SEC Filing | Comscore, Inc.

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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, 2023


☐			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)

(703) 438-2000

(Registrant's Telephone Number, Including Area Code)

_____________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on Which Registered

Common Stock, par value $0.001 per share

SCOR

NASDAQ 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 4, 2023, there were 93,494,451 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, 2023

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Cautionary Note Regarding Forward Looking Statements			i
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			14
Item 3. Quantitative and Qualitative Disclosures about Market Risk			21
Item 4. Controls and Procedures			22
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			23
Item 1A. Risk Factors			23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			23
Item 3. Defaults Upon Senior Securities			23
Item 4. Mine Safety Disclosures			24
Item 5. Other Information			24
Item 6. Exhibits			25
SIGNATURE			26

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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; expectations regarding our restructuring activities and cost-reduction initiatives; 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, dividend requirements 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 contractual disputes, 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, 2022; 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.

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ITEM 1.			FINANCIAL STATEMENTS

COMSCORE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	As of		As of
	March 31, 2023		December 31, 2022
(In thousands, except share and par value data)	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	20,274	$	20,044
Restricted cash	398		398
Accounts receivable, net of allowances of $646 and $798, respectively ($743 and $1,034 of accounts receivable attributable to related parties, respectively)	62,988		68,457
Prepaid expenses and other current assets	15,839		15,922
Total current assets	99,499		104,821
Property and equipment, net	37,160		36,367
Operating right-of-use assets	23,804		23,864
Deferred tax assets	3,575		3,351
Intangible assets, net	10,516		13,327
Goodwill	388,263		387,973
Other non-current assets	10,826		10,883
Total assets	$	573,643	$	580,586
Liabilities, Convertible Redeemable Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable ($12,449 and $12,090 attributable to related parties, respectively)	$	33,694	$	29,090
Accrued expenses ($4,892 and $4,297 attributable to related parties, respectively)	36,289		43,393
Contract liabilities ($1,235 and $1,341 attributable to related parties, respectively)	56,868		52,944
Customer advances	11,688		11,527
Current portion of contingent consideration	3,623		7,134
Current operating lease liabilities	7,861		7,639
Warrants liability	2,533		718
Other current liabilities ($11,688 and $7,863 attributable to related parties, respectively)	14,958		12,646
Total current liabilities	167,514		165,091
Non-current operating lease liabilities	28,787		29,588
Non-current portion of accrued data costs ($17,057 and $15,471 attributable to related parties, respectively)	26,882		25,106
Revolving line of credit	16,000		16,000
Deferred tax liabilities	2,719		2,127
Other non-current liabilities	7,078		10,627
Total liabilities	248,980		248,539
Commitments and contingencies
Convertible redeemable preferred stock, $0.001 par value; 82,527,609 shares authorized, issued and outstanding as of March 31, 2023 and December 31, 2022; aggregate liquidation preference of $215,688 as of March 31, 2023, and $211,863 as of December 31, 2022 (related parties)	187,885		187,885
Stockholders' equity:
Preferred stock, $0.001 par value; 7,472,391 shares authorized as of March 31, 2023 and December 31, 2022; no shares issued or outstanding as of March 31, 2023 or December 31, 2022	—		—
Common stock, $0.001 par value; 275,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 99,124,324 shares issued and 92,359,528 shares outstanding as of March 31, 2023, and 98,869,738 shares issued and 92,104,942 shares outstanding as of December 31, 2022	92		92
Additional paid-in capital	1,694,378		1,690,783
Accumulated other comprehensive loss	(14,423)		(15,940)
Accumulated deficit	(1,313,285)		(1,300,789)
Treasury stock, at cost, 6,764,796 shares as of March 31, 2023 and December 31, 2022	(229,984)		(229,984)
Total stockholders' equity	136,778		144,162
Total liabilities, convertible redeemable preferred stock and stockholders' equity	$	573,643	$	580,586

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)	2023		2022
Revenues (2)	$	91,558	$	93,966

