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Table of Contents

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 June 30, 2023
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 August 3, 2023, there were 95,086,334 shares of the registrant's Common Stock outstanding.


Table of Contents

COMSCORE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2023
TABLE OF CONTENTS
 
PART I. FINANCIAL INFORMATION



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; 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; compliance with Nasdaq continued listing standards; 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 ofAs of
June 30, 2023December 31, 2022
(In thousands, except share and par value data)(Unaudited)
Assets
Current assets:
Cash and cash equivalents$22,657 $20,044 
Restricted cash398 398 
Accounts receivable, net of allowances of $864 and $798, respectively ($675 and $1,034 of accounts receivable attributable to related parties, respectively)
54,404 68,457 
Prepaid expenses and other current assets13,852 15,922 
Total current assets91,311 104,821 
Property and equipment, net 37,835 36,367 
Operating right-of-use assets22,721 23,864 
Deferred tax assets 3,479 3,351 
Intangible assets, net 9,716 13,327 
Goodwill 344,066 387,973 
Other non-current assets10,350 10,883 
Total assets$519,478 $580,586 
Liabilities, Convertible Redeemable Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable ($14,103 and $12,090 attributable to related parties, respectively)
$31,354 $29,090 
Accrued expenses ($4,372 and $4,297 attributable to related parties, respectively)
38,237 43,393 
Contract liabilities ($1,026 and $1,341 attributable to related parties, respectively)
52,737 52,944 
Revolving line of credit16,000  
Accrued dividends (related parties)15,559 7,863 
Customer advances9,567 11,527 
Current portion of contingent consideration3,648 7,134 
Current operating lease liabilities8,053 7,639 
Warrants liability945 718 
Other current liabilities2,255 4,783 
Total current liabilities178,355 165,091 
Non-current operating lease liabilities26,990 29,588 
Non-current portion of accrued data costs ($18,855 and $15,471 attributable to related parties, respectively)
28,918 25,106 
Non-current revolving line of credit 16,000 
Deferred tax liabilities1,418 2,127 
Other non-current liabilities7,128 10,627 
Total liabilities242,809 248,539 
Commitments and contingencies
Convertible redeemable preferred stock, $0.001 par value; 100,000,000 shares authorized and 82,527,609 shares issued and outstanding as of June 30, 2023 and 82,527,609 shares authorized, issued and outstanding as of December 31, 2022; aggregate liquidation preference of $219,559 as of June 30, 2023, and $211,863 as of December 31, 2022 (related parties)
187,885 187,885 
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized as of June 30, 2023 and 7,472,391 shares authorized as of December 31, 2022; no shares issued or outstanding as of June 30, 2023 or December 31, 2022
  
Common stock, $0.001 par value; 275,000,000 shares authorized as of June 30, 2023 and December 31, 2022; 101,851,130 shares issued and 95,086,334 shares outstanding as of June 30, 2023, and 98,869,738 shares issued and 92,104,942 shares outstanding as of December 31, 2022
95 92 
Additional paid-in capital1,695,281 1,690,783 
Accumulated other comprehensive loss(14,542)(15,940)
Accumulated deficit(1,362,066)(1,300,789)
Treasury stock, at cost, 6,764,796 shares as of June 30, 2023 and December 31, 2022
(229,984)(229,984)
Total stockholders' equity88,784 144,162 
Total liabilities, convertible redeemable preferred stock and stockholders' equity$519,478 $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 June 30,Six Months Ended June 30,
(In thousands, except share and per share data)2023202220232022
Revenues (2)
$93,684 $91,434 $185,242 $185,400 
Cost of revenues (1) (2) (3)
52,958 51,467 104,887 104,385 
