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Item 7. Management’s Discussion and Analysis

2025-03-13 compared with 2024-03-14 · 158 added, 124 removed, 405 unchanged (41% of the section changed)

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Today, we serve more than 740,000 customers across three core verticals:

Home Services;

Health Services;

and Fitness & Wellness Services.

Within our core verticals, our customers operate within numerous micro-verticals, ranging from home service professionals, such as home improvement contractors and home maintenance technicians, to physician practices and therapists within Health Services, to personal trainers and salon owners within Fitness & Wellness.

EverPro for Home Services;

EverHealth for Health Services;

and EverWell for Wellness Services.

Our platform provides vertically-tailored SaaS solutions that address service SMBs’ increasingly specialized demands, as well as highly complementary solutions that provide fully-integrated offerings, allowing service SMBs and EverCommerce to succeed in the market, and provide end consumers more convenient service experiences.

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Our solutions include:

custom website design, development and hosting, responsive web design, marketing campaign design and management, search engine optimization (“SEO”), paid search and display advertising, social media and blog automation, call tracking, review monitoring and marketplace lead generation, among others.

custom website design, development and hosting, responsive web design, marketing campaign design and management, search engine optimization, paid search and display advertising, social media and blog automation, call tracking, review monitoring and marketplace lead generation, among others.

In March 2025, the Company announced the evaluation of strategic alternatives for our Marketing Technology

Solutions with an expectation of a probable disposition by sale within the next 12 months.

The Company expects to reflect Marketing Technology Solutions as discontinued operations beginning with its first quarter 2025 financial reporting.

We go to market with suites of solutions that are aligned to our three core verticals.

(i) the EverPro suite of solutions in Home Services;

(ii) the EverHealth suite of solutions within Health Services;

and (iii) the EverWell suite of solutions in Fitness & Wellness Services.

Within each suite, our Business Management Software – the system of action at the center of a service business’ operation – is typically the first solution adopted by a customer.

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Our business benefits from attractive unit economics.

Approximately 97% of our revenue in the years ended December 31, 2023 and 2022 was recurring or re-occurring, and we maintained an annualized net pro forma revenue retention rate of approximately 95% for the quarter ended December 31, 2023.

Excluding our marketing technology solutions, our annualized net revenue retention rate for our core software and payments solutions was approximately 100% for the quarter ended December 31, 2023.

Approximately 97% of our revenue was recurring or re-occurring in both of the years ended December 31, 2024 and 2023, and we maintained an annualized net revenue retention rate of approximately 91% and 93% for the quarters ended December 31, 2024 and 2023, respectively.

Our annualized pro forma net revenue retention rate was equal to the annualized net revenue retention rate for the quarters ended December 31, 2024 and 2023, respectively.

Excluding our marketing technology solutions, our annualized net revenue retention rate for our core software and payments solutions was approximately 96% and 98% for the quarters ended December 31, 2024 and 2023, respectively.

We believe the retention and growth of revenue from our existing customers is a helpful measure of the health of our business and our future growth prospects.

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For example, we have leveraged our land and expand strategy to cross sell solutions to our existing customers, which has supported our high net pro forma revenue retention rate by increasing customer utilization of our solutions, educating customers as to how our platform and synergies can support their businesses and, in turn, improving customer stickiness.

We calculate our monthly net pro forma revenue retention rate for a particular month as the recurring or re-occurring revenue gained/lost from existing customers, less the recurring or re-occurring revenue lost from cancelled customers, as a percentage of total recurring or re-occurring revenue 12 months prior, divided by 12.

We calculate our annualized net revenue retention rate based on the average of the annualized net revenue retention rate calculated for each month during the twelve-month period as of the most recent quarter end.

Our calculation of net revenue retention rate for any fiscal period includes the positive recurring and re-occurring revenue impacts of selling new solutions to existing customers and the negative impacts of contraction and attrition among this set of customers.

The annualized net revenue retention rate for a particular month is calculated as the recurring or re-occurring revenue gained/lost from existing customers, less the recurring or re-occurring revenue lost from cancelled customers as a percentage of total recurring or re-occurring revenue during the corresponding month of the prior year.

For existing customers, we consider customers that existed 11 or more months prior to the current month and that do not have an end date (i.e., cancelled relationship) on or after the first day of the current month.

For example, the recurring or re-occurring revenue gained/lost from existing customers in November 2024 is the difference between the recurring or re-occurring revenue generated in November 2024 and the same such revenue generated in November 2023, for customers with a start date prior to December 1, 2023 and no end date or cancelled relationship on or after November 1, 2024.

For cancelled customers, we examine customers that cancelled their relationships on or after the first day of the month that is 12 months prior to the current month and before the first day of the current month.

For cancelled customers, we examine customers that cancelled their relationships on or after the first day of the month that is 12 months prior to the current month and

before the first day of the current month.

For example, the recurring or reoccurring revenue lost from cancelled customers in November 2024 is the difference between the recurring or re-occurring revenue generated in November 2024 and the same such revenue generated in November 2023, for customers that cancelled on or after November 1, 2023 and before November 1, 2024.

Net pro forma revenue retention is calculated as if acquisitions that were closed during the prior period presented were closed on the first day of such period presented.

Our calculation of net pro forma revenue retention rate for any fiscal period includes the positive recurring and re-occurring revenue impacts of selling new solutions to existing customers and the negative impacts of contraction and attrition among this set of customers.

Our net pro forma revenue retention rate

may fluctuate as a result of a number of factors, including the growing level of our revenue base, the level of penetration within our customer base, expansion of solutions, new acquisitions and our ability to retain our customers.

Our calculation of net pro forma revenue retention rate may differ from similarly titled metrics presented by other companies.

The annualized pro forma net revenue retention is calculated as the annualized net revenue retention rate adjusted as though acquisitions and dispositions that were closed during the prior period presented were closed on the first day of such period presented.

Our annualized net revenue retention rate and pro forma net revenue retention rate may fluctuate as a result of a number of factors, including the growing level of our revenue base, the level of penetration within our customer base, expansion of solutions, new acquisitions and dispositions and our ability to retain our customers.

Our calculation of annualized net revenue retention rate and annualized pro forma net revenue retention rate may differ from similarly titled metrics presented by other companies.

This rate for any fiscal period includes the positive recurring and re-occurring revenue impacts of selling new solutions to existing customers and the negative impacts of contraction and attrition among this set of customers.