Cost of revenues (1) (2) (3)	51,929		52,918
Selling and marketing (1) (3)	17,154		17,166
Research and development (1) (3)	8,919		9,532
General and administrative (1) (3)	13,574		18,117
Amortization of intangible assets	2,811		6,779
Restructuring	998		—
Total expenses from operations	95,385		104,512
Loss from operations	(3,827)		(10,546)
Other (expense) income, net	(1,812)		2,433
(Loss) gain from foreign currency transactions	(1,466)		420
Interest expense, net	(352)		(200)
Loss before income taxes	(7,457)		(7,893)
Income tax provision	(1,214)		(1,383)
Net loss	$	(8,671)	$	(9,276)
Net loss available to common stockholders:
Net loss	$	(8,671)	$	(9,276)
Convertible redeemable preferred stock dividends (2)	(3,825)		(3,825)
Total net loss available to common stockholders:	$	(12,496)	$	(13,101)
Net loss per common share:
Basic and diluted	$	(0.13)	$	(0.14)

Weighted-average number of shares used in per share calculation - Common Stock:
Basic and diluted	93,850,266		91,686,733

Comprehensive loss:
Net loss	$	(8,671)	$	(9,276)
Other comprehensive income (loss):
Foreign currency cumulative translation adjustment	1,517		(541)
Total comprehensive loss	$	(7,154)	$	(9,817)

(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,
	2023		2022
Revenues	$	3,009	$	4,412
Cost of revenues	7,707		7,668
Convertible redeemable preferred stock dividends	(3,825)		(3,825)


(3) Stock-based compensation expense is included in the line items above as follows:

	Three Months Ended March 31,
	2023		2022
Cost of revenues	$	78	$	301
Selling and marketing	105		263
Research and development	55		200
General and administrative	879		1,772
Total stock-based compensation expense	$	1,117	$	2,536

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 Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Treasury stock, at cost		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2022	82,527,609	$	187,885	92,104,942	$	92	$	1,690,783	$	(15,940)	$	(1,300,789)	$	(229,984)	$	144,162
Net loss	—	—		—	—		—		—		(8,671)		—		(8,671)
Convertible redeemable preferred stock dividends (1)	—	—		—	—		—		—		(3,825)		—		(3,825)
Restricted stock units distributed	—	—		286,038	—		—		—		—		—		—
Exercise of Common Stock options	—	—		3,000	—		3		—		—		—		3
Payments for taxes related to net share settlement of equity awards	—	—		(34,452)	—		(48)		—		—		—		(48)
Amortization of stock-based compensation	—	—		—	—		879		—		—		—		879
Settlement of restricted stock unit liability	—	—		—	—		2,761		—		—		—		2,761
Foreign currency translation adjustment	—	—		—	—		—		1,517		—		—		1,517

Balance as of March 31, 2023	82,527,609	$	187,885	92,359,528	$	92	$	1,694,378	$	(14,423)	$	(1,313,285)	$	(229,984)	$	136,778


(In thousands, except share data)	Convertible Redeemable Preferred Stock			Common Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Treasury stock, at cost		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance as of December 31, 2021	82,527,609	$	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, 2022	82,527,609	$	187,885	90,705,342	$	91	$	1,687,608	$	(12,639)	$	(1,231,816)	$	(229,984)	$	213,260

(1) Transactions for these line items were exclusively with related parties (refer to Footnote 4, Convertible Redeemable Preferred Stock and Stockholders' Equity and Footnote 8, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information).

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)	2023		2022
Operating activities:
Net loss	$	(8,671)	$	(9,276)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation	4,724		4,191
Amortization of intangible assets	2,811		6,779
Change in fair value of warrants liability	1,815		(2,435)
Non-cash operating lease expense	1,395		1,483
Stock-based compensation expense	1,117		2,536
Deferred tax provision	566		513
Amortization expense of finance leases	429		704
Change in fair value of contingent consideration liability	96		2,348

