Blackbaud Inc 10-K for FY2023

Blackbaud Inc (BLKB)

10-K 2024-02-21 For: 2023-12-31

Added on April 09, 2026

About this 10-K

Blackbaud Inc filed this 10-K on February 21, 2024, covering the fiscal year ended December 31, 2023 (FY2023).

Headline figures

Fiscal year ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.11B; up 4.5% from $1.06B a year earlier
Net income: $1.82M; compared with a net loss of $45.41M a year earlier
Diluted EPS: $0.03; compared with -$0.88 a year earlier

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Delaware			11-2617163
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)



Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common Stock, $0.001 Par Value	BLKB	Nasdaq Global Select Market
Preferred Stock Purchase Rights	N/A	Nasdaq Global Select Market
Securities Registered Pursuant to Section 12(g) of the Act: None


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		2

PART I.		3
Item 1.	Business	3
Item 1A.	Risk factors	16
Item 1B.	Unresolved staff comments	30
Item 1C.	Cybersecurity	30
Item 2.	Properties	32
Item 3.	Legal proceedings	32
Item 4.	Mine safety disclosures	32

PART II.		33
Item 5.	Market for registrant's common equity, related stockholder matters and issuer purchases of equity securities	33
Item 6.	[Reserved]	34
Item 7.	Management's discussion and analysis of financial condition and results of operations	35
Item 7A.	Quantitative and qualitative disclosures about market risk	64
Item 8.	Financial statements and supplementary data	65
Item 9.	Changes in and disagreements with accountants on accounting and financial disclosure	112
Item 9A.	Controls and procedures	112
Item 9B.	Other information	113
Item 9C.	Disclosure regarding foreign jurisdictions that prevent inspections	113

PART III.		114
Item 10.	Directors, executive officers and corporate governance	114
Item 11.	Executive compensation	114
Item 12.	Security ownership of certain beneficial owners and management and related stockholder matters	114
Item 13.	Certain relationships and related transactions, and director independence	114
Item 14.	Principal accountant fees and services	114

PART IV.		115
Item 15.	Exhibits and financial statement schedules	115
Item 16.	Form 10-K Summary	119

SIGNATURES		120


December 31,	2018	2019	2020	2021	2022	2023
Blackbaud, Inc.	$100.00	$127.30	$92.21	$126.53	$94.30	$138.90
Nasdaq Composite Index	100.00	136.69	198.10	242.03	163.28	236.17
Nasdaq Computer Index	100.00	148.27	233.26	296.23	192.48	315.60


Period	Total number of shares purchased(1)	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs(2)	Approximate dollar value of shares that may yet be purchased under the plans or programs (in thousands)(2)
Beginning balance, October 1, 2023					$	250,000
October 1, 2023 through October 31, 2023	—	$	—	—	250,000
November 1, 2023 through November 30, 2023	3,194	73.02		—	250,000
December 1, 2023 through December 31, 2023	222,593	84.89		221,836	231,169
Total	225,787	$	84.72	221,836	$	231,169


☑			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the fiscal year ended December 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to .


			1						Product Innovation and Delivery

			2						Bookings Growth and Acceleration

			3						Transactional Revenue Optimization and Expansion

			4						Modernized Approach to Pricing and Multi-Year Customer Contracts

			5						Keen Attention to Cost Management


Total Revenue ($M)						Income from Operations ($M)
YoY Growth (%)						YoY Growth (%)


			+						Increase in total revenue, as described above
			+						Net decreases in the following costs primarily due to our targeted workforce reductions discussed below: •Decrease in compensation costs other than stock-based compensation of $35.4 million; and •Decrease in commission expense of $1.1 million
			+						Decrease in third-party contractor costs of $12.2 million primarily due to our focus on cost management
			+						Decrease in hosting and data center costs of $5.0 million as we continue to migrate our cloud infrastructure to leading public cloud service providers and make investments in security; currently, we expect our cloud infrastructure migration efforts and increased level of cybersecurity investments to continue for the foreseeable future
			+						Decrease in Security Incident-related expenses, net of insurance, of $2.3 million. See "Security Incident update" below on page 39.
			+						Decrease in cost of revenue from a $2.3 million impairment charge during the three months ended June 30, 2022, against previously capitalized software development costs that reduced the carrying value of those assets to zero. The impairment charge resulted primarily from our decision to end customer support for certain solutions