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Impact of Macroeconomic Climate

The macroeconomic climate continues to see pressure from global developments such as international geopolitical conflicts, terrorism, a future pandemic, rising inflation, fluctuations in the value of the US Dollar, rising interest rates and supply chain disruptions.

The macroeconomic climate has seen in the recent years, and may continue to see, pressure from global developments such as international geopolitical conflicts, increased tariffs and proposed tariffs between the United States and other nations, terrorism, pandemics or health crises, rising inflation, fluctuations in the value of the US Dollar, rising interest rates and supply chain disruptions.

These developments have had and may continue to have an adverse effect on our revenues and demand for our products and services, as well as on our costs of doing business.

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Sale of Fitness Solutions

On March 13, 2024, we entered into definitive sale and purchase agreements to sell our fitness solutions to Jonas Software (see Note 2.

Summary of Significant Accounting Policies).

We expect the transaction to close in two parts.

The North American businesses, Club OS and ASF, have closed simultaneous with signing.

The international businesses, ClubWise and MyPTHub, are expected to close during the third quarter of 2024 following customary closing conditions and regulatory approvals.

The Company does not consider the sale of the asset disposal group to be a strategic shift that will have a material effect on its operations and financial results, and therefore it does not qualify for reporting as a discontinued operation.

On March 13, 2024, we entered into definitive sale and purchase agreements to sell our fitness solutions, comprised of North American Fitness and UK Fitness (“Fitness Solutions”), to Jonas Software (see Note 3.

Acquisitions and Dispositions included in this Annual Report on Form 10-K).

The sale of North American Fitness closed simultaneously with signing and the sale of UK Fitness closed July 1, 2024.

The divestiture did not qualify for reporting as a discontinued operation and therefore, its results were included in our unaudited condensed consolidated financial statements included in this Annual Report on Form 10-K through the applicable date of sale.

During the year ended December 31, 2024, we recognized losses of $ 4.9 million related to the sale of Fitness Solutions, which are included in loss on sale and impairments on our consolidated statements of operations and comprehensive loss included in this Annual Report on Form 10-K.

During the year ended December 31, 2024, we recognized $ 6.4 million of goodwill impairment charges representing the allocated goodwill to Fitness Solutions, which is included in loss on sale and impairments on the consolidated statements of operations and comprehensive loss included in this Annual Report on Form 10-K.

Key Factors Affecting Our Performance

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Sustaining our growth requires continued adoption of our solutions by new customers.

Through organic growth of our business and acquisitions, the number of customers on our platform increased from over 685,000 at the end of 2022 to approximately 708,000 at the end of 2023.

Through organic growth of our business, the number of customers on our platform increased to approximately 740,000 at the end of 2024.

Excluding the customers associated with the sale of our fitness assets, we served more than 690,000 customers at the end of 2023 ( see Note 3.

Acquisitions and Dispositions included in this Annual Report on Form 10-K).

We will continue to invest in our efficient go-to-market strategy as we further penetrate our addressable markets.

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A primary focus for revenue expansion focuses on cross-selling payments solutions to customers in an effort to prioritize margin growth.

We also generate subscription and marketing technology revenue from cross-selling our Customer Engagement and Marketing Technology Solutions across our customer base.

We also generate subscription and marketing technology revenue from cross-selling our Customer

Engagement and Marketing Technology Solutions across our customer base.

These solutions increase customer loyalty, repeat purchases, improve customer experiences and help businesses to manage campaigns and generate quality leads.

Expanding into New Products and Verticals

Expanding into New Products and Micro-Verticals

Given our position in the service SMB ecosystem, as well as our relationships and level of engagement with our customers, we use insights gained through our customer relationships and lifecycle to identify additional solutions that are value-additive for our customers.

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We continue to drive awareness and generate demand for our solutions in order to acquire new customers and develop new service SMB relationships, as we believe that we still have a significant market opportunity ahead of us.

We will continue to expand efforts to

market our solutions directly to SMBs through online digital marketing, raising brand awareness at conferences and events, and other marketing channels.

We will continue to expand efforts to market our solutions directly to SMBs through online digital marketing, raising brand awareness at conferences and events, and other marketing channels.

We believe this investment, coupled with our attractive unit economics, will enable us to grow our customer base and continue our strategy of profitable growth.

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We believe that investment in technology development will contribute to our long-term growth, but may also negatively impact our short-term profitability.

In 2023, we continued to invest in scalable operations and necessary functions to support operating as a public company, including Sarbanes-Oxley compliance.

In 2024, we continued to invest in scalable operations, including vertical market leadership, and necessary functions to support operating as a public company, including Sarbanes-Oxley compliance.

Additionally, we continued to evaluate our suite of solutions and strategic options to drive investment in our highest growth solutions while simplifying our business to align with our transformation initiatives, including the divestiture of Fitness Solutions.

In 2025 and beyond, incremental investments will be needed to support the ongoing transformation of our business and infrastructure, including Sarbanes-Oxley compliance.

As part of our transformation initiatives, we expect to continue to evaluate our suite of solutions and may pursue dispositions of non-core assets and other strategic transactions.

In March 2025, the Company announced the evaluation of strategic alternatives for our Marketing Technology Solutions with an expectation of a probable disposition by sale in 2025.

The Company expects to reflect Marketing Technology Solutions as discontinued operations beginning with its first quarter 2025 financial reporting.

We acquire companies to accelerate our position as a market leader, fill gaps within our vertically tailored solutions, deepen our competitive moats in existing verticals and enter new verticals and geographies.

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For additional information, see Part I.

“Risk Factors—Risks Related to Our Business—Our recent growth rates may not be sustainable or indicative of future growth,” “—We may reduce our rate of acquisitions and may be unsuccessful in achieving our objectives through acquisitions, dispositions or other strategic transactions” and “—Revenues and profits generated through acquisitions may be less than anticipated, and we may fail to uncover all liabilities of acquisition targets through the due diligence process prior to an acquisition, resulting in unanticipated costs, losses or a decline in profits, as well as potential impairment charges.

“Risk Factors—Risks Related to Our Business—Our recent growth rates may not be sustainable or indicative of future growth,” “—We may be unsuccessful in achieving our objectives through acquisitions, dispositions or other strategic transactions” and “—Revenues and profits generated through acquisitions may be less than anticipated, and we may fail to uncover all liabilities of acquisition targets through the due diligence process prior to an acquisition, resulting in unanticipated costs, losses or a decline in profits, as well as potential impairment charges.