Selling and marketing (1) (3)
17,036 17,485 34,190 34,651 
Research and development (1) (3)
8,790 9,917 17,709 19,449 
General and administrative (1) (3)
13,274 17,103 26,848 35,220 
Impairment of goodwill44,100  44,100  
Restructuring4,104  5,102  
Amortization of intangible assets801 6,772 3,612 13,551 
Total expenses from operations141,063 102,744 236,448 207,256 
Loss from operations(47,379)(11,310)(51,206)(21,856)
Other income (expense), net1,609 4,557 (203)6,990 
(Loss) gain from foreign currency transactions(168)2,527 (1,634)2,947 
Interest expense, net(363)(176)(715)(376)
Loss before income taxes(46,301)(4,402)(53,758)(12,295)
Income tax benefit (provision)1,392 (648)178 (2,031)
Net loss$(44,909)$(5,050)$(53,580)$(14,326)
Net loss available to common stockholders:
Net loss$(44,909)$(5,050)$(53,580)$(14,326)
Convertible redeemable preferred stock dividends (2)
(3,872)(3,868)(7,697)(7,693)
Total net loss available to common stockholders:$(48,781)$(8,918)$(61,277)$(22,019)
Net loss per common share:
Basic and diluted$(0.51)$(0.10)$(0.65)$(0.24)
Weighted-average number of shares used in per share calculation - Common Stock:
Basic and diluted95,528,637 92,405,250 94,690,383 92,048,120 
Comprehensive loss:
Net loss$(44,909)$(5,050)$(53,580)$(14,326)
Other comprehensive (loss) income:
Foreign currency cumulative translation adjustment(119)(4,544)1,398 (5,085)
Total comprehensive loss$(45,028)$(9,594)$(52,182)$(19,411)
(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 9, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Revenues$2,937 $4,186 $5,946 $8,598 
Cost of revenues7,366 7,773 15,073 15,441 
Convertible redeemable preferred stock dividends(3,872)(3,868)(7,697)(7,693)
(3) Stock-based compensation expense is included in the line items above as follows:
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Cost of revenues$244 $421 $322 $722 
Selling and marketing210 409 315 672 
Research and development193 311 248 511 
General and administrative1,014 2,121 1,893 3,893 
Total stock-based compensation expense$1,661 $3,262 $2,778 $5,798 
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, 202282,527,609 $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, 202382,527,609 $187,885 92,359,528 $92 $1,694,378 $(14,423)$(1,313,285)$(229,984)$136,778 
Net loss— — — — — — (44,909)— (44,909)
Convertible redeemable preferred stock dividends (1)
— — — — — — (3,872)— (3,872)
Restricted stock units distributed— — 2,735,991 3 — — — — 3 
Payments for taxes related to net share settlement of equity awards— — (9,185)— (12)— — — (12)
Amortization of stock-based compensation— — — — 915 — — — 915 
Foreign currency translation adjustment— — — — — (119)— — (119)
Balance as of June 30, 202382,527,609 $187,885 95,086,334 $95 $1,695,281 $(14,542)$(1,362,066)$(229,984)$88,784 

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(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 
Foreign currency translation adjustment— — — — — (541)— — (541)
Other— — (661)— (3)— — — (3)
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 
Net loss      (5,050) (5,050)
Convertible redeemable preferred stock dividends (1)
      (3,868) (3,868)
Restricted stock units distributed  958,594 1     1 
Exercise of Common Stock options  745      
Payment for taxes related to net share settlement of equity awards  (12,646)— (23)   (23)
Amortization of stock-based compensation    2,011    2,011 
Foreign currency translation adjustment    — (4,544)  (4,544)
Other  121,357  —     
Balance as of June 30, 202282,527,609 $187,885 91,773,392 $92 $1,689,596 $(17,183)$(1,240,734)$(229,984)$201,787 
(1) Transactions for these line items were exclusively with related parties (refer to Footnote 5, Convertible Redeemable Preferred Stock and Stockholders' Equity and Footnote 9, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information).
See accompanying Notes to Condensed Consolidated Financial Statements.
