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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________
FORM 10-Q
_____________________________________________
 (Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to
Commission file number: 001-33520
_____________________________________________
COMSCORE, INC.
(Exact name of registrant as specified in its charter)
_____________________________________________
Delaware 54-1955550
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification Number)

11950 Democracy Drive, Suite 600
Reston, Virginia 20190
(Address of Principal Executive Offices)
(703438-2000
(Registrant's Telephone Number, Including Area Code)
_____________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of Each ClassTrading SymbolName of Each Exchange on Which Registered
Common Stock, par value $0.001 per shareSCORNASDAQ Global Select Market
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, a 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 registrant's classes of common stock, as of the latest practicable date: As of May 6, 2022, there were 90,705,342 shares of the registrant's Common Stock outstanding.


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COMSCORE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2022
TABLE OF CONTENTS
 



Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We may make certain statements, including in this Quarterly Report on Form 10-Q, or 10-Q, including the information contained in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations", and the information incorporated by reference in this 10-Q, that constitute forward-looking statements within the meaning of federal and state securities laws. Forward-looking statements are all statements other than statements of historical fact. We attempt to identify these forward-looking statements by words such as "may," "will," "should," "could," "might," "expect," "plan," "anticipate," "believe," "estimate," "target," "goal," "predict," "intend," "potential," "continue," "seek" and other comparable words. Similarly, statements that describe our business strategy, goals, prospects, opportunities, outlook, objectives, plans or intentions are also forward-looking statements. These statements may relate to, but are not limited to, expectations of future operating results or financial performance; expectations regarding the impact on our business of the coronavirus ("COVID-19") pandemic and global measures to mitigate the spread of the virus; macroeconomic trends that we expect may influence our business, including any recession or changes in consumer behavior resulting from the COVID-19 pandemic; plans for financing and capital expenditures; expectations regarding liquidity, customer payments and compliance with debt and financing covenants and other payment obligations; expectations regarding enhanced commercial relationships and the development and introduction of new products; potential limitations on our net operating loss carryforwards and other tax assets; regulatory compliance and expected changes in the regulatory or privacy landscape affecting our business; expected impact of litigation and regulatory proceedings; and plans for growth and future operations, as well as assumptions relating to the foregoing.
Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. These statements are based on expectations and assumptions as of the date of this 10-Q regarding future events and business performance and involve known and unknown risks, uncertainties and other factors that may cause actual events or results to be materially different from any future events or results expressed or implied by these statements. These factors include those set forth in the following discussion and within Item 1A, "Risk Factors" of this 10-Q and elsewhere within this report; those identified within Item 1A, "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2021; and those identified in other documents that we file from time to time with the U.S. Securities and Exchange Commission, or SEC.
We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. You should not place undue reliance on forward-looking statements, which apply only as of the date of this 10-Q. You should carefully review the risk factors described in this 10-Q and in other documents that we file from time to time with the SEC. Except as required by applicable law, including the rules and regulations of the SEC, we undertake no obligation, and expressly disclaim any duty, to publicly update or revise forward-looking statements, whether as a result of any new information, future events or otherwise. Although we believe the expectations reflected in the forward-looking statements are reasonable as of the date of this 10-Q, our statements are not guarantees of future results, levels of activity, performance, or achievements, and actual outcomes and results may differ materially from those expressed in, or implied by, any of our statements.