			-						Increase in stock-based compensation expense of $17.5 million attributable to primarily due to overall Company performance against 2023 goals and 2022 performance-based equity award adjustments, partially offset by the targeted workforce reductions during the fourth quarter of 2022 and first quarter of 2023
			-						Increase in transaction-based costs of $9.2 million related to the increase in the volume of transactions for which we process payments and, to a lesser extent, increases in vendor rates
			-						Increase in amortization of intangible assets from business combinations of $4.2 million due to our acquisition of EVERFI
			-						Net decrease of $4.0 million due to an increase in amortization of capitalized software and content development costs, partially offset by an increase in software and content development costs that were required to be capitalized under the internal-use software guidance


			+						Increase in transactional recurring revenue of $30.5 million primarily due to positive results related to pricing initiatives we implemented during 2023 and increases in volume for our Blackbaud Tuition Management, JustGiving and Blackbaud Merchant Services solutions; and
			+						Increase in contractual recurring revenue of $29.3 million related to the performance of our cloud solutions and, to a lesser extent, the early impact of our pricing initiatives; partially offset by a decrease in maintenance revenue as customers migrate to our cloud solutions.


			+						Increase in transaction-based costs of $9.2 million related to the increase in the volume of transactions for which we process payments and, to a lesser extent, increases in vendor rates
			+						Increase in amortization of software development costs of $5.6 million due to our continued investments in the innovation and security of our solutions
			+						Increase in amortization of intangible assets from business combinations of $4.0 million primarily due to our acquisition of EVERFI in December 2021
			+						Increase in stock-based compensation costs of $2.8 million primarily due to overall Company performance against 2023 goals and 2022 performance-based equity award adjustments, partially offset by the targeted workforce reductions during the fourth quarter of 2022 and first quarter of 2023
			-						Decrease in compensation costs other than stock-based compensation of $8.7 million primarily due to our targeted workforce reductions discussed above
			-						Decrease in hosting and data center costs of $5.1 million as we continue to migrate our cloud infrastructure to leading public cloud service providers and make investments in security; currently, we expect our cloud infrastructure migration efforts and increased level of cybersecurity investments to continue for the foreseeable future
			-						Decrease in third-party contractor costs of $1.1 million primarily due to our focus on cost management


			-						Decrease in one-time consulting revenue of $9.2 million primarily due to less sales of creative services and implementation and customization services. Also contributing is an increase in utilization of third-party service delivery partners. For several years, we have been strategically shifting away from a one-time services business model towards sales of retained and managed services and also embedding services in our renewable cloud solution contracts. Retained and managed services contracts that we expect to have a term consistent with our cloud solution contracts, and embedded services are recorded as recurring revenue.
			-						Decrease in one-time analytics revenue of $3.0 million as analytics are generally integrated in our cloud solutions


			-						Decrease in compensation costs of $7.9 million primarily related to our targeted workforce reductions during the fourth quarter of 2022 and first quarter of 2023 and a continued shift in resources historically supporting one-time services and other towards recurring revenue
			-						Decrease in employee severance of $1.2 million primarily due to our targeted workforce reductions discussed above, the majority of which were recorded in cost of one-time services and other in the fourth quarter of 2022
			-						Decrease in direct costs of revenue of $1.2 million primarily related to our decrease in sales of creative services
			+						Increase in third-party contractor costs of $1.2 million primarily due to an increase in partners delivering services


			-						Decrease in third-party contractor costs of $6.5 million primarily due to a decrease in our use of third-party software developers
			-						Decrease in compensation costs other than stock-based compensation of $3.9 million primarily due to our targeted workforce reductions discussed above

