Investing in our common stock involves a high degree of risk.
−Removed: You should consider carefully the risks and uncertainties described below, together with all of the other information contained in this report, and in our other public filings in evaluating our business.
+Added: You should carefully consider the risks and uncertainties described below, together with all of the other information contained in this report, and in our other public filings in evaluating our business.
Our business, financial condition, operating results, cash flow, and prospects could be materially and adversely affected by any of these risks or uncertainties.
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Risks Related to our Business and Industry
−Removed: The ongoing COVID-19 pandemic could materially and adversely affect our business, results of operations and financial condition.
−Removed: In March 2020, the World Health Organization declared the outbreak of COVID-19 a pandemic, which continues to spread throughout the United States and the world and has resulted in authorities implementing numerous measures to contain the virus, including travel bans and restrictions, quarantines, shelter-in-place orders, and business limitations and shutdowns.
−Removed: While we are unable to accurately predict the full impact that COVID-19 will have on our results from operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures, our compliance with these measures has impacted our day-to-day operations and could disrupt our business and operations, as well as that of our marketers, partners, suppliers and others with whom we work, for an indefinite period of time.
−Removed: To support the health and well-being of our employees, marketers, partners and communities, our employees began working remotely in March 2020 and are still largely working from home.
−Removed: In addition, many of our marketers and prospective marketers, as well as our partners, are working remotely.
−Removed: The disruptions to our operations caused by COVID-19 may result in inefficiencies, delays and additional costs that we cannot fully mitigate through remote or other alternative work arrangements.
−Removed: In addition, given the economic uncertainty created by COVID-19, including supply-chain disruptions and inflationary pressures, we have and may continue to see delays in our sales cycle, failures of marketers to renew at all or to renew at a reduced scope their agreements with us, requests from marketers for payment term deferrals as well as pricing concessions, which, if significant, could materially and adversely affect our business, results of operations and financial condition.
−Removed: The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including the duration and spread of the outbreak, its impact on industry events, and its effect on consumer spending, our marketers, partners, suppliers and vendors and other parties with whom we do business, all of which are uncertain and cannot be predicted at this time.
−Removed: To the extent possible, we are conducting business as usual, with necessary or advisable modifications to employee work locations.
−Removed: We will continue to actively monitor the rapidly evolving situation related to COVID-19 and may take actions that alter our business operations, including those that may be required by federal, foreign, state or local authorities, or that we determine are in the best interests of our employees, marketers, partners, suppliers, vendors and stockholders.
−Removed: At this point, the extent to which the COVID-19 pandemic may impact our business, results of operations and financial condition is uncertain.
−Removed: More generally, the pandemic raises the possibility of an extended global economic downturn and has caused volatility in financial markets, which could materially and adversely affect demand for our solution and materially and adversely impact our results and financial condition even after the pandemic is contained and remaining shelter-in-place orders are lifted.
−Removed: The pandemic may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including risks associated with our guidance, our marketers, our potential marketers, our market opportunity, renewals and sales cycle, among others.
−Removed: We will continue to evaluate the nature and extent of the impact of COVID-19 on our business.
−Removed: The full extent of COVID-19’s impact on our operations and financial performance depends on future developments that are uncertain and unpredictable, including the duration and spread of the pandemic, the resurgence or additional mutations of the virus, the effectiveness of the vaccines or effective therapeutics for the virus, the virus’ impact on capital and financial markets, the timing of an economic recovery and any new information that may emerge concerning the severity of the virus, its spread to other regions as well as the actions taken to contain it, among others.
−Removed: Any of these impacts could have a material adverse impact on our business, results of operations and financial condition and ability to execute and capitalize on our strategies.
−Removed: Due to the current uncertainty regarding the severity and duration of the COVID-19 pandemic, we cannot predict whether our response to date or the actions we may take in the future will be effective in mitigating the effects of COVID-19 on our business, results of operations or financial condition.
−Removed: Unfavorable conditions in the global economy or the industries we serve could limit our ability to grow our business and negatively affect our operating results.
−Removed: General worldwide economic conditions have experienced significant instability in recent years including the recent global economic uncertainty and financial market conditions caused by the COVID-19 pandemic and the current hostilities between Russia and Ukraine.
+Added: Unfavorable conditions, including inflationary pressure, in the global economy or the industries we serve could limit our ability to grow our business and negatively affect our operating results.
+Added: General worldwide economic conditions have experienced significant instability in recent years including the recent global economic uncertainty and financial market conditions.
+Added: For example, inflation rates, particularly in the United States and United Kingdom, have increased recently to levels not seen in years, and increased inflation may result in decreased demand for our products and solutions, increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital.
+Added: In addition, the Federal Reserve has raised, and may again raise, interest rates in response to concerns about inflation, which coupled with reduced government spending and volatility in financial markets may have the effect of further increasing economic uncertainty and heightening these risks.
+Added: Additionally, financial markets around the world experienced volatility following the invasion of Ukraine by Russia in February 2022.
These conditions make it extremely difficult for marketers and us to accurately forecast and plan future business activities and could cause marketers to continue to reduce or delay their marketing spending.
−Removed: For example, there has been an impact from the COVID-19 pandemic on spending by our marketers.
−Removed: We have also seen disruption in consumer spending in our data and it is impossible to predict the duration of the disruption.
−Removed: At this time, the potential impact on marketer spend and consumer spending from the COVID-19 pandemic is difficult to predict and, therefore, it is not possible to fully determine the impact on our future results.
Historically, economic downturns have resulted in overall reductions in marketing spending.
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We have historically generated a substantial majority of our revenue from marketers in the restaurant, brick and mortar retail, telecommunications and cable industries, and have recently entered new industries such as travel and entertainment, direct-to-consumer, grocery and gas.
−Removed: All of these industries have been negatively impacted by the pandemic and certain precautions taken to control the pandemic.
+Added: All of these industries have been negatively impacted by the pandemic and inflationary pressure and certain precautions taken to control the pandemic and inflationary pressure.
We cannot predict the timing, strength or duration of any economic slowdown or recovery.
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Factors that may impact our quarterly operating results include the factors set forth in this “Risk Factors” section, as well as the following:
−Removed: • our ability to maintain and grow our business in light of the global COVID-19 pandemic and precautions taken to reduce the risk of this virus;
• our ability to attract and retain marketers and partners;
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• quarantine, private travel limitation, or business disruption in regions affecting our operations, stemming from actual, imminent or perceived outbreak of contagious disease, including the COVID-19 pandemic;
−Removed: • volatile recovery from the pandemic;
+Added: • volatile recovery from the pandemic, including inflationary pressure;
• other events or factors, including those resulting from war, such as the current hostilities between Russia and Ukraine or incidents of terrorism;
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• costs related to acquisitions of other businesses or technologies;
+Added: • our ability to maintain and grow our business in light of the global COVID-19 pandemic and precautions taken to reduce the risk of this virus.
Fluctuations in our quarterly operating results, non-GAAP metrics and other metrics and the price of our common stock may be particularly pronounced in the current economic environment due to the uncertainty caused by and the unprecedented nature of the current COVID-19 pandemic.
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We may not be able to sustain our revenue and billings growth rate in the future.