Claims against us relating to any acquisition may necessitate our seeking claims against the seller for which the seller may not indemnify us or that may exceed the seller’s indemnification obligations.”

Key Business and Financial Metrics

In addition to our results and measures of performance determined in accordance with Generally Accepted Accounting Principles (”GAAP”), we believe the following key business and non-GAAP financial measures are useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business, formulating business plans and making strategic decisions.

In addition to our results and measures of performance determined in accordance with accounting principles generally accepted in the United States of America (“U.S.

GAAP”), we believe the following key business and non-GAAP financial measures are useful in evaluating and comparing our financial and operational performance over multiple periods, identifying trends affecting our business, formulating business plans and making strategic decisions.

Pro Forma Revenue Growth Rate

Pro Forma Revenue Growth Rate is a key performance measure that our management uses to assess our consolidated operating performance over time.

Pro Forma Revenue Growth Rate is a key performance measure that our management uses to assess our consolidated operating performance from continuing operations over time.

Management also uses this metric for planning and forecasting purposes.

Our year-over-year Pro Forma Revenue Growth Rate is calculated as though all acquisitions completed as of the end of the latest period were closed as of the first day of the prior year period presented.

In calculating Pro Forma Revenue Growth Rate, we add the revenue from acquisitions for the reporting periods prior to the date of acquisition (including estimated purchase accounting adjustments), and then calculate our revenue growth rate between the two reported periods.

As a result, Pro Forma Revenue Growth Rate includes pro forma revenue from businesses acquired during the period, including revenue generated during periods when we did not yet own the acquired businesses.

In including such pre-acquisition revenue, Pro Forma Revenue Growth Rate allows us to measure the underlying revenue growth of our business as it stands as of the end of the respective period, which we believe provides insight into our then-current operations.

Our year-over-year Pro Forma Revenue Growth Rate is calculated as though all acquisitions and divestitures completed as of the end of the latest period were closed as of the first day of the prior year period presented.

In calculating Pro Forma Revenue Growth Rate, we add the revenue from acquisitions for the reporting periods prior to the date of acquisition (including estimated purchase accounting adjustments) and exclude revenue from divestitures for the reporting periods prior to the date of divestiture, and then calculate our revenue growth rate between the two reported periods.

As a result, Pro Forma Revenue Growth Rate includes pro forma revenue from businesses acquired and excludes revenue from businesses divested during the period, including revenue generated during periods when we did not yet own the acquired businesses and excludes revenue prior to the divestiture of the business.

In including such pre-acquisition revenue and excluding pre-divestiture revenue, Pro Forma Revenue Growth Rate allows us to measure the underlying revenue growth of our business as it stands as of the end of the respective period, which we believe provides insight into our then-current operations.

Pro Forma Revenue Growth Rate does not represent organic revenue generated by our business as it stood at the beginning of the respective period.

Pro Forma Revenue Growth Rates are not necessarily indicative of either future results of operations or actual results that might have been achieved had the acquisitions been consummated on the first day of the prior year period presented.

We believe that this metric is useful to investors in analyzing our financial and operational performance period over period and evaluating the growth of our business, normalizing for the impact of acquisitions.

Pro Forma Revenue Growth Rates are not necessarily indicative of either future results of operations or actual results that might have been achieved had the acquisitions and divestitures been consummated on the first day of the prior year period presented.

This metric is particularly useful to management due to the number of acquired entities.

Our Pro Forma Revenue Growth rate was 8.6% for the year ended December 31, 2023 reflective of the underlying growth in our business including new customers and providing more solutions to existing customers.

Our Revenue Growth Rate was 3.5% for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

Total revenues include post-acquisition revenue from Kickserv, which was acquired August 10, 2023 (see Note 3.

Acquisitions and Dispositions in this Annual Report on Form 10-K), of $3.0 million and $1.0 million during the years ended December 31, 2024 and 2023, respectively.

Additionally, total revenues include pre-divestiture revenue from Fitness Solutions, which was divested in 2024 (see Note 3.

Acquisitions and Dispositions in this Annual Report on Form 10-K), of $8.1 million and $23.7 million during the years ended December 31, 2024 and 2023, respectively.

Our Pro Forma Revenue Growth rate was 5.7% for the year ended December 31, 2024, reflective of the underlying growth in our business as a result of new customers and providing more solutions to existing customers.

Non-GAAP Financial Measures

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Adjusted EBITDA

Adjusted EBITDA is calculated as net loss adjusted to exclude interest and other expense, net, income tax expense (benefit), depreciation and amortization, other amortization, stock-based compensation and transaction-related and other non-recurring costs.

Adjusted EBITDA is calculated as net loss adjusted to exclude interest and other expense, net, income tax expense (benefit), depreciation and amortization, other amortization, stock-based compensation expense and transaction-related and other non-recurring or unusual costs.

Other amortization includes amortization for capitalized contract acquisition costs.

Transaction-related costs are specific deal-related costs such as legal fees, financial and tax due diligence, consulting and escrow fees.

Other non-recurring costs are expenses such as impairment charges, system implementation costs, severance expense related to planned restructuring activities, and costs associated with integration and transformational improvements.

Transaction-related and other non-recurring costs are excluded as they are not representative of our underlying operating performance.

Other non-recurring or unusual costs are expenses such as impairment charges, (gains) losses from divestitures, system implementation costs, executive separation costs, severance expense related to planned restructuring activities, and costs associated with integration and transformational improvements.

Transaction-related and other non-recurring or unusual costs are excluded as they are not representative of our underlying operating performance.

Adjusted EBITDA is a key performance measure that our management uses to assess our financial performance and is also used for internal planning and forecasting purposes.

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Interest and other expense, net 35,559 46,407

Income tax expense (benefit)

1,639 (4,680)

Income tax expense

Depreciation and amortization 88,824 104,201

Other amortization 6,903 5,738

Stock-based compensation 25,559 26,818

Transaction-related and other non-recurring costs

Stock-based compensation expense

26,491 25,559

Transaction-related and other non-recurring or unusual costs

54,531 17,695

Adjusted EBITDA $ 177,001 $ 155,619

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Sales commissions that are incremental to obtaining a customer contract are deferred and amortized ratably over the estimated period of our relationship with that customer.

