Document

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



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

For the quarterly period ended March 31, 2020



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

For the transition period from to

Commission File Number: 001-34846

RealPage, Inc.

(Exact name of registrant as specified in its charter)



Delaware		75-2788861
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2201 Lakeside Boulevard, Richardson, Texas 75082-4305

(Address of principal executive offices)

(Zip Code)

(972) 820-3000

(Registrant’s telephone number, including area code)

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	RP	The NASDAQ Stock Market LLC

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

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

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



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class		April 24, 2020
Common Stock, $0.001 par value		96,206,957

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INDEX



PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited)	1
Condensed Consolidated Statements of Operations (Unaudited)	2
Condensed Consolidated Statements of Comprehensive Income (Unaudited)	3
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	4
Condensed Consolidated Statements of Cash Flows (Unaudited)	6
Notes to the Condensed Consolidated Financial Statements (Unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3. Quantitative and Qualitative Disclosures About Market Risk	46
Item 4. Controls and Procedures	47
PART II—OTHER INFORMATION
Item 1. Legal Proceedings	48
Item 1A. Risk Factors	49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 6. Exhibits	53
SIGNATURES AND EXHIBIT INDEX
Exhibit Index	54
Signatures	54

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

RealPage, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except per share and share amounts)



	March 31, 2020			December 31, 2019
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	184,309		$	197,154
Restricted cash	241,310			243,323
Accounts receivable, less allowances of $10,622 and $10,271 at March 31, 2020 and December 31, 2019, respectively	131,613			143,127
Prepaid expenses	26,886			24,539
Other current assets	27,519			27,387
Total current assets	611,637			635,530
Property, equipment, and software, net	165,957			163,282
Right-of-use assets	118,741			121,941
Goodwill	1,663,142			1,611,749
Intangible assets, net	369,942			372,996
Deferred tax assets, net	34,249			33,812
Other assets	28,819			30,507
Total assets	$	2,992,487		$	2,969,817
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	40,210		$	40,092
Accrued expenses and other current liabilities	87,337			89,038
Current portion of deferred revenue	137,904			134,148
Current portion of term loans	22,500			18,750
Customer deposits held in restricted accounts	241,759			243,316
Total current liabilities	529,710			525,344
Deferred revenue	4,490			4,793
Revolving facility	230,000			230,000
Term loans, net	567,942			575,313
Convertible notes, net	308,389			305,188
Lease liabilities, net of current portion	131,099			133,313
Other long-term liabilities	30,014			22,940
Total liabilities	1,801,644			1,796,891
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $0.001 par value: 10,000,000 shares authorized and zero shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively	—			—
Common stock, $0.001 par value: 250,000,000 shares authorized, 96,288,420 and 96,100,296 shares issued and 96,277,515 and 94,744,157 shares outstanding at March 31, 2020 and December 31, 2019, respectively	96			96
Additional paid-in capital	1,199,209			1,222,356
Treasury stock, at cost: 10,905 and 1,356,139 shares at March 31, 2020 and December 31, 2019, respectively	(104		)	(39,483		)
Accumulated deficit	(2,090		)	(7,695		)
Accumulated other comprehensive loss	(6,268		)	(2,348		)
Total stockholders’ equity	1,190,843			1,172,926
Total liabilities and stockholders’ equity	$	2,992,487		$	2,969,817

See accompanying notes.

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RealPage, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

(unaudited)



	Three Months Ended March 31,
	2020			2019
Revenue:
On demand	$	268,471		$	226,519
Professional and other	8,202			7,787
Total revenue	276,673			234,306
Cost of revenue	108,910			90,194
Amortization of product technologies	13,772			9,514
Gross profit	153,991			134,598
Operating expenses:
Product development	31,548			29,897
Sales and marketing	54,657			44,823
General and administrative	40,528			28,143
Amortization of intangible assets	11,419			9,836
Total operating expenses	138,152			112,699
Operating income	15,839			21,899
Interest expense and other, net	(12,735		)	(5,980		)
Income before income taxes	3,104			15,919
Income tax (benefit) expense	(2,501		)	4,647
Net income	$	5,605		$	11,272

Net income per share attributable to common stockholders:
Basic	$	0.06		$	0.12
Diluted	$	0.06		$	0.12
Weighted average common shares outstanding:
Basic	92,654			91,490
Diluted	95,919			95,561

See accompanying notes.

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RealPage, Inc.

Condensed Consolidated Statements of Comprehensive Income

(in thousands)

(unaudited)



	Three Months Ended March 31,
	2020			2019
Net income	$	5,605		$	11,272
Other comprehensive loss:
Unrealized loss on derivative instruments, net of tax	(3,549		)	(586		)
Reclassification adjustment for losses (gains) included in earnings on derivative instruments, net of tax	134			(220		)
Foreign currency translation adjustment	(505		)	(99		)
Other comprehensive loss, net of tax	(3,920		)	(905		)
Comprehensive income	$	1,685		$	10,367

See accompanying notes.

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RealPage, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)



	Three-Month Period Ended March 31, 2020

	Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock					Total Stockholders’ Equity
	Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Shares		Amount			Total Stockholders’ Equity
Balance as of January 1, 2020	96,100	$	96	$	1,222,356		$	(2,348	)	$	(7,695	)	1,356		$	(39,483	)	$	1,172,926
Stock option exercises	188	—		350			—			—			(151	)	4,556			4,906
Issuance of restricted stock	—	—		(40,449		)	—			—			(1,345	)	40,449			—
Treasury stock purchased, at cost	—	—		2,133			—			—			151		(5,626		)	(3,493		)
Stock-based compensation	—	—		14,819			—			—			—		—			14,819
Other comprehensive loss - derivative instruments	—	—		—			(3,415		)	—			—		—			(3,415		)
Foreign currency translation	—	—		—			(505		)	—			—		—			(505		)
Net income	—	—		—			—			5,605			—		—			5,605
Balance as of March 31, 2020	96,288	$	96	$	1,199,209		$	(6,268	)	$	(2,090	)	11		$	(104	)	$	1,190,843

See accompanying notes.