−Removed: Our revenue decreased 11% from $210.4 million in 2019 to $186.9 million in 2020, but our revenue increased 43% from $186.9 million in 2020 to $267.1 million in 2021.
−Removed: Our billings decreased 17% from $316.1 million in 2019 to $263.4 million in 2020, but our billings increased 50% from $263.4 million in 2020 to $394.1 million in 2021.
−Removed: We may not be able to maintain year-over-year revenue and billings growth in the near term or at all.
−Removed: We expect revenue and billings growth rates will continue to be negatively impacted by the COVID-19 pandemic, and you should not consider our revenue and billings growth in any specific historical periods as indicative of our future performance.
−Removed: Our revenue and billings may be negatively impacted in future periods due to a number of factors, including slowing demand for our solutions, increasing competition, decreasing growth of our overall market, our inability to engage and retain a sufficient number of marketers or partners, or our failure, for any reason, to capitalize on growth opportunities.
+Added: Our revenue increased 43% from $186.9 million in 2020 to $267.1 million in 2021, and our revenue increased 12% from $267.1 million in 2021 to $298.5 million in 2022.
+Added: Our billings increased 50% from $263.4 million in 2020 to $394.1 million in 2021, and our billings increased 12% from $394.1 million in 2021 to $442.5 million in 2022.
+Added: We may not be able to maintain year-over-year revenue and billings growth in the near term or at all, and you should not consider our revenue and billings growth in any specific historical periods as indicative of our future performance.
+Added: Our revenue and billings may be negatively impacted in future periods due to a number of factors, including slowing demand for our solutions, increasing competition, decreasing growth of our overall market, inflationary pressure, our inability to engage and retain a sufficient number of marketers or partners, or our failure, for any reason, to capitalize on growth opportunities.
If we are unable to maintain consistent revenue, revenue growth or billings growth, our stock price could be volatile, and it may be difficult for us to achieve and maintain profitability.
We are dependent upon the Cardlytics platform.
−Removed: Substantially all of our revenue and billings during 2020 and 2021 were derived from sales of advertising via the Cardlytics platform.
−Removed: We have historically derived substantially all of our revenue and billings from our Cardlytics platform.
+Added: The majority of our revenue and billings during 2021 and 2022 were derived from sales of advertising via the Cardlytics platform.
Our operating results could suffer due to:
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• FI partners may elect to use their Partner Share to fund their Consumer Incentives;
−Removed: • the introduction by competitors of products and technologies that serve as a replacement or substitute for, or represent an improvement over, the Cardlytics platform;
−Removed: • FI partners developing their own technology to support purchase intelligence marketing or other incentive programs;
+Added: • the introduction by competitors of products and technologies that serve as a replacement or substitute for, or represent an improvement over, the Cardlytics platform, or an FI partner’s decision to implement any existing or future product or technology of a competitor alongside, or in lieu, of the Cardlytics platform;
+Added: • FI partners developing, or acquiring, their own technology to support purchase intelligence marketing or other incentive programs;
• technological innovations or new standards that the Cardlytics platform does not address;
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If we are unable to grow our revenue and billings from sales of the Cardlytics platform, our business and operating results would be harmed.
−Removed: We are substantially dependent on Chase, Bank of America and a limited number of other FI partners.
+Added: We are substantially dependent on Chase, Bank of America, Wells Fargo and a limited number of other FI partners.
We require participation from our FI partners in the Cardlytics platform and access to their purchase data in order to offer our solutions to marketers and their agencies.
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In addition, we pay most of our FI partners a Partner Share, which is a negotiated and fixed percentage of our billings less certain costs.
−Removed: During 2019, 2020 and 2021, Bank of America, National Association (“Bank of America”) and JPMorgan Chase Bank, National Association (“Chase”) combined to account for over 75% of the total Partner Share we paid to all FI partners, with each representing over 25%.
+Added: During 2020 and 2021, our top two FI partners combined to account for over 75% of the total Partner Share we paid to all partners, with each representing over 25%.
No other partner accounted for over 10% of Partner Share during these periods.
+Added: During 2022, our top three FI partners combined to account for over 80% of the total Partner Share we paid to all partners, with the top two FI partners each representing over 20% and third largest FI partner representing over 10% of Partner Share.
+Added: No other partner accounted for over 10% of Partner Share during these periods.
Our agreements with a substantial majority of our FI partners have three- to seven-year terms but are generally terminable by the FI partner on 90 days or less prior notice.
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• if new technical requirements arise;
−Removed: • consumer concern over use of purchase data;
+Added: • concern by our FI Partners or their customers related to our use of purchase data;
• if they choose to develop and use in-house solutions or use a competitive solution in lieu of our solutions;
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To the extent that we breach or are alleged to have breached the terms of our agreement with any FI partner, or a disagreement arises with an FI partner regarding the interpretation of our contractual arrangements, which has occurred in the past and may occur again in the future, such an FI partner may be more likely to cease providing us data or to terminate its agreement with us.
−Removed: The loss of Bank of America, Chase or any other significant FI partner would significantly harm our business, results of operations and financial conditions.
+Added: The loss of Bank of America, Chase, Wells Fargo or any other significant FI partner would significantly harm our business, results of operations and financial conditions.
We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which would cause our stock price to decline.
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If we are unable to successfully market our solutions to appeal to marketers and their agencies in new industries, we may not be able to achieve our growth or business objectives.
−Removed: We derive a material portion of our revenue from a limited number of marketers, and the loss of one or more of these marketers could adversely impact our business, results of operations and financial conditions.
−Removed: Although our revenue and accounts receivable span a large number of marketers segregated by both geography and industry, we derive a material portion of our revenue from a concentrated marketer base.
−Removed: During 2019, 2020 and 2021, our top five marketers accounted for 27%, 35% and 29% of our revenue, respectively, with one marketer accounting for over 10% during each period, respectively.
−Removed: As of December 31, 2020 and 2021, our top five marketers accounted for 31% and 19% of our accounts receivable, respectively, with one marketer representing over 10% and no marketers representing over 10% as of each period, respectively.
−Removed: We do not have material long-term commitments from most of these marketers.
−Removed: If we were to lose one or more of our significant marketers, our revenue may significantly decline.
−Removed: In addition, revenue from significant marketers may vary from period-to-period depending on the timing or volume of marketing spend.
−Removed: Further, our credit risk is concentrated among a limited number of marketers.
−Removed: The loss of one or more of our significant marketers could adversely affect our business, results of operations and financial conditions.
An actual or perceived breach of the security of our systems could result in a disruption of our operations, or a third-party’s entry into our FI partners’ systems, which would be detrimental to our business, reputation, financial condition and operating results.
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We do not currently receive or have access to any personally identifiable information ("PII") from our FI partners, although we may obtain or have access to PII from our FI partners in the future as our business evolves.
−Removed: However, because of the interconnected nature of our infrastructure with that of our FI partners, there is a risk that third parties may attempt to gain access to our systems, or our FI partners’ systems through our systems, for the purpose of stealing sensitive or proprietary data, accessing sensitive information on our network, or disrupting our or their respective operations.
+Added: There is a risk that third parties may attempt to gain access to our systems, or our FI partners’ systems through our systems, for the purpose of stealing sensitive or proprietary data, accessing sensitive information on our network, or disrupting our or their respective operations.