i

Table of Contents


PART I. FINANCIAL INFORMATION
ITEM 1.FINANCIAL STATEMENTS
COMSCORE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
As ofAs of
March 31, 2022December 31, 2021
(In thousands, except share and par value data)(Unaudited)
Assets
Current assets:
Cash and cash equivalents$29,629 $21,854 
Restricted cash425 425 
Accounts receivable, net of allowances of $972 and $1,173, respectively ($2,311 and $3,606 of accounts receivable attributable to related parties, respectively)
64,618 72,059 
Prepaid expenses and other current assets14,378 14,769 
Total current assets109,050 109,107 
Property and equipment, net 35,600 36,451 
Operating right-of-use assets27,744 29,186 
Deferred tax assets 3,173 2,811 
Intangible assets, net 33,166 39,945 
Goodwill 435,473 435,711 
Other non-current assets11,507 10,263 
Total assets$655,713 $663,474 
Liabilities, Convertible Redeemable Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable ($10,028 and $6,575 attributable to related parties, respectively)
$29,124 $23,575 
Accrued expenses ($3,857 and $4,122 attributable to related parties, respectively)
38,393 45,264 
Contract liabilities ($3,748 and $3,553 attributable to related parties, respectively)
58,563 54,011 
Customer advances10,933 11,613 
Warrants liability8,085 10,520 
Current operating lease liabilities7,579 7,538 
Other current liabilities ($11,688 and $7,863 attributable to related parties, respectively)
18,251 12,850 
Total current liabilities170,928 165,371 
Non-current operating lease liabilities34,238 36,055 
Non-current portion of accrued data costs ($10,109 and $7,843 attributable to related parties, respectively)
18,195 16,005 
Revolving line of credit16,000 16,000 
Deferred tax liabilities2,762 2,103 
Other non-current liabilities ($994 and $1,582 attributable to related parties, respectively)
12,445 16,879 
Total liabilities254,568 252,413 
Commitments and contingencies
Convertible redeemable preferred stock, $0.001 par value; 82,527,609 shares authorized, issued and outstanding as of March 31, 2022 and December 31, 2021; aggregate liquidation preference of $215,688 as of March 31, 2022, and $211,863 as of December 31, 2021 (related parties)
187,885 187,885 
Stockholders' equity:
Preferred stock, $0.001 par value; 7,472,391 shares authorized as of March 31, 2022 and December 31, 2021; no shares issued or outstanding as of March 31, 2022 or December 31, 2021
  
Common stock, $0.001 par value; 275,000,000 shares authorized as of March 31, 2022 and December 31, 2021; 97,470,138 shares issued and 90,705,342 shares outstanding as of March 31, 2022, and 97,172,086 shares issued and 90,407,290 shares outstanding as of December 31, 2021
91 90 
Additional paid-in capital1,687,608 1,683,883 
Accumulated other comprehensive loss(12,639)(12,098)
Accumulated deficit(1,231,816)(1,218,715)
Treasury stock, at cost, 6,764,796 shares as of March 31, 2022 and December 31, 2021
(229,984)(229,984)
Total stockholders' equity213,260 223,176 
Total liabilities, convertible redeemable preferred stock and stockholders' equity$655,713 $663,474 
See accompanying Notes to Condensed Consolidated Financial Statements.
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COMSCORE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
 Three Months Ended March 31,
(In thousands, except share and per share data)20222021
Revenues (2)
$93,966 $90,330 
Cost of revenues (1) (2) (3)
52,918 52,702 
Selling and marketing (1) (3)
17,166 17,827 
Research and development (1) (3)
9,532 10,353 
General and administrative (1) (3)
18,117 14,468 
Amortization of intangible assets6,779 6,439 
Total expenses from operations104,512 101,789 
Loss from operations(10,546)(11,459)
Other income (expense), net2,433 (8,274)
Gain from foreign currency transactions420 1,074 
Interest expense, net (2)
(200)(7,045)
Loss on extinguishment of debt (2)
 (9,629)
Loss before income taxes(7,893)(35,333)
Income tax provision(1,383)(1,022)
Net loss$(9,276)$(36,355)
Net loss available to common stockholders
Net loss$(9,276)$(36,355)
Convertible redeemable preferred stock dividends (2)
(3,825)(935)
Total net loss available to common stockholders$(13,101)$(37,290)
Net loss per common share:
Basic and diluted$(0.14)$(0.49)
Weighted-average number of shares used in per share calculation - Common Stock:
Basic and diluted91,686,733 76,147,342 
Comprehensive loss:
Net loss$(9,276)$(36,355)
Other comprehensive loss:
Foreign currency cumulative translation adjustment(541)(2,151)
Total comprehensive loss$(9,817)$(38,506)
(1) Excludes amortization of intangible assets, which is presented as a separate line item.
(2) Transactions with related parties are included in the line items above as follows (refer to Footnote 8, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information):
Three Months Ended March 31,
20222021
Revenues$4,412 $3,856 
Cost of revenues7,668 9,821 
Interest expense, net (4,692)
Loss on extinguishment of debt (9,608)
Convertible redeemable preferred stock dividends(3,825)(935)
(3) Stock-based compensation expense is included in the line items above as follows:
Three Months Ended March 31,
20222021
Cost of revenues$301 $855 
Selling and marketing263 955 
Research and development200 642 
General and administrative1,772 2,485 
Total stock-based compensation expense$2,536 $4,937 
See accompanying Notes to Condensed Consolidated Financial Statements.