We expect our sales and marketing expenses will increase in absolute dollars and may increase as a percentage of revenue for the foreseeable future as we continue to increase investments to support our growth.

We expect our sales and marketing expenses from continuing operations will increase in absolute dollars and may increase as a percentage of revenue for the foreseeable future as we continue to increase investments to support our growth.

Product Development

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Product development expenses also include third-party outsourced technology costs incurred in developing our platforms, and computer equipment, software and subscription services dedicated for use by our product development organization.

We expect our product development expenses to increase in absolute dollars and remain generally consistent as a percentage of revenue for the foreseeable future as we continue to dedicate substantial resources to develop, improve and expand the functionality of our solutions.

We expect our product development expenses from continuing operations to increase in absolute dollars and increase as a percentage of revenue during 2025 as we continue to dedicate substantial resources to develop, improve and expand the functionality of our solutions.

General and Administrative

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General and administrative expenses also include external legal, accounting and other professional services fees, rent, software and subscription services dedicated for use by our general and administrative employees and other general corporate expenses.

We expect general and administrative expense to increase on an absolute dollar basis for the foreseeable future as we continue to increase investments to support our growth and due to increased costs as a result of being a public company.

We expect general and administrative expense from continuing operations to increase on an absolute dollar basis for the foreseeable future due to costs as a result of being a public company.

As we are able to further scale our operations in the future, we would expect that general and administrative expenses would decrease as a percentage of revenue.

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Depreciation and amortization primarily relate to intangible assets, property and equipment and capitalized software.

During the fourth quarter of 2023, we determined that the estimated fair value of our fitness asset group was insufficient to recover the net carrying value of the asset group resulting in an impairment of long-lived assets of approximately $5.1 million (s ee Note 19.

Subsequent Event included in this Annual Report on Form 10-K ).

Additionally, during the year ended December 31, 2023, t he Company ceased use of certain leased premises and subleased certain facilities resulting in an impairment charge of $1.2 million to impair the right-of-use lease assets to their fair value.

Loss on Sale and Impairments

Loss on sale relates to the divestiture of Fitness Solutions.

Impairments include goodwill impairment charges and operating lease impairments related to the Company’s decision to cease use of certain leased premises and sublease certain facilities.

Interest and Other Expense, net

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Depreciation and amortization 88,824 104,201

Loss on sale and impairments

Total operating expenses 698,513 672,943

Operating income (loss)

2,426 (30,594)

Operating income

Interest and other expense, net (35,559) (46,407)

Net loss before income tax (expense) benefit

Net loss before income tax expense

(35,307) (43,981)

Income tax (expense) benefit

Income tax expense

(5,782) (1,639)

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Depreciation and amortization 12.7 % 15.4 % (2.7) %

Impairment 0.9 % — % 0.9 %

Loss on sale and impairments

5.7 % 0.9 % 4.8 %

Total operating expenses 100.0 % 99.6 % 0.4 %

While revenue growth remains a key focus, we remain committed to continued expansion of gross margin, net income and Adjusted EBITDA through ongoing transformation initiatives.

As a percentage of revenue, cost of revenues declined from 35.0% to 34.2%, an improvement of approximately 80 basis points resulting in higher gross margin.

Additionally, the combination of cost of revenue, sales and marketing, product development and general and administrative costs declined from 87.1% to 83.3%, an improvement of approximately 380 basis points.

As a percentage of revenue, cost of revenues declined from 34.2% for the year ended December 31, 2023 to 32.7% for the year ended December 31, 2024, an improvement of approximately 150 basis points resulting in higher gross margin.

Additionally, the combination of cost of revenue, sales and marketing, product development and general and administrative costs declined from 83.3% for the year ended December 31, 2023 to 81.6% for the year ended December 31, 2024, an improvement of approximately 170 basis points.

A discussion on primary drivers of cost reductions resulting in improved margin follows in the subsequent sections.

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Total revenues $ 698,765 $ 675,369 $ 23,396 3.5 %

Revenues increased $54.6 million, or 8.8%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022, which primarily represents the organic growth of the business as there were no material acquisitions during 2023 or 2022.

This increase was driven primarily by a $29.4 million increase from subscription and transaction revenues due to our expansion in our number of customers and certain price increases across our portfolio.

Additionally, there was a $25.5 million increase due to higher transaction volumes processed through our payment platforms.

The decline in marketing technology solutions revenues of 1.1% resulted primarily from a reduction in demand driven by decreases in consumer spending during 2023.

The majority of our revenue growth is attributable to the successful delivery of system of action capabilities to our SMBs in our verticals of home services, health and wellness as well as the ancillary revenue included in “other” associated with these services.

The combined growth of revenue from the categories of subscription and transaction fees and other was 11.5% partially offset by a reduction in marketing technology solutions, which has experienced more volatility in revenue generation than the delivery of services through system of actions.

Revenues increased $23.4 million, or 3.5%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The growth of revenue from subscription and transaction fees was 5.4% during the year ended December 31, 2024 as compared to the prior year period, while the changes in marketing technology solutions and other revenues experienced more volatility in revenue generation than the delivery of services through our system of actions.

The majority of our revenue growth is attributable to the successful delivery of system of action capabilities to our SMBs in our verticals of home services, health and wellness.

The subscription and transaction revenue increases during the year ended December 31, 2024 consist primarily of increases from (a) business management software and (b) billing and payment solutions.

Business management software revenues drove a $24.8 million increase in subscription and transaction revenues due to an expansion in our number of customers, certain price increases across our portfolio, and an increase in rebate revenue from contracted suppliers due to growth of membership subscriptions in group purchasing programs.

Billing and payment solutions revenues drove an increase of $3.3 million, which was primarily due to higher transaction volumes processed through our payment platforms, partially offset by lower revenue in 2024 due to the Fitness Solutions divestiture.

Subscription and transaction revenues also include $3.0 million and $1.0 million of post-acquisition revenue from Kickserv for the years ended December 31, 2024 and 2023, respectively, and pre-divestiture revenue from Fitness Solutions of $8.0 million and $23.3 million for the years ended December 31, 2024 and 2023, respectively (see Note 3.

Acquisitions and Dispositions in this Annual Report on Form 10-K).

Marketing technology solutions revenues decreased $3.9 million during the year ended December 31, 2024,

which was primarily due to a reduction in demand driven by decreases in consumer spending, partially offset by certain price increases and customer growth related to lead generation services.