Additionally, we receive and have access to PII as a result of other aspects of our business.
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In the event that our protection efforts are unsuccessful, and our systems are compromised such that a third-party gains entry to our or any of our FI partners’ systems, we could suffer substantial harm.
−Removed: In addition, due to the COVID-19 pandemic, we have transitioned the vast majority of our employees to remote work, which may make us more vulnerable to cyberattacks.
+Added: In addition, a vast majority of our employees work remotely, which may make us more vulnerable to cyberattacks.
A security breach could result in operational or administrative disruptions, or impair our ability to meet our marketers’ requirements, which could result in decreased revenue.
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If the use of our solutions increases, or if marketers or partners demand more advanced features from our solutions, we will need to devote additional resources to improving our solutions, and we also may need to expand our technical infrastructure at a more rapid pace than we have in the past.
−Removed: This may involve purchasing or leasing data center capacity and equipment, upgrading our technology and infrastructure and introducing new or enhanced solutions.
+Added: This may involve purchasing equipment, additional data storage and maintenance solutions, upgrading our technology and infrastructure and introducing new or enhanced solutions.
It may take a significant amount of time to plan, develop and test changes to our infrastructure, and we may not be able to accurately forecast demand or predict the results we will realize from such improvements.
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If we fail to generate sufficient revenue to offset our contractual commitments to FIs, our business, results of operations and financial conditions could be harmed.
−Removed: We have a minimum Partner Share commitment to a certain FI partner totaling $10.0 million over a 12-month period beginning on April 1, 2022.
+Added: We have a minimum Partner Share commitment to a certain FI partner totaling $10.0 million over a 12-month period which began on April 1, 2022.
+Added: To the extent that this commitment is expected to exceed the amount of Partner Share otherwise payable to such FI partner in the absence of such commitment, we accrue any expected shortfall over the commitment period.
+Added: We accrued for zero and $3.2 million of expected minimum Partner Share commitment shortfalls as of December 31, 2021 and 2022, respectively.
To the extent that we are unable to generate revenue from marketers sufficient to offset our Partner Share commitments and other obligations, our business, results of operations and financial conditions could be harmed.
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• issues associated with running a consumer-facing mobile application including proper notifications, rewards, and charges;
−Removed: • potential lost sales and customers if our FI or advertising clients decide not to do business with the combined company;
• potential unknown liabilities and unforeseen expenses associated with the acquisitions;
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If any of these events were to occur, our ability to maintain relationships with customers, suppliers and employees or our ability to achieve the anticipated benefits of the acquisition could be adversely affected or could reduce our future earnings or otherwise adversely affect our business and financial results and, as a result, adversely affect the market price of our common stock.
+Added: The amount we will have to pay in connection with the acquisition of Bridg has not been conclusively determined, and it may be materially larger than we expect.
+Added: As part of the acquisition of Bridg, we agreed to make two earnout payments:
+Added: a First Anniversary Payment and a Second Anniversary Payment.
+Added: We have agreed to pay at least 30% of the First Anniversary Payment and the Second Anniversary Payment in cash, with the remainder to be paid in cash or our common stock, at our option.
+Added: Depending on the total amount we have to pay for the earnout payments and the price of our stock during the relevant time periods, we may be required to pay more than 30% of one or both earnout payments in cash even if we did not want to do so, due to a provision in the merger agreement that does not allow us to issue more than 19.9% of our common stock in connection with the transactions contemplated by the merger agreement.
+Added: In June 2022, we calculated the First Anniversary Payment and provided the calculation to the Stockholder Representative.
+Added: The Stockholder Representative has objected to our calculation of the amount of the First Anniversary Payment.
+Added: We are following the dispute resolution process specific to the First Anniversary Payment stated in the merger agreement.
+Added: It is possible that the final amount of the First Anniversary Payment will be materially larger than we currently expect, and it is further possible that, as a result of this process, the Second Anniversary Payment will be materially larger than we currently expect, which could adversely affect our business, results of operations and financial conditions.
+Added: We derive a material portion of our revenue from a limited number of marketers, and the loss of one or more of these marketers could adversely impact our business, results of operations and financial conditions.
+Added: Our revenue and accounts receivable are diversified among a large number of marketers segregated by both geography and industry.
+Added: During 2020, 2021 and 2022, our top five marketers accounted for 35%, 29% and 17% of our revenue, respectively, with one marketer accounting for over 10% during 2020 and 2021.
+Added: While no marketer accounted for over 10% of our revenue during 2022, we may have one or more marketer account for over 10% of our revenue in future periods.
+Added: As of December 31, 2021 and 2022, our top five marketers accounted for 19% and 18% of our accounts receivable, respectively, with no individual marketer representing over 10% as of the end of each period, respectively.
+Added: We do not have material long-term commitments from most of these marketers.
+Added: If we were to lose one or more of our significant marketers, our revenue may significantly decline.
+Added: In addition, revenue from significant marketers may vary from period-to-period depending on the timing or volume of marketing spend.
+Added: Further, our credit risk is concentrated among a limited number of marketers.
+Added: The loss of one or more of our significant marketers could adversely affect our business, results of operations and financial conditions.
+Added: The ongoing COVID-19 pandemic could materially and adversely affect our business, results of operations and financial condition.
+Added: COVID-19, including variants of COVID-19, has resulted, at times, in the implementation or reimplementation of significant governmental measures, including lockdowns, closures, quarantines, occupancy limits and travel bans intended to control the spread of the virus.
+Added: In response to the pandemic, our employees began working remotely in March 2020 and many are still primarily or exclusively working from home.
+Added: In addition, many of our marketers and prospective marketers, as well as our partners, are working remotely.
+Added: We have had to expend, and may be required to continue to expend, significant time, attention, and resources to respond to the COVID-19 pandemic and the associated global economic uncertainty, including to develop and implement internal policies and procedures and track changes in laws and government guidelines and restrictions.
+Added: The remote working environment may also create increased vulnerability to cybersecurity incidents, including breaches of information systems security, which could damage our reputation and commercial relationships.
+Added: To the extent that future COVID restrictions are reinstated or additional prevention and mitigation measures are implemented, or there is uncertainty about the effectiveness of these or any other measures to contain or treat COVID-19 or any of its variants, there potentially could be an adverse impact on global economic conditions, which could materially and adversely impact our operations and the operations of our marketers, partners, suppliers and others with whom we work.
+Added: While, at this time, we are working to manage and mitigate potential disruptions from the virus or any of its variants on our employees and operations, the fluid nature of the pandemic and uncertainties regarding the related economic impact are likely to result in sustained market turmoil, which may materially and adversely impact our business, results of operations and financial condition.
+Added: We cannot predict how the COVID-19 pandemic, including with respect to variants of COVID-19, will continue to develop, whether and to what extent government regulations or other restrictions may impact our operations or those of our customers, or whether or to what extent the COVID-19 pandemic or the effects thereof may have longer term unanticipated impacts on our business.
+Added: The full extent of COVID-19’s impact on our operations and financial performance depends on future developments that are uncertain and unpredictable, including the duration, spread and intensity of future variants of the virus, the virus’ impact on capital and financial markets, the timing of an economic recovery and any new information that may emerge concerning the severity of the virus, among others.