			+						Increase in stock-based compensation of $6.6 million primarily due to overall Company performance against 2023 goals and 2022 performance-based equity award adjustments, partially offset by the targeted workforce reductions during the fourth quarter of 2022 and first quarter of 2023


Description of Business


Market Overview


Strategy


Customers


Interest expense ($M)
Percentages indicate expenses as a percentage of total revenue


Other income ($M)
Percentages indicate expenses as a percentage of total revenue


(dollars in millions)	December 31, 2023		December 31, 2022		Change
Total deferred revenue(1)	394.9		385.2		2.5	%
Less: Long-term portion	2.4		2.8		(14.9)	%
Current portion(1)	$	392.5	$	382.4	2.6	%


Income tax provision (benefit) ($M)
Percentages indicate effective income tax rates


	Years ended December 31,
(dollars in millions, except per share amounts)	2023			2022
GAAP Revenue	$	1,105.4		$	1,058.1

GAAP gross profit	$	603.2		$	552.7
GAAP gross margin	54.6		%	52.2		%
Non-GAAP adjustments:
Add: Stock-based compensation expense	16.7			14.4
Add: Amortization of intangibles from business combinations	52.5			48.5
Add: Employee severance	0.8			2.1

Subtotal(1)	69.9			65.1
Non-GAAP gross profit(1)	$	673.2		$	617.8
Non-GAAP gross margin	60.9		%	58.4		%

GAAP income (loss) from operations	$	44.7		$	(28.5)
GAAP operating margin	4.0		%	(2.7)		%
Non-GAAP adjustments:
Add: Stock-based compensation expense	127.8			110.3
Add: Amortization of intangibles from business combinations	55.6			51.4
Add: Employee severance	5.1			5.2
Add: Acquisition and disposition-related costs(2)(3)	7.5			6.1
Add: Restructuring and other real estate activities	—			0.1
Add: Security Incident-related costs, net of insurance(4)	53.4			55.7
Add: Impairment of capitalized software development costs	—			2.3
Subtotal(1)	249.4			231.1
Non-GAAP income from operations(1)	$	294.1		$	202.6
Non-GAAP operating margin	26.6		%	19.1		%

GAAP income (loss) before provision (benefit) for income taxes	$	17.6		$	(55.6)
GAAP net income (loss)	$	1.8		$	(45.4)
Shares used in computing GAAP diluted earnings (loss) per share	53,721,342			51,569,148
GAAP diluted earnings (loss) per share	$	0.03		$	(0.88)
Non-GAAP adjustments:
Add: GAAP income tax provision (benefit)	15.8			(10.2)
Add: Total non-GAAP adjustments affecting income from operations	249.4			231.1


Non-GAAP income before provision for income taxes	267.0			175.5
Assumed non-GAAP income tax provision(5)	53.4			35.1
Non-GAAP net income(1)	$	213.6		$	140.4

Shares used in computing Non-GAAP diluted earnings per share	53,721,342			52,207,573
Non-GAAP diluted earnings per share	$	3.98		$	2.69


Financial Covenant	Requirement	Ratio as of December 31, 2023
Net Leverage Ratio(1)	≤ 4.00 to 1.00	1.97 to 1.00
Interest Coverage Ratio	≥ 2.50 to 1.00	9.67 to 1.00


	Payments due by period
(in millions)	Less than 1 year		More than 1 year		Total(1)
Recorded contractual obligations:
Debt	$	19.3	$	761.9	$	781.1
Operating leases	8.7		46.8		55.5
Interest payments on debt	—		5.5		5.5
Contingent consideration	—		1.4		1.4
Unrecorded contractual obligations:
Purchase obligations	88.1		169.5		257.6
Interest payments on debt	35.1		55.9		90.9
Total contractual obligations(1)	$	151.1	$	1,040.9	$	1,192.0