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RealPage, Inc.

Condensed Consolidated Statements of Stockholders’ Equity, continued

(in thousands)

(unaudited)



	Three-Month Period Ended March 31, 2019

	Common Stock			Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Treasury Stock					Total Stockholders’ Equity
	Shares	Amount		Additional Paid-in Capital			Accumulated Other Comprehensive Loss			Accumulated Deficit			Shares		Amount			Total Stockholders’ Equity
Balance as of January 1, 2019	95,991	$	96	$	1,187,683		$	(492	)	$	(58,793	)	2,341		$	(65,470	)	$	1,063,024
Cumulative effect of adoption of ASU 2017-12	—	—		—			25			(25		)	—		—			—
Stock option exercises	7	—		(837		)	—			—			(89	)	2,714			1,877
Issuance of restricted stock	—	—		(34,456		)	—			—			(1,130	)	34,456			—
Treasury stock purchased, at cost	—	—		437			—			—			143		(5,453		)	(5,016		)
Stock-based compensation	—	—		15,123			—			—			—		—			15,123
Other comprehensive loss- derivative instruments	—	—		—			(806		)	—			—		—			(806		)
Foreign currency translation	—	—		—			(99		)	—			—		—			(99		)
Net income	—	—		—			—			11,272			—		—			11,272
Balance as of March 31, 2019	95,998	$	96	$	1,167,950		$	(1,372	)	$	(47,546	)	1,265		$	(33,753	)	$	1,085,375

See accompanying notes.

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RealPage, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)



	Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net income	$	5,605		$	11,272
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	33,562			27,824
Amortization of debt discount and issuance costs	3,474			3,234
Amortization of right-of-use assets	3,603			3,005
Deferred taxes	(2,992		)	2,550
Stock-based expense	16,201			14,913
Loss on disposal and impairment of other long-lived assets	12			286
Change in fair value of equity investment	—			(2,600		)
Acquisition-related consideration	489			405
Changes in assets and liabilities, net of assets acquired and liabilities assumed in business combinations:
Accounts receivable	12,674			(983		)
Prepaid expenses and other current assets	(2,199		)	3,197
Other assets	1,553			185
Accounts payable	(887		)	4,001
Accrued compensation, taxes, and benefits	(4,290		)	(10,603		)
Deferred revenue	2,077			90
Customer deposits	(5,007		)	(50,252		)
Other current and long-term liabilities	(2,293		)	(2,532		)
Net cash provided by operating activities	61,582			3,992
Cash flows from investing activities:
Purchases of property, equipment, and software	(13,254		)	(10,873		)
Acquisition of businesses, net of cash and restricted cash acquired	(59,462		)	—
Net cash used in investing activities	(72,716		)	(10,873		)
Cash flows from financing activities:
Payments on term loans	(3,750		)	(4,033		)
Payments on finance lease obligations	(811		)	(769		)
Payments of acquisition-related consideration	(45		)	(11,412		)
Proceeds from exercise of stock options	4,906			1,877
Purchase of treasury stock related to stock-based compensation	(3,493		)	(5,016		)
Other financing activities, net	(26		)	—
Net cash used in financing activities	(3,219		)	(19,353		)
Net decrease in cash, cash equivalents and restricted cash	(14,353		)	(26,234		)
Effect of exchange rate on cash	(505		)	(99		)
Cash, cash equivalents and restricted cash:
Beginning of period	440,477			382,758
End of period	$	425,619		$	356,425

See accompanying notes.

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RealPage, Inc.

Condensed Consolidated Statements of Cash Flows, continued

(in thousands)

(unaudited)



	Three Months Ended March 31,
	2020		2019
Supplemental cash flow information:
Cash paid for interest	$	7,152	$	1,378
Cash paid for income taxes, net	$	652	$	138
Right-of-use assets obtained in exchange for operating lease obligations	$	1,392	$	—
Non-cash investing and financing activities:
Accrued property, equipment, and software	$	3,146	$	1,805

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets and that shown in the Condensed Consolidated Statements of Cash Flows:
	March 31, 2020		December 31, 2019
Cash and cash equivalents	$	184,309	$	197,154
Restricted cash	241,310		243,323
Total cash, cash equivalents and restricted cash shown in the Condensed Consolidated Statements of Cash flows	$	425,619	$	440,477

See accompanying notes.

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RealPage, Inc.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

1. The Company

RealPage, Inc., a Delaware corporation (together with its subsidiaries, the “Company” or “we” or “us”), is a leading global provider of software and data analytics to the real estate industry. Our platform of data analytics and software solutions enables the rental real estate industry to manage property operations (such as marketing, pricing, screening, leasing, payment processing and accounting), identify opportunities through market intelligence, and obtain data-driven insight for better operational and financial decision-making. Our integrated, on demand platform provides a single point of access and a massive repository of real-time lease transaction data, including prospect, renter, and property data. By leveraging data as well as integrating and streamlining a wide range of complex processes and interactions among the rental real estate ecosystem (owners, managers, prospects, renters, service providers, and investors), our platform helps our clients improve financial and operational performance and prudently place and harvest capital.

We are closely monitoring the impact of the COVID-19 virus (“COVID-19”) pandemic on various aspects of our business. COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020, and the President of the United States declared the COVID-19 outbreak a national emergency. While the COVID-19 pandemic has not had a material adverse impact on our operations to date, the future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving. It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affected, and the resulting economic impact may materially affect our future results of operations, cash flows and financial position, as well as the financial health of our customers.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements and footnotes have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. We believe that the disclosures made are appropriate and conform to those rules and regulations, and that the condensed or omitted information is not misleading.