+Added: As a result, it is not currently possible to ascertain the overall impact of COVID-19 on our business.
+Added: If, however, the pandemic continues to persist as a severe worldwide health crisis, it may harm our business, and also may have the effect of heightening many of the other risks described in this “Risk Factors” section.
We have a short operating history, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
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• increase market awareness of our solutions and enhance our brand;
−Removed: • manage increased operating expenses as we continue to invest in our infrastructure to scale our business and operate as a public company;
+Added: • manage increased operating expenses as we continue to invest in our infrastructure to scale our business;
• attract, hire, train, integrate and retain qualified and motivated employees.
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In addition, a failure by our partners to properly deliver or sufficiently promote marketing campaigns would reduce the efficacy of our solutions and impair our ability to attract and retain marketers and their agencies.
−Removed: As a result, the revenue we generate from our Cardlytics platform solution may be adversely affected, which would materially and adversely affect our business, financial condition and results of operations.
+Added: As a result, the revenue we generate from our Cardlytics platform may be adversely affected, which would materially and adversely affect our business, financial condition and results of operations.
If we do not effectively grow and train our sales team, we may be unable to add new marketers or increase sales to our existing marketers and our business will be adversely affected.
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We have incurred net losses since inception and expect to incur net losses in the future.
−Removed: We incurred net losses of $17.1 million, $55.4 million and $128.6 million in 2019, 2020 and 2021 respectively, respectively.
+Added: We incurred net losses of $55.4 million, $128.6 million and $465.3 million in 2020, 2021 and 2022, respectively.
As of December 31, 2022, we had an accumulated deficit of $976.6 million.
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We plan to continue to invest in our research and development and sales and marketing efforts, and we anticipate that our operating expenses will continue to increase as we scale our business and expand our operations.
−Removed: We also expect our general and administrative expense to increase as a result of our growth and operating as a public company.
+Added: We also expect our general and administrative expense to increase as a result of our growth.
Our ability to achieve and sustain profitability is based on numerous factors, many of which are beyond our control.
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We operate in an emerging industry and future demand and market acceptance for our solutions is uncertain.
−Removed: We believe that our future success will depend in large part on the growth, if any, in the market for purchase intelligence.
+Added: We believe that our future success will depend in large part on the growth, if any, of the market for purchase intelligence.
Utilization of consumer purchase data to inform marketing is an emerging industry and future demand and market acceptance for this type of marketing is uncertain.
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Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards or customer requirements.
−Removed: Larger competitors are also often in a better position to withstand any significant reduction in capital spending and will therefore not be as susceptible to economic downturns.
+Added: Larger competitors are also often in a better position to withstand any significant reduction in capital spending and will therefore not be as susceptible to economic downturns and inflationary pressure.
In addition, current or potential competitors may be acquired by third parties with greater available resources.
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To attract, retain and increase new marketers and partners, we will need to expand and enhance our solutions to meet changing needs, add functionality and address technological advancements.
+Added: Specifically, we are migrating to a cloud-based solution hosted by Amazon Web Services.
If we are unable to adapt our solutions to evolving trends in the marketing industry, if we are unable to properly identify and prioritize appropriate solution development projects or if we fail to develop and effectively market new solutions or enhance existing solutions to address the needs of existing and new marketers and partners, we may not be able to achieve or maintain adequate market acceptance and penetration of our solutions, and our solutions may become less competitive or obsolete.
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Any such error, failure, malfunction, disruption or delay could result in damage to our reputation and could harm our business, financial condition and operating results.
−Removed: Significant system disruptions or loss of data center capacity could adversely affect our business, financial condition and operating results.
+Added: Significant system disruptions, loss of data center capacity, or changes to our data hosting solutions could adversely affect our business, financial condition and operating results.
Our business is heavily dependent upon highly complex data processing capabilities.
−Removed: We contract with our primary third-party data center, located in Atlanta, Georgia, and our redundancy data center, located in Suwanee, Georgia, pursuant to agreements that expire in 2023, subject to earlier termination upon material breach and a failure to cure.
+Added: We currently contract with Amazon Web Services for our cloud-hosting solutions.
+Added: We have begun to migrate and will continue to migrate our data storage capabilities to Amazon Web Services’ cloud-hosting solution.
+Added: If we do not complete the migration, are not successful in completing a seamless migration, or fail to administer the cloud-hosting solution in a well-managed, secure and effective manner, we may experience unplanned service disruptions or unforeseen costs.
If for any reason our arrangements with our third-party data centers or other data-hosting solutions are terminated, or if we are unable to renew our agreements on commercially reasonable terms, we may be required to transfer that portion of our operations to new data center facilities or other data-hosting solutions, and we may incur significant costs and possible service interruption in connection with doing so.
−Removed: Further, protection of our third-party data centers or other data-hosting solutions against damage or interruption from fire, flood, tornadoes, power loss, telecommunications or equipment failure or other disasters and events beyond our control is important to our continued success.
+Added: Further, protection of our third-party data centers or other data-hosting solutions against damage or interruption from cyber-attacks, fire, flood, tornadoes, power loss, telecommunications or equipment failure or other disasters and events beyond our control is important to our continued success.
Any damage to, or failure of, the systems of the data centers or other data-hosting solutions that we utilize, or of our own equipment located within such data centers, could result in interruptions to the availability or functionality of our solutions.
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We are dependent on the continued services and performance of our senior management and other key personnel, the loss of any of whom could adversely affect our business.
−Removed: Our future success depends in large part on the continued contributions of our senior management and other key personnel, including our cofounder and chief executive officer, Lynne Laube.
+Added: Our future success depends in large part on the continued contributions of our senior management and other key personnel.
In particular, the leadership of key management personnel is critical to the successful management of our company, the development of our solutions and our strategic direction.
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Our international sales and operations subject us to additional risks that can adversely affect our business, operating results and financial condition.
−Removed: During each of 2019, 2020 and 2021, we derived 11%, 8% and 8% of our revenue outside the U.S., respectively.
+Added: During each of 2020, 2021 and 2022, we derived 8% of our revenue outside the U.S., respectively.
While substantially all of our operations are located in the U.S., we have an office in the U.K.
−Removed: and Canada, and a research and development and support office in Visakhapatnam, India and may continue to expand our international operations as part of our growth strategy.
+Added: and may continue to expand our international operations as part of our growth strategy.
Our ability to convince marketers to expand their use of our solutions or renew their agreements with us is directly correlated to our direct engagement with such marketers or their agencies.
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• increased financial accounting and reporting burdens and complexities;
−Removed: • general economic conditions in each country or region;
−Removed: • the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic;
−Removed: • reduction in billings, foreign currency exchange rates, and trade with the European Union;
+Added: • general economic conditions in each country or region, including inflationary pressure;
+Added: • the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic, including inflationary pressure;
+Added: • reduction in billings, foreign currency exchange rates, and trade with the United Kingdom;
• contractual and legislative restrictions or changes;
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• reduced protection for intellectual property rights in some countries and practical difficulties of enforcing rights abroad;
−Removed: • compliance with the laws of foreign taxing jurisdictions and overlapping of different tax regimes.
+Added: • compliance with the laws of foreign taxing jurisdictions and overlap of different tax regimes.
Any of these risks could adversely affect our international operations, reduce our international revenues or increase our operating costs, adversely affecting our business, financial condition and operating results.