Other	254		469
Changes in operating assets and liabilities:
Accounts receivable	5,868		7,301
Prepaid expenses and other assets	38		(1,270)
Accounts payable, accrued expenses and other liabilities	(4,914)		(2,288)
Contract liabilities and customer advances	3,540		3,209
Operating lease liabilities	(1,817)		(1,856)
Net cash provided by operating activities	7,251		12,408

Investing activities:
Capitalized internal-use software costs	(5,345)		(3,452)
Purchases of property and equipment	(487)		(347)
Net cash used in investing activities	(5,832)		(3,799)

Financing activities:

Contingent consideration payment at initial value	(1,037)		—
Principal payments on finance leases	(445)		(796)

Other	(174)		48
Net cash used in financing activities	(1,656)		(748)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	467		(86)
Net increase in cash, cash equivalents and restricted cash	230		7,775
Cash, cash equivalents and restricted cash at beginning of period	20,442		22,279
Cash, cash equivalents and restricted cash at end of period	$	20,672	$	30,054


	As of March 31,
	2023		2022
Cash and cash equivalents	$	20,274	$	29,629
Restricted cash	398		425
Total cash, cash equivalents and restricted cash	$	20,672	$	30,054


	Three Months Ended March 31,
	2023		2022
Supplemental disclosures of non-cash investing and financing activities:
Convertible redeemable preferred stock dividends accrued but not yet paid (related parties)	$	3,825	$	3,825
Settlement of restricted stock unit liability	2,761		1,719
Right-of-use assets obtained in exchange for operating lease liabilities	1,239		—
Change in accounts payable and accrued expenses related to capital expenditures	1,113		722

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.

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, 2022 (the "2022 10-K"). The Condensed Consolidated Results of Operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2023 or thereafter. All references to March 31, 2023 and 2022 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.

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

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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, 2023 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, 2023, 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 (expense) income, 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 exercise price, price and expected volatility of the Company's Common Stock, risk-free rate, and the remaining term of the warrants. As of March 31, 2023, the probability of a change of control was determined to be remote and did not require an enhancement to the valuation technique.

Other (Expense) Income, Net

Other (expense) income, 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 components of other (expense) income, net:


	Three Months Ended March 31,
(In thousands)		2023		2022
Change in fair value of warrants liability		$	(1,815)	$	2,435
Other		3		(2)
Total other (expense) income, net		$	(1,812)	$	2,433

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 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, 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,
	2023	2022
Preferred stock (1)	85,708,361	85,708,361
Warrants	5,457,026	5,457,026
Stock options and restricted stock units	5,661,332	4,672,593
Contingent consideration (2)	3,980,488	2,955,326
Total	100,807,207	98,793,306

(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 Company's acquisition of Shareablee, Inc. ("Shareablee") in December 2021. 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 paid $3.6 million of the total $3.7 million first installment in cash in the first quarter of 2023. The remaining amount of the first installment is expected to be paid in cash in the second quarter of 2023. The Company calculated a potential anti-dilutive share count based on the remaining expected payments totaling $4.9 million and the $1.23 per share closing price

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of the Company's Common Stock on the Nasdaq Global Select Market on March 31, 2023. The Company calculated a potential anti-dilutive share count based on the expected payments totaling $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.

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 attributes revenue to geographical markets based on the location of the customer. 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)	2023		2022
By solution group:
Digital Ad Solutions	$	50,447	$	53,137
Cross Platform Solutions	41,111		40,829
Total	$	91,558	$	93,966
By geographical market:
United States	$	82,641	$	84,082
Europe	4,683		5,207
Latin America	1,720		1,790
Canada	1,421		1,819
Other	1,093		1,068
Total	$	91,558	$	93,966
By timing of revenue recognition:
Products and services transferred over time	$	77,656	$	77,944
Products and services transferred at a point in time	13,902		16,022
Total	$	91,558	$	93,966

Contract Balances

The following table provides information about receivables, contract assets, contract liabilities and customer advances from contracts with customers:


	As of		As of
(In thousands)	March 31, 2023		December 31, 2022
Accounts receivable, net	$	62,988	$	68,457
Current and non-current contract assets	6,540		6,736
Current contract liabilities	56,868		52,944
Current customer advances	11,688		11,527
Non-current contract liabilities	355		887