Other revenues decreased $0.8 million during the year ended December 31, 2024 driven by revenue related to project implementation and customer development services which did not recur in the current year.

Cost of Revenues

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Cost of revenues (exclusive of depreciation and amortization presented separately below) $ 228,379 $ 231,007 $ (2,628) (1.1) %

Cost of revenues increased by $13.6 million, or 6.3%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

This increase is primarily comprised of an additional $5.4 million of lead generation and ad spend subject to resale to customers, $3.3 million of email and SMS expense, $2.6 million of campaign mail expense, and $2.1 million of application programming interface fees.

Cost of revenues decreased by $2.6 million, or 1.1%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The decrease is primarily comprised of a $5.7 million decrease in personnel and compensation expense, a $1.7 million reduction in outsourced services, and a $0.8 million reduction in lead generation and ad spend subject to resale to customers, partially offset by a $2.1 million increase in software hosting expense, a $1.9 million increase in application programming interface fees, and a $0.9 million increase in campaign mail expense.

Sales and Marketing

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Sales and marketing $ 122,505 $ 123,561 $ (1,056) (0.9) %

Sales and marketing expenses increased by $4.5 million, or 3.8%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

The increase was driven primarily by an additional $2.3 million in advertising spend, $1.1 million in software and tools and $1.0 million in personnel and compensation expense.

Sales and marketing expenses decreased by $1.1 million, or 0.9%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The decrease was driven primarily by a $1.7 million reduction in personnel and compensation expense, a $1.2 million reduction in third-party commissions, partially offset by a $0.7 million increase in advertising, $0.8 million increase in outsourced services and $0.3 million in professional fees and consulting expenses.

Product Development

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Product development expenses increased by $4.1 million, or 5.4%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The increase was a result of investments in our technology and teams to support our various solutions as well as centralized security operations, information technology and cloud engineering, driven by an additional $1.5 million of personnel and compensation expense, $1.3 million of software and tools, and $1.3 million of technology spend.

The increase was a result of an additional $2.2 million of personnel and compensation expense, $2.0 million of outsourced services, and $1.6 million of software and tools, driven by investments in our technology and teams to support our various solutions as well as centralized security operations, information technology and cloud engineering.

The increase was partially offset by a $1.5 million decrease in professional fees and consulting expenses.

General and Administrative

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General and administrative $ 139,423 $ 132,235 $ 7,188 5.4 %

General and administrative expenses decreased by $0.2 million, or 0.2%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

The decrease was driven primarily by a $1.9 million decrease in stock-based compensation expense, $1.6 million decrease in facility expense and $1.0 million decrease in professional fees, offset by an additional $4.1 million of personnel and compensation expense.

General and administrative expenses increased by $7.2 million, or 5.4%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023.

The increase was driven primarily by an additional $4.4 million of personnel and compensation expense, a $2.4 million increase in software and tools, a $2.1 million increase in outsourced services, and a $1.6 million increase in

stock-based compensation expense, partially offset by $2.5 million decrease in facility expense and $1.4 million decrease in bad debt expense.

Depreciation and Amortization

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The reduction in depreciation and amortization was driven primarily by the reduced rate of replacement assets resulting from a slowdown in business acquisitions.

Specifically, these decreases were driven primarily by a decrease of $9.7 million in intangible assets’ amortization, partially offset by $2.7 million of additional capitalized software amortization and an increase of $0.5 million of property and equipment depreciation.

Specifically, the decrease was driven primarily by $16.3 million in lower intangible assets’ amortization and a decrease of $0.8 million of property and equipment depreciation, partially offset by $1.8 million of additional capitalized software amortization.

Loss on Sale and Impairments

Year Ended December 31, Change

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(dollars in thousands)

Impairment $ 6,325 $ — $ 6,325 100.0 %

During the fourth quarter 2023, we determined that the estimated fair value of our fitness asset group was insufficient to recover the net carrying value of the asset group resulting in an impairment of long-lived assets of approximately $5.1 million ( s ee Note 19.

Subsequent Event included in this Annual Report on Form 10-K ).

Additionally, during the year ended December 31, 2023, we ceased use of certain leased premises and subleased certain facilities resulting in an impairment charge of $1.2 million to impair the right-of-use lease assets to their fair value.

We did not have similar expenses for the year ended December 31, 2022.

Loss on sale and impairments

$ 39,709 $ 6,325 $ 33,384 100.0 %

During the fourth quarter 2024, in conjunction with our review of strategic alternatives for our Marketing Technology Solutions, we evaluated the recoverability of our marketing technology reporting unit and determined that the estimated fair value was insufficient to recover the net carrying value of the reporting unit resulting in an impairment of goodwill of approximately $28.1 million (see Note 20.

Subsequent Event in this Annual Report on Form 10-K).

In March 2024, we entered into definitive sale and purchase agreements to sell our Fitness Solutions (see Note 3.

Acquisitions and Dispositions included in this Annual Report on Form 10-K).

During the year ended December 31, 2024, we recognized losses of $4.9 million related to the sale of Fitness Solutions and $6.4 million of goodwill impairment charges representing the allocated goodwill to Fitness Solutions.

Additionally, we ceased use of certain leased premises and subleased certain facilities resulting in an impairment charge of $0.4 million and $1.2 million to impair the right-of-use lease assets to their fair value during the years ended December 31, 2024 and 2023, respectively.

Interest and Other Expense, net

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Interest and other expense, net $ 35,559 $ 46,407 $ (10,848) (23.4) %

Interest and other expense, net, increased by $12.5 million, or 36.9%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

The increase was driven primarily by higher interest expense as a result of increased variable base interest rates during 2023 on the Company’s Credit Facilities of $14.9 million, partially offset by a decrease of $0.9 million in unrealized losses recorded on the interest rate swaps and a $0.8 million increase in interest income.

Income Tax (Expense) Benefit

Interest and other expense, net, decreased by $10.8 million, or 23.4%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023 with the changes primarily driven by volatility of interest rates and the associated impact on the fair value of interest rate swaps.

The decrease for the year ended December 31, 2024 was driven primarily by an unrealized gain of $6.4 million on interest rate swaps, as compared to an unrealized loss of $2.0 million in the comparative period, a $2.1 million increase in interest income, and a decrease of $1.9 million in interest expense as a result of lower variable base interest rates on the Company’s Credit Facilities.