11 unchanged sentences
If currency exchange rates fluctuate substantially in the future, the results of our operations could be adversely affected.
−Removed: Due to our international operations, we may be exposed to the effects of fluctuations in currency exchange rates.
+Added: Due to our international operations, we may be exposed to the effects of fluctuations in currency exchange rates, including inflationary pressure.
We generate revenue and incur expenses for employee compensation and other operating expenses at our U.K.
−Removed: and Indian offices in the local currency.
+Added: office in the local currency.
Fluctuations in the exchange rates between the U.S.
−Removed: dollar, British pound, Canadian dollar and Indian rupee could result in the dollar equivalent of such revenue and expenses being lower, which could have a negative net impact on our reported operating results.
+Added: dollar, British pound and Canadian dollar could result in the dollar equivalent of such revenue and expenses being lower, which could have a negative net impact on our reported operating results.
Although we may in the future decide to undertake foreign exchange hedging transactions to cover a portion of our foreign currency exchange exposure, we currently do not hedge our exposure to foreign currency exchange risks.
3 unchanged sentences
federal and state NOLs of $626.5 million and $255.6 million , respectively.
−Removed: Our NOLs generated in tax years ending on or prior to December 31, 2017 are only permitted to be carried forward for 20 years under applicable U.S.
−Removed: Under the Tax Cuts and Jobs Act ("the Tax Act"), as modified by the CARES Act, our federal NOLs generated in tax years ending after December 31, 2017 may be carried forward indefinitely, but the deductibility of federal NOLs, particularly for tax years beginning after December 31, 2020, may be limited.
−Removed: It is uncertain if and to what extent various states will conform to the Tax Act and the CARES Act.
−Removed: In addition, under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended, ("the Code") and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or taxes may be limited.
−Removed: We have experienced “ownership changes” under IRC Section 382 in the past, and future changes in ownership of our stock, including by reason of future offerings, as well as other changes that may be outside of our control, could result in future ownership changes under IRC Section 382.
−Removed: If we are or become subject to limitations on our use of NOLs under IRC Section 382, our NOLs could expire unutilized or underutilized, even if we earn taxable income against which our NOLs could otherwise be offset.
+Added: Our federal NOLs generated in tax years beginning before January 1, 2018, are only permitted to be carried forward for 20 years under applicable U.S.
+Added: Our federal NOLs generated in tax years beginning after December 31, 2017, may be carried forward indefinitely, but the deductibility of such federal NOL carryforwards is limited to 80% of taxable income.
+Added: It is uncertain if and to what extent various states will conform to federal law.
+Added: In addition, under Section 382 and Section 383 of the Internal Revenue Code of 1986, as amended (the "Code"), if a corporation undergoes an “ownership change,” which is generally defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOL carryforwards and other pre-change tax attributes to offset its post-change taxable income or taxes may be limited.
+Added: We have experienced “ownership changes” under Code Section 382 in the past, and future changes in ownership of our stock, including by reason of future offerings, as well as other changes that may be outside of our control, could result in future ownership changes under Code Section 382.
+Added: If we are or become subject to limitations on our use of federal NOL carryforwards under IRC Section 382, our federal NOL carryforwards could expire unutilized or underutilized, even if we earn taxable income against which our federal NOL carryforwards could otherwise be offset.
Similar provisions of state tax law may also apply to limit our use of accumulated state tax attributes.
−Removed: In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
+Added: In addition, at the state level, there may be periods during which the use of NOL carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.
+Added: Changes in tax laws or regulations could materially adversely affect our company.
+Added: New tax laws or regulations could be enacted at any time, and existing tax laws or regulations could be interpreted, modified or applied in a manner that is adverse to us, which could adversely affect our business and financial condition.
+Added: For instance, the United States recently passed the Inflation Reduction Act, which provides for a minimum tax equal to 15% of the adjusted financial statement income of certain large corporations, as well as a 1% excise tax on certain share buybacks by public corporations that would be imposed on such corporations.
+Added: In addition, it is uncertain if and to what extent various states will conform to federal tax legislation.
+Added: The impact of such changes or future legislation could increase our U.S.
+Added: tax expense and could have a material adverse impact on our business and financial condition.
Future acquisitions could disrupt our business and adversely affect our business, financial condition and operating results.
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We may not succeed in addressing these or other risks or any other problems encountered in connection with the integration of any acquired business.
−Removed: The inability to integrate successfully the business, technologies, products, personnel or operations of any acquired business, or any significant delay in achieving integration, could have a material adverse effect on our business, financial condition and operating results.
+Added: The inability to successfully integrate the business, technologies, products, personnel or operations of any acquired business, or any significant delay in achieving integration, could have a material adverse effect on our business, financial condition and operating results.
Charges to earnings resulting from our acquisitions may cause our operating results to suffer .
−Removed: Under accounting principles, we have allocated the total purchase price of Dosh’s and Bridg’s net tangible assets and intangible assets based on their fair values as of the date of the acquisitions, and we have recorded the excess of the purchase price over those fair values as goodwill.
+Added: Under accounting principles, we have allocated the total purchase price of Dosh’s, Bridg’s and Entertainment's net tangible assets and intangible assets based on their fair values as of the date of the acquisitions, and we have recorded the excess of the purchase price over those fair values as goodwill.
Our management’s estimates of fair value will be based upon assumptions that they believe to be reasonable but that are inherently uncertain.
The following factors, among others, could result in material charges that would cause our financial results to be negatively impacted:
−Removed: • impairment of goodwill;
+Added: • impairment of goodwill and other long-term assets;
• charges for the amortization of identifiable intangible assets and for stock-based compensation;
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Some of these costs may have to be accounted for as expenses that would negatively impact our results of operations.
−Removed: We may in the future may become involved in securities class action litigation that could divert management's attention and harm our business and insurance coverage may not be sufficient to cover all costs and damages.
−Removed: It is common for securities class-action litigation to follow acquisitions.
−Removed: Responding to any litigation could divert management's attention and harm our business.
−Removed: Moreover, insurance coverage may not be sufficient to cover all costs and damages we incur in connection with the litigation.
+Added: During the year ended December 31, 2022 we recognized a goodwill and intangible impairment of $453.29 million.
+Added: Refer to Note 5—Goodwill and Acquired Intangibles to our condensed consolidated financial statements for additional information regarding the goodwill impairment.
We may require additional capital to support growth, and such capital might not be available on terms acceptable to us, if at all, which may in turn hamper our growth and adversely affect our business.
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However, in August 2020, the Financial Accounting Standards Board published an Accounting Standards Update ("ASU") 2020-06, eliminating the separate accounting for the debt and equity components as described above.
−Removed: ASU 2020-06 will be effective for SEC-reporting entities for fiscal years beginning after December 15, 2021 (or, in the case of smaller reporting companies, December 15, 2023), including interim periods within those fiscal years.
−Removed: For reporting periods reported after January 1, 2022 we will adopt this standard using the modified retrospective method which allows for a cumulative-effect adjustment to the opening balance sheet without restating prior periods.
−Removed: When effective, we expect the elimination of the separate accounting described above to reduce the interest expense that we expect to recognize for the notes for accounting purposes.