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COMSCORE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY
(Unaudited)
(In thousands, except share data)Convertible Redeemable Preferred StockCommon StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Treasury stock, at costTotal
Stockholders'
Equity
SharesAmountSharesAmount
Balance as of December 31, 202182,527,609 $187,885 90,407,290 $90 $1,683,883 $(12,098)$(1,218,715)$(229,984)$223,176 
Net loss— — — — — — (9,276)— (9,276)
Convertible redeemable preferred stock dividends (1)
— — — — — — (3,825)— (3,825)
Restricted stock units distributed— — 212,246 — — — — —  
Exercise of Common Stock options— — 86,941 1 102 — — — 103 
Payments for taxes related to net share settlement of equity awards— — (474)— (1)— — — (1)
Amortization of stock-based compensation— — — — 1,908 — — — 1,908 
Settlement of restricted stock unit liability— — — — 1,719 — — — 1,719 
Other— — (661)— (3)— — — (3)
Foreign currency translation adjustment— — — — — (541)— — (541)
Balance as of March 31, 202282,527,609 $187,885 90,705,342 $91 $1,687,608 $(12,639)$(1,231,816)$(229,984)$213,260 
(In thousands, except share data)Convertible Redeemable Preferred StockCommon StockAdditional
Paid-In
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Treasury stock, at costTotal
Stockholders'
Equity
SharesAmountSharesAmount
Balance as of December 31, 2020 $ 72,938,546 $73 $1,621,986 $(7,030)$(1,156,055)$(229,984)$228,990 
Net loss— — — — — — (36,355)— (36,355)
Convertible redeemable preferred stock, net of issuance costs (1)
82,527,609 188,183 — — — — — — — 
Convertible redeemable preferred stock dividends (1)
— — — — — — (935)— (935)
Interest paid in Common Stock (1)
— — 4,165,781 4 10,808 — — — 10,812 
Conversion shares issued as extinguishment cost on senior secured convertible notes (1)
— — 3,150,000 3 9,605 — — — 9,608 
Restricted stock units distributed— — 442,051 1 — — — — 1 
Payments for taxes related to net share settlement of equity awards— — (10,231)— (37)— — — (37)
Settlement of restricted stock unit liability— — — — 7,117 — — — 7,117 
Amortization of stock-based compensation— — — — 1,358 — — — 1,358 
Foreign currency translation adjustment— — — — — (2,151)— — (2,151)
Balance as of March 31, 202182,527,609 $188,183 80,686,147 $81 $1,650,837 $(9,181)$(1,193,345)$(229,984)$218,408 
(1) Transactions for these line items were exclusively with related parties (refer to Footnote 4, Convertible Redeemable Preferred Stock and Stockholders' Equity, Footnote 5, Debt, and Footnote 8, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information). Gross proceeds from related parties for the issuance of convertible redeemable preferred stock were $204.0 million.
See accompanying Notes to Condensed Consolidated Financial Statements.
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COMSCORE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Three Months Ended March 31,
(In thousands)20222021
Operating activities:
Net loss$(9,276)$(36,355)
Adjustments to reconcile net loss to net cash provided by operating activities:
Amortization of intangible assets 6,779 6,439 
Depreciation4,191 4,054 
Stock-based compensation expense2,536 4,937 
Change in fair value of contingent consideration liability2,348  
Non-cash operating lease expense1,483 1,262 
Amortization expense of finance leases704 443 
Deferred tax provision513 638 
Change in fair value of warrants liability(2,435)10,001 
Loss on extinguishment of debt 9,629 
Non-cash interest expense on senior secured convertible notes (1)
 4,692 
Other 469 260 
Changes in operating assets and liabilities:
Accounts receivable7,301 7,326 
Prepaid expenses and other assets(1,270)3,119 
Accounts payable, accrued expenses and other liabilities(2,288)4,970 
Contract liabilities and customer advances3,209 (2,085)
Operating lease liabilities(1,856)(1,442)
Net cash provided by operating activities12,408 17,888 
Investing activities:
Capitalized internal-use software costs(3,452)(3,535)
Purchases of property and equipment(347)(157)
Net cash used in investing activities(3,799)(3,692)
Financing activities:
Principal payments on finance leases(796)(466)
Principal payment and extinguishment costs on senior secured convertible notes (1)
 (204,014)
Principal payment and extinguishment costs on secured term note (14,031)
Proceeds from issuance of convertible redeemable preferred stock, net of issuance costs (1)
 188,183 
Other48 (149)
Net cash used in financing activities(748)(30,477)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(86)(588)
Net increase (decrease) in cash, cash equivalents and restricted cash7,775 (16,869)
Cash, cash equivalents and restricted cash at beginning of period22,279 50,741 
Cash, cash equivalents and restricted cash at end of period$30,054 $33,872 
As of March 31,
20222021
Cash and cash equivalents$29,629 $29,075 
Restricted cash425 4,797 
Total cash, cash equivalents and restricted cash $30,054 $33,872 

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Three Months Ended March 31,
20222021
Supplemental disclosures of non-cash investing and financing activities:
Convertible redeemable preferred stock dividends accrued but not yet paid (1)
$3,825 $935 
Settlement of restricted stock unit liability1,719 7,118 
Interest paid in Common Stock (1)
 10,812 
Conversion shares issued as extinguishment cost on senior secured convertible notes (1)
 9,608 
Right-of-use assets obtained in exchange for operating lease liabilities 2,977 
(1) Transactions for these line items were exclusively with related parties (refer to Footnote 4, Convertible Redeemable Preferred Stock and Stockholders' Equity, Footnote 5, Debt, and Footnote 8, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information). Gross proceeds from related parties for the issuance of convertible redeemable preferred stock were $204.0 million.