Revenue Recognition
Description	Judgments and Uncertainties	Effect if Actual Results Differ From Assumptions
See Note 2 to our consolidated financial statements in this report for a complete discussion of our revenue recognition policies. Revenues are recognized when control of our services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. We determine revenue recognition through the following steps: (1) Identification of the contract, or contracts, with a customer; (2) Identification of the performance obligations in the contract; (3) Determination of the transaction price; (4) Allocation of the transaction price to the performance obligations in the contract; and (5) Recognition of revenue when, or as, we satisfy a performance obligation. We have not made any material changes in the accounting methodology we use to recognize revenue during the year ended December 31, 2023.	Our revenue recognition accounting methodology may contain uncertainties because it could require us to make significant estimates and assumptions, and to apply judgment for certain customer contracts. For example, for certain arrangements that have multiple performance obligations, we may need to exercise judgment and use estimates in order to (1) determine whether performance obligations are distinct and should be accounted for separately; (2) determine the standalone selling price of each performance obligation; (3) allocate the transaction price among the various performance obligations on a relative standalone selling price basis; and (4) determine whether revenue for each performance obligation should be recognized at a point in time or over time.	If we were to change any of these judgments or estimates, it could cause a material increase or decrease in the amount of revenue or deferred revenue that we report in a particular period.


Business Combinations
Description	Judgments and Uncertainties	Effect if Actual Results Differ From Assumptions
We allocate the purchase price of an acquired business to its identifiable assets acquired and liabilities assumed at the acquisition date based upon their estimated fair values. The excess of the purchase price over the amount allocated to the identifiable assets acquired and liabilities assumed, if any, is recorded as goodwill. We use available information to estimate fair values. We typically engage outside appraisal firms to assist in the fair value determination of long-lived and identifiable intangible assets, and any other significant assets or liabilities. We adjust the preliminary purchase price allocation, as necessary, up to one year after the acquisition closing date as we obtain new information about facts and circumstances that existed as of the closing date. We have not made any material changes in the accounting methodology we use for business combinations during the year ended December 31, 2023.	Our purchase price allocation methodology contains uncertainties because it requires us to make significant estimates and assumptions, and to apply judgment to estimate the fair value of assets acquired and liabilities assumed, especially with respect to long-lived and intangible assets. Management estimates the fair value of assets acquired and liabilities assumed based on quoted market prices, the carrying value of the acquired assets and widely accepted valuation techniques, including discounted cash flows, market multiple analyses and replacement cost. We apply significant judgement in estimating the fair value of intangible assets acquired, which involves the use of significant assumptions. Significant assumptions used in the valuation of customer relationships include future revenue and operating expenses, customer attrition rates, contributory asset charges, tax amortization benefit, and discount rates. Significant assumptions used in the valuation of certain developed technology assets include future revenue, proprietary technology obsolescence curve, royalty rate, and discount rate. Significant assumptions used in the valuation of marketing assets include assumptions about the period of time the brand will continue to be valuable, royalty rate, and discount rate. Significant assumptions used in the valuation of content intangible assets include cost-based assumptions. Our estimates of fair value are based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable, and unanticipated events and changes in circumstances may occur.	If actual results are materially different than the assumptions we used to determine fair value of the assets acquired and liabilities assumed through a business combination as well as the estimated useful lives of the acquired intangible assets, it is possible that adjustments to the carrying values of such assets and liabilities will have a material impact on our financial position and results of operations. See Note 3 to our consolidated financial statements in this report for information regarding our business acquisitions.