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COMSCORE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 Six Months Ended June 30,
(In thousands)20232022
Operating activities:
Net loss$(53,580)$(14,326)
Adjustments to reconcile net loss to net cash provided by operating activities:
Impairment of goodwill44,100  
Depreciation9,593 8,356 
Amortization of intangible assets 3,612 13,551 
Non-cash operating lease expense2,847 2,990 
Stock-based compensation expense2,778 5,798 
Amortization expense of finance leases849 1,360 
Deferred tax (benefit) provision(675)781 
Change in fair value of warrants liability227 (6,995)
Change in fair value of contingent consideration liability155 2,403 
Other 860 1,128 
Changes in operating assets and liabilities:
Accounts receivable14,301 14,413 
Prepaid expenses and other assets2,093 (2,278)
Accounts payable, accrued expenses and other liabilities(4,094)2,544 
Contract liabilities and customer advances(3,070)(1,642)
Operating lease liabilities(3,778)(3,850)
Net cash provided by operating activities16,218 24,233 
Investing activities:
Capitalized internal-use software costs(10,884)(7,587)
Purchases of property and equipment(1,122)(669)
Net cash used in investing activities(12,006)(8,256)
Financing activities:
Contingent consideration payment at initial value(1,037) 
Principal payments on finance leases(888)(1,456)
Payments for dividends on convertible redeemable preferred stock (1)
 (15,512)
Other(254)(21)
Net cash used in financing activities(2,179)(16,989)
Effect of exchange rate changes on cash, cash equivalents and restricted cash580 (1,208)
Net increase (decrease) in cash, cash equivalents and restricted cash2,613 (2,220)
Cash, cash equivalents and restricted cash at beginning of period20,442 22,279 
Cash, cash equivalents and restricted cash at end of period$23,055 $20,059 
(1) Transactions for this line item were exclusively with related parties (refer to Footnote 9, Related Party Transactions, of the Notes to Condensed Consolidated Financial Statements for additional information).
As of June 30,
20232022
Cash and cash equivalents$22,657 $19,634 
Restricted cash398 425 
Total cash, cash equivalents and restricted cash $23,055 $20,059 
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Six Months Ended June 30,
20232022
Supplemental disclosures of non-cash investing and financing activities:
Convertible redeemable preferred stock dividends accrued but not yet paid (related parties)$7,697 $ 
Settlement of restricted stock unit liability2,761 1,719 
Right-of-use assets obtained in exchange for operating lease liabilities1,239  
Change in accounts payable and accrued expenses related to capital expenditures722 979 
Right-of-use assets obtained in exchange for finance lease liabilities 1,106 
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 ("CEO"), 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, accrued dividends have been separated from other current liabilities on the Condensed Consolidated Balance Sheets.
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 and six months ended June 30, 2023 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2023 or thereafter. All references to June 30, 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.
Goodwill
The Company tests goodwill for impairment annually during the fourth quarter as of October 1, or more frequently when events or changes in circumstances indicate that fair value is below carrying value.
The Company has a single reporting unit. Accordingly, the impairment assessment for goodwill is performed at the enterprise level. Goodwill is reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair
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value of the reporting unit below its carrying value. The Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. The qualitative evaluation is an assessment of factors, including operating results and cost factors, as well as industry, market and macroeconomic conditions, to determine whether it is more likely than not that the fair value of the reporting unit is less than the respective carrying amount, including goodwill. If the Company chooses not to complete a qualitative assessment or if the initial assessment indicates that it is more likely than not that the carrying value of the reporting unit exceeds its estimated fair value, additional quantitative testing is required.
The fair value of the reporting unit is determined utilizing a discounted cash flow model, and a market value approach is utilized to supplement the discounted cash flow model. The estimated fair value of a reporting unit is determined based on assumptions regarding estimated future cash flows, discount rates, long-term growth rates and market values. Additionally, the Company considers income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment charge.
The Company monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, volatility in the Company's market capitalization, and general industry, market and macroeconomic conditions.
As of June 30, 2023, the Company concluded that it was more likely than not that the estimated fair value of its reporting unit was less than its carrying value. In its assessment, the Company considered the decline in the Company's stock price and market capitalization among other factors. The Company performed a quantitative goodwill impairment test using a discounted cash flow model, supported by a market approach. The Company's reporting unit did not pass the goodwill impairment test, and as a result, the Company recorded a $44.1 million non-cash impairment charge.
For further information refer to Footnote 4, Goodwill.
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. (together with its affiliate Qurate SCOR, LLC, "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 5, 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.
On May 16, 2023, Qurate sold 27,509,203 shares of Preferred Stock to Liberty Broadband Corporation ("Liberty") in a privately negotiated transaction.
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 June 30, 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 June 30, 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 5, 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 exercise price, price and expected volatility of the Company's Common Stock, risk-free rate, and the remaining term of the warrants. As of June 30, 2023, the probability of a change of control was determined to be remote and did not require an enhancement to the valuation technique.