See accompanying Notes to Condensed Consolidated Financial Statements.
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COMSCORE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1.Organization
comScore, Inc., together with its consolidated subsidiaries (collectively, "Comscore" or the "Company"), headquartered in Reston, Virginia, is a global information and analytics company that measures audiences, consumer behavior and advertising across media platforms.
Operating segments are defined as components of a business that can earn revenues and incur expenses for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker ("CODM"). The Company's CODM is its Chief Executive Officer, who decides how to allocate resources and assess performance. The Company has one operating segment. A single management team reports to the CODM, who manages the entire business. The Company's CODM reviews consolidated results of operations to make decisions, allocate resources and assess performance and does not evaluate the profit or loss from any separate geography or product line.
2.Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned domestic and foreign subsidiaries. All intercompany transactions and balances are eliminated upon consolidation.
Reclassification
Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. Specifically, change in fair value of financing derivatives, accretion of debt discount, and amortization of deferred financing costs have been aggregated within other operating activities on the Condensed Consolidated Statements of Cash Flows.
Unaudited Interim Financial Information
The interim Condensed Consolidated Financial Statements included in this quarterly report have been prepared by the Company and are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The interim Condensed Consolidated Financial Statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. These interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 (the "2021 10-K"). The Condensed Consolidated Results of Operations for the three months ended March 31, 2022 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2022 or thereafter. All references to March 31, 2022 and 2021 in the Notes to Condensed Consolidated Financial Statements are unaudited.
Use of Estimates and Judgments in the Preparation of the Condensed Consolidated Financial Statements
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expense during the reporting periods. Significant estimates and judgments are inherent in the analysis and the measurement of management's standalone selling price, principal versus agent revenue recognition, determination of performance obligations, determination of transaction price, including the determination of variable consideration and allocation of transaction price to performance obligations, deferred tax assets and liabilities, including the identification and quantification of income tax liabilities due to uncertain tax positions, the valuation and recoverability of goodwill, intangible and other long-lived assets, the determination of appropriate discount rates for lease accounting, the probability of exercising either lease renewal or termination clauses, the assessment of potential loss from contingencies, the fair value determination of contingent consideration from business combinations, financing-related liabilities and warrants, and the valuation of options, performance-based and market-based stock awards. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances.
Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. The Company evaluates its estimates and assumptions on an ongoing basis.
Business Combination
In December 2021, the Company and two newly formed, wholly owned subsidiaries of the Company entered into an Agreement and Plan of Merger (the "Merger Agreement") with Shareablee, Inc. ("Shareablee"), pursuant to which the Company acquired Shareablee (the "Merger"). Total consideration paid or payable by the Company related to the Merger (valued as of the closing date of the Merger) was $31.4 million, which
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included $5.6 million for the fair value of contingent consideration payable based on the achievement of certain contractual milestones or future revenue performance. The maximum amount of contingent consideration payable under the Merger is $8.6 million.
The contingent consideration is classified as a liability due to the fact it will be settled in cash or a variable number of shares of the Company's common stock, par value $0.001 ("Common Stock") (or a combination thereof), and the amount of the payment is not dependent upon the fair value of the Common Stock. The contingent consideration liability is measured at fair value on a recurring basis until the contingency is resolved.
The fair value of the contingent consideration liability is estimated using a combination of valuation techniques. One technique is an option pricing model within a Monte Carlo simulation that determines an average projected payment value across numerous iterations. This technique determines projected payments based on simulated revenues derived from an internal forecast, adjusted for a selected revenue volatility and risk premium based on market data for comparable guideline public companies. The other technique is a discounted cash flow model that assumes achievement of the contractual milestones, resulting in payment of the full deferred amount. In both techniques, the projected payments are then discounted back to the valuation date at the Company's cost of debt using a term commensurate with the contractual payment dates.