The unaudited Condensed Consolidated Financial Statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. All intercompany balances and transactions have been eliminated in consolidation. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year.

These financial statements should be read in conjunction with the financial statements and the notes thereto included in our Annual Report on Form 10-K filed with the SEC on March 2, 2020 (“Annual Report on Form 10-K”).

Concentrations of Credit Risk

Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash and cash equivalents and accounts receivable. Our cash accounts are maintained at various high credit quality financial institutions and may exceed federally insured limits. We have not experienced any losses in such accounts.

Substantially all of our accounts receivable are derived from clients in the residential rental housing market. Concentrations of credit risk with respect to accounts receivable and revenue have historically been limited because our customers are geographically dispersed across primarily the United States. Furthermore, no single client accounted for 10% or more of our revenue or accounts receivable for the three months ended March 31, 2020 or 2019. We do not require collateral from clients.

The financial health of our customers, including their ability to generate cash flows sufficient to meet their obligations to us, is dependent on among other things the ability of their residents to meet their lease obligations on a consistent and timely basis. A portion of those residents have already been, or may in the future be, affected by the general business closures and limitations resulting from the COVID-19 pandemic. The degree to which our customers will be adversely affected by COVID-19 is not yet known and will be affected by several factors including the severity and duration of the outbreak and the effect of government subsidies provided to both residents, owners and managers of rental properties.

We maintain an allowance for credit losses based upon the expected collectability of accounts receivable using historical loss rates adjusted for forward-looking assumptions based on management’s judgments. Such reserves may not be sufficient if

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the effects of COVID-19 are significant. We have not recognized additional allowances as a result of COVID-19 for the three months ended March 31, 2020, because it is too early to estimate the amount, if any, of such additional reserves that may be required in the future. We are working closely with our customers to help them address the operational challenges they face as a result of COVID-19, and we will adjust our estimates of reserves for credit losses in future periods as appropriate.

Segment and Geographic Information

Our chief operating decision maker is our Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Accordingly, we have determined we operate as a single reporting segment and operating unit structure.

Principally, all of our revenue for the three months ended March 31, 2020 and 2019 was earned in the United States. Net property, equipment, and software located in the United States amounted to $157.2 million and $154.5 million at March 31, 2020 and December 31, 2019, respectively. Net property, equipment, and software located in our international subsidiaries amounted to $8.8 million and $8.8 million at March 31, 2020 and December 31, 2019, respectively. Substantially all of the net property, equipment, and software held in our international subsidiaries was located in the Philippines, India, and Spain at both March 31, 2020 and December 31, 2019.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the amounts reported and disclosed in the financial statements and accompanying notes. Such significant estimates include, but are not limited to, the determination of the allowances against our accounts receivable; useful lives of intangible assets; impairment assessments on long-lived assets (including goodwill and indefinite-lived intangible assets); contingent commissions related to the sale of insurance products; fair value of acquired net assets and contingent consideration in connection with business combinations; the nature and timing of satisfaction of performance obligations and related reserves; fair values of stock-based awards; loss contingencies; and the recognition, measurement and valuation of current and deferred income taxes. Actual results could differ from these estimates. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable, the result of which forms the basis for making judgments about the carrying value of assets and liabilities. For greater detail regarding these accounting policies and estimates, refer to our Annual Report on Form 10-K.

The COVID-19 pandemic did not have a material impact on our financial results for the three months ended March 31, 2020, because the outbreak did not significantly affect business activities in the U.S. until mid-March 2020, and because we were able to continue to provide our services employing work-from-home strategies without any significant interruption in those services. We have considered COVID-19 in preparing the estimates used in the preparation of our financial statements for the three months ended March 31, 2020, but the ultimate effect on our financial results and those of our customers in the near and long term is uncertain. We will continue to revise our estimates in future periods for additional changes brought about by the evolving COVID-19 pandemic or other issues as additional information becomes available.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments with an initial maturity of three months or less at the date of purchase to be cash equivalents. The fair value of our cash and cash equivalents approximates carrying value.

Restricted cash primarily consists of cash collected from tenants that will be remitted to our clients.

Accounts Receivable

Accounts receivable primarily represent trade receivables from clients recorded at the invoiced amount, net of allowances, which are based on our historical experience, the aging of our trade receivables, and management judgment.

Trade receivables are written off against the allowance when management determines a balance is uncollectible. We incurred bad debt expense of $0.5 million and $1.1 million for the three months ended March 31, 2020 and 2019, respectively.

Internally Developed Software

Costs incurred to develop software intended for our internal use are capitalized during the application development stage. Capitalization of such costs ceases once the project is substantially complete and ready for its intended use. We also capitalize costs related to specific upgrades and enhancements when it is probable the expenditure will result in additional functionality. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred.

Internally developed software costs are included in “Property, equipment, and software, net” in the accompanying Condensed Consolidated Balance Sheets and are amortized on a straight-line basis over their expected useful lives. Amortization of internally developed software is included in “Amortization of product technologies” in the accompanying Condensed Consolidated Statements of Operations.

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Business Combinations

We allocate the fair value of the purchase consideration of our acquisitions to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Purchase consideration includes assets transferred, liabilities assumed, and/or equity interests issued by us, all of which are measured at their fair value as of the date of acquisition. Our business combination transactions may be structured to include a combination of up-front, deferred and contingent payments to be made at specified dates subsequent to the date of acquisition. These payments may include a combination of cash and equity. Deferred and contingent payments determined to be purchase consideration are recorded at fair value as of the acquisition date. Deferred obligations are generally subject to adjustments specified in the underlying purchase agreement related to the seller’s indemnification obligations. Contingent consideration is an obligation to make future payments to the seller contingent upon the achievement of future operational or financial targets.

