506
Fair value, vested and expected to vest	197,708
Fair value of options	153,366
Stock-based compensation expense	$ 57,079
Fair Value Assumptions and Methodology
Share Price	$ 19.00
Volatility	36.70%
Expected term (in years)	6 years 6 months
Risk-free interest rate	0.40%
SAR \| Minimum
Compensation plans:
Service requirement (in years)		1 year
Unrecognized compensation expense period	1 year	1 year
SAR \| Maximum
Compensation plans:
Service requirement (in years)		10 years
Unrecognized compensation expense period	5 years	5 years
SAR \| Accounting Standards Update 2016-09
Compensation plans:
Unrecognized compensation expense			$ 2,422
SAR \| Year one
Compensation plans:
Vesting percentage		25.00%
SAR \| Year two
Compensation plans:
Vesting percentage		50.00%
SAR \| Year five
Compensation plans:
Vesting percentage		100.00%

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Amended and Retired SAR Plan, activity (Details) - $ / shares shares in Thousands		9 Months Ended	12 Months Ended
	Jul. 28, 2020	Sep. 30, 2020	Dec. 31, 2019
SAR
Vested and Expected to Vest
Balance, Bgn	12,086	12,276	10,671
Granted		702	2,409
Exercised		(829)	(609)
Forfeited		63	195
Converted		(12,038)
Balance, End	48	48	12,276
Vested
Balance, Bgn		6,207	5,889
Exercised		(829)	(609)
Vested		(1,410)	(630)
Balance, End		48	6,207
Nonvested Units
Balance, Bgn		6,069	4,782
Forfeited		(63)	(195)
Vested		(1,410)	(630)
Balance, End			6,069
Grant values
Granted		$ 4.70	$ 3.73
Vested		2.50
Forfeited		2.50
Balance, End		2.50
Grant values, Nonvested
Forfeited		2.50
SAR \| Minimum
Grant values
Balance, Bgn			0.92
Vested			0.92
Exercised		1.31	1.31
Forfeited			2.13
Converted		0.92
Grant values, Vested
Exercised		1.31	1.31
Grant values, Nonvested
Balance Bgn		0.92
Forfeited			2.13
Balance, End			0.92
SAR \| Maximum
Grant values
Balance, Bgn		3.73	3.17
Granted			2.50
Vested		3.73	3.73
Exercised		2.50
Forfeited			2.50
Converted		4.70
Balance, End			3.73
Grant values, Vested
Exercised		$ 2.50
Grant values, Nonvested
Forfeited			$ 2.50
Vested units
Vested and Expected to Vest
Granted		21	297
Converted		(6,761)
Non vested units
Vested and Expected to Vest
Granted		681	2,112
Converted		(5,277)

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Amended Options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended	9 Months Ended		12 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Jun. 30, 2020	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Compensation plans:
Temporary equity and were reclassified to stockholders’ equity	$ (69,177)
Amended Options
Compensation plans:
Triggering event (as percentage of stock)				50.00%
Partial triggering event				25.00%
Tag along right				51.00%
Drag along right				51.00%
Increases in value of Options for Redeemable Shares	21,954	$ 579		$ 69,177	$ 762
Temporary equity and were reclassified to stockholders’ equity	$ 69,177
Units
Balance, Bgn			3,849	3,849	4,125	4,125
Exercised			(173)			(276)
Exchange				(3,676)
Balance, End						3,849
Weighted Average Per Share
Balance, Bgn			$ 0.19	$ 0.19	$ 0.20	$ 0.20
Exercised			$ 0.30			0.25
Exchange				$ 0.19
Balance, End						$ 0.19
Aggregate intrinsic value
Beginning of period			$ 17,344	$ 17,344	$ 14,581	$ 14,581
Exercised				759		957
Amendment and exchange of options				$ 69,177
End of period						$ 17,344

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Options under 2020 Plan (Details) $ / shares in Units, shares in Thousands, $ in Thousands		9 Months Ended
	Jul. 28, 2020 shares	Sep. 30, 2020 USD ($) $ / shares shares
2020 Plan
Compensation plans:
Intrinsic value, exercises \| $		$ 63,295
Intrinsic value, outstanding \| $		$ 253,006
Remaining contractual life, outstanding		7 years 5 months 19 days
Vested and exercisable		7,224
Intrinsic value, exercisable \| $		$ 153,414
Remaining contractual life, exercisable		7 years 1 month 21 days
Units
Exercised		(3,402)
Balance, End	15,714	12,312
Vested and exercisable		7,224
Weighted Average Per Share
Exchange \| $ / shares		$ 1.11
Balance, End \| $ / shares		2.45
Exercisable \| $ / shares		$ 1.76
Unrecognized compensation expense \| $		$ 40,434
2020 Plan \| Maximum
Weighted Average Per Share
Vesting period		4 years
Unrecognized compensation expense period		5 years
2020 Plan \| Minimum
Weighted Average Per Share
Vesting period		1 year
Unrecognized compensation expense period		1 year
Converted Options
Units
Exchange		12,038
Weighted Average Per Share
Balance, End \| $ / shares		$ 2.18
Amended Options
Units
Exchange		3,676
Weighted Average Per Share
Exercised \| $ / shares		$ 0.19

