What changed in this filing

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Item 1A. Risk Factors

2022-02-25 compared with 2021-03-01 · 215 added, 111 removed, 562 unchanged (37% of the section changed)

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Our relationships with insurance providers are dependent on our ability to deliver quality referrals at attractive volumes and prices.

If insurance providers are not able to acquire their preferred referrals in our marketplace, they may stop buying referrals from us, or may decrease the amount they are willing to spend for referrals.

If insurance providers are not able to acquire their preferred referrals in our marketplace, they may stop buying referrals from us, or may decrease the amount

they are willing to spend for referrals.

Our agreements with insurance providers are short-term agreements, and insurance providers can stop participating in our marketplace at any time with no notice.

As a result, we cannot guarantee that insurance providers will continue to work with us, or, if they do, the number of referrals they will purchase from us, the price they will pay per referral or their total spend with us.

For example, we are currently experiencing, and expect to continue to experience, a decrease in auto insurance carrier marketing spend, which we believe is due to challenges in the auto insurance industry.

In addition, we may not be able to attract new insurance providers to our marketplace or increase the amount of revenue we earn from insurance providers over time.

If we are unable to maintain existing relationships with insurance providers in our marketplace, or unable to add new insurance providers, we may be unable to offer our consumers the shopping experience they expect.

If we are unable to maintain existing relationships with insurance providers in our marketplace, or are unable to add new insurance providers, we may be unable to offer our consumers the shopping experience they expect.

This deficiency could reduce consumers’ confidence in our services, making us less popular with consumers.

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We depend, in part, on search engines, display advertising, social media, email, content-based online advertising and other online sources for our website traffic.

We are included in search results as a result of both paid search listings, where we

purchase specific search terms that result in the inclusion of our advertisement, and, separately, organic searches that depend upon the content on our sites.

We are included in search results as a result of both paid search listings, where we purchase specific search terms that result in the inclusion of our advertisement, and, separately, organic searches that depend upon the content on our sites.

Search engines, social media platforms and other online sources often revise their algorithms and introduce new advertising products.

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Consumer traffic to our websites and the volume of quote requests generated by consumer traffic varies and can decline from to time.

For example, quote requests increased to 4,113,000 in the three months ended March 31, 2019, increased to 4,519,000 in the three months ended June 30, 2019, increased to 5,516,000 in the three months ended September 30, 2019 and increased to 5,863,000 in the three months ended December 31, 2019.

Quote requests increased to 7,392,000 in the three months ended March 31, 2020, decreased to 6,777,000 in the three months ended June 30, 2020 decreased to 6,291,000 in the three months ended September 30, 2020 and increased to 6,553,000 in the three months ended December 31, 2020.

For example, quote requests increased to 7,392,000 in the three months ended March 31, 2020, decreased to 6,777,000 in the three months ended June 30, 2020, decreased to 6,291,000 in the three months ended September 30, 2020, and increased to 6,553,000 in the three months ended December 31, 2020.

Quote requests increased to 7,720,000 in the three months ended March 31, 2021, decreased to 6,781,000 in the three months ended June 30, 2021,

increased to 7,613,000 in the three months ended September 30, 2021 and increased to 8,156,000 in the three months ended December 31, 2021.

Additionally, even if we are successful in generating traffic to our websites, we may not be able to convert these visits into consumer quote requests.

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pandemic could adversely affect our business, results of operations and financial condition.

In March 2020, the World Health Organization declared the outbreak of COVID-19

pandemic has continued 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.

pandemic has had a significant adverse impact on global commercial activity and has created significant volatility in financial markets.

Many governmental authorities have implemented travel bans and restrictions, quarantines, shelter-in-place

orders, business limitations and shutdowns and other measures to attempt to contain the spread of the virus.

Government recommendations and requirements are continuing to change and there remains significant uncertainty as to the breadth and duration of business disruptions related to COVID-19,

as well as its impact on the global economy and consumer confidence.

As a result, 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, containment measures and the potential economic impact on our insurance provider customers and our users.

To support the health and well-being of our employees and communities, our employees began working remotely starting in March 2020.

Work-from-home and other measures introduce additional operational risks, including cybersecurity risks, and have affected the way we conduct our product and business development efforts as well as other activities, which could have an adverse effect on our operations.

will have on our insurance provider customers or our users, or on our results from operations, financial condition, liquidity and cash flows.

The impact of the COVID-19

pandemic could also exacerbate other risks discussed in this Risk Factors section and this report, which could in turn have a material adverse effect on us.

To support the health and well-being of our employees and communities, our employees began working remotely starting in March 2020, however our offices are now open for use.

Work-from-home and other measures have introduced additional operational risks, including cybersecurity risks, and have affected the way we conduct our product and business development efforts as well as other activities, which could have an adverse effect on our operations.

There is no certainty that such measures will be sufficient to mitigate the risks posed by the virus, and illness and workforce disruptions could lead to unavailability of key personnel and harm our ability to perform critical functions.

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may result in inefficiencies, delays and additional costs in our sales and marketing efforts that we cannot fully mitigate through remote or other alternative work arrangements.

also unsure what additional actions our carrier and agent customers, as well as our users, may take in response to coronavirus (COVID-19).

In addition, we are unable to predict how user behavior will change in response to COVID-19.

example, we believe that immediately after shelter-in-place

orders went into effect consumers performed less searches for insurance online.

The degree to which COVID-19 impacts

our results will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, other actions taken by governments, businesses, and individuals in response to the virus and resulting economic disruption, and how quickly and to what extent normal economic and operating conditions can resume.

We are similarly unable to predict the degree to which the pandemic will impact our users, insurance provider customers, suppliers, vendors, and other partners, and their financial conditions, but a material effect on these parties could also adversely affect us.

The impact of COVID-19

could also exacerbate other risks discussed in this Risk Factors section and this report, which could in turn have a material adverse effect on us.

Developments related to COVID-19

have been rapidly changing, and additional impacts and risks may arise that we are not currently aware of or to which we may not be able to appropriately respond.