As of March 31, 2022, the Company determined sufficient achievement of the contractual milestones had been demonstrated and the full amount of the contingent consideration was reasonably certain to be payable. The fair value was remeasured using only the discounted cash flow model. As a result, the estimated fair value of the contingent consideration liability as of March 31, 2022 was $7.9 million. The loss due to change in fair value of $2.3 million for the three months ended March 31, 2022 was classified within general and administrative expense in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
Refer to Footnote 6, Fair Value Measurements, for information on the Level 3 inputs utilized for the determination of the fair value of the contingent consideration.
In April 2022, the contingency surrounding the amount of consideration payable was resolved and the full amount was deemed payable, subject to reduction for any pending indemnification claims and other terms set forth in the Merger Agreement. The Company expects to settle the liability in three installments of $3.7 million, $3.7 million and $1.2 million payable in any combination of cash and Common Stock (at the Company's election) in December 2022, 2023 and 2024, respectively.
Preferred Stock
In January 2021, the Company entered into separate Securities Purchase Agreements with each of Charter Communications Holding Company, LLC ("Charter"), Qurate Retail, Inc. ("Qurate") and Pine Investor, LLC ("Pine") (the "Securities Purchase Agreements") for the issuance and sale of shares of Series B Convertible Preferred Stock, par value $0.001 ("Preferred Stock") described in Footnote 4, Convertible Redeemable Preferred Stock and Stockholders' Equity. The issuance of the Preferred Stock pursuant to the Securities Purchase Agreements (the "Transactions") and related matters were approved by the Company's stockholders on March 9, 2021 and completed on March 10, 2021.
The Preferred Stock is contingently redeemable upon certain deemed liquidation events, such as a change in control. Because a deemed liquidation event could constitute a redemption event outside of the Company's control, all shares of Preferred Stock have been presented outside of permanent equity in mezzanine equity on the Condensed Consolidated Balance Sheets. The instrument was initially recognized at fair value net of issuance costs. The Company reassesses whether the Preferred Stock is currently redeemable, or probable to become redeemable in the future, as of each reporting date. If the instrument meets either of these criteria, the Company will accrete the carrying value to the redemption value. The Preferred Stock has not been adjusted to its redemption amount as of March 31, 2022 because a deemed liquidation event is not considered probable.
The Preferred Stock includes a change of control put option which allows the holders of the Preferred Stock to require the Company to repurchase such holders' shares in cash in an amount equal to the initial purchase price plus accrued dividends. The change of control put option was determined to be a derivative liability. As of March 31, 2022, the probability of a change of control was determined to be remote and the fair value of the change of control derivative was determined to be negligible.
Warrants Liability
In June 2019, the Company issued warrants to CVI Investments, Inc. ("CVI") in connection with the private placement described in Footnote 4, Convertible Redeemable Preferred Stock and Stockholders' Equity. The warrants were determined to be freestanding financial instruments that qualify for liability treatment as a result of net cash settlement features associated with a cap on the issuance of shares, under certain circumstances, or upon a change of control. Changes in the fair value of these instruments are recorded in other income (expense), net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
The fair value of each warrant is estimated utilizing an option pricing model. Significant valuation inputs include the price and expected volatility of the Company's Common Stock, risk-free rate, and the remaining term of the warrants. As of March 31, 2022, the probability of a change of control was determined to be remote and did not require an enhancement to the valuation technique.
Loss on Extinguishment of Debt
In March 2021, the Company recorded a $9.6 million loss on debt extinguishment related to the payoff of its senior secured convertible notes (the "Notes") and a foreign secured promissory note (the "Secured Term Note"). Loss on extinguishment of debt represents the difference between the
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carrying value of the Company's debt instruments and any consideration paid to its creditors in the form of cash or shares of the Company's Common Stock on the extinguishment date. These transactions are described in Footnote 5, Debt.
Other Income (Expense), Net
Other income (expense), net represents income and expenses incurred that are generally not recurring in nature or are not part of the Company's normal operations. The following is a summary of the significant components of other income (expense), net:
 Three Months Ended March 31,
(In thousands)20222021
Change in fair value of warrants liability$2,435 $(10,001)
Change in fair value of financing derivatives 1,800 
Other (2)(73)
Total other income (expense), net
$2,433 $(8,274)
Loss Per Share
The Company uses the two-class method to calculate net loss per share. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. Under the two-class method, earnings for the period are allocated between common stockholders and participating security holders based on their respective rights to receive dividends as if all undistributed book earnings for the period were distributed.
Basic loss per share is computed by dividing total net loss available to common stockholders by the weighted-average number of common shares outstanding for the period. This includes the effect of vested and deferred restricted stock units granted to members of the Company's Board of Directors ("Board") and certain employees. These awards are expected to be settled in shares of Common Stock and generally distributed upon the earlier of the individual's separation from service or a change of control. Diluted loss per share includes the effect of potential common shares, such as the Company's Preferred Stock, Notes, warrants, stock options and restricted stock units, and contingent consideration liability to the extent the effect is dilutive. In periods with a net loss available to common stockholders, the anti-dilutive effect of these potential common shares is excluded and diluted net loss per share is equal to basic net loss per share.