Income Taxes
Description	Judgments and Uncertainties	Effect if Actual Results Differ From Assumptions
We make estimates and judgments in accounting for income taxes. Our income tax returns, like those of most companies, are periodically audited by domestic and foreign tax authorities. We measure and recognize uncertain tax positions. To recognize uncertain tax positions, we must first determine if it is more likely than not that the position will be sustained upon audit. We must then measure the benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. We make estimates in determining tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial reporting purposes. We record valuation allowances to reduce our deferred tax assets to the amount expected to be realized. We have not made any material changes in the accounting methodology we use to assess income tax during the year ended December 31, 2023.	The calculation of our income tax provision requires estimates due to transactions, credits and calculations where the ultimate tax determination is uncertain. Uncertainties arise as a consequence of the actual source of taxable income between domestic and foreign locations, the outcome of tax audits and the ultimate utilization of tax credits. Our effective income tax rate is also affected by changes in the geographic distribution of our earnings or losses, changes in tax law in jurisdictions where we conduct business. Significant judgment is required in the identification and measurement of uncertain tax positions. Our liability for unrecognized tax benefits contains uncertainties because management is required to make assumptions and to apply judgment to estimate the exposures associated with our various filing positions. In assessing the adequacy of a recorded valuation allowance significant judgment is required. We consider all positive and negative evidence and a variety of factors including the scheduled reversal of deferred tax liabilities, historical and projected future taxable income, and prudent and feasible tax planning strategies.	Although we believe that the judgments and estimates discussed herein are reasonable, actual results could differ, and we may be exposed to losses or gains that could be material. To the extent actual results differ from estimated amounts recorded, such differences will impact the income tax provision in the period in which the determination is made. If we determine there is less than a 50% likelihood that we will be able to use a deferred tax asset in the future in excess of its net carrying value, then an adjustment to the deferred tax asset valuation allowance is made to increase income tax expense, thereby reducing net income in the period such determination was made.


Long-lived Assets and Intangible Assets Other Than Goodwill
Description	Judgments and Uncertainties	Effect if Actual Results Differ From Assumptions
We review our long-lived assets and intangible assets other than goodwill for impairment when events or changes in circumstances indicate the carrying amount may not be recoverable. If such events or changes in circumstances occur, we use the undiscounted cash flow method to determine whether our long-lived and intangible assets other than goodwill are impaired. To the extent that the carrying value of the asset or asset group exceeds the undiscounted cash flows over the estimated remaining life of the asset, we measure the impairment using discounted cash flows. We have not made any material changes in the accounting methodology we use to assess impairment loss during the year ended December 31, 2023.	In estimating future cash flows, assets are grouped at the lowest level for which there is identifiable cash flows that are largely independent of cash flows from other asset groups. When measuring impairment of an asset or asset group using discounted cash flows, we make assumptions and apply judgment in estimating future cash flows and asset or asset group fair values, including annual revenue growth rates, a terminal year growth rate and selecting a discount rate that reflects the risk inherent in future cash flows.	During 2023, we recorded immaterial noncash impairment charges against certain operating lease ROU assets and certain property and equipment assets. For additional information, see Notes 7 and 11 to our consolidated financial statements in this report. We do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to assess impairment losses. However, if actual results are not consistent with our estimates or assumptions, we may be exposed to an impairment charge that could materially adversely impact our consolidated financial position and results of operations.


Loss Contingencies
Description	Judgments and Uncertainties	Effect if Actual Results Differ From Assumptions
We are subject to the possibility of various loss contingencies, including legal proceedings and claims, that arise in the normal course of business, as well as certain other non-ordinary course proceedings, claims and investigations, as described in Note 11 to the consolidated financial statements in this report. We record an accrual for a loss contingency when it is both probable that a material liability has been incurred and the amount of the loss can be reasonably estimated. If only a range of estimated losses can be determined, we accrue an amount within the range that, in our judgment, reflects the most likely outcome; if none of the estimates within that range is a better estimate than any other amount, we accrue the low end of the range. For proceedings in which an unfavorable outcome is reasonably possible but not probable and an estimate of the loss or range of losses arising from the proceeding can be made, we disclose such an estimate, if material. If such a loss or range of losses is not reasonably estimable, we disclose that fact. We have not made any material changes in the accounting methodology we use to assess loss contingencies during the year ended December 31, 2023.	We review any such loss contingency accruals at least quarterly and adjust them to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Often these issues are subject to substantial uncertainties and, therefore, the probability of loss and the estimation of damages are difficult to ascertain. These assessments can involve a series of complex judgments about future events and can rely heavily on estimates and assumptions that have been deemed reasonable by us.	With the exception of the 2020 Security Incident, we do not believe there is a reasonable likelihood that there will be a material change in the future estimates or assumptions we use to determine loss contingencies. However, if facts and circumstances change in the future that change our belief regarding assumptions used to determine our estimates, we may be exposed to losses that could be material. Although we believe we have substantial defenses in these matters, we could incur judgments or enter into settlements of claims that could have a material adverse effect on our consolidated financial position, results of operations or cash flows in any particular period. For additional information, see Note 11 to our consolidated financial statements in this report.