Income Tax Expense

Year Ended December 31, Change

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(dollars in thousands)

Income tax (expense) benefit

Income tax expense

$ (5,782) $ (1,639) $ (4,143) 252.8 %

Income tax (expense) benefit decreased by $6.3 million, or 135.0%, for the year ended December 31, 2023 as compared to the year ended December 31, 2022, with the change driven primarily by discrete items and the year-over-year decrease in the Company’s pre-tax loss.

The year ended December 31, 2023 includes the release of a valuation allowance in the second quarter of 2023.

The year ended December 31, 2022 included a California law change, an intercompany intellectual property sale, and the establishment of a valuation allowance for our New Zealand subsidiaries in the first quarter of 2022.

Income tax expense increased by $4.1 million, or 252.8%, for the year ended December 31, 2024 as compared to the year ended December 31, 2023, with the change driven primarily by an increase in U.S.

federal and state income taxes and discrete items, including the sale of Fitness Solutions and the goodwill impairment of the marketing technology reporting unit.

Liquidity and Capital Resources

To date, our primary sources of liquidity have been net cash provided by operating activities, proceeds from equity issuances and long-term debt.

Our primary use of liquidity through 2021 was primarily associated with acquisitions of businesses.

Subsequent to 2021, we have utilized liquidity for items such as strategic investments in the ongoing transformation of our business and infrastructure, our recent business acquisition of Kickserv and share repurchases authorized through our Repurchase Program.

To date, our primary sources of liquidity have been net cash provided by operating activities, proceeds from equity issuances and proceeds from long-term debt.

We utilize liquidity for items such as strategic investments in the ongoing transformation of our business and infrastructure, our business acquisitions (such as Kickserv) and share repurchases authorized through our Repurchase Program.

For a description of our recent acquisitions, see Note 3.

Acquisitions in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.

Absent significant deterioration of market conditions, we expect that working capital requirements, capital expenditures,

acquisitions, the Company’s Repurchase Program (as defined below), debt servicing and lease obligations will be our principal needs for liquidity going forward.

As of December 31, 2023, we had cash, cash equivalents and restricted cash of $96.2 million, $190.0 million of available borrowing capacity under our Revolver (as defined below) and $537.6 million outstanding under our Term Loans (as defined below).

Acquisitions and Dispositions in the notes to the consolidated financial statements included in this Annual Report on Form 10-K.

Absent significant deterioration of market conditions, we expect that working capital requirements, capital expenditures, acquisitions, the Company’s Repurchase Program (as defined below), debt servicing and lease obligations will be our principal needs for liquidity going forward.

As of December 31, 2024, we had cash, cash equivalents and restricted cash of $135.8 million, $190.0 million of available borrowing capacity under our Revolver (as defined below) and $532.1 million outstanding under our Term Loan (as defined below).

We believe that our existing cash, cash equivalents and restricted cash, availability under our Credit Facilities, and our cash flows from operations will be sufficient to fund our working capital requirements and planned capital expenditures, and to service our debt obligations for at least the next twelve months.

However, our future working capital requirements will depend on many factors, including our rate of revenue growth, the timing and size of future acquisitions, and the timing of introductions of new products and services.

We expect to consummate acquisitions of complementary businesses in the future that could require us to seek additional equity or debt financing.

Additional funds may not be available on terms favorable to us, or at all.

If needed, additional funds may not be available on terms favorable to us, or at all.

If we are unable to raise additional funds when desired, our business, financial condition and results of operations could be adversely affected.

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Net cash provided by operating activities was $113.2 million for the year ended December 31, 2024, compared to $104.6 million for the year ended December 31, 2023.

Changes in net cash provided by operating activities result primarily from cash received from net sales within our subscription and transaction fees and marketing technology solutions.

Changes in net cash provided by operating activities resulted primarily from cash received from net sales within our subscription and transaction fees and marketing technology solutions.

Other drivers of the changes in net cash provided by operating activities include payments for personnel expenses for our employees, costs related to delivering our services and products, partner commissions, advertising and interest on our long-term debt.

The increase in cash provided for the year ended December 31, 2023 compared to the year ended December 31, 2022 was primarily due to higher cash collections from our subscription and transaction fees and marketing technology solutions, which includes revenues from payment processing of approximately $62.3 million, partially offset by higher interest payments of $15.1 million, costs directly related to the delivery of our services and products of $12.4 million, and higher investments made to support the growth of our business including personnel expenses of $2.7 million.

The increase in cash provided for the year ended December 31, 2024 compared to the year ended December 31, 2023 was primarily due to an increase in cash collections from our subscription and transaction fees and marketing technology solutions, which includes revenues from payment processing of approximately $28.0 million and higher interest income of $2.0 million, partially offset by

investments made to support the growth of our business including personnel expenses of $13.8 million, an increase in costs directly related to the delivery of our services and products of $7.0 million, and an increase in taxes of $1.4 million.

Cash Flow from Investing Activities

During the year ended December 31, 2024, net cash used in investing activities of $12.3 million was related primarily to costs to develop software of $17.4 million and $1.5 million for purchases of property and equipment, partially offset by proceeds from the sale of Fitness Solutions, net of transaction costs, cash and restricted cash sold for approximately $6.6 million.

During the year ended December 31, 2023, net cash used in investing activities of $38.0 million was related primarily to costs to develop software of $20.0 million, the acquisition of Kickserv, net of cash acquired, for approximately $15.0 million and $3.0 million for purchases of property and equipment.

During the year ended December 31, 2022, net cash used in investing activities of $18.1 million was related primarily to costs to develop software of $15.5 million and $2.6 million for purchases of property and equipment.

Cash Flow from Financing Activities

During the year ended December 31, 2024, net cash used in financing activities of $59.6 million was related primarily to the repurchase and retirement of shares of our common stock of $57.7 million.

During the year ended December 31, 2022, net cash used in financing activities of $47.3 million was related primarily to the repurchase and retirement of shares of our common stock of $43.0 million and $9.5 million for payments on long-term debt, partially offset by net proceeds from common stock issuances of $5.2 million.

During the year ended December 31, 2023, net cash used in financing activities of $66.6 million was related primarily to the repurchase and retirement of shares of our common stock of $67.3 million.

For additional information regarding our repurchase and retirement of shares of our common stock, refer to Note 11.