Although we expect that current cash and cash equivalent balances and cash flows generated from operations will be sufficient to meet our working capital needs and other capital and liquidity requirements for at least the next 12 months, if our access to capital is restricted or our borrowing costs increase, our operations and financial condition could be adversely impacted.

We are also unsure what additional actions our carrier and agent customers, as well as our users, may take in response to the COVID-19

In addition, we are unable to predict how user behavior and the overall insurance markets will change in response to the COVID-19

For example, we believe that immediately after shelter-in-place

orders went into effect consumers performed fewer searches for insurance online.

Although we expect that current cash and cash equivalent balances will be sufficient to meet our working capital needs and other capital and liquidity requirements for at least the next 12 months, if our access to capital is restricted or our borrowing costs increase as a result of the COVID-19

pandemic, our operations and financial condition could be adversely impacted.

We compete with other media for advertising spend from our insurance provider customers, and if we are unable to maintain or increase our share of the advertising spend of our insurance provider customers, our business could be harmed.

We compete for insurance provider advertising spend with traditional offline media such as television, billboards, radio, magazines and newspapers, as well as online sources such as websites, social media and websites dedicated to providing multiple quote insurance information.

websites dedicated to providing multiple quote insurance information.

Our ability to attract and retain insurance provider customers, and to generate advertising revenue from them, depends on a number of factors, including:

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Insurance providers in our marketplace participate in a unified, real-time auction.

Since our agreements with insurance providers are short-term agreements, insurance providers can decrease their bids or stop

participating in our auctions at any time with no notice.

Since our agreements with insurance providers are short-term agreements, insurance providers can decrease their bids or stop participating in our auctions at any time with no notice.

In addition, insurance providers frequently change their bidding in our auctions, which can make it difficult to predict revenue from period to period.

Because our insurance provider customers can stop buying from us, or spend less with us, at any time our business, results of operations and financial condition could be materially adversely affected with little to no notice.

For example, some of our large auto insurance carrier customers have reduced their bids, and have indicated further bid reductions, in response to challenges in the auto insurance industry.

If we are unable to develop new offerings, achieve increased consumer adoption of those offerings or penetrate new vertical markets, our business and financial results could be materially adversely affected.

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Without an innovative marketplace and related product and service offerings, we may be unable to attract additional consumers or retain current consumers, which could adversely affect our ability to attract and retain insurance providers who want to participate in our marketplace, which could, in turn, harm our business and financial results.

In addition, while we have historically concentrated our efforts on the automobile insurance market, we will need to further penetrate additional vertical markets, such as home and renters, life, commercial and health insurance, in order to achieve our long-term growth goals.

In addition, while we have historically concentrated our efforts on the automobile insurance market, we will need to further penetrate additional vertical markets, such as home and renters, life and health insurance, in order to achieve our long-term growth goals.

Our success in the automobile insurance market depends on our deep understanding of this industry.

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Our business is substantially dependent on revenue from automotive insurance providers and subject to risks related to automotive insurance and the larger automotive industry.

Our business may also be adversely affected by downturns in the home and renters, life, commercial and health insurance industries.

Our business may also be adversely affected by downturns in the home and renters, life and health insurance industries.

A substantial majority of the insurance purchased through our marketplace is automobile insurance and our financial prospects depend significantly on the larger automotive industry ecosystem.

Revenue from automotive insurance providers accounted for 82% of our total revenue for the year ended December 31, 2020 and 85% of our revenue for the year ended December 31, 2019.

Revenue from automotive insurance providers accounted for 79% of our total revenue for the year ended December 31, 2021 and 82% of our total revenue for the year ended December 31, 2020.

If insurance carriers experience large or unexpected losses through the offering of insurance, these carriers may choose to decrease the amount of money they spend with us.

For example, starting in late 2021, many auto insurance carriers experienced larger than expected loss-ratios which resulted in a decrease in spending in our marketplace.

In addition, decreases in consumer demand in the automotive industry in general could adversely affect the demand for insurance and, in turn, the number of consumers using our marketplace to request insurance quotes.

For example, trends in the automotive industry, such as from the effects of ride sharing applications, including Uber and Lyft, distracted driving and autonomous driving technologies, have the potential to adversely affect automobile purchases and to decrease the demand for auto insurance.

Similarly, we believe that current shortages of semiconductor chips for new car production, as well as the availability of automotive parts used in car repair, is resulting in higher insurance claims losses and increasing insurance carrier loss ratios.

We depend on third-party publishers, including strategic partners, for a significant portion of our visitors.

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In many instances, third-party publishers can change the media inventory they make available to us at any time in ways that could impact our results of operations.

In addition, third-party

publishers may place significant restrictions on our offerings.

In addition, third-party publishers may place significant restrictions on our offerings.

These restrictions may prohibit advertisements from specific clients or specific industries, or restrict the use of certain creative content or formats.

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As a result, we may not be able to acquire media inventory that meets our insurance provider’s performance, price, and quality requirements, in which case our revenue could decline, or our operating costs could increase.

Changes in the health insurance market or in the variety, quality and affordability of the insurance products offered by our insurance carrier partners could harm our business, operating results, financial condition and prospects.

The demand for our agency services is impacted by the variety, quality and price of the insurance products we distribute.

If insurance carriers do not continue to provide us with a variety of high-quality, affordable insurance products, or if as a result of consolidation in the insurance industry or otherwise their offerings are limited, our sales may decrease and our business, operating results, financial condition and prospects could be harmed.

The commissions received by our DTC agency are set by our insurance carrier partners and can be reduced with little to no notice.

Additionally, our insurance carrier partners can also change their underwriting practices in ways that reduce the number of insurance policies we sell, which could harm our business, operating results, financial condition and prospects.

Our commission rates from our insurance carrier partners are typically set by each carrier or negotiated between us and each carrier, and carriers can alter and have altered these commission rates with relatively short notice.

Changes of this nature could result in reduced commissions or impact our relationship with such carriers.