The following is a summary of the Common Stock equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share, as their effect would be anti-dilutive:
 Three Months Ended March 31,
 20222021
Preferred stock (1)
85,708,361 19,472,807 
Warrants5,457,026 5,457,026 
Stock options and restricted stock units4,672,593 3,614,221 
Contingent consideration (2)
2,955,326  
Senior secured convertible notes 4,981,309 
Total98,793,306 33,525,363 
(1) Includes the effect of potential Common Stock that would be issued to settle unpaid dividends accrued to holders of the Preferred Stock if they elected to convert their shares at the beginning of the period.
(2) A contingent consideration liability was recognized as part of the Shareablee acquisition described in Footnote 2, Summary of Significant Accounting Policies. The liability payments may be settled in any combination of cash or shares of Common Stock (at the Company's election) based on the volume-weighted average trading price of the Common Stock for the ten trading days prior to the date of each payment. Settlement of this liability in Common Stock could potentially dilute basic earnings per share in future periods. The Company calculated a potential anti-dilutive share count based on the maximum potential payments of $8.6 million and the $2.91 per share closing price of the Company's Common Stock on the Nasdaq Global Select Market on March 31, 2022.
Income Taxes
A significant portion of the Company's net operating loss carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code. The Company anticipates the Transactions may have triggered further limitations but has not yet reached a final conclusion as to whether an ownership change occurred and to what extent its net operating loss carryforwards are further limited. If an ownership change occurred as a result of the Transactions, the annual limitation under Section 382 may cause a significant portion of the Company's net operating loss carryforwards to expire prior to use. Due to the Company's valuation allowance position in the United States, the required revaluation of its deferred tax assets related to these limited U.S. federal and state net operating loss carryforwards is not expected to have a material impact on the Condensed Consolidated Financial Statements or related disclosures.
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3.Revenue Recognition
The following table presents the Company's revenue disaggregated by solution group, geographical market and timing of transfer of products and services. The Company has one reportable segment in accordance with ASC 280, Segment Reporting; as such, the disaggregation of revenue below reconciles directly to its unique reportable segment.
Three Months Ended March 31,
(In thousands)20222021
By solution group:
Digital Ad Solutions$53,137 $53,045 
Cross Platform Solutions40,829 37,285 
Total$93,966 $90,330 
By geographical market:
United States$84,082 $77,774 
Europe5,207 8,271 
Canada1,819 1,744 
Latin America1,790 1,576 
Other1,068 965 
Total$93,966 $90,330 
By timing of revenue recognition:
Products and services transferred over time$77,944 $68,116 
Products and services transferred at a point in time16,022 22,214 
Total$93,966 $90,330 
Contract Balances
The following table provides information about receivables, contract assets, contract liabilities and customer advances from contracts with customers:
As ofAs of
(In thousands)March 31, 2022December 31, 2021
Accounts receivable, net$64,618 $72,059 
Current and non-current contract assets5,392 4,875 
Current contract liabilities58,563 54,011 
Current customer advances10,933 11,613 
Non-current contract liabilities730 1,262 
Significant changes in the current contract liabilities balance are as follows:
Three months ended March 31,
(In thousands)20222021
Revenue recognized that was included in the opening contract liabilities balance$(34,979)$(31,891)
Cash received or amounts billed in advance and not recognized as revenue39,950 30,844 
Remaining Performance Obligations
As of March 31, 2022, approximately $225.0 million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied) for non-cancelable contracts with an original expected duration of longer than one year. The Company expects to recognize revenue on approximately 39% of these remaining performance obligations during the remainder of 2022, approximately 32% in 2023, and approximately 13% in 2024, with the remainder recognized thereafter.
4.Convertible Redeemable Preferred Stock and Stockholders' Equity
2021 Issuance of Preferred Stock
On March 10, 2021, the Company issued and sold 82,527,609 shares of Preferred Stock in exchange for aggregate gross proceeds of $204.0 million. Net proceeds from the Transactions totaled $187.9 million after deducting issuance costs.
The Preferred Stock is convertible at the option of the holders at any time into shares of Common Stock based on a conversion rate set in accordance with the Certificate of Designations of the Preferred Stock. The conversion right is subject to certain anti-dilution adjustments and customary provisions related to partial dividend periods. As of March 31, 2022, each share of Preferred Stock was convertible into 1.057292 shares of Common Stock, with such conversion rate scheduled to return to 1.00 upon payment of accrued dividends on June 30, 2022.