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Credit Facilities

We are party to a credit agreement, as amended, that provides for two term loans for an aggregate principal amount of $550.0 million (“Term Loans”), a revolver with a capacity of $190.0 million (“Revolver”) and a sub-limit of the Revolver available for letters of credit up to an aggregate face amount of $20.0 million.

We are party to a credit agreement, as amended, that provides for one term loan for an aggregate principal amount of $550.0 million (“Term Loan”), a revolver with a capacity of $190.0 million (“Revolver”) and a sub-limit of the Revolver available for letters of credit up to an aggregate face amount of $20.0 million.

These debt arrangements are collectively referred to herein as the “Credit Facilities”.

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In addition, we are subject to a financial covenant with respect to the Revolver whereby, if the aggregate principal amount of revolving loans (excluding letters of credit) outstanding on the last day of any fiscal quarter exceeds 35% of the aggregate commitments available under the Revolver, then our first lien leverage ratio as of the last day of such fiscal quarter must be 7.50 to 1.00 or less.

Prior to July 1, 2023, borrowings under the Credit Facilities were available as ABR or Eurocurrency borrowings.

ABR borrowings under the Credit Facilities accrued interest at an alternate base rate plus an applicable rate, and Eurocurrency borrowings accrued interest at a LIBOR rate plus an applicable rate.

The ABR rate represented the greater of the prime rate, Federal Reserve Bank of New York rate plus ½ of 1%, and an adjusted LIBOR rate for a one month interest period plus 1%.

With respect to ABR borrowings, interest payments are due on a quarterly basis on the last business day of each March, June, September and December.

With respect to Eurocurrency borrowings, interest payments are due on the last business day of the interest period applicable to the borrowing and, in the case of a Eurocurrency borrowing with an interest period of more than three months’ duration, each day prior to the last day of such interest period that occurs at intervals of three months’ duration after the first day of such interest period.

Effective as of July 1, 2023, borrowings under the Credit Facilities bear interest at the Company’s option at ABR plus an applicable rate, or at a forward-looking term rate based upon the secured overnight financing rate (“SOFR”), plus (i) (a) with respect to Term Loans, credit spread adjustments of 0.11448%, 0.26161%, 0.42826% and 0.71513% for interest periods of one, three, six and twelve months, respectively, and (b) with respect to revolving loans, a credit spread adjustment of 0.0% (“Adjusted SOFR”) plus (ii) an applicable rate, in each case with such applicable rate based on the Company’s first lien net leverage ratio.

Effective as of July 1, 2023, borrowings under the Credit Facilities bear interest at the Company’s option at ABR plus an applicable rate, or at a forward-looking term rate based upon the secured overnight financing rate (“SOFR”), plus (i) (a) with respect to the Term Loan, credit spread adjustments of 0.11448%, 0.26161%, 0.42826% and 0.71513% for interest periods of one, three, six and twelve months, respectively, and (b) with respect to revolving loans, a credit spread adjustment of 0.0% (“Adjusted SOFR”) plus (ii) an applicable rate, in each case with such applicable rate based on the Company’s first lien net leverage ratio.

The ABR represents the highest of the prime rate, Federal Reserve Bank of New York rate plus ½ of 1%, and the Adjusted SOFR for a one month interest period plus 1%.

The applicable rate for the Term Loans and the Revolver was 3.0% for Adjusted SOFR borrowings and 2.0% for ABR borrowings, in each case subject to change based on our first lien net leverage ratio.

Effective October 31, 2022, we entered into an interest rate swap agreement in connection with the Company’s Credit Facilities for a notional amount of $200.0 million to convert a portion of the floating rate component of the Term Loans from a floating rate to a fixed rate (the “Initial Swap”).

The applicable rate for the Term Loan and the Revolver was 3.0% for Adjusted SOFR borrowings and 2.0% for ABR borrowings, in each case subject to change based on our first lien net leverage ratio.

On December 13, 2024, the Company entered into an amendment (the “Amendment”) to the Credit Facilities to reduce the applicable margin and remove the credit spread adjustment from the existing Term Loan in their entirety in an aggregate principal amount of $533.5 million.

Following the Amendment, the Term Loan bears interest, at the borrower’s election, at (x) a forward-looking term rate based upon SOFR plus an applicable margin of 2.50%, with a minimum forward-looking SOFR rate 0.50% or (y) ABR plus an

applicable margin of 1.50%, with a minimum ABR of 1.50%, in each case, with no step-downs.

The credit spread adjustment was removed in connection with the Amendment.

The refinanced Term Loan priced at par and refinanced all of the existing term loans outstanding under the Credit Agreement immediately prior to giving effect to the Amendment.

Beginning in late 2022, we executed a series of three interest rate swaps (for total notional amounts of $425 million) to convert a portion of the floating rate component of our Term Loan to a fixed rate.

Effective October 31, 2022, we entered into an interest rate swap agreement in connection with the Company’s Credit Facilities for a notional amount of $200.0 million (the “Initial Swap”).

The Initial Swap has a term of five years with a fixed rate in the agreement of 4.212% as amended in June 2023.

Additionally, effective March 31, 2023, the Company entered into a second interest rate swap agreement in connection with our Credit Facilities for a notional amount of $100.0 million to convert a portion of the floating rate component of the Term Loans from a floating rate to a fixed rate (the “Second Swap”).

The Second Swap has a term of approximately 4.5 years with a fixed rate in the agreement of 3.951%, as amended in June 2023.

Additionally, effective September 20, 2024, the Company entered into a third interest rate swap agreement in connection with our Credit Facilities for a notional amount of $125.0 million (the “Third Swap”).

The Third Swap has a term of approximately 3.0 years with a fixed rate in the agreement of 3.395%.

The Revolver has a variable commitment fee, which is based on our first lien leverage ratio.

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The Term Loans mature in July 2028.

The Term Loans may be repaid or prepaid but may not be re-borrowed.

As of December 31, 2023, there was $537.6 million outstanding under our Credit Facilities, all of which was related to the Term Loans as no amounts were outstanding under the Revolver.

The effective interest rate on the Term Loans was approximately 8.5% for the year ended December 31, 2023, excluding the effect of any interest rate swap agreements.

The Term Loan may be repaid or prepaid but may not be re-borrowed.

As of December 31, 2024, there was $532.1 million outstanding under our Credit Facilities, all of which was related to the Term Loan as no amounts were outstanding under the Revolver.