In addition, insurance carriers periodically change the criteria they use for determining whether they are willing to insure individuals.

Future changes in insurance carrier underwriting criteria could negatively impact sales of, or the renewal or approval rates of, insurance policies on our distribution platform and could harm our business, operating results, financial condition and prospects.

Our insurance carrier partners can choose to no longer offer products and services through us and may instead sell directly to consumers or through our competitors.

Our DTC agents are appointed to sell insurance products by our carrier partners.

None of these appointments are exclusive, and consumers may obtain quotes and purchase the same insurance policies we sell directly from the carrier, or from our competitors.

Insurance carriers often attract consumers directly through their own marketing campaigns or other methods of distribution, such as referral arrangements, internet sites, physical storefront operations or broker agreements.

Furthermore, our insurance carrier partners could discontinue distributing their products through our agency services, which would reduce the breadth of the products we distribute and could put us at a competitive disadvantage.

If consumers seek insurance policies directly from insurance carriers or through our competitors, the number of consumers shopping for insurance through our platform may decline, and our business, operating results, financial condition and prospects could be materially and adversely affected.

If our ability to enroll individuals during the Annual Enrollment Period and Open Enrollment Period is impeded, our business will be harmed.

During 2021 most of our DTC agency commissions were achieved in the fourth quarter.

In general, our Medicare Advantage and Medicare Supplement policies are submitted during the Annual Enrollment Period, or AEP.

Our agents, systems and processes must handle an increased volume of transactions that occur during the AEP and the Open Enrollment Period, or OEP.

To accommodate this increased volume, we hire additional agents during these periods.

In order for agents to be effective, we must ensure agents are properly trained, licensed, appointed and certified to the extent required by state authorities and our insurance carrier partners.

If technology failures, any inability to timely employ, license, train, certify and retain our employees to sell health insurance products, interruptions in the operation of our systems, issues with government-run

health insurance exchanges, weather-related events that prevent our employees from coming to our offices, or any other circumstances prevent our health insurance agency from operating as expected during an enrollment period, we could sell fewer policies and suffer a reduction in our business and our operating results, financial condition, prospects and profitability could be materially and adversely affected.

If our DTC agents are unable to effectively convert consumer referrals to bound insurance policies, our business may be adversely affected.

Our DTC agency depends on our ability to successfully obtain insurance referrals and convert those referrals to bound policies.

If we are unable to convert these consumers, or if our conversion rates do not match our expectations, our business may be substantially impacted.

Many factors impact our conversion rate, including the quality of our referrals, the effectiveness of our agents, and the effectiveness of our workflow technology.

If referral quality diminishes, our conversion rates will be adversely affected.

Competition in the marketplace and referral quality affect conversion rates.

If competition for customers increases, our referral costs

will increase and conversion rates may decline, even absent a degradation in referral quality.

Our conversion rates are also affected by agent tenure.

If agent turnover increases, leading to a decline in the average tenure of our agents, conversion rates may be adversely affected.

If we are unable to recruit, train and retain talented agents, our ability to successfully convert consumer referrals may be adversely impacted.

Our conversion rates may also be affected by issues with our workflow technology.

Any adverse impact on our conversion rates could cause a material and adverse effect on our business, operating results, financial condition and prospects.

Our business is dependent on our obtaining a large quantity of high intent consumer referrals in a cost-effective manner.

Our business requires access to a large quantity of quality consumer referrals to keep our agents productive.

We are dependent upon a number of lead suppliers from whom we obtain consumer referrals to support our sales of insurance policies.

The loss of one or more of these referral sources, or our failure to otherwise compete to secure quality consumer referrals, could significantly limit our ability to access our target market for selling policies.

We may not be able to compete successfully for high-quality referrals against our current or future competitors, some of whom have significantly greater financial, technical, marketing and other resources than we do.

If we fail to compete successfully with our competitors to source high intent consumers, we may experience increased marketing costs, lower policy sales, and loss of market share, and our business and profitability could be materially and adversely affected.

If we fail to build and maintain our brand, our ability to expand the use of our marketplace by consumers and insurance providers may be adversely affected.

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We are unable to control how our insurance provider customers evaluate our performance.

Certain of these metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and adversely affect our business.

Certain of these metrics are subject to inherent challenges in measurement, and real or perceived inaccuracies in such metrics may harm our reputation and adversely affect

our business.

In addition, the metrics we provide may differ from estimates published by third parties or from similar metrics of our competitors due to differences in methodology.

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We face significant competition in marketing on offline channels, including from competitors and insurance carriers who may have significantly greater resources and brand recognition than we do.

If we fail to expand our marketing efforts in offline channels or to market ourselves successfully on such channels, we may

not experience increases in consumer traffic and increased referral and advertising revenue necessary to grow our business, which could have a material adverse effect on our results of operations and financial results.

If we fail to expand our marketing efforts in offline channels or to market ourselves successfully on such channels, we may not experience increases in consumer traffic and increased referral and advertising revenue necessary to grow our business, which could have a material adverse effect on our results of operations and financial results.

Failure to increase our revenue or reduce our sales and marketing expense as a percentage of revenue would adversely affect our financial condition and profitability.

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Furthermore, these investments may not decrease as a percentage of revenue if our business grows.

In particular, we intend to continue investing to market to our consumers including to increase awareness of our brand, including through television and radio advertisements.

In particular, we intend to continue investing in marketing to our consumers to increase brand awareness, including through television and radio advertisements.

There can be no assurance that these investments will increase revenue or that we will eventually be able to decrease our sales and marketing expense as a percentage of revenue, and failure to do so would adversely affect our financial condition and profitability.

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Through our verified partner network, we acquire consumer quote requests that are submitted by consumers directly to select third parties.

While we have increased the number of quote requests acquired from these third-party sources, we still have limited experience in acquiring quote requests from third-party providers, we do not know if we will be able to acquire quote requests in significant volume, at prices that are attractive, whether the consumers will represent high-intent insurance shoppers, or whether insurance providers in our marketplace will purchase referrals for consumers acquired through our verified partner network.