The valuation of the net assets acquired as well as certain elements of purchase consideration requires management to make significant estimates and assumptions, especially with respect to future expected cash flows, useful lives, and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain, and, as a result, actual results may differ from estimates. During the measurement period, we may record adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill. Changes to the fair value of contingent payments is reflected in “General and administrative” costs in the accompanying Condensed Consolidated Statements of Operations.

Acquisition costs are expensed as incurred and are included in “General and administrative” in the accompanying Condensed Consolidated Statements of Operations. We include the results of operations from acquired businesses in our consolidated financial statements from the effective date of the acquisition.

Goodwill and Indefinite-Lived Intangible Assets

We test goodwill and indefinite-lived intangible assets for impairment separately on an annual basis in the fourth quarter of each year, or more frequently if circumstances indicate that the assets may not be recoverable.

We evaluate impairment of goodwill either by assessing qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or by performing a quantitative assessment. Qualitative factors include industry and market considerations, overall financial performance, and other relevant events and circumstances affecting the reporting unit. If we choose to perform a qualitative assessment and after considering the totality of events or circumstances, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we would perform a quantitative fair value test. Our quantitative impairment assessment utilizes a weighted combination of a discounted cash flow model (known as the income approach) and comparisons to publicly traded companies engaged in similar businesses (known as the market approach). These approaches involve judgmental assumptions, including forecasted future cash flows expected to be generated by the business over an extended period of time, long-term growth rates, the identification of comparable companies, and our discount rate based on our weighted average cost of capital. These assumptions are predominately unobservable inputs and considered Level 3 measurements. We adopted ASU 2017-04, Intangibles - Goodwill and Other, which simplifies the testing for goodwill impairment by eliminating the requirement to determine the fair value of individual assets and liabilities of a reporting unit to measure goodwill impairment, prospectively on January 1, 2020. To calculate any potential impairment, we compare the fair value of a reporting unit with its carrying amount, including goodwill. Any excess of the carrying amount of the reporting unit over its fair value is recognized as an impairment loss, and the carrying value of goodwill is written down. For purposes of goodwill impairment testing, we have one reporting unit.

We quantitatively evaluate indefinite-lived intangible assets by estimating the fair value of those assets based on estimated future earnings derived from the assets using the income approach. Key assumptions for this assessment include forecasted future cash flows from estimated royalty rates and our discount rate based on our weighted average cost of capital. These assumptions are unobservable Level 3 measurements, as described in Note 13 of our Condensed Consolidated Financial Statements. Assets with indefinite lives that have been determined to be inseparable due to their interchangeable use are grouped into single units of accounting for purposes of testing for impairment. If the carrying amount of an identified intangible asset with an indefinite life exceeds its fair value, we would recognize an impairment loss equal to the excess of carrying value over fair value.

Leases

We determine if an arrangement contains a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and the corresponding lease liabilities represent its obligation to make lease payments arising from the lease. Our ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The ROU asset is reduced for tenant incentives and excludes any initial direct costs incurred. For our real estate contracts with lease and non-lease components, we have elected to combine the lease and non-lease components as a single lease component. The implicit rate within our leases are generally not readily

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determinable, and we use our incremental borrowing rate at the lease commencement date to determine the present value of lease payments. The determination of our incremental borrowing rate requires judgment. We determine our incremental borrowing rate for each lease using our current borrowing rate, adjusted for various factors including collateralization and term to align with the terms of the lease. Certain of our leases include options to extend the lease. Our lease values include options to extend the lease when it is reasonably certain we will exercise such options.

Operating and finance leases are included in “Right-of-use assets”, “Accrued expenses and other current liabilities”, and “Lease liabilities, net of current portion” in the accompanying Condensed Consolidated Balance Sheets.

Lease expenses for minimum lease payments for operating leases are recognized on a straight-line basis over the lease term. Amortization expense of the ROU asset for finance leases is recognized on a straight-line basis over the lease term and interest expense for finance leases is recognized based on the incremental borrowing rate.

We have elected not to recognize a lease liability or ROU asset for short-term leases, defined as those which have a term of twelve months or less.

Deferred Revenue

For several of our solutions, we invoice our clients in annual, monthly, or quarterly installments in advance of the commencement of the service period. Deferred revenue is recognized when billings are due or payments are received in advance of revenue recognition from our subscription and other services. Accordingly, the deferred revenue balance does not represent the total contract value of annual subscription agreements.

Revenue Recognition

Revenues are derived from on demand software solutions, professional services and other goods and services. We recognize revenue as we satisfy one or more service obligations under the terms of a contract, generally as control of goods and services are transferred to our clients. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. We include estimates of variable consideration in revenue to the extent that it is probable that a significant reversal of cumulative revenue will not occur. We estimate and accrue a reserve for credits and other adjustments as a reduction to revenue based on several factors, including past history.

On Demand Revenue

Our on demand revenue consists of license and subscription fees, transaction and payment processing fees related to certain of our software-enabled value-added services, and commissions derived from our selling certain risk mitigation services.

We generally recognize revenue from subscription fees on a straight-line basis over the access period beginning on the date that we make our service available to the client. Our subscription agreements generally are non-cancellable, have an initial term of one year or longer and are billed either monthly, quarterly or annually in advance. Non-refundable upfront fees billed at the initial order date that are not associated with an upfront service obligation are recognized as revenue on a straight-line basis over the period in which the client is expected to benefit, which we consider to be three years.

We recognize revenue from transaction fees in the month the related services are performed based on the amount we have the right to invoice.