The effective interest rate on the Term Loan was approximately 8.6% for the year ended December 31, 2024, excluding the effect of any interest rate swap agreements.

As of December 31, 2024, we were in compliance with the covenants under the Credit Facilities.

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On June 14, 2022, our Board approved a stock repurchase program (as subsequently amended, the “Repurchase Program”) with authorization to purchase up to $50.0 million in shares of the Company’s common stock through the expiration of the program on December 21, 2022.

On November 7, 2022, our Board approved an expansion of the Repurchase Program with authorization to purchase up to an additional $50.0 million in shares of the Company’s common stock ($100.0 million total) and an extension to the expiration of the Repurchase Program through December 31, 2023.

On November 5, 2023, our Board approved an additional expansion of the Repurchase Program with authorization to purchase up to an additional $50.0 million in shares of the Company’s common stock (from $100.0 million to $150.0 million in total) and extended the expiration of the Repurchase Program through December 31, 2024.

On November 7, 2022, November 5, 2023, and May 21, 2024, our Board increased the authorization of the Repurchase Program by an additional $50.0 million in shares of the Company’s common stock on each date for a total authorization to repurchase up to $200.0 million in shares of the Company’s common stock, and most recently extended the expiration of the Repurchase Program through December 31, 2025.

Repurchases under the program may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at the Company’s discretion, depending on market conditions and corporate needs.

This Repurchase Program does not obligate the Company to acquire any particular amount of common stock and may be modified, suspended or terminated at any time at the discretion of the Board.

The Repurchase Program does not obligate the Company to acquire any particular amount of common stock and may be modified, suspended or terminated at any time at the discretion of the Board.

The Company expects to fund repurchases with existing cash on hand.

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Long-Term Debt and 17.

Commitments and Contingencies in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for a discussion of our debt, operating lease and contractual obligations, respectively.

Commitments and Contingencies in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for a discussion of our operating lease, debt and contractual obligations, respectively.

Critical Accounting Estimates

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Revenues are derived from subscription and transaction fees, marketing technology solutions, and other revenues.

We recognize revenue when our customers obtain control of goods or services in an amount that reflects the consideration that we expect to receive in exchange for those goods or services.

We recognize revenue when our customers obtain control of goods or services in an amount that reflects the consideration that we expect to receive

in exchange for those goods or services.

In determining the total consideration that we expect to receive, we include variable consideration only to the extent that it is probable that a significant reversal of cumulative revenue will not occur when the uncertainty is resolved.

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In fulfillment of our payment processing services, we partner with third-party merchants and processors who assist us in fulfillment of our obligations to customers.

We have concluded that we do not possess the ability to control the underlying services provided by third parties in the fulfillment of our obligations to customers and therefore recognize revenue net of interchange fees retained by the card issuing financial institutions

and fees charged by payment networks.

Transaction services contracts with customers are generally for a term of one month and automatically renew each month.

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In accordance with applicable accounting guidance, a company can assess qualitative factors to determine whether it is necessary to perform a goodwill impairment test or may elect to proceed directly to a quantitative goodwill impairment test.

The Company performed a quantitative annual impairment assessment for the year ended December 31, 2023 and a qualitative assessment for the previously reported periods, each of which resulted in substantial excess of estimated fair value over net carrying value for each reporting unit.

For the year ended December 31, 2023 the Company performed a quantitative assessment, which resulted in substantial excess of estimated fair value over net carrying value for each reporting unit.

The qualitative annual impairment assessment for the year ended December 31, 2024 excluded the marketing technology reporting unit as discussed below.

For the quantitative assessment, we use a weighted combination of a discounted cash flow model (known as the income approach) and comparisons to publicly traded companies engaged in similar businesses (known as the market approach).

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As part of the market approach, we make judgments about the comparability of publicly traded companies engaged in similar businesses.

For the qualitative assessments, we reviewed factors including macroeconomic conditions, industry and market conditions, cost factors, overall financial performance, changes in any key personnel, any changes in composition of carrying amount of our assets

and changes in our stock price.

There were no reasonable changes to the methods and assumptions that would have resulted in an impairment.

In the future, if there are material changes in the underlying estimates and assumptions pertaining to the impairment assessment, the financial statements could be materially impacted.

For each year end, we determined that it was more likely than not that the fair value of each of our reporting units was more than the respective related carrying amounts, including goodwill, and therefore did not record any goodwill impairment.

For the years ended December 31, 2023 and 2022, we determined that it was more likely than not that the fair value of each of our reporting units was more than the respective related carrying amounts, including goodwill, and therefore did not record any goodwill impairment.

The Company performed a qualitative annual impairment assessment for the year ended December 31, 2024 and 2022, which resulted in substantial excess of estimated fair value over net carrying value for each reporting unit, except for the marketing technology reporting unit for the year ended December 31, 2024 as further described below.

As a result of this qualitative assessment for the year ended December 31, 2024, we performed a further quantitative evaluation for the marketing technology reporting unit.

During the fourth quarter 2024, in conjunction with our review of strategic alternatives for our Marketing Technology Solutions, and as a result of lower than expected financial performance and future forecasted growth rates we determined that the estimated fair value of our marketing technology reporting unit was insufficient to recover the net carrying value of the reporting unit resulting in an impairment of goodwill of approximately $28.1 million (see Note 20.

Subsequent Event included in this Annual Report on Form 10-K).

In connection with the definitive sale and purchase agreements to sell our fitness solutions, we tested the goodwill balance for impairment as of March 31, 2024 and recognized a goodwill impairment of $6.4 million representing the allocated goodwill for Fitness Solutions (see Note 3.

Acquisitions and Dispositions included in this Annual Report on Form 10-K).

Intangible assets are initially valued at fair value using generally accepted valuation methods appropriate for the type of intangible asset.

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Indicators we reviewed included whether there was a significant decrease in market prices of our assets, a significant adverse change in the extent or manner in which our assets are being used, a significant adverse change in legal factors affecting our assets and a cash flow loss.

Subsequent Event included in this Annual Report on Form 10-K ) of which $3.1 million was attributable to intangible assets.

The Company did not identify indicators of impairment for the years ended December 31, 2022 and 2021.

The Company did not identify indicators of impairment for the year ended December 31, 2022.

In the future, if there are material changes in the underlying estimates and assumptions pertaining to the impairment assessment, the financial statements could be materially impacted.

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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.

What changed 10-K

Item 7. Management’s Discussion and Analysis