Additionally, any failure by us or third parties in our verified partner network on which we rely for quote requests to adhere to or successfully implement appropriate processes and procedures in response to existing regulations and changing regulatory requirements could result in legal and monetary liability, significant fines and penalties, or damage to our reputation in the marketplace, any of which could have a material adverse effect on our business, financial condition, and results of operations.

While we have increased the number of quote requests acquired from these third-party sources, we still have limited experience in acquiring quote requests from third-party providers, we do not know if we will be able to continue to acquire verified partner network quote requests in significant volume, at prices that are attractive, whether the consumers will represent high-intent insurance shoppers, or whether insurance providers in our marketplace will purchase referrals for consumers acquired through our verified partner network.

Additionally, any failure by us or third parties in our verified partner network on which we rely for quote requests to adhere to or successfully implement appropriate processes and procedures in response to existing regulations and changing regulatory requirements could result in significant legal and monetary liability, including fines and penalties, or damage to our reputation in the marketplace, any of which could have a material adverse effect on our business, financial condition, and results of operations.

A significant portion of the agents in our marketplace are affiliated with a limited number of insurance carriers.

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As our user base and the amount of information shared on our websites and mobile applications continue to grow, we will need an increasing amount of network capacity and computing power.

We have spent and expect to continue to spend substantial amounts on data centers and equipment and

related network infrastructure and services to handle the traffic on our websites and mobile applications and to help shorten the length of or prevent system interruptions.

We have spent and expect to continue to spend substantial amounts on data centers and equipment and related network infrastructure and services to handle the traffic on our websites and mobile applications and to help shorten the length of or prevent system interruptions.

The operation of these systems is expensive and complex and we could experience operational failures.

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Although we carry business interruption insurance, it may not be sufficient to compensate us for the potentially significant losses, including the potential harm to the future growth of our business that may result from interruptions in our service as a result of system failures.

Consumer adoption of call blocking technology, or restrictions placed by telephone carriers and communication platforms, may reduce our ability to call or text message our consumers, which could significantly decrease the number of quote requests and value of our data referrals and substantially harm our business.

Consumer adoption of call blocking technology may reduce, and restrictions implemented by telephone carriers and communications platforms have reduced, our ability to call or text message our consumers, which could significantly decrease the number of quote requests and value of our data referrals and substantially harm our business.

Increased adoption of call blocking technology may prevent us from reaching our consumers that have expressed an interest in getting insurance information.

Additionally, telephone carriers and communication platforms may themselves place restrictions on our ability to call or send text messages to our consumers.

Additionally, telephone carriers and communication platforms have themselves placed restrictions on our ability to call or send text messages to our consumers.

If calls or text messages to our consumers are blocked, or if insurance providers obtaining data referrals have their calls or text messages blocked due to these call blocking technologies or restrictions, we may see a significant decrease in quote requests, the value of our referrals and the number of data and call referrals we are able to sell to insurance providers which could materially adversely impact our business.

We depend on key personnel to operate our business, and if we are unable to retain, attract and integrate qualified personnel, our ability to develop and successfully grow our business could be harmed.

We believe our success has depended, and continues to depend, on the efforts and talents of our executives and employees.

We believe our success depends, on the efforts and talents of our executives and employees.

Our future success depends on our continuing ability to attract, develop, motivate and retain highly qualified and skilled employees.

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Experienced information technology personnel, who are critical to the success of our business, are in particularly high demand.

This demand is particularly acute in the greater Boston, Massachusetts area, where we are headquartered.

Competition for their talents is intense, and retaining such individuals can be difficult.

The loss of any of our executive officers or key employees could materially adversely affect our ability to execute our business plan and strategy, and we may not be able to find adequate replacements on a timely basis, or at all.

Our executive officers and other employees are at-will employees, which means they may terminate their employment relationships with us at any time, and their knowledge of our business and industry would be extremely difficult to replace.

Our executive officers and other employees are at-will employees, which

means they may terminate their employment relationships with us at any time, and their knowledge of our business and industry would be extremely difficult to replace.

We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees.

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We have incurred net losses in the past and have never generated net income on an annual basis.

We anticipate that our operating expenses and capital expenditures will increase substantially in the foreseeable future as we continue to invest to expand into new verticals, enhance our brand awareness, hire additional employees, consider expanding outside of the United States and improve our technology and infrastructure capabilities.

We anticipate that our operating expenses and capital expenditures will increase substantially in the foreseeable future as we continue to invest to expand into new verticals, grow our DTC agency, enhance our brand awareness, hire additional employees, consider expanding outside of the United States and improve our technology and infrastructure capabilities.

Our expansion efforts may prove more expensive than we anticipate, and we may not succeed in increasing our revenue and margins sufficiently to offset these higher expenses.

We incur significant expenses in acquiring consumers, developing our technology and marketing the products and services we offer.

Our costs also may increase due to our continued new product development and general administrative expenses, such as legal and accounting expenses related to being a public company.

Our costs also may increase due to our continued new product development and general

administrative expenses, such as legal and accounting expenses related to being a public company.

If we fail to increase our revenue or manage these additional costs, we may continue to incur losses in the future.

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Our results may vary as a result of fluctuations in the number of consumers and insurance providers using our marketplace and the size and seasonal variability of the marketing budgets of our insurance provider customers.

In addition, the auto, home and renters, life, commercial and health insurance industries may each be subject to their own cyclical trends and uncertainties.

In addition, the auto, home and renters, life and health insurance industries may each be subject to their own cyclical trends and uncertainties.

Fluctuations and variability across these different verticals may affect our revenue.

result of the potential variations in our revenue and results of operations, period-to-period comparisons may

As a result of the potential variations in our revenue and results of operations, period-to-period comparisons may

not be meaningful and the results of any one period should not be relied on as an indication of future performance.

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Our past growth may not be indicative of our future growth, and our revenue growth rate may decline in the future.