+Added: ASU 2020-06 effective for SEC-reporting entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years.
+Added: On January 1, 2022, we adopted this standard using the modified retrospective method which allowed for a cumulative-effect adjustment to the opening balance sheet without restating prior periods.
+Added: As we did not elect the fair value option in the process, the notes, net of issuance costs, are accounted for as a single liability measured at amortized cost.
+Added: Upon adoption, we recorded a decrease in accumulated deficit of $11.2 million, an increase to the notes, net of $40.2 million and a decrease to additional paid in capital of $51.4 million.
If accounting standards change in the future and we are not permitted to use the treasury stock method, then our diluted earnings per share may decline.
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Risks Related to Regulatory and Intellectual Property Matters
−Removed: We and our FI partners are subject to stringent and changing privacy and data security laws, contractual obligations, self-regulatory schemes, government regulation, and standards related to data privacy and security.
−Removed: The actual or perceived failure by us, our customers, our partners, or other third parties upon whom we rely to comply with such obligations could harm our reputation, result in significant expense, subject us to significant fines and liability or otherwise adversely affect our business.
−Removed: We collect, receive, store, process, use, generate, transfer, disclose, make accessible, protect and share personal information and other information (“Process” or “Processing”) necessary to operate our business, for legal and marketing purposes, and for other business-related purposes.
−Removed: We, our FI partners, our marketers and other third parties upon whom we rely are subject to a number of domestic and international privacy and security laws, rules, regulations and guidance regarding privacy, information security and Processing (“Data Protection Laws”) as well as laws and regulations regarding online services and the Internet generally.
−Removed: In the U.S., the rules and regulations to which we, directly or contractually through our partners, or our marketers may be subject include those promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act, the Gramm-Leach-Bliley Act and state cybersecurity and breach notification laws, as well as regulator enforcement positions and expectations reflected in federal and state regulatory actions, settlements, consent decrees and guidance documents.
+Added: We and our FI partners are subject to stringent and changing privacy and data security laws, rules, contractual obligations, self-regulatory schemes, government regulation, policies and other obligations related to data privacy and security.
+Added: The actual or perceived failure by us, our customers, our partners, or other third parties upon whom we rely to comply with such obligations could lead to regulatory investigations or actions, litigation, disruptions of our business operations, loss of customers or sales, harm our reputation, result in significant expense, loss of revenue or profits, subject us to significant fines and liability or otherwise adversely affect our business.
+Added: In the ordinary course of business, we collect, receive, store, process, use, generate, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share personal information and other information (“Process” or “Processing”) necessary to operate our business, for legal and marketing purposes, and for other business-related purposes.
+Added: We, our FI partners, our marketers and other third parties upon whom we rely are subject to a number of data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy policies, contractual requirements, and other obligations relating to data privacy and security as well as laws and regulations regarding online services and the Internet generally.
+Added: In the U.S., the rules and regulations to which we, directly or contractually through our partners, or our marketers may be subject include those promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Health Insurance Portability and Accountability Act, the Gramm-Leach-Bliley Act and state cybersecurity, privacy and breach notification laws, as well as regulator enforcement positions and expectations reflected in federal and state regulatory actions, settlements, consent decrees and guidance documents.
The regulatory framework for online services and data privacy and security issues worldwide can vary substantially from jurisdiction to jurisdiction, is rapidly evolving and is likely to remain uncertain for the foreseeable future.
4 unchanged sentences
Additionally, new legislation proposed or enacted in various other states will continue to shape the data privacy environment nationally.
−Removed: regulators also may implement “Do-Not-Track” legislation, particularly if the industry does not implement a standard.
−Removed: Effective January 1, 2014, the California Governor signed into law an amendment to the California Online Privacy Protection Act of 2003.
−Removed: Such amendment requires operators of commercial websites and online service providers, under certain circumstances, to disclose in their privacy policies how such operators and providers respond to browser “do not track” signals.
−Removed: In addition, the regulatory environment for the collection and use of consumer data by marketers is evolving in the U.S.
−Removed: and internationally and is currently, in part, a self-regulatory framework, which relies on market participants to ensure self-compliance.
−Removed: The voluntary nature of this self-regulatory framework may change.
The California Consumer Privacy Act (“CCPA”), which took effect on January 1, 2020, is an example of the trend towards increasingly comprehensive privacy legislation being introduced in the United States.
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there is significant ambiguity regarding what constitutes a sale and many of our or our partner’s business practices may qualify.
−Removed: Further, California voters approved a new privacy law, the California Privacy Rights Act (“CPRA”), in the November 3, 2020 election.
−Removed: Effective starting on January 1, 2023, the CPRA will significantly modify the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information.
+Added: Further the California Privacy Rights Act (“CPRA”), became effective starting on January 1, 2023, which significantly modifies the CCPA, including by expanding consumers’ rights with respect to certain sensitive personal information.
The CPRA also creates a new state agency that will be vested with authority to implement and enforce the CCPA and the CPRA.
−Removed: New legislation proposed or enacted in various other states will continue to shape the data privacy environment nationally.
−Removed: For example, on March 2, 2021, Virginia enacted the Virginia Consumer Data Protection Act, or CDPA, which becomes effective on January 1, 2023, and on June 8, 2021, Colorado enacted the Colorado Privacy Act, or CPA, which takes effect on July 1, 2023.
−Removed: The CPA and CDPA are similar to the CCPA and CPRA but aspects of these state privacy statutes remain unclear, resulting in further legal uncertainty and potentially requiring us to modify our data practices and policies and to incur substantial additional costs and expenses in an effort to comply.
−Removed: Complying with the CCPA, CPRA, CDPA, CPA, or other laws, regulations, amendments to or re-interpretations of existing laws and regulations, and contractual or other obligations relating to privacy, data protection, data transfers, data localization, or information security may require us to make changes to our services to enable us or our customers to meet new legal requirements, incur substantial operational costs, modify our data practices and policies, and restrict our business operations.
−Removed: Any actual or perceived failure by us to comply with these laws, regulations, or other obligations may lead to significant fines, penalties, regulatory investigations, lawsuits, significant costs for remediation, damage to our reputation, or other liabilities.
−Removed: Internationally, virtually every jurisdiction in which we operate has established its own data security and privacy legal frameworks with which we, directly or contractually through our partners, our marketers or other third parties upon whom we rely may be required to comply, even if we are not established or based in such jurisdictions.
+Added: Other states, such as Virginia, Colorado, Utah, and Connecticut, have also passed comprehensive privacy laws, and similar laws are being considered in several other states, as well as at the federal and local levels.
+Added: These developments may further complicate compliance efforts, and may increase legal risk and compliance costs for us and the third parties upon whom we rely.
+Added: Outside of the United States, an increasing number of laws, regulations, and industry standards may govern data privacy and security.
+Added: For example, the European Union’s General Data Protection Regulation (“EU GDPR”) and the United Kingdom’s GDPR (“UK GDPR”), impose strict requirements for processing personal data.
+Added: For example, under the EU GDPR, companies may face temporary or definitive bans on data processing and other corrective actions;
+Added: fines of up to 20 million Euros or 4% of annual global revenue, whichever is greater;
+Added: or private litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests..