We offer risk mitigation services to our clients by acting as an insurance agent and derive commission revenue from the sale of insurance products to our clients’ residents. The commissions are based upon a percentage of the premium that the insurance company charges to the policyholder and are subject to forfeiture in instances where a policyholder cancels prior to the end of the policy. Our contracts with our underwriting partners provide for contingent commissions to be paid to us in accordance with the agreements. Our estimate of contingent commission revenue considers the variable factors identified in the terms of the applicable agreement. We recognize commissions related to these services as earned ratably over the policy term and insurance commission receivable in “Accounts receivable, less allowances”.

Professional and Other Revenue

Professional services and other revenues generally consist of the fees we receive for providing implementation and consulting services, submeter equipment and ongoing maintenance of our existing on premise licenses.

Professional services are billed either on a time and materials basis or on a fixed price basis, and revenue is recognized over time as we perform the obligation. Professional services are typically sold bundled in a contract with other on demand solutions but may be sold separately. Professional service contracts sold separately generally have terms of one year or less. For bundled arrangements, where we account for individual services as a separate performance obligation, the transaction price is allocated between separate services in the bundle based on their relative standalone selling prices.

Other revenues consist primarily of submeter equipment sales that include related installation services. Such sales are considered bundled, and revenue from these bundled sales is recognized in proportion to the number of installed units

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completed to date as compared to the total contracted number of units to be provided and installed. For all other equipment sales, we generally recognize revenue when control of the hardware has transferred to our client.

Revenue recognized for on premise software sales generally consists of annual maintenance renewals on existing term or perpetual license, which is recognized ratably over the service period.

Contracts with Multiple Performance Obligations

The majority of the contracts we enter into with clients, including multiple contracts entered into at or near the same time with the same client, require us to provide one or more on demand software solutions, professional services and may include equipment. For these contracts, we account for individual performance obligations separately: i) if they are distinct or ii) if the promised obligations represent a series of distinct services that are substantially the same and have the same pattern of transfer to the client. Once we determine the performance obligations, we determine the transaction price, which includes estimating the amount of variable consideration, if any, to be included in the transaction price. For contracts with multiple performance obligations, we allocate the transaction price to the separate performance obligations on a relative standalone selling price basis. The standalone selling prices of our service are estimated using a market assessment approach based on our overall pricing objectives taking into consideration market conditions and other factors including the number of solutions sold, client demographics and the number and types of users within our contracts.

Sales, value add, and other taxes we collect from clients and remit to governmental authorities are excluded from revenues.

Fair Value Measurements

We measure our financial instruments and acquisition-related contingent consideration obligations at fair value at each reporting period using a fair value hierarchy. A financial instrument’s classification within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

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

Level 2 - Inputs are quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable, and market-corroborated inputs which are derived principally from or corroborated by observable market data.

Level 3 - Inputs are derived from valuation techniques in which one or more of the significant inputs or value drivers are unobservable.

The categorization of an asset or liability is based on the inputs described above and does not necessarily correspond to our perceived risk of that asset or liability. Moreover, the methods used by us may produce a fair value calculation that is not indicative of the net realizable value or reflective of future fair values. Furthermore, although we believe our valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments and non-financial assets and liabilities could result in a different fair value measurement at the reporting date.

Certain financial instruments, which may include cash, cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses are recorded at their carrying amounts, which approximates their fair values due to their short-term nature.

We hold an equity investment which does not have a readily determinable fair value. We measure this investment at cost less impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

Recently Adopted Accounting Standards

Accounting Standards Update 2016-13

In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU replaced the incurred loss impairment methodology in GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Our financial assets in the scope of ASU 2016-13 mainly consist of short-term trade receivables. We have also considered contract assets in our evaluation. Historically, our actual credit losses have not been material. In addition to continuing to individually assess overdue customer balances for expected credit losses, we have implemented modifications to our historical methodology that reflect the expected credit losses on receivables considering both historical experience and forward-looking assumptions. We adopted ASU 2016-13 using the modified retrospective approach on January 1, 2020, resulting in no cumulative adjustment to retained

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earnings. The adoption of this ASU did not have a material impact on our Condensed Consolidated Financial Statements. We will continue to actively monitor the impact of the COVID-19 pandemic on expected credit losses.

The rollforward of the allowance for credit losses, a component of our allowance for accounts receivable, as of March 31, 2020 was as follows (in thousands):



Balance as of January 1, 2020	$	4,229
Provision for credit losses	823
Write-offs, net of recoveries	(305		)
Balance as of March 31, 2020	$	4,747

Accounting Standards Update 2018-15

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and early adoption is permitted. We adopted ASU 2018-15 prospectively as of January 1, 2020. The impact to our financial statements will depend on the nature of our future cloud computing arrangements, however this standard did not have a material impact on our financial statements as of March 31, 2020.

Accounting Standards Update 2020-04

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848). ASU 2020-04 contains practical expedients for activities related to reference rate reform that impact debt, leases, derivatives and other contracts. The guidance in ASU 2020-04 is optional and may be elected over time as reference rate reform activities occur. During the first quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We continue to evaluate the impact of the guidance and may apply other elections, as applicable, as additional changes in the market occur.

Recently Issued Accounting Standards

Accounting Standards Update 2019-12

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. ASU 2019-12 will be effective for interim and annual periods beginning after December 15, 2020. Early adoption is permitted. We are currently evaluating the impact of adopting this standard on our consolidated financial statements.

3. Acquisitions

2020 Acquisitions

On January 22, 2020, we entered into an Agreement and Plan of Merger, by which we acquired all of the outstanding stock of Modern Message Inc. (“Modern Message”), a provider of resident engagement solutions to the multifamily housing industry. Aggregate purchase consideration was $64.7 million, comprised of $62.7 million paid at closing and deferred cash obligations of up to $2.0 million, subject to working capital adjustments and indemnification claims. A portion of the deferred cash obligations will be released within 150 days of closing, a portion on the first anniversary of the closing, and the remainder on the second anniversary of closing. In addition, the Agreement and Plan of Merger provided for retention incentives for certain executives in the form of restricted stock grants that are tied to post-acquisition employment service. These shares were granted during the first quarter of 2020, and had an aggregate grant date fair value of $10.7 million which will be recognized as stock-based compensation over the requisite service period. The acquisition was financed with cash on hand.