Our revenue grew from $96.8 million in 2015 to $122.8 million in 2016, to $126.2 million in 2017, to $163.3 million in 2018, to $248.8 million in 2019 and to $346.9 million in 2020, increases of 26.8%, 2.8%, 29.4%, 52.3% and 39.4%, respectively.

Our revenue grew from $96.8 million in 2015 to $122.8 million in 2016, to $126.2 million in 2017, to $163.3 million in 2018, to $248.8 million in 2019, to $346.9 million in 2020 and to $418.5 million in 2021, increases of 26.8%, 2.8%, 29.4%, 52.3%, 39.4% and 20.6%, respectively.

This growth may not be indicative of our future growth, if any, and we will not be able to grow as expected, or at all, if we do not accomplish the following:

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If our revenue or revenue growth rates decline, investors’ perceptions of our business may be adversely affected and the market price of our Class A common stock could decline.

Our operating results will be impacted by factors that impact our estimate of the constrained lifetime value of commissions per policy.

We recognize commission revenue based on the latest estimated constrained lifetime value, or constrained LTV, for each product.

Constrained LTVs are impacted by a number of factors, which include, but are not limited to, carrier mix, policy duration and conversion rates of paying policies.

These factors impact historical trends and changes in those factors or in historical trends will affect our constrained LTV estimates in future periods and therefore could adversely affect our revenue and financial results in those future periods.

As a result, adverse changes in the constraints we apply or the assumptions we make in computing expected lifetime values, such as increased cancellation rates or lower renewal rates, would harm our business, operating results, financial condition and prospects.

Additionally, if customer cancellation rates exceed our expectations or renewal rates are less than expected, we may not receive the commission revenue we have projected to receive, despite our having incurred and recorded the cost to sell the policy.

Any adverse impact on cancellation or renewal rates could lead to our receipt

of commission payments that are less than the amount we estimated when we recognized commission revenue.

Under such circumstances, we would need to decrease the remaining commissions receivable balance, which would result in a change to earnings in the period of the write-off.

Our dedication to making decisions based primarily on the best interests of our company and stockholders may cause us to forgo short-term gains in pursuit of potential but uncertain long-term growth.

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While we use encryption and authentication technology licensed from third parties designed to effect secure transmission of such information, we cannot guarantee the security of the transfer and storage of the personal information we collect from customers.

transactions, and the increased sophistication and activities of computer hackers, organized crime, terrorists, and other external parties, including foreign state actors.

We have been subject to, and are likely to continue to be the target of, future cyberattacks.

Cybersecurity risks have significantly increased in recent years, in part, because of the proliferation of new technologies, the use of the internet and telecommunications technologies to exchange information and conduct transactions, and the increased sophistication and activities of computer hackers, organized crime, terrorists, and other external parties, including foreign state actors.

We have been subject to, and are likely to continue to be the target of, cyberattacks.

These cyberattacks could include computer viruses, malicious or destructive code, phishing attacks, denial of service or information, improper access by employees or third-party partners or other security breaches that have or could in the future result in the unauthorized release, gathering, monitoring, misuse, loss or destruction of our confidential, proprietary and other information, confidential and other information concerning employees or consumers, or otherwise materially disrupt our or our other third-party partners’ network access or business operations.

We also have employees and contractors that are located outside of the United States.

These individuals may be at greater risk of cyberattacks, and we may not be able to successfully secure our data on servers located in the United States.

Although we have a chief information officer who coordinates our cybersecurity measures, policies and procedures, and our chief information officer regularly reports to our board of directors regarding these matters, we cannot be certain that our efforts, as well as those of our third-party partners and service providers, will be able to prevent breaches of the security of our information systems and technology.

If we, or any of our third-party partners and service providers, experience compromises to security that result in websites or mobile application performance or availability problems, the complete shutdown of our websites or mobile applications or the loss or unauthorized disclosure, access, acquisition, alteration or use of confidential information, consumers and insurance providers may lose trust and confidence in us, and consumers and insurance providers may decrease the use of our website or stop using our website entirely.

Further, outside parties may attempt to fraudulently induce employees, consumers or insurance providers to disclose sensitive information in order to gain access to our information or consumers’ or insurance providers’ information.

Further, outside parties may attempt to fraudulently induce employees, consumers or insurance providers to disclose sensitive information in order to

gain access to our information or consumers’ or insurance providers’ information.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently, often are not recognized until launched against a target, and may originate from less regulated and remote areas around the world, we may be unable to proactively address these techniques or to implement adequate preventative measures.

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Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to consumers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of sensitive information, which could include personally identifiable information or other user data, may result in governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us by consumer advocacy groups or others, and could cause consumers and insurance providers to lose trust in us, all of which could be costly and have an adverse effect on our business.

In addition, new and changed rules and regulations regarding privacy, data protection and cross-border transfers of consumer information could cause us to delay planned uses and disclosures of data to comply with applicable privacy and

data protection requirements.

Moreover, if third parties that we work with violate applicable laws or our policies, such violations also may put consumer or insurance provider information at risk and could in turn harm our reputation, business and operating results.

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In some circumstances, we may determine to do so through the acquisition of complementary businesses and technologies rather than through internal development.

For example, in September 2020, we closed our acquisition of Crosspointe Insurance & Financial Services, LLC, or Crosspointe.

For example, in September 2020, we acquired Eversurance, and in August 2021, we acquired PolicyFuel.

The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to successfully complete identified acquisitions.

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potential write-offs of intangibles or other assets acquired in such transactions that may have an adverse effect on our operating results in a given period;

potential liabilities for activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

potential liabilities for reputational harm from activities of the acquired company before the acquisition, including patent and trademark infringement claims, violations of laws, commercial disputes, tax liabilities and other known and unknown liabilities;

litigation or other claims in connection with the acquired company, including claims from terminated employees, consumers, former stockholders or other third parties.

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Also, the anticipated benefits of any acquisitions may not be realized.

We use third-party contractor insurance agents to sell insurance for our direct-to-consumer

We use third-party contractor insurance agents to sell insurance for our DTC agency.

These agents could take actions that could harm our business.