			Page No.
Reports of Independent Registered Public Accounting Firms (PCAOB IDs 42 and 238)			66
Consolidated Balance Sheets			70
Consolidated Statements of Comprehensive (Loss) Income			71
Consolidated Statements of Cash Flows			72
Consolidated Statements of Stockholders’ Equity			73
Notes to Consolidated Financial Statements			74


			Revenue Recognition - Payment Processing Services
Description of the Matter			The Company recorded transactional recurring revenues of $333 million for the year ended December 31, 2023. Included in transactional recurring revenues are revenues related to payment processing services provided to customers that enable donations and the purchase of goods and services. As discussed in Note 2 to the consolidated financial statements, the Company recognizes revenue for payment processing services over time based on the amount billable to the customer since it has the right to invoice the customer in an amount that directly corresponds with the value to the customer for the Company’s performance to date. The processing of transactions and recording of revenues for these services involves a significant volume of transactions that are highly automated and are based on contractual terms with the customer and the Company’s third-party vendors.

			Auditing the revenues for these payment processing services is complex because the processes are highly automated and involve multiple IT systems with a significant volume of transactions and related underlying data. Further, auditing the revenues for these payment processing services required the involvement of data professionals to assist in validating the integrity of the underlying data and recalculating the revenues recorded during the period.



How We Addressed the Matter in Our Audit			We obtained an understanding, evaluated the design, and tested the operating effectiveness of the Company’s controls over its payment processing services provided to customers that enable donations and the purchase of goods and services. We identified the relevant systems used in these payment processing services, including relevant third-party service organization systems, and evaluated the IT general controls over each of these systems. We also tested the relevant automated controls and other business processes controls.

			To test revenue recognized for payment processing services, our procedures included, among others, the involvement of data professionals to recalculate the revenue recognized. For a selection of payment processing transactions, we also agreed the amount of revenues recognized for processing fees retained by the Company to source documents and tested the mathematical accuracy of the recorded revenue. We also evaluated if the transactions were processed, and funds received prior to December 31, 2023, including sending confirmations directly to financial institutions.


(dollars in thousands, except per share amounts)	December 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	31,251	$	31,691
Restricted cash	697,006		702,240
Accounts receivable, net of allowance of $6,907 and $7,318 at December 31, 2023 and December 31, 2022, respectively	101,862		102,809
Customer funds receivable	353		249
Prepaid expenses and other current assets	99,285		81,654
Total current assets	929,757		918,643
Property and equipment, net	98,689		107,426
Operating lease right-of-use assets	36,927		45,899
Software and content development costs, net	160,194		141,023
Goodwill	1,053,738		1,050,272
Intangible assets, net	581,937		635,136
Other assets	51,037		94,304
Total assets	$	2,912,279	$	2,992,703
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	25,184	$	42,559
Accrued expenses and other current liabilities	64,322		86,002
Due to customers	695,842		700,860
Debt, current portion	19,259		18,802
Deferred revenue, current portion	392,530		382,419
Total current liabilities	1,197,137		1,230,642
Debt, net of current portion	760,405		840,241
Deferred tax liability	93,292		125,759
Deferred revenue, net of current portion	2,397		2,817
Operating lease liabilities, net of current portion	40,085		44,918
Other liabilities	10,258		4,294
Total liabilities	2,103,574		2,248,671
Commitments and contingencies (see Note 11)
Stockholders’ equity:
Preferred stock; 20,000,000 shares authorized; none outstanding	—		—
Common stock, $0.001 par value; 180,000,000 shares authorized; 69,188,304 and 67,814,044 shares issued at December 31, 2023 and December 31, 2022, respectively; 53,625,440 and 53,068,814 shares outstanding at December 31, 2023 and December 31, 2022, respectively	69		68
Additional paid-in capital	1,203,012		1,075,264
Treasury stock, at cost; 15,562,864 and 14,745,230 shares at December 31, 2023 and December 31, 2022, respectively	(591,557)		(537,287)
Accumulated other comprehensive (loss) income	(1,688)		8,938
Retained earnings	198,869		197,049
Total stockholders’ equity	808,705		744,032
Total liabilities and stockholders’ equity	$	2,912,279	$	2,992,703