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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 components of other income (expense), net:
 Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2023202220232022
Change in fair value of warrants liability$1,588 $4,560 $(227)$6,995 
Other 21 (3)24 (5)
Total other income (expense), net
$1,609 $4,557 $(203)$6,990 
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 June 30,Six Months Ended June 30,
 2023202220232022
Preferred stock (1)
87,255,753 87,255,753 85,708,361 85,708,361 
Warrants5,457,026 5,457,026 5,457,026 5,457,026 
Stock options and restricted stock units6,291,041 4,461,988 5,977,191 4,566,611 
Contingent consideration (2)
6,044,444 4,174,757 6,044,444 4,174,757 
Total105,048,264 101,349,524 103,187,022 99,906,755 
(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 through the second quarter of 2023. The remaining amount of the first installment will be settled in cash and is therefore excluded from Common Stock equivalents herein. The Company calculated a potential anti-dilutive share count based on the remaining expected payments totaling $4.9 million and the $0.81 per share closing price of the Company's Common Stock on the Nasdaq Global Select Market on June 30, 2023. The Company calculated a potential anti-dilutive share count based on the expected payments totaling $8.6 million and the $2.06 per share closing price of the Company's Common Stock on the Nasdaq Global Select Market on June 30, 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
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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 June 30,Six Months Ended June 30,
(In thousands)2023202220232022
By solution group:
Digital Ad Solutions$52,649 $51,630 $103,096 $104,767 
Cross Platform Solutions41,035 39,804 82,146 80,633 
Total$93,684 $91,434 $185,242 $185,400 
By geographical market:
United States$84,999 $81,631 $167,640 $165,713 
Europe4,545 4,475 9,228 9,682 
Latin America1,705 2,136 3,425 3,926 
Canada1,420 2,174 2,841 3,993 
Other1,015 1,018 2,108 2,086 
Total$93,684 $91,434 $185,242 $185,400 
By timing of revenue recognition:
Products and services transferred over time$78,968 $76,738 $156,624 $154,682 
Products and services transferred at a point in time14,716 14,696 28,618 30,718 
Total$93,684 $91,434 $185,242 $185,400 
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)June 30, 2023December 31, 2022
Accounts receivable, net$54,404 $68,457 
Current and non-current contract assets6,149 6,736 
Current contract liabilities52,737 52,944 
Current customer advances9,567 11,527 
Non-current contract liabilities110 887 
Significant changes in the current contract liabilities balance are as follows:
Six Months Ended June 30,
(In thousands)20232022
Revenue recognized that was included in the opening contract liabilities balance$(41,009)$(43,405)
Cash received or amounts billed in advance and not recognized as revenue40,832 44,740 
Remaining Performance Obligations
As of June 30, 2023, approximately $220 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 28% of these remaining performance obligations during the remainder of 2023, approximately 39% in 2024, and approximately 18% in 2025, with the remainder recognized thereafter.
4.Goodwill
The Company tests goodwill for impairment annually during the fourth quarter as of October 1, or more frequently when events or changes in circumstances indicate that fair value is below carrying value. As of June 30, 2023, the Company concluded that it was more likely than not that the estimated fair value of its reporting unit was less than its carrying value. In its assessment, the Company considered the decline in the Company's stock price and market capitalization, among other factors. The Company performed quantitative testing on its reporting unit using a discounted cash flow model (a form of the income approach) utilizing Level 3 unobservable inputs, supported by a market approach. The Company relied in part on the work of an independent valuation firm engaged by the Company to provide inputs as to the fair value of the reporting unit and to assist in the related calculations and analysis.
The Company's reporting unit did not pass the goodwill impairment test, and as a result the Company recorded a $44.1 million impairment charge for the three months ended June 30, 2023.
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The change in the carrying value of goodwill is as follows:
(In thousands)
Balance as of December 31, 2021
$435,711 
Translation adjustments(1,438)
Impairment charge(46,300)
Balance as of December 31, 2022
$387,973 
Translation adjustments193 
Impairment charge(44,100)
Balance as of June 30, 2023
$344,066 
5.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 June 30, 2023, each share of Preferred Stock would have been convertible into 1.076270 shares of Common Stock, with such assumed conversion rate scheduled to return to 1.00 upon payment of accrued dividends.
As of June 30, 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.