An example of the type of international regulation to which we may be subject is the U.K.’s Privacy and Electronic Communications Regulations 2011 (“PECR”), which implements the requirements of Directive 2009/136/EC (which amended Directive 2002/58/EC), which is known as the ePrivacy Directive.
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The PECR also imposes sector-specific breach reporting requirements, but only as applicable to providers of particular public electronic communications services.
−Removed: Additional EU member state laws of this type may follow.
−Removed: The European General Data Protection Regulation ("GDPR") is another example of the type of data protection legislation that may present a risk to our business.
−Removed: The GDPR imposes additional obligations and risk upon our business and increases substantially the penalties to which we could be subject in the event of any non–compliance.
−Removed: The GDPR imposes more stringent data protection requirements and requires us and our customers to give more detailed disclosures about how we collect, use and share personal information;
−Removed: contractually commit to data protection measures in our contracts with clients;
−Removed: maintain adequate data security measures;
−Removed: notify regulators and affected individuals of certain data breaches;
−Removed: meet extensive privacy governance and documentation requirements;
−Removed: and honor individuals’ data protection rights, including their rights to access, correct and delete their personal information.
−Removed: The GDPR provides greater penalties for noncompliance than previous data protection laws.
−Removed: Administrative fines under the GDPR can amount up to 20 million Euros or four percent of the group’s annual global turnover, whichever is highest.
−Removed: We may also be obligated to assist our customers, partners, and vendors with their own compliance obligations under the GDPR, which could require expenditure of significant resources.
−Removed: Assisting our customers, partners, and vendors in complying with the GDPR, or complying with the GDPR ourselves, may cause us to incur substantial operational costs or require us to change our business practices.
−Removed: The GDPR also imposes strict rules on the transfer of personal data out of the European Economic Area, or EEA, to the United States.
−Removed: Although one of the primary mechanisms for legally transferring personal data (known as Privacy Shield) was invalidated, the European Commission released a set of “Standard Contractual Clauses” in June 2021 that is designed to be a valid mechanism by which entities can validly transfer personal data out of the EEA to jurisdictions that the European Commission has not found to provide an adequate level of protection.
−Removed: The Standard Contractual Clauses, however, require parties that rely upon that legal mechanism to comply with additional obligations, such as conducting transfer impact assessments to determine whether additional security measures are necessary to protect the at-issue personal data.
−Removed: Moreover, due to potential legal challenges, there exists some uncertainty regarding whether the Standard Contractual Clauses will remain a valid mechanism for transfers of personal data out of the EEA.
−Removed: Additionally, Brexit took effect in January 2020, which will lead to further legislative and regulatory changes.
−Removed: Although the European Commission announced a decision of “adequacy” concluding that the UK ensures an equivalent level of data protection to the GDPR, which provides some relief regarding the legality of continued personal data flows from the EEA to the UK, some uncertainty remains, as this adequacy determination must be renewed after four years and may be modified or revoked in the interim.
−Removed: In addition to governmental regulation, we are also subject to the terms of our external and internal privacy and security policies, representations, certifications, standards, publications and frameworks, and contractual obligations to third parties related to privacy, information security and Processing (“Data Protection Obligations”), including without limitation, operating rules and standards imposed by industry organizations.
−Removed: Government regulation and industry standards may increase the costs of doing business online.
−Removed: Given that existing and proposed Data Protection Laws, industry standards and Data Protection Obligations can impose increasingly complex and burdensome obligations, and with substantial uncertainty over the interpretation and application of these requirements, we and our partners have faced and may face additional challenges in addressing and complying with them, and making necessary changes to our privacy policies and practices.
−Removed: In particular, there has been increasing public and regulatory concern and public scrutiny about the use of personally identifiable information.
−Removed: Because the interpretation and application of privacy and data protection laws are still uncertain, it is possible that these laws may be interpreted and applied in a manner that is inconsistent with our existing data management practices.
−Removed: To comply with our data protection and privacy obligations, we may be required to:
−Removed: fundamentally change our business models or practices, including, changing the information we collect or share;
−Removed: incur material costs and expenses;
−Removed: or divert management’s time and attention.
−Removed: Any of these effects could materially adversely affect our business operations and financial results, and may limit the adoption and use of, and reduce the overall demand for, our products, which could have an adverse impact on our business.
−Removed: Additionally, our partners may choose to alter or discontinue our program in light of the CCPA or other laws or regulations, which could adversely affect our financial condition.
+Added: Additional European Union member state laws of this type may follow.
+Added: In the ordinary course of business, we may transfer personal data from Europe and other jurisdictions to the United States or other countries.
+Added: Europe and other jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries.
+Added: In particular, the European Economic Area (EEA) and the United Kingdom (UK) have significantly restricted the transfer of personal data to the United States and other countries whose privacy laws it believes are inadequate.
+Added: Other jurisdictions may adopt similarly stringent interpretations of their data localization and cross-border data transfer laws.
+Added: Although there are currently various mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law, such as the EEA standard contractual clauses and UK’s International Data Transfer Agreement, these mechanisms are subject to legal challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the United States.
+Added: If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions, substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and injunctions against our processing or transferring of personal data necessary to operate our business.
+Added: Additionally, companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are subject to increased scrutiny from regulators, individual litigants, and activist groups.
+Added: Some European regulators have ordered certain companies to suspend or permanently cease certain transfers out of Europe for allegedly violating GDPR’s cross-border data transfer limitations.
+Added: Obligations related to data privacy and security are quickly changing, becoming increasingly stringent, and creating regulatory uncertainty.
+Added: Additionally, these obligations may be subject to differing applications and interpretations, which may be inconsistent or conflict among jurisdictions.
+Added: Preparing for and complying with these obligations requires us to devote significant resources, which may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.
+Added: In addition, these obligations may require us to change or business model.
We may, for example, be required to, or otherwise may determine that it is advisable to, develop or obtain additional tools and technologies for validation of certain of our limited sales related to online purchases to compensate for a potential lack of cookie data.
Even if we are able to do so, such additional tools may be subject to further regulation, time consuming to develop or costly to obtain, and less effective than our current use of cookies.
−Removed: While we strive to comply with applicable Data Protection Laws and Data Protection Obligations to the extent possible, we may at times fail to do so, or may be perceived to have failed to do so.
−Removed: For example, if we inadvertently received personal information from our partners, we may not comply with applicable Data Protection Laws and Data Protection Obligations with respect to that personal information.
−Removed: Moreover, despite our efforts, we may not be successful in achieving compliance if our personnel or vendors do not comply with applicable Data Protection Laws and Data Protection Obligations.
−Removed: Additionally, in many cases we or our partners take steps to anonymize information such that it no longer constitutes personal information;
−Removed: we may fail, or be accused of failing, to properly anonymize such information.
−Removed: We may also be subject to claims of liability or responsibility for the actions of third parties with whom we interact or upon whom we rely in relation to various solutions, including but not limited to our marketers and their agencies and partners.