The acquired identified intangible assets consisted of developed technology, client relationships, and trade names that were assigned estimated useful lives of five, nine and five years, respectively. Preliminary goodwill recognized of $49.3 million is primarily comprised of anticipated synergies from the expansion of our resident engagement platform. Goodwill and the acquired identified intangible assets are not deductible for tax purposes. Acquisition costs associated with this transaction totaled $0.3 million.

Purchase Consideration and Purchase Price Allocations

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The estimated fair values of assets acquired and liabilities assumed are provisional and are based primarily on the information available as of the acquisition date. We believe this information provides a reasonable basis for estimating the fair values of assets acquired and liabilities assumed, but we are awaiting additional information necessary to finalize those values. Therefore, the provisional measurements of fair value are subject to change, and such changes could be significant. We expect to finalize the valuation of these assets and liabilities as soon as practicable, but no later than one year from the acquisition closing date. The components of the purchase consideration and the preliminary allocation of purchase price as of March 31, 2020 is as follows:



	Modern Message
	(in thousands)
Fair value of purchase consideration:
Cash, net of cash acquired	$	62,710
Deferred obligations, net	2,008
Total fair value of purchase consideration	$	64,718

Fair value of net assets acquired:
Restricted cash	$	3,248
Accounts receivable	1,160
Intangible assets:
Developed product technologies	8,700
Client relationships	9,400
Trade names	700
Goodwill	49,268
Other assets	416
Accounts payable and accrued liabilities	(774		)
Client deposits held in restricted accounts	(3,450		)
Deferred revenue	(198		)
Deferred tax liability, net	(3,752		)
Total fair value of net assets acquired	$	64,718

2019 Acquisitions

We completed five acquisitions during fiscal year 2019. For the acquisitions in the table below, the estimated fair values of assets acquired and liabilities assumed are provisional. We expect to finalize the valuation of these assets and liabilities as soon as practicable, but no later than one year from the acquisition dates. The allocation of each purchase price, including effects of measurement period adjustments recorded as of March 31, 2020, is as follows:



		Date of Acquisition	Aggregate Purchase Price		Closing Cash Payment, Net of Cash Acquired		Net Tangible Assets Acquired (Liabilities Assumed)			Identified Intangible Assets		Goodwill Recognized
			(in thousands)
LeaseTerm Solutions	(Provisional)	Apr 2019	$	26,512	$	23,417	$	587		$	7,300	$	18,625
Hipercept	(Provisional)	Jul 2019	$	28,303	$	17,804	$	149		$	4,800	$	23,354
Simple Bills	(Provisional)	Jul 2019	$	18,149	$	14,875	$	(724	)	$	9,300	$	9,573
IMS	(Provisional)	Dec 2019	$	55,605	$	50,177	$	60		$	16,100	$	39,445
Buildium	(Provisional)	Dec 2019	$	569,431	$	566,241	$	(14,467	)	$	113,000	$	470,898

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Deferred Obligations and Contingent Consideration Activity

The following table presents changes in the Company’s deferred cash and stock obligations and contingent consideration for the three months ended March 31, 2020 and the year ended December 31, 2019:



	Deferred Cash and Stock Obligations			Contingent Consideration			Total
	(in thousands)
Balance at January 1, 2019	$	52,142		$	6,000		$	58,142
Additions, net of fair value discount	18,183			6,700			24,883
Cash payments	(25,215		)	(5,963		)	(31,178		)
Settlements through common stock issued	(14,846		)	—			(14,846		)
Accretion expense	1,540			58			1,598
Change in fair value	—			(259		)	(259		)
Indemnification claims and other adjustments	(57		)	—			(57		)
Balance at December 31, 2019	31,747			6,536			38,283
Additions, net of fair value discount	2,008			—			2,008
Cash payments	(45		)	—			(45		)
Accretion expense	267			51			318
Change in fair value	—			185			185
Indemnification claims and other adjustments	(266		)	—			(266		)
Balance at March 31, 2020	$	33,711		$	6,772		$	40,483

In May 2019, in connection with our April 2018 acquisitions of NovelPay, LLC (“NovelPay”) and ClickPay Services, Inc. (collectively with NovelPay, “ClickPay”), we issued an aggregate of 154,281 shares of our common stock to the equity holders of ClickPay. These shares are subject to a holdback with respect to indemnification and post-closing purchase price adjustments pursuant to the acquisition agreements.

In September 2019, we settled a deferred equity obligation with regard to our September 2018 acquisition of LeaseLabs, Inc. through the issuance of 80,012 shares of our common stock.

Pro Forma Results of Acquisitions

The following table presents unaudited pro forma results of operations for the three months ended March 31, 2020 and 2019, as if the aforementioned 2020 and 2019 acquisitions had occurred as of January 1, 2019 and 2018, respectively. The pro forma information includes the business combination accounting effects resulting from these acquisitions, including interest expense, tax expense or benefit, issuance of shares of our common stock, and additional amortization resulting from the valuation of amortizable intangible assets. We prepared the pro forma financial information for the combined entities for comparative purposes only, and it is not indicative of what actual results would have been if the acquisitions had occurred at the beginning of the periods presented, or of future results.