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As of March 31, 2022, no shares of Preferred Stock have been converted into Common Stock.
The holders of Preferred Stock are entitled to participate in all dividends declared on the Common Stock on an as-converted basis and are also entitled to a cumulative dividend at the rate of 7.5% per annum, payable annually in arrears and subject to increase under certain circumstances. In addition, such holders are entitled to request, and the Company will take all actions reasonably necessary to pay, a one-time dividend ("Special Dividend") equal to the highest dividend that the Company's Board determines can be paid at the applicable time (or a lesser amount agreed upon by the holders), subject to additional conditions and limitations set forth in a Stockholders Agreement entered into by the Company and the holders on March 10, 2021 (the "Stockholders Agreement"). As set forth in the Stockholders Agreement, the Company may be obligated to obtain debt financing in order to effectuate the Special Dividend.
2019 Issuance and Sale of Common Stock and Warrants
On June 23, 2019, the Company entered into a Securities Purchase Agreement with CVI, pursuant to which CVI agreed to purchase (i) 2,728,513 shares of Common Stock (the "Initial Shares"), at a price of $7.33 per share and (ii) Series A Warrants, Series B-1 Warrants, Series B-2 Warrants and Series C Warrants, for aggregate gross proceeds of $20.0 million (the "Private Placement"). The Private Placement closed on June 26, 2019 (the "CVI Closing Date"). The Series B-1 Warrants and Series B-2 Warrants expired in 2020.
The Series C Warrants were exercised on October 10, 2019. As a result of this exercise, the Company issued 2,728,513 shares of Common Stock to CVI on October 14, 2019. In addition, the number of shares issuable under the Company's Series A Warrants was increased by 2,728,513.
The Series A Warrants are exercisable by the holders for a period of five years from the CVI Closing Date and are currently exercisable into 5,457,026 shares of Common Stock. The Series A Warrants may be exercised for cash or through a net settlement feature under certain circumstances.
The exercise price for the Series A Warrants is subject to anti-dilution adjustment in certain circumstances, including upon certain issuances of capital stock. Upon the issuance of the Preferred Stock, the Company adjusted the exercise price of the Series A Warrants from $12.00 to $2.4719 per share, the closing price of the Transactions.
CVI will not have the right to exercise any warrant that would result in CVI beneficially owning more than 4.99% of the outstanding Common Stock after giving effect to such exercise. CVI has the right, in its discretion, to raise this threshold up to 9.99% with 60 days' notice to the Company. In addition, if and to the extent the exercise of any warrants would, together with the issuances of the Initial Shares and the shares issued pursuant to the exercise of any other warrants, result in the issuance of 20.0% or more of the outstanding Common Stock of the Company on the CVI Closing Date, the Company intends to, in lieu of issuing such shares, settle the obligation to issue such shares in cash.
The estimated fair value of the Series A Warrants as of March 31, 2022 was $8.1 million. Refer to Footnote 6, Fair Value Measurements, for information on the Level 3 inputs utilized for the determination of the fair value of the warrants.
5.Debt
Revolving Credit Agreement
On May 5, 2021, the Company entered into a senior secured revolving credit agreement (the "Revolving Credit Agreement") among the Company, as borrower, certain subsidiaries of the Company, as guarantors, Bank of America N.A., as administrative agent (in such capacity, the "Agent"), and the lenders from time to time party thereto.
The Revolving Credit Agreement had an original borrowing capacity equal to $25.0 million and bore interest on borrowings at a Eurodollar Rate (as defined in the Revolving Credit Agreement) that was based on LIBOR. The Company may also request the issuance of letters of credit under the Revolving Credit Agreement in an aggregate amount up to $5.0 million, which reduces the amount of available borrowings by the amount of such issued and outstanding letters of credit. The facility has a maturity of three years from the closing date of the agreement.
On February 25, 2022, the Company entered into an amendment (the "Amendment") to the Revolving Credit Agreement to expand its aggregate borrowing capacity from $25.0 million to $40.0 million. The Amendment also replaced the Eurodollar Rate with a SOFR-based interest rate and modified the Applicable Rate definition in the Revolving Credit Agreement to increase the Applicable Rate payable on SOFR-based loans to 2.50% until the date a compliance certificate is received for the quarter ending March 31, 2023, with such Applicable Rate thereafter reducing to 2.25%.