−Removed: If we, or our business associates or other third parties upon whom we rely fail, or are perceived to have failed, to address or comply with applicable data protection laws, privacy policies and data protection obligations, or if our privacy policies are, in whole or part, found to be inaccurate, incomplete, deceptive, unfair or misrepresentative of our actual practices, it could:
−Removed: increase our compliance and operational costs;
−Removed: expose us to regulatory scrutiny, actions, fines and penalties;
−Removed: result in reputational harm;
−Removed: lead to a loss of consumers;
−Removed: reduce the use of our products by end users or our customers;
−Removed: affect our ability to attract new marketers and partners and maintain relationships with our existing marketers and partners;
−Removed: lead to special, compensatory punitive and statutory damages, litigation, injunctive relief, or consent orders regarding our privacy and security practices;
−Removed: introduce requirements that we provide notices, credit monitoring services and/or credit restoration services or other relevant services to impacted individuals;
−Removed: lead to an inability to Process data;
−Removed: lead to other adverse actions against our licenses to do business;
−Removed: or otherwise adversely affect our business.
+Added: Our business model materially depends on our ability to process personal data, so we are particularly exposed to the risks associated with the rapidly changing legal landscape.
+Added: For example, we may be at heighten risk of regulatory scrutiny, and any changes in the regulatory framework could require us to fundamentally change our business model.
+Added: We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations.
+Added: Moreover, despite our efforts, our personnel or third parties on whom we rely may fail to comply with such obligations, which could negatively impact our business operations.
+Added: If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including, but not limited to:
+Added: government enforcement actions (e.g.
+Added: investigations, fines, penalties, audits and inspections);
+Added: litigation (including class-action claims);
+Added: additional reporting requirements and/or oversight;
+Added: bans on processing personal data;
+Added: and orders to destroy or not use personal data.
+Added: Any of these events could have a material adverse effect on our reputation, business or financial condition, including, but not limited to:
+Added: loss of customers;
+Added: interruptions or stoppages in our business operations;
+Added: inability to process personal data or to operate in certain jurisdictions;
+Added: limited ability to develop or commercialize our products;
+Added: expenditure of time and resources to defend any claim or inquiry;
+Added: adverse publicity;
+Added: or substantial changes to our business model or operations.
If the use of matching technologies, such as cookies, pixels and device identifiers, is rejected by Internet users, restricted or otherwise subject to unfavorable terms, such as by non-governmental entities, our validation methodologies could be impacted and we may lose customers and revenue.
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The most commonly used Internet browsers allow Internet users to modify their browser settings to prevent cookies from being accepted by their browsers or are set to block third-party cookies by default.
−Removed: Further, Google recently announced its plans to eliminate third-party cookies from its browser in 2022.
+Added: Further, Google eliminated third-party cookies from its browser in 2022.
If more browser providers and Internet users adopt these settings or delete their cookies more frequently than they currently do, our practices related to the validation of limited online purchases could be impacted, which could result in us needing to implement other available methodologies.
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and other jurisdictions, all of which provide only limited protection and may not now or in the future provide us with a competitive advantage.
−Removed: As of the date of filing, we had seven issued patents relating to our software.
+Added: As of the date of filing, we had eight issued patents relating to our software.
We cannot assure you that any patents will issue from any patent applications, that patents that issue from such applications will give us the protection that we seek or that any such patents will not be challenged, invalidated, or circumvented.
−Removed: Any patents that may issue in the future from our pending or future patent applications may not provide sufficiently broad protection and may not be enforceable in actions against alleged infringers.
+Added: Any patents that may issue in the future from our pending or future patent applications may not provide sufficiently broad protection and may not be enforceable in actions against alleged infringements.
We have registered, or are registering, the “Cardlytics,” “Dosh," "Bridg" and "Entertainment" names and logos in the U.S.
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• general economic, regulatory and market conditions.
−Removed: Recently, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies due to, among other factors, the actions of market participants or other actions outside of our control, including general market volatility caused by expected interest rate changes, inflation and the COVID-19 pandemic.
+Added: Recently, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies, including our own, due to, among other factors, the actions of market participants or other actions outside of our control, including general market volatility caused by expected interest rate changes, inflation and the COVID-19 pandemic.
These fluctuations have often been unrelated or disproportionate to the operating performance of those companies.
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The forum selection clause in our amended and restated certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us.
−Removed: We have identified a material weakness in our internal control over financial reporting, and if our remediation of such material weakness is not effective, or if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.
−Removed: In the course of preparing our financial statements for the year ended December 31, 2021, we identified a material weakness in our internal control over financial reporting.
−Removed: A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.
−Removed: The material weakness identified pertains to significant acquisitions, including the oversight of third-party valuation specialists and sufficiently precise reviews of the related valuation reports for our goodwill and acquired intangible assets, contingent consideration and liabilities assumed.
−Removed: If we are unable to further implement and maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.
−Removed: If we are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by Nasdaq, the SEC or other regulatory authorities, which could require additional financial and management resources.
−Removed: Furthermore, we cannot assure you that the measures we have taken to date, and actions we may take in the future, will be sufficient to remediate the control deficiencies that led to our material weakness in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.
−Removed: Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business.
−Removed: Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future.
−Removed: Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods.
−Removed: Any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we are required to include in our periodic reports that are filed with the SEC.
−Removed: Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.
−Removed: In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the Nasdaq.
General Risk Factors
14 unchanged sentences
We are unable to predict the effect that sales, particularly sales by our directors, executive officers, and significant stockholders, may have on the prevailing market price of our common stock.
−Removed: With the exception of 172,880 shares issued in the purchase of Entertainment, which are subject to holding periods under the restrictions of Rule 144 under the Securities Act as of the time of this filing, all of our outstanding shares of common stock are available for sale in the public market, subject only to the restrictions of Rule 144 under the Securities Act in the case of our affiliates.
+Added: All of our outstanding shares of common stock are available for sale in the public market, subject only to the restrictions of Rule 144 under the Securities Act in the case of our affiliates.
In addition, the shares of common stock subject to outstanding options under our equity incentive plans and the shares reserved for future issuance under our equity incentive plans, as well as shares issuable upon vesting of restricted stock unit awards, will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations.
12 unchanged sentences
We have incurred and will continue to incur increased costs as a result of being a public company.
−Removed: As a public company, and particularly as we are no longer an “emerging growth company,” we have incurred and we will continue to incur significant legal, accounting and other expenses that we did not incur as a private company.
+Added: As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses that we did not incur as a private company.
The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Stock Market and other applicable securities rules and regulations impose various requirements on public companies.
1 unchanged sentence
Such additional costs going forward could negatively affect our financial results.
+Added: Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism.
+Added: Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expenses, hinder the execution of our business and growth strategy and impact the price of our common stock.
+Added: In the past, securities class action litigation often has been brought against companies following a decline in the market price of such companies’ securities.
+Added: In addition, stockholder activism, which could take many forms and arise in a variety of situations, has been increasing recently, and new universal proxy rules could significantly lower the cost and further increase the ease and likelihood of stockholder activism.
+Added: This risk is especially relevant for us as a result of the significant stock price volatility experienced by technology companies in recent years.
+Added: Volatility in our stock price or other reasons may in the future cause us to become the target of securities litigation or stockholder activism.
+Added: Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs, including significant legal fees and other expenses, and divert our management and board of directors’ attention and resources from our business.
+Added: Additionally, securities litigation and stockholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with customers and business partners, adversely affect our reputation, and make it more difficult to attract and retain qualified personnel.
+Added: Our stock price could also be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism.
UNRESOLVED STAFF COMMENTS
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.