	Three Months Ended March 31, 2020 Pro Forma		Three Months Ended March 31, 2019 Pro Forma
	(unaudited)		(unaudited)
	(in thousands, except per share amounts)		(in thousands, except per share amounts)
Total revenue	$	277,155	$	255,528
Net income (loss)	$	6,170	$	(268	)
Net income (loss) per share:
Basic	$	0.07	$	0.00
Diluted	$	0.06	$	0.00

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4. Revenue Recognition

Disaggregation of Revenue

The following table presents our revenues disaggregated by major revenue source. Sales and usage-based taxes are excluded from revenues.



	Three Months Ended March 31,
	2020		2019
	(in thousands)
On demand
Property management	$	62,332	$	49,914
Resident services	119,085		96,804
Leasing and marketing	46,789		44,270
Asset optimization	40,265		35,531
Total on demand revenue	268,471		226,519

Professional and other	8,202		7,787
Total revenue	$	276,673	$	234,306

On Demand Revenue

We generate the majority of our on demand revenue by licensing software-as-a-service (“SaaS”) solutions to our clients on a subscription basis. Our SaaS solutions are provided pursuant to contractual commitments that typically include a promise that we will stand ready, on a monthly basis, to deliver access to our technology platform over defined service delivery periods. These solutions represent a series of distinct services that are substantially the same and have the same pattern of transfer to the client. Revenue from our SaaS solutions is generally recognized ratably over the term of the arrangement.

Consideration for our on demand subscription services consist of fixed, variable and usage-based fees. We invoice a portion of our fees at the initial order date and then monthly or annually thereafter. Subscription fees are generally fixed based on the number of sites and the level of services selected by the client.

We sell certain usage-based services, primarily within our property management, resident services and leasing and marketing solutions, to clients based on a fixed rate per transaction. Revenues are calculated based on the number of transactions processed monthly and will vary from month to month based on actual usage of these transaction-based services over the contract term, which is typically one year in duration. The fees for usage-based services are not associated with every distinct service promised in the series of distinct services we provide our clients. As a result, we allocate variable usage-based fees only to the related transactions and recognize them in the month that usage occurs.

As part of our resident services offerings, we offer risk mitigation services to our clients by acting as an insurance agent and we derive commission revenue from the sale of insurance products to our clients’ residents. The commissions are based upon a percentage of the premium that the insurance company underwriting partners charge to the policyholder and are subject to forfeiture in instances where a policyholder cancels prior to the end of the policy. The overall insurance services we provide represent a single performance obligation that qualifies as a separate series. Our contracts with our underwriting partners also provide for contingent commissions to be paid to us in accordance with the agreements. The contingent commissions are not associated with every distinct service promised in the series of distinct insurance services we provide. We generally accrue and recognize contingent commissions monthly based on estimates of the variable factors identified in the terms of the applicable agreements.

Professional Services and Other Revenues

Professional services revenues primarily consist of fees for implementation services, consulting services and training. Professional services are billed either on a fixed rate per hour (time) and materials basis or on a fixed price basis. Professional services are typically sold bundled in a contract with other on demand solutions but may be sold separately. For bundled arrangements, we allocate the transaction price to separate services based on their relative standalone selling prices if a service is separately identifiable from other items in the bundled arrangement and if a client can benefit from it on its own or with other resources readily available to the client.

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Other revenues consist of submeter equipment sales that include related installation services, sales of other equipment and on premise software sales. Submeter hardware and installation services are considered to be part of a single performance obligation due to the significance of the integration and interdependency of the installation services with the meter equipment. Our typical payment terms for submeter installations require a percentage of the overall transaction price to be paid upfront, with the remainder billed as progress payments. We recognize submeter revenue in proportion to the number of fully installed units completed to date as compared to the total contracted number of units to be provided and installed. For all other equipment sales, we generally recognize revenue when control of the hardware has transferred to our client, which occurs at a point in time, typically upon delivery to the client.

The majority of on premise revenue consists of maintenance renewals from clients who renew for an additional one-year term. Maintenance renewal revenue is recognized ratably over the service period based upon the standalone selling price of that service obligation.

Contract Balances

Contract assets generally consist of amounts recognized as revenue before they can be invoiced to clients or amounts invoiced to clients prior to the period in which the service is provided where the right to payment is subject to conditions other than just the passage of time. These contract assets are included in “Accounts receivable” in the accompanying Condensed Consolidated Financial Statements and related disclosures. Contract liabilities are comprised of billings or payments received from our clients in advance of performance under the contract. We refer to these contract liabilities as “Deferred revenue” in the accompanying Condensed Consolidated Financial Statements and related disclosures. We recognized revenue of $80.9 million for the three months ended March 31, 2020, which was included in the line “Deferred revenue” in the accompanying Condensed Consolidated Balance Sheet as of the beginning of the period.

Contract Acquisition Costs

We capitalize certain commissions as incremental costs of obtaining a contract with a client if we expect to recover those costs. The commissions are capitalized and amortized over a period of benefit determined to be three years. Below is a summary of our capitalized commissions costs and their respective locations in the accompanying Condensed Consolidated Balance Sheets:



	Balance Sheet Location	March 31, 2020		December 31, 2019
		(in thousands)
Capitalized commissions costs - current	Other current assets	$	10,054	$	9,870
Capitalized commissions costs - noncurrent	Other assets	8,566		8,463
Total capitalized commissions costs		$	18,620	$	18,333

Amortization of capitalized commissions was $2.8 million and $1.8 million for the three months ended March 31, 2020 and 2019, respectively. No impairment loss was recognized in relation to these capitalized costs.

Remaining Performance Obligations

Certain clients commit to purchase our solutions for terms ranging from two to seven years. We expect to recognize approximately $500.6 million of revenue in the future related to performance obligations for on demand contracts with an original duration greater than one year that were unsatisfied or partially unsatisfied as of March 31, 2020. Our estimate does not include amounts related to:


•	professional and usage-based services that are billed and recognized based on services performed in a certain period;


•	amounts attributable to unexercised contract renewals that represent a material right; or


•	amounts attributable to unexercised client options to purchase services that do not represent a material right.