The Amendment also modified certain financial covenants under the Revolving Credit Agreement. As amended, the Revolving Credit Agreement requires the Company to maintain:
minimum Consolidated EBITDA (as defined in the Revolving Credit Agreement) of not less than $20.0 million for the most recently ended four fiscal quarter period, tested as of the last day of each fiscal quarter ending on or before December 31, 2022;
a minimum Consolidated Asset Coverage Ratio (as defined in the Revolving Credit Agreement) of not less than 1.5 to 1.0, tested as of the last day of each fiscal quarter ending on or before December 31, 2022; and
a minimum Consolidated Fixed Charge Coverage Ratio (as defined in the Revolving Credit Agreement) of not less than 1.25 to 1.0 for the most recently ended four fiscal quarter period, tested as of the last day of each fiscal quarter ending on or after March 31, 2023.
Additionally, the Revolving Credit Agreement contains restrictive covenants that limit the Company's ability to, among other things, incur additional indebtedness or liens, make investments and loans, enter into mergers and acquisitions, make or declare dividends and other payments,
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enter into certain contracts, sell assets and engage in transactions with affiliates. The Revolving Credit Agreement is also subject to customary events of default, including a change in control. If an event of default occurs and is continuing, the Agent or the Required Lenders may accelerate any amounts outstanding and terminate lender commitments. The Company is in compliance with the covenants under the amended Revolving Credit Agreement as of March 31, 2022.
The Revolving Credit Agreement is guaranteed by the Company and its domestic subsidiaries (other than Excluded Subsidiaries (as defined in the Revolving Credit Agreement)) and is secured by a first lien security interest in substantially all assets of the Company and its domestic subsidiaries (other than Excluded Subsidiaries), subject to certain customary exclusions.
As of March 31, 2022, the Company had outstanding borrowings of $16.0 million, and issued and outstanding letters of credit of $3.3 million, under the amended Revolving Credit Agreement, with remaining borrowing capacity of $20.7 million.
Senior Secured Convertible Notes and Financing Derivatives
During 2018, the Company entered into certain agreements with funds affiliated with or managed by Starboard Value LP (collectively, "Starboard"), pursuant to which the Company issued and sold to Starboard a total of $204.0 million in Notes, as well as warrants to purchase shares of the Company's Common Stock. The warrants were exercised in full by Starboard in 2019.
The Notes contained, among other features, an interest rate reset feature which the Company determined represented an embedded derivative that must be bifurcated and accounted for separately from the Notes. This feature reset the interest rate on the Notes based on the trading price of the Company's Common Stock.
Interest on the Notes was payable on a quarterly basis in arrears, at the option of the Company, in cash, or, subject to certain conditions, through the issuance by the Company of additional shares of Common Stock ("PIK Interest Shares"). On January 25, 2021, the Company paid quarterly accrued interest of $6.1 million through the issuance of 2,802,454 PIK Interest Shares.
In connection with the Transactions described in Footnote 4, Convertible Redeemable Preferred Stock and Stockholders' Equity, the Company used cash proceeds of $204.0 million from the issuance of shares of its Preferred Stock to extinguish the Notes and related financing derivatives on March 10, 2021. The Company also issued 3,150,000 additional shares to Starboard (the "Conversion Shares"), as additional creditor consideration, which were valued at $9.6 million. Lastly, the Company paid interest accrued of $4.7 million for the period from January 1, 2021 to March 10, 2021 through the issuance of 1,363,327 PIK Interest Shares.
The Company recorded a loss on extinguishment of the Notes of $9.3 million during the three months ended March 31, 2021.
Secured Term Note
During 2019, the Company's wholly owned subsidiary, Rentrak B.V., entered into an agreement with several third parties for the Secured Term Note in exchange for gross proceeds of $13.0 million.
The Secured Term Note included a redemption feature which, upon the occurrence of certain fundamental transactions, would require the Company to redeem the Secured Term Note in full, plus accrued interest, and remit a prepayment premium equal to the remaining contractual interest cash flows (the "interest make-whole redemption"). The Company determined this feature represented an embedded derivative that must be bifurcated and accounted for separately from the Secured Term Note.
In connection with the Transactions described in Footnote 4, Convertible Redeemable Preferred Stock and Stockholders' Equity, the Company used restricted cash from its balance sheet to extinguish the Secured Term Note and interest make-whole redemption on March 10, 2021, of which $13.0 million and $1.0 million were for principal repayments and settlement of the interest make-whole redemption, respectively.
The Company recorded a loss on extinguishment of the Secured Term Note of $0.3 million during the three months ended March 31, 2021.    
6.Fair Value Measurements
The Company's financial instruments measured at fair value in the accompanying Condensed Consolidated Balance Sheets on a recurring basis consist of the following:
As ofAs of
 March 31, 2022December 31, 2021
(In thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Money market funds (1)
$7,929 $ $ $7,929 $2,429 $