Significant changes in the current contract liabilities balance are as follows:


	Three Months Ended March 31,
(In thousands)	2023		2022
Revenue recognized that was included in the opening contract liabilities balance	$	(30,307)	$	(34,979)
Cash received or amounts billed in advance and not recognized as revenue	37,070		39,950

Remaining Performance Obligations

As of March 31, 2023, approximately $230 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

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expects to recognize revenue on approximately 39% of these remaining performance obligations during the remainder of 2023, approximately 32% in 2024, and approximately 15% in 2025, 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, 2023, each share of Preferred Stock would have been convertible into 1.057292 shares of Common Stock, with such assumed conversion rate scheduled to return to 1.00 upon payment of accrued dividends on June 30, 2023.

As of March 31, 2023, 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 in 2021, 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. On March 15, 2023, the Company granted Common Stock awards to certain non-executive employees valued at $1.01 per share (the closing price of the Common Stock on March 15, 2023) under the Company's annual incentive compensation plan, resulting in a further adjustment of the Series A Warrants exercise price from $2.4719 to $1.01 per share. The estimated fair value of the Series A Warrants immediately after the exercise price adjustment on March 15, 2023 was $1.7 million, reflecting an increase of $1.0 million compared to the value as of December 31, 2022.

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, 2023 was $2.5 million. Refer to Footnote 6, Fair Value Measurements, for further information.

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

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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 "2022 Amendment") to the Revolving Credit Agreement to expand its aggregate borrowing capacity from $25.0 million to $40.0 million. The 2022 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%. Finally, the amendment modified certain financial covenants under the Revolving Credit Agreement.

On February 24, 2023, the Company entered into an additional amendment (the "2023 Amendment") to the Revolving Credit Agreement. Among other things, the 2023 Amendment (i) increased the minimum Consolidated EBITDA and Consolidated Asset Coverage Ratio financial covenant requirements under the Revolving Credit Agreement, (ii) modified the measurement periods for certain financial covenants contained in the Revolving Credit Agreement, (iii) introduced a minimum liquidity covenant, and (iv) modified the Applicable Rate definition in the Revolving Credit Agreement to increase the Applicable Rate payable on SOFR-based loans to 3.50%.

As modified, the Revolving Credit Agreement requires the Company to maintain:

•minimum Consolidated EBITDA (as defined in the Revolving Credit Agreement) of not less than $22.0 million, $24.0 million, $32.0 million and $35.0 million for the most recently ended four fiscal quarter period, tested as of the last day of the fiscal quarters ending on March 31, June 30, September 30 and December 31, 2023, respectively;

•a minimum Consolidated Asset Coverage Ratio (as defined in the Revolving Credit Agreement) of not less than 2.0 to 1.0, tested as of the last day of each calendar month through maturity of the Revolving Credit Agreement;

•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, 2024; and

•minimum Liquidity (as defined in the Revolving Credit Agreement) of $28.0 million, tested as of the last business day of each calendar month through maturity of the Revolving Credit Agreement.

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, 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 was in compliance with the covenants under the amended Revolving Credit Agreement as of March 31, 2023.

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, 2023, the Company had outstanding borrowings of $16.0 million, and issued and outstanding letters of credit of $3.4 million, under the amended Revolving Credit Agreement, with remaining borrowing capacity of $20.6 million.

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 of								As of
	March 31, 2023								December 31, 2022
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

Assets

Money market funds (1)	$	2,480	$	—	$	—	$	2,480	$	2,455	$	—	$	—	$	2,455

Liabilities
Contingent consideration liability (2)	$	—	$	4,672	$	—	$	4,672	$	—	$	8,158	$	—	$	8,158
Warrants liability (3)	—		—		2,533		2,533		—		—		718		718
Total liabilities	$	—	$	4,672	$	2,533	$	7,205	$	—	$	8,158	$	718	$	8,876

(1) Level 1 cash equivalents are invested in money market funds that are intended to maintain a stable net asset value of $1.00 per share by investing in liquid, high quality U.S. dollar-denominated money market instruments with maturities less than three months.