At an annual meeting of stockholders of the Company held on June 15, 2023 (the "Annual Meeting"), the Company's stockholders approved proposals permitting the payment of annual dividends on the Preferred Stock in the form of cash, shares of Common Stock, additional shares of Preferred Stock, or a combination thereof. On the same date, each holder of Preferred Stock waived its right to receive on June 30, 2023 the annual dividends otherwise payable by the Company on that date (the "Waivers"), and the Company's Board of Directors elected to defer the June 30, 2023 payment. Under the Waivers and the Certificate of Designations governing the Preferred Stock, the deferred dividends will accrue and accumulate at a rate of 9.5% per year from June 30, 2023 until declared and paid, with payment to occur on or before December 31, 2023 subject to certain conditions. As of June 30, 2023, accrued dividends for the Preferred Stock totaled $15.6 million.
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
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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 June 30, 2023 was $0.9 million. Refer to Footnote 7, Fair Value Measurements, for further information.
6.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 "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 June 30, 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 June 30, 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. During the three months ended June 30, 2023, the Company reclassified the outstanding borrowings to current liabilities from non-current liabilities as the facility matures in May 2024.
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7.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
 June 30, 2023December 31, 2022
(In thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets
Money market funds (1)
$109 $ $ $109 $2,455 $ $ $2,455 
Liabilities
Contingent consideration liability (2)
$ $4,701 $ $4,701 $ $8,158 $ $8,158 
Warrants liability (3)
  945 945   718 718 
Total liabilities$ $4,701 $945 $5,646 $ $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 June 30, 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 June 30, 2023 and December 31, 2022, respectively. The non-current portion of the contingent consideration liability was $1.1 million as of June 30, 2023 and $1.0 million as of December 31, 2022.
(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 June 30, 2023 and December 31, 2022.
The elimination of the option pricing model used to value the contingent consideration liability reflected a change in the Company's valuation technique during the three and six months ended June 30, 2022. There were no changes to the Company's valuation techniques or methodologies during the three and six months ended June 30, 2023.
The following tables present the changes in the Company's recurring Level 3 fair valued instruments for the six months ended June 30, 2023 and 2022, respectively:
(In thousands)Warrants Liability
Balance as of December 31, 2022$718 
Total loss recognized due to remeasurement (1)
227 
Balance as of June 30, 2023$945 
(1) The loss on remeasurement of the warrants liability was recorded in other income (expense), net, in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
(In thousands)Contingent Consideration Liability Warrants Liability
Balance as of December 31, 2021$5,600 $10,520 
Total loss (gain) recognized due to remeasurement (1)
2,348 (6,995)
Transfer to Level 2 (2)
(7,948) 
Balance as of June 30, 2022$ $3,525 
(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 income (expense), net, in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
(2) The contingent consideration liability was transferred from Level 3 to Level 2 at the beginning of 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 June 30, 2023 and December 31, 2022 that are measured at fair value on a recurring basis:
Fair Value Measurements
Significant Valuation TechniqueSignificant Valuation InputsJune 30, 2023December 31, 2022
Warrants liabilityOption pricingStock price$0.81$1.16
Exercise price$1.01$2.47
Volatility70.0%65.0%
Term
0.99 years
1.49 years
Risk-free rate5.4%
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.
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Fair Value Measurements on a Nonrecurring Basis
For the three months ended June 30, 2023, the Company recorded a goodwill impairment charge of $44.1 million. Refer to Footnote 4, Goodwill for further details. The remeasurement of goodwill is classified as a non-recurring Level 3 fair value assessment due to the significance of unobservable inputs developed in the determination of the fair value. The Company used a discounted cash flow model to determine the estimated fair value of the reporting unit. The Company made estimates and assumptions regarding future cash flows, discount rates, long-term growth rates and market values to determine the reporting unit's estimated fair value. It is possible that future changes in such circumstances, or in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of the reporting unit, would require the Company to record additional non-cash impairment charges.