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Options under 2020 Plan Price Range (Details) shares in Thousands	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Options outstanding, vested and exercisable:
Options outstanding	12,312
Options vested and exercisable	7,224
$0.15 to $0.71
Options outstanding, vested and exercisable:
Exercise prices, lower range \| $ / shares	$ 0.15
Exercise prices, upper range \| $ / shares	$ 0.71
Options outstanding	2,552
Options outstanding, life	9 years 4 months 24 days
Options vested and exercisable	2,552
Options vested and exercisable, life	9 years 4 months 24 days
$2.15
Options outstanding, vested and exercisable:
Exercise prices \| $ / shares	$ 2.15
Options outstanding	1,295
Options outstanding, life	4 years 4 months 24 days
Options vested and exercisable	1,295
Options vested and exercisable, life	4 years 4 months 24 days
$2.50
Options outstanding, vested and exercisable:
Exercise prices \| $ / shares	$ 2.50
Options outstanding	2,816
Options outstanding, life	5 years 8 months 12 days
Options vested and exercisable	1,808
Options vested and exercisable, life	5 years 7 months 6 days
$2.67
Options outstanding, vested and exercisable:
Exercise prices \| $ / shares	$ 2.67
Options outstanding	901
Options outstanding, life	6 years 4 months 24 days
Options vested and exercisable	430
Options vested and exercisable, life	6 years 4 months 24 days
$3.17
Options outstanding, vested and exercisable:
Exercise prices \| $ / shares	$ 3.17
Options outstanding	1,674
Options outstanding, life	7 years 6 months
Options vested and exercisable	861
Options vested and exercisable, life	7 years 6 months
$3.73
Options outstanding, vested and exercisable:
Exercise prices \| $ / shares	$ 3.73
Options outstanding	2,392
Options outstanding, life	9 years
Options vested and exercisable	278
Options vested and exercisable, life	8 years 10 months 24 days
$4.70
Options outstanding, vested and exercisable:
Exercise prices \| $ / shares	$ 4.70
Options outstanding	682
Options outstanding, life	9 years 4 months 24 days

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Restricted Stock Units (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 28, 2020	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Compensation plans:
Compensation expense		$ 64,294	$ 1,310	$ 140,890	$ 3,930
Restricted Stock Units
Compensation plans:
Fair value of options				1,958
Compensation expense		18		18
Unrecognized compensation cost		$ 1,940		$ 1,940
Unrecognized compensation expense period				4 years
Units
Granted	10			88
Balance, End	10	88		88
Weighted Average Per Share
Granted				$ 22.36
Balance, End		$ 22.36		$ 22.36
Restricted Stock Units \| Minimum
Compensation plans:
Service requirement (in years)				1 year
Restricted Stock Units \| Maximum
Compensation plans:
Service requirement (in years)				4 years

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Restricted Stock Awards (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands		3 Months Ended	9 Months Ended
	Jul. 28, 2020	Sep. 30, 2020	Sep. 30, 2020	Sep. 30, 2019
Compensation plans:
Stock-based compensation expense			$ 140,890	$ 3,930
Restricted Stock Awards
Compensation plans:
Fair value of options		$ 13,190
Stock-based compensation expense				$ 2,014
Unrecognized compensation cost		$ 11,158	$ 11,158
Unrecognized compensation expense period			2 years 2 months 12 days
Units
Granted	694
Vested				(21)
Forfeited				1
Balance, End	694			672
Weighted Average Per Share
Granted	$ 19.00
Vested				$ 19.00
Forfeited				19.00
Balance, End				$ 19.00

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Employee Stock Purchase Plan (Details) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Compensation plans:
Compensation expense	$ 64,294	$ 1,310	$ 140,890	$ 3,930
ESPP
Compensation plans:
Purchase price as a percent of fair value			85.00%
Reserved for issuance			1,000
Maximum issuance (as a percentage of outstanding)			1.00%
Maximum issuance (in shares)			16,000
Compensation expense	121		$ 121
Shares purchased			0
Unrecognized compensation cost	$ 116		$ 116

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - ESPP - Option-pricing model key input assumptions (Details) - ESPP - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Compensation plans:
Discount	15.00%	15.00%	15.00%	15.00%
Offering Period			6 months
Fair Value Assumptions and Methodology
Share Price	$ 19.00		$ 19.00
Volatility	35.00%		35.00%
Expected term (in years)	3 months 29 days		3 months 29 days
Risk-free interest rate	0.11%		0.11%

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Amended and Retired SAR Plan, base value (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Allocation of costs
Compensation expense	$ 64,294	$ 1,310	$ 140,890	$ 3,930
Research and development
Allocation of costs
Compensation expense	6,340	131	14,000	393
Selling and marketing
Allocation of costs
Compensation expense	12,821	261	28,140	784
General and administrative
Allocation of costs
Compensation expense	29,561	590	64,029	1,769
Software subscriptions
Allocation of costs
Compensation expense	6,342	131	14,002	393
Services
Allocation of costs
Compensation expense	$ 9,230	$ 197	$ 20,719	$ 591

EMPLOYEE BENEFIT AND DEFERRED COMPENSATION PLANS - Stock-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Allocation of costs
Compensation expense	$ 64,294	$ 1,310	$ 140,890	$ 3,930
SAR
Allocation of costs
Compensation expense	62,141	$ 1,310	138,737	$ 3,930
Restricted Stock Units
Allocation of costs
Compensation expense	18		18
Restricted Stock Awards
Allocation of costs
Compensation expense	2,014		2,014
ESPP
Allocation of costs
Compensation expense	$ 121		$ 121

RELATED PARTIES (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
RELATED PARTIES
Advances to stockholders	$ 2	$ 283

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
COMMITMENTS AND CONTINGENCIES
Operating lease expense	$ 1,736	$ 1,628	$ 5,187	$ 4,720