(2) The fair value of this liability as of March 31, 2023 and December 31, 2022 is derived from a technique which utilizes market-corroborated inputs that result in classification as a Level 2 fair value measurement as of such date. The non-current portion of the contingent consideration liability is classified within non-current liabilities in the Condensed Consolidated Balance Sheets. The current portion of the contingent consideration liability was $3.6 million and $7.1 million as of March 31, 2023 and December 31, 2022, respectively. The non-current portion of the contingent consideration liability was $1.0 million as of March 31, 2023 and December 31, 2022, respectively.

(3) The fair value of this liability is derived from a technique which utilizes inputs, certain of which are significant and unobservable, that result in classification as a Level 3 fair value measurement. Warrants liability includes only the Series A warrants as of March 31, 2023 and December 31, 2022.

There were no changes to the Company's valuation techniques or methodologies during the three months ended March 31, 2023 or 2022.

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The following tables present the changes in the Company's recurring Level 3 fair valued instruments for the three months ended March 31, 2023 and 2022, respectively:


(In thousands)	Warrants Liability
Balance as of December 31, 2022	$	718

Total loss recognized due to remeasurement (1)	1,815


Balance as of March 31, 2023	$	2,533

(1) The loss on remeasurement of the warrants liability was recorded in other (expense) income, net, in the Condensed Consolidated Statements of Operations and Comprehensive Loss.


(In thousands)	Contingent Consideration Liability (2)		Warrants Liability
Balance as of December 31, 2021	$	5,600	$	10,520
Total loss (gain) recognized due to remeasurement (1)	2,348		(2,435)
Balance as of March 31, 2022	$	7,948	$	8,085

(1) The loss due to remeasurement of the contingent consideration liability was recorded in general and administrative expense, and the gain on remeasurement of the warrants liability was recorded in other (expense) income, net, in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

(2) The contingent consideration liability was transferred from Level 3 to Level 2 in the second quarter of 2022 due to the resolution of the contingency regarding the amount of consideration payable.

The following table displays the valuation technique and the significant inputs, certain of which are unobservable, for the Company's Level 3 liabilities that existed as of March 31, 2023 and December 31, 2022 that are measured at fair value on a recurring basis:

Fair Value Measurements

Significant Valuation Technique

Significant Valuation Inputs

March 31, 2023

December 31, 2022

Warrants liability

Option pricing

Stock price

$1.23

$1.16

Exercise price

$1.01

$2.47

Volatility

65.0%

Term

1.24 years

1.49 years

Risk-free rate

4.6%

The primary sensitivities in the valuation of the warrants liability are driven by the exercise price, the Common Stock price at the measurement date and the expected volatility of the Common Stock over the remaining term.

7.Accrued Expenses


	As of		As of
(In thousands)	March 31, 2023		December 31, 2022
Accrued data costs	$	17,367	$	18,515
Payroll and payroll-related	9,791		15,118
Professional fees	2,071		2,410
Restructuring accrual	1,447		1,288
Other	5,613		6,062
Total accrued expenses	$	36,289	$	43,393

8.Related Party Transactions

Transactions with WPP

As of March 31, 2023 (based on public filings), WPP plc and its affiliates ("WPP") owned 11,319,363 shares of the Company's outstanding Common Stock, representing 12.3% of the outstanding Common Stock. The Company provides WPP, in the normal course of business, services amongst its different product lines and receives various services from WPP supporting the Company's data collection efforts.

The Company's results from transactions with WPP, as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Loss, are as follows:


	Three Months Ended March 31,
(In thousands)	2023		2022
Revenues	$	2,308	$	3,341
Cost of revenues	2,736		2,140

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The Company has the following balances related to transactions with WPP, as reflected in the Condensed Consolidated Balance Sheets:


	As of		As of
(In thousands)	March 31, 2023		December 31, 2022
Assets
Accounts receivable, net	$	526	$