The accompanying notes are an integral part of these consolidated financial statements.


	Years ended December 31,
(dollars in thousands)	2023		2022		2021
Cash flows from operating activities
Net income (loss)	$	1,820	$	(45,407)	$	5,698
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	109,487		102,369		82,410
Provision for credit losses and sales returns	4,500		6,066		11,450
Stock-based compensation expense	127,762		110,294		120,379
Deferred taxes	(24,368)		(26,644)		(2,429)
Amortization of deferred financing costs and discount	1,775		2,364		1,570
Other non-cash adjustments	5,023		5,676		10,490
Changes in operating assets and liabilities, net of acquisition and disposal of businesses:
Accounts receivable	(3,237)		(7,340)		(6,525)
Prepaid expenses and other assets	16,851		26,235		(2,048)
Trade accounts payable	(18,576)		21,607		(9,670)
Accrued expenses and other liabilities	(30,275)		(2,386)		(8,190)
Deferred revenue	8,872		11,059		10,526
Net cash provided by operating activities	199,634		203,893		213,661
Cash flows from investing activities
Purchase of property and equipment	(4,685)		(12,289)		(11,664)
Capitalized software and content development costs	(59,443)		(58,774)		(40,489)
Purchase of net assets of acquired companies, net of cash and restricted cash acquired	(13)		(20,912)		(419,120)
Cash received in sale of business	—		6,426		—


Other investing activities	(250)		—		—
Net cash used in investing activities	(64,391)		(85,549)		(471,273)
Cash flows from financing activities
Proceeds from issuance of debt	293,200		211,000		582,200
Payments on debt	(374,595)		(310,740)		(152,971)
Debt issuance costs	—		—		(3,106)
Stock issuance costs	—		(1,339)		—
Employee taxes paid for withheld shares upon equity award settlement	(35,867)		(36,376)		(39,404)

Change in due to customers	(6,812)		111,386		(13,464)
Change in customer funds receivable	(60)		380		(731)
Purchase of treasury stock	(18,831)		—		(108,416)
Net cash (used in) provided by financing activities	(142,965)		(25,689)		264,108
Effect of exchange rate on cash, cash equivalents and restricted cash	2,048		(10,486)		297
Net (decrease) increase in cash, cash equivalents and restricted cash	(5,674)		82,169		6,793
Cash, cash equivalents and restricted cash, beginning of year	733,931		651,762		644,969
Cash, cash equivalents and restricted cash, end of year	$	728,257	$	733,931	$	651,762

Supplemental disclosure of cash flow information
Cash paid for interest	$	(38,052)	$	(33,371)	$	(16,386)
Cash (paid) for taxes, net of refunds	(35,619)		(9,670)		(10,073)
Non-cash investing and financing activities:
Purchase of EVERFI through the issuance of stock (see Note 3)	—		—		(303,633)