We expect to recognize revenue on approximately 72.4% of the remaining performance obligations over the next 24 months, with the remainder recognized thereafter. Revenue from remaining performance obligations for professional service contracts as of March 31, 2020 was immaterial.

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5. Property, Equipment, and Software

Property, equipment, and software consisted of the following at March 31, 2020 and December 31, 2019:



	March 31, 2020			December 31, 2019
	(in thousands)
Leasehold improvements	$	68,619		$	70,558
Data processing and communications equipment	81,067			77,358
Furniture, fixtures, and other equipment	37,972			35,856
Software	167,466			157,832
Property, equipment, and software, gross	355,124			341,604
Less: Accumulated depreciation and amortization	(189,167		)	(178,322		)
Property, equipment, and software, net	$	165,957		$	163,282

Depreciation and amortization expense for property, equipment, and purchased software was $7.4 million and $7.5 million for the three months ended March 31, 2020 and 2019, respectively.

The unamortized amount of capitalized software development costs was $69.9 million and $66.5 million at March 31, 2020 and December 31, 2019, respectively. Amortization expense related to capitalized software development costs totaled $4.1 million and $3.2 million for the three months ended March 31, 2020 and 2019, respectively.

6. Leases

Our leases are primarily comprised of real estate leases of office facilities and equipment under operating leases that expire on various dates through 2033. In May 2015, we entered into a lease agreement for office space located in Richardson, Texas to serve as our corporate headquarters and data center. The lease, which is classified as a finance lease, is for a term of twelve years, beginning in 2016, and includes optional extension periods. The lease agreement contains provisions for rent escalations over the term of the lease and leasehold improvement incentives.

The components of lease costs for the three months ended March 31, 2020 and 2019 were as follows:



	Three Months Ended March 31,		Three Months Ended March 31,
	2020		2019
	(in thousands)
Operating lease cost	$	4,472	$	3,486

Finance lease cost:
Depreciation of finance lease asset	$	992	$	992
Interest on lease liabilities	1,030		1,045
Total finance lease cost	$	2,022	2,037

Rent expense for short-term leases for the three months ended March 31, 2020 and 2019 was not material.

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Supplemental balance sheet information related to leases at March 31, 2020, was as follows:



	Operating leases			Finance leases			Total leases
	(in thousands, except lease term and discount rate)
Right-of-use assets	$	65,493		$	53,248		$	118,741

Lease liabilities, current ⁽¹⁾	$	13,052		$	3,407		$	16,459
Lease liabilities, net of current portion	58,573			72,526			131,099
Total lease liabilities	$	71,625		$	75,933		$	147,558

Weighted average remaining term (in years)	5.8			13.4
Weighted average discount rate	4.8		%	5.4		%


⁽¹⁾	Included in the line “Accrued expenses and other current liabilities” in the accompanying Condensed Consolidated Balance Sheets.

Supplemental balance sheet information related to leases at December 31, 2019, was as follows:



	Operating leases			Finance leases			Total leases
	(in thousands, except lease term and discount rate)
Right-of-use assets	$	67,700		$	54,241		$	121,941

Lease liabilities, current ⁽¹⁾	$	12,873		$	3,254		$	16,127
Lease liabilities, net of current portion	59,822			73,491			133,313
Total lease liabilities	$	72,695		$	76,745		$	149,440

Weighted average remaining term (in years)	6.1			13.7
Weighted average discount rate	4.8		%	5.4		%


⁽¹⁾	Included in the line “Accrued expenses and other current liabilities” in the accompanying Condensed Consolidated Balance Sheets.

Supplemental cash flow information related to leases for the three months ended March 31, 2020 and 2019 was as follows, in thousands:



	Three Months Ended March 31,		Three Months Ended March 31,
	2020		2019
Cash payments for lease liabilities within operating activities:
Operating leases	$	3,048	$	3,658
Finance leases	$	1,030	$	1,045
Non-cash activity:
Right-of-use assets obtained in exchange for operating lease obligations	$	1,392	$	—

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At March 31, 2020, future maturities of lease liabilities due under these lease agreements were as follows for the years ending December 31, in thousands:



	Operating leases			Finance leases			Total leases
2020	$	12,613		$	4,979		$	17,592
2021	15,690			7,504			23,194
2022	13,695			7,609			21,304
2023	11,943			7,714			19,657
2024	9,941			7,819			17,760
Thereafter	18,471			72,214			90,685
Total undiscounted lease payments	82,353			107,839			190,192
Present value adjustment	(10,728		)	(31,906		)	(42,634		)
Present value of lease payments	$	71,625		$	75,933		$	147,558

7. Goodwill and Intangible Assets

Changes in the carrying amount of goodwill during the three months ended March 31, 2020 were as follows, in thousands:



Balance as of January 1, 2020	$	1,611,749
Goodwill acquired	49,268
Measurement period adjustments	2,125
Balance as of March 31, 2020	$	1,663,142

Identified intangible assets consisted of the following at March 31, 2020 and December 31, 2019:



	March 31, 2020							December 31, 2019
	Carrying Amount		Accumulated Amortization			Net		Carrying Amount		Accumulated Amortization			Net
	(in thousands)
Finite-lived intangible assets:
Developed technologies	$	286,003	$	(135,513	)	$	150,490	$	277,030	$	(125,537	)	$	151,493
Client relationships	349,838		(150,311		)	199,527		341,438		(140,044		)	201,394
Trade names	26,257		(17,539		)	8,718		25,557		(16,928		)	8,629
Non-compete agreements	5,273		(2,450		)	2,823		5,273		(2,186		)