We contract licensed insurance agents to sell insurance in connection with our direct-to-consumer

We contract licensed insurance agents to sell insurance in connection with our DTC agency.

These agents are independent contractors and, as such, are not our employees, and we do not exercise control over their day-to-day

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If we raise additional funds through further issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our Class A common stock.

If we are unable to obtain

adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, operating results, financial condition and prospects could be materially adversely affected.

Litigation could distract management, increase our expenses or subject us to material money damages and other remedies.

We were previously subject to class action lawsuits alleging violations of the Telephone Consumer Protection Act, or TCPA, and were subject to a class action lawsuit alleging federal securities law violations in connection with our IPO, and may be involved from time to time in various additional legal proceedings, including, but not limited to, actions relating to breach of contract, breach of federal and state privacy laws, and intellectual property infringement that might necessitate changes to our business or operations.

If we are unable to obtain adequate financing or financing on terms satisfactory to us, when we require it, our ability to continue to pursue our business objectives and to respond to business opportunities, challenges or unforeseen circumstances could be significantly limited, and our business, operating results, financial condition and prospects could be materially adversely affected.

Litigation could distract management, increase our expenses or subject us to material monetary damages and other remedies.

We were previously subject to class action lawsuits alleging violations of the Telephone Consumer Protection Act, or TCPA, and were subject to a class action lawsuit alleging federal securities law violations in connection with our initial public offering, or IPO, and may be involved from time to time in various additional legal proceedings, including, but not limited to, actions relating to breach of contract, breach of federal and state privacy laws, and intellectual property infringement that might necessitate changes to our business or operations.

Regardless of whether any claims against us have merit, or whether we are ultimately held liable or subject to payment of damages, claims may be expensive to defend and may divert management’s time away from our operations.

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We conduct marketing activities, directly and indirectly, via telephone, text messages, email and/or through other online and offline marketing channels, which general marketing activities are governed by numerous federal and state regulations, such as the Telemarketing Sales Rule, state telemarketing laws, federal and state privacy laws, the Controlling the Assault of Non-Solicited Pornography and

Marketing Act of 2003, or CAN-SPAM Act, the

TCPA, and the Federal Trade Commission Act and its accompanying regulations and guidelines, among others.

Marketing Act of 2003, or CAN-SPAM Act, the TCPA, and the Federal Trade Commission Act and its accompanying regulations and guidelines,

among others.

In addition to being subject to action by regulatory agencies, some of these laws, like the TCPA, allow private individuals to bring litigation against companies for breach of these laws, and we have received complaints from individuals that we have violated the TCPA.

We are also dependent on our third-party vendors to comply with applicable laws.

For example, with the commencement of our verified partner network in 2019, we depend upon these third-party vendors to obtain consent from consumers to receive telemarking calls in compliance with the TCPA.

We may be alleged to have indemnification obligations to third-party customers for alleged breaches of privacy laws like the TCPA, which could increase our defense costs and require that we pay damages if there were an adverse ruling in any such claims.

Any of these events may have a material adverse effect on our business, results of operations, financial condition and prospects.

For example, with the commencement of our verified partner network in 2019, we depend upon these third-party vendors to obtain consent from consumers to receive telemarketing calls in compliance with the TCPA.

We may be alleged to have indemnification obligations to third-party customers for alleged breaches of privacy laws like the TCPA, which could increase our defense costs and require that we pay damages, even if there is no adverse ruling in connection with any such claims.

While we have not incurred any material costs to date with respect to these types of events, any of these events may have a material adverse effect on our business, results of operations, financial condition and prospects.

Companies in the internet, technology and media industries are frequently subject to allegations of infringement or other violations of intellectual property rights.

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voice messages.

Federal Communications Commission (the “FCC”), and the U.S.

Federal Trade Commission (the “FTC”) have responsibility for regulating various aspects of these laws.

Federal Communications Commission, or the FCC, and the U.S.

Federal Trade Commission, or the FTC, have responsibility for regulating various aspects of these laws.

Among other requirements, the TCPA requires us to obtain prior express written consent for certain telemarketing calls.

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Like other companies that rely on telephone and text communications, we have been and may be subject to future putative class action suits alleging violations of the TCPA.

If in the future we are found to have violated the TCPA, the amount of damages and potential liability could be extensive and adversely impact our business.

If in the future we are found to have violated the TCPA, the amount of damages

and potential liability could be extensive and adversely impact our business.

Accordingly, were such a class certified or if we are unable to successfully defend such a suit, then TCPA damages could have a material adverse effect on our results of operations and financial condition.

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If the market rate of interest increases substantially, we would have to pay additional interest, which would reduce cash available for our other business needs.

We intend to satisfy any future debt service obligations with our existing cash and cash equivalents and cash flows from operations.

We intend to satisfy any future debt service obligations with our existing cash and cash equivalents.

Under our loan and security agreement with Western Alliance Bank, our failure to make payments when due or comply with specified covenants, as well as the occurrence of an event that would reasonably be expected to have a material adverse effect on our business, operations, assets or condition, is an event of default.

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We rely on a combination of trademark, trade secret and copyright law and contractual restrictions to protect our intellectual property.

In addition, we attempt to protect our intellectual property, technology and confidential information by requiring our employees and consultants to enter into confidentiality and assignment of inventions agreements and third parties to enter into nondisclosure agreements as we deem appropriate.

In addition, we attempt to protect our intellectual property, technology and confidential information by requiring our employees and consultants to enter into confidentiality and assignment

of inventions agreements and third parties to enter into nondisclosure agreements as we deem appropriate.

Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our website features, software and functionality or obtain and use information that we consider proprietary.

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Competitors may adopt service names similar to ours, thereby harming our ability to build brand identity and possibly leading to user confusion.

In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of the term “EverQuote.” We currently hold the “everquote.com” internet domain name as well as various other

related domain names.

The regulation of domain names in the United States is subject to change.

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Our activities are subject to extensive regulation under the laws of the United States and its various states and the other jurisdictions in which we operate.