8.Accrued Expenses
As ofAs of
(In thousands)June 30, 2023December 31, 2022
Accrued data costs$17,800 $18,515 
Payroll and payroll-related10,898 15,118 
Professional fees1,955 2,410 
Restructuring accrual3,284 1,288 
Other4,300 6,062 
Total accrued expenses$38,237 $43,393 
9.Related Party Transactions
Transactions with WPP
As of June 30, 2023 (based on public filings), WPP plc and its affiliates ("WPP") owned 11,319,363 shares of the Company's outstanding Common Stock, representing 11.9% 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 June 30,Six Months Ended June 30,
(In thousands)2023202220232022
Revenues $2,116 $3,369 $4,424 $6,710 
Cost of revenues2,387 2,234 5,123 4,374 
The Company has the following balances related to transactions with WPP, as reflected in the Condensed Consolidated Balance Sheets:
As ofAs of
(In thousands)June 30, 2023December 31, 2022
Assets
Accounts receivable, net$457 $825 
Liabilities
Accounts payable$2,090 $2,398 
Accrued expenses1,030 1,108 
Contract liabilities728 1,132 
Transactions with Charter, Qurate, Liberty and Pine
Through May 15, 2023, Charter, Qurate, and Pine each held 33.3% of the outstanding shares of Preferred Stock. On May 16, 2023, Qurate sold its Preferred Stock to Liberty, and as of June 30, 2023, Charter, Liberty and Pine each hold 33.3% of the outstanding shares of Preferred Stock. Charter, Liberty and Pine are entitled to convert the Preferred Stock into shares of Common Stock and to vote as a single class with the holders of the Common Stock as set forth in the Certificate of Designations. As of June 30, 2023 (based on public filings), Pine also owned 2,193,088 shares of the Company's outstanding Common Stock, representing 2.3% of the outstanding Common Stock. In addition, Charter, Liberty and Pine each designated two members of the Company's Board in accordance with the Stockholders Agreement.
At the Annual Meeting on June 15, 2023, the Company's stockholders approved proposals permitting the payment of annual dividends on the Preferred Stock in the form of cash, shares of Common Stock, additional shares of Preferred Stock, or a combination thereof. On the same date, each holder of Preferred Stock waived its right to receive on June 30, 2023 the annual dividends otherwise payable by the Company on that date. The deferred dividends will accrue at a rate of 9.5% per year from June 30, 2023 until declared and paid, with payment to occur on or before December 31, 2023 subject to certain conditions.
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As of June 30, 2023, Charter, Liberty and Pine each owned 27,509,203 shares of Preferred Stock. As of June 30, 2023, total accrued dividends to the holders of Preferred Stock were $15.6 million.
As of December 31, 2022, Charter, Qurate and Pine each owned 27,509,203 shares of Preferred Stock. Accrued dividends to the holders of Preferred Stock as of December 31, 2022 were $7.9 million.
Concurrent with the closing of the Transactions on March 10, 2021, the Company entered into a ten-year Data License Agreement ("DLA") with Charter Communications Operating, LLC ("Charter Operating"), an affiliate of Charter. Under the DLA, Charter Operating will bill the Company for license fees according to a payment schedule that gradually increases from $10.0 million in the first year of the term to $32.3 million in the tenth year of the term. The Company recognizes expense for the license fees ratably over the term. On November 6, 2022, the Company and Charter Operating entered into an amendment to the DLA, pursuant to which the Company will receive license fee credits totaling $7.0 million. In June 2023, the Company exchanged correspondence with counsel to Charter Operating regarding Charter Operating's compliance with certain terms of the DLA. In response, Charter Operating denied the Company's concerns and notified the Company of alleged breaches of the DLA by the Company. Charter Operating demanded that the Company cure the alleged breaches and pay outstanding balances to Charter Operating by August 6, 2023. If either party were to terminate the DLA, all amounts then due to Charter Operating would be immediately due and payable, and Charter Operating could seek liquidated damages as set forth in the DLA. To date, however, neither party has indicated that it intends to terminate the DLA, and the parties are discussing a resolution to the matter.
The Company's results from transactions with Charter and its affiliates, as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Loss, are detailed below:
Three Months Ended June 30,Six Months Ended June 30,
(In thousands)2023202220232022
Revenues$514 $546 $999 $1,272 
Cost of revenues4,979 5,539 9,950 11,067 
The Company has the following liability balances related to transactions with Charter and its affiliates, as reflected in the Condensed Consolidated Balance Sheet:
As ofAs of
(In thousands)June 30, 2023December 31, 2022
Accounts payable$12,013 $9,693 
Accrued expenses3,342 3,189 
Non-current portion of accrued data costs18,855