Purchase of software and services by assuming directly related liabilities	(2,491)		(1,710)		—
Purchase of equipment and other assets included in accounts payable	(837)		(158)		(1,747)


(dollars in thousands)	Common stock			Treasury stock			Additional paid-in capital		Accumulated other comprehensive (loss) income		Retained earnings		Total stockholders' equity
	Shares	Amount		Shares	Amount
Balance at December 31, 2020	60,904,638	$	61	(12,054,268)	$	(353,091)	$	544,963	$	(2,497)	$	236,714	$	426,150
Net income	—	—		—	—		—		—		5,698		5,698
Common stock issued in purchase of EVERFI (see Note 3)	3,844,423	4		—	—		303,629		—		—		303,633
Purchase of treasury shares under stock repurchase program	—	—		(1,592,933)	(108,416)		—		—		—		(108,416)
Vesting of restricted stock units	1,014,562	1		—	—		—		—		—		1
Shares withheld to satisfy tax withholdings	—	—		(535,604)	(39,404)		—		—		—		(39,404)
Stock-based compensation	—	—		—	—		120,335		—		44		120,379
Restricted stock grants	596,763	—		—	—		—		—		—		—
Restricted stock cancellations	(194,720)	—		—	—		—		—		—		—
Other comprehensive income	—	—		—	—		—		9,019		—		9,019
Balance at December 31, 2021	66,165,666	$	66	(14,182,805)	$	(500,911)	$	968,927	$	6,522	$	242,456	$	717,060
Net loss	—	—		—	—		—		—		(45,407)		(45,407)
Stock issuance costs related to purchase of EVERFI (see Note 3)	—	—		—	—		(1,352)		—		—		(1,352)
Retirements of common stock(1)	(33,535)	—		—	—		(2,605)		—		—		(2,605)

Vesting of restricted stock units	1,015,304	—		—	—		—		—		—		—
Shares withheld to satisfy tax withholdings	—	—		(562,425)	(36,376)		—		—		—		(36,376)
Stock-based compensation	—	—		—	—		110,294		—		—		110,294
Restricted stock grants	846,295	2		—	—		—		—		—		2
Restricted stock cancellations	(179,686)	—		—	—		—		—		—		—
Other comprehensive income	—	—		—	—		—		2,416		—		2,416
Balance at December 31, 2022	67,814,044	$	68	(14,745,230)	$	(537,287)	$	1,075,264	$	8,938	$	197,049	$	744,032
Net income	—	—		—	—		—		—		1,820		1,820

Retirements of common stock(1)	(143)	—		—	—		(14)		—		—		(14)
Purchase of treasury shares under stock repurchase program	—	—		(221,836)	(18,831)		—		—		—		(18,831)
Vesting of restricted stock units	1,007,921	—		—	—		—		—		—		—
Shares withheld to satisfy tax withholdings	—	—		(595,798)	(35,439)		—		—		—		(35,439)
Stock-based compensation	—	—		—	—		127,762		—		—		127,762
Restricted stock grants	473,341	1		—	—		—		—		—		1
Restricted stock cancellations	(106,859)	—		—	—		—		—		—		—
Other comprehensive loss	—	—		—	—		—		(10,626)		—		(10,626)
Balance at December 31, 2023	69,188,304	$	69	(15,562,864)	$	(591,557)	$	1,203,012	$	(1,688)	$	198,869	$	808,705


	Basis of amortization	Amortization period (in years)
Customer relationships	Straight-line and Curve of Economic Benefit(1)	10-17
Marketing assets	Straight-line and Curve of Economic Benefit(1)	14-15
Developed technology	Straight-line and Curve of Economic Benefit(1)	3-14
Content	Straight-line	9


Years ended December 31, (in thousands)	Balance at beginning of year		Provision/ adjustment		Write-off		Recovery		Balance at end of year
2023	$	6,022	$	2,012	$	(2,539)	$	601	$	6,096
2022	9,375		1,281		(5,162)		528		6,022
2021	9,016		4,483		(4,565)		441		9,375