We are currently subject to a variety of, and may in the future become subject to additional, international, federal, state and local laws or judicial decisions that are continuously evolving and developing, including laws regarding the insurance industry, mobile- and internet-based businesses and other businesses that rely on advertising, as well as privacy and consumer protection laws, including the TCPA, the Telemarketing Sales Rule, the CAN-SPAM Act, the

We are currently subject to a variety of, and may in the future become subject to additional, international, federal, state and local laws or judicial decisions that are

continuously evolving and developing, including laws regarding the insurance industry, mobile- and internet-based businesses and other businesses that rely on advertising, as well as privacy and consumer protection laws, including the TCPA, the Telemarketing Sales Rule, the CAN-SPAM Act, the

Fair Credit Reporting Act, the Health Insurance Portability and Accountability Act, and employment laws, including those governing wage and hour requirements.

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We assess customer insurance needs, collect customer contact information and provide other product offerings, which results in us receiving personal information.

This information is increasingly subject to

legislation and regulation in the United States.

This information is increasingly subject to legislation and regulation in the United States.

This legislation and regulation is generally intended to protect individual privacy and the privacy and security of personal information.

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For example, the California Consumer Privacy Act, or CCPA, went into effect on January 1, 2020.

The CCPA creates new individual privacy rights for California consumers (as the word is broadly defined in the law) and places increased privacy and security

The CCPA created new individual privacy rights for California consumers (as the word is broadly defined in the law) and placed increased privacy and security

obligations on many organizations that handle personal information of consumers or households.

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certain sales or transfers of personal information, and provides consumers with a new cause of action for certain data breaches.

The CCPA authorized the Attorney General to bring enforcement actions for violations beginning July 1, 2020.

The CCPA authorized the Attorney General of the state of California to bring enforcement actions for violations beginning July 1, 2020.

The CCPA may have a substantial negative impact on our business activities and increase our compliance costs and potential liability.

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Changes in applicable laws and regulations may materially increase our direct and indirect compliance and other expenses of doing business, having a material adverse effect on our business, financial condition and results of operations.

If there were to be changes to statutory or regulatory requirements, we may be unable to comply fully with or maintain all required insurance licenses and approvals.

If there were to be changes to statutory or regulatory requirements, we may be unable to comply

fully with or maintain all required insurance licenses and approvals.

Regulatory authorities have relatively broad discretion to grant, renew and revoke licenses and approvals.

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In some cases, these insurance and other laws and regulations may impose operational limitations on our business, including on the products and services we may offer or on the amount or type of compensation we may collect.

Additionally, as a result of our entry into the health insurance vertical and our acquisition of Crosspointe, we are now engaged in marketing and selling Medicare plans that are principally regulated by The Centers for Medicare & Medicaid Services, but are also subject to state laws.

Additionally, as a result of our entry into the health insurance vertical and our acquisition of Eversurance, we are now engaged in marketing and selling Medicare plans that are principally regulated by The Centers for Medicare & Medicaid Services, but are also subject to state laws.

The laws and regulations applicable to the marketing and sale of Medicare plans are numerous, ambiguous and complex.

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federal government does not directly regulate the business of insurance.

However, federal legislation and administrative policies in several areas can significantly and adversely affect insurance entities.

However, federal legislation and administrative policies in several areas can significantly

and adversely affect insurance entities.

These areas include financial services regulation, securities regulation, privacy and taxation.

In the future, additional federal regulation may be enacted, which could affect the way we conduct our business and could result in higher compliance costs.

Insurance laws or regulations that are adopted or amended, in addition to changes in federal statutes, including the Gramm-Leach-Bliley Act and the McCarran-Ferguson Act, financial services regulations and federal taxation laws or regulation, may be more restrictive than current laws or regulations and may result in lower revenues or higher costs of compliance and thus could have a material adverse effect on our results of operations and limit our growth.

Insurance laws or regulations that are adopted or amended, in addition to changes in federal statutes, including the Gramm-Leach-Bliley Act and the McCarran-Ferguson Act, financial services regulations and federal taxation laws or regulations, may be more restrictive than current laws or regulations and may result in lower revenues or higher costs of compliance and thus could have a material adverse effect on our results of operations and limit our growth.

The increasing adoption by states of cybersecurity regulations could impose additional compliance burdens on us and expose us to additional liability.

In response to the growing threat of cyber-attacks in the insurance industry, certain jurisdictions, including New York, have begun to consider new cybersecurity measures, including the adoption of cybersecurity regulations.

In March 2017, the New York State Department of Financial Services promulgated Cybersecurity Requirements for Financial Services Companies, which requires us to establish and maintain a cybersecurity program and implement and maintain cybersecurity policies and procedures with specific requirements.

Additionally, on October 24, 2017, the National Association of Insurance Commissioners, or NAIC, adopted its Insurance Data Security Model Law to serve as model legislation for states to enact in order to govern cybersecurity and data protection practices of insurers, insurance agents, and other licensed entities registered under state insurance laws.

Alabama, Connecticut, Delaware, Indiana, Louisiana, Maryland, Michigan, Mississippi, New Hampshire, Ohio, South Carolina and Virginia have adopted versions of the NAIC Insurance Data Security Model Law, each with a different effective date, and other states may adopt versions of the NAIC Insurance Data Security Model Law in the future.

Although we take steps to comply with applicable cybersecurity regulations, our failure to comply with new or existing cybersecurity regulations could result in regulatory actions and other penalties.

In addition, efforts to comply with new or existing cybersecurity regulations could impose significant costs on our business, which could materially and adversely affect our business, financial condition or results of operations.

The marketing and sale of Medicare plans are subject to numerous, complex and frequently changing laws, regulations and guidelines, and non-compliance

with or changes in laws, regulations and guidelines could harm our business, operating results and financial condition.

The marketing and sale of Medicare plans are subject to numerous laws, regulations and guidelines at the federal and state level.

The marketing and sale of Medicare Advantage and Medicare Part D prescription drug plans are principally regulated by the Centers for Medicare & Medicaid Services, or CMS, but are also subject to state laws.

The marketing and sale of Medicare Supplement plans are principally regulated on a state-by-state

basis by state departments of insurance.

The laws and regulations applicable to the marketing and sale of Medicare plans are numerous, ambiguous and complex, and, particularly with respect to regulations and guidance issued by CMS for Medicare Advantage and Medicare Part D prescription drug plans, change frequently.

We have altered, and likely will have to continue to alter, our marketing materials and sales process to comply with these laws, regulations and guidelines.

Health insurance carriers whose Medicare plans we sell may be required to approve our websites, our call center scripts and some of our marketing materials in order for us to market and sell Medicare plans to Medicare-eligible individuals as a health insurance agent.

In addition, certain aspects of our Medicare plan marketing partner relationships have been in the past, and will be in the future, subjected to CMS and health insurance carrier review.

Our health insurance carrier partners, CMS, or state departments of insurance may object to or not approve aspects of our online platforms, sales function or marketing material and processes and may determine that certain existing aspects of our Medicare-related business are not in compliance with legal requirements.

CMS scrutinizes health insurance carriers whose Medicare plans we sell and those health insurance

carriers may be held responsible for actions that we and our agents take.

Based on industry guidance, we expect that health insurance carriers will be increasingly evaluating broker performance based on quality of their enrollments, including complaints, retention rates, customer satisfaction and volumes.

As a result, health insurance carriers may terminate their relationships with us or require us to take other corrective action if our Medicare product sales, marketing and operations are not in compliance or give rise to too many complaints.

The termination of or change in our relationships with health insurance carriers could reduce the products we are able to offer, result in the loss of commissions for past and future sales and otherwise harm our business, operating results and financial condition.

Changes to the laws, regulations and guidelines relating to the sale of Medicare plans, their interpretation or the manner in which they are enforced could impact the manner in which we conduct our Medicare business, or our sale of Medicare plans, or we could be prevented from operating aspects of our Medicare revenue generating activities altogether, which would harm our business, operating results and financial condition.

We may in the future receive inquiries from CMS or state departments of insurance regarding our marketing and business practices and compliance with laws and regulations.

Inquiries and proceedings initiated by the government could adversely impact our health insurance licenses, require us to pay fines, require us to modify marketing and business practices, result in litigation and otherwise harm our business, operating results or financial condition.

In May 2021, CMS changed its process for the submission and approval of marketing materials related to Medicare Advantage and Medicare Part D prescription drug plans.

The practical application of the previous process allowed for a lead carrier to handle most of the review and filing of Medicare plan marketing materials with CMS.

The new process requires each carrier to approve of each filed marketing material and has resulted in a more complicated and time consuming process to get our marketing material filed with CMS and through the process with carriers.

In October 2021, CMS issued a letter reiterating that certain types of marketing materials, including certain generic marketing materials that refer to the benefits or costs of Medicare Advantage or Medicare Part D prescription drug plans but that do not specifically mention a health insurance carrier’s name or a specific plan, must be filed with CMS.

As a result, we now submit to each Medicare Advantage and Medicare Part D prescription drug plan carrier with which we have a relationship a significantly larger number of marketing materials than we have in the past.

We may not be able to use certain of our marketing materials and implement our marketing programs effectively if CMS or a health insurance carrier has comments or disapproves of our marketing materials.

If we do not timely file the additional marketing materials with CMS or if health insurance carriers do not adapt to the new CMS requirements or increase the efficiency with which they review our marketing material, it could harm our sales and also harm our ability to efficiently change and implement new or existing marketing material, including call center scripts and our websites, which could harm our business, operating results and financial condition.

If we or our marketing partners are not successful in timely receiving health insurance carrier or CMS approval of our marketing materials, we could be prevented from implementing our Medicare marketing and sales initiatives, which could harm our business, operating results and financial conditions, particularly if such delay or non-compliance

occurs during the Medicare annual enrollment period or the Medicare Advantage open enrollment period.

Taxing authorities may assert that we should have collected or in the future should collect sales, use, value added or similar taxes, and we could be subject to liability with respect to past or future sales, which could adversely affect our operating results.

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Such tax assessments, penalties and interest, or future requirements may adversely affect our operating results.

For example, we were contacted by a representative from a state tax assessor’s office requesting remittance of uncollected sales taxes.

For example, we were contacted by a representative from a state tax assessor’s office

requesting remittance of uncollected sales taxes.

While we do not believe our services are taxable in this state, if we do not prevail in our position, uncollected sales taxes due for the period could amount to approximately $1.5 million including interest and penalties.

Federal, state and international laws regulating telephone and email marketing practices impose certain obligations on marketers, which could reduce our ability to expand our business.

We, along with third parties we acquire quote requests from, and the insurance providers using our marketplace, make telephone calls and send emails to consumers who request insurance quotes through our marketplace.

We, along with third parties we acquire consumer referrals from, and the insurance providers using our marketplace, make telephone calls and send emails to consumers who request insurance quotes through our marketplace.

The United States regulates marketing by telephone and email.

The TCPA prohibits companies from making certain telemarketing calls to numbers listed in the Federal Do-Not-Call

Registry and imposes other obligations and limitations on making phone calls and sending text messages to consumers.

Act regulates commercial email messages and specifies penalties for the transmission of commercial email messages that do not comply with certain requirements, such as providing an opt-out

mechanism for stopping future emails from senders.

We, along with third parties we acquire quote requests from, and the insurance providers who use our marketplace may need to comply with such laws and any associated rules and regulations.

The TCPA prohibits companies from making certain telemarketing calls to numbers listed in the Federal Do-Not-Call Registry and imposes other obligations and limitations on making phone calls and sending text messages to consumers.

The CAN-SPAM Act regulates commercial email messages and specifies penalties for the transmission of commercial email messages that do not comply with certain requirements, such as providing an opt-out mechanism for stopping future emails from senders.

We, along with third parties we acquire consumer referrals from, and the insurance providers who use our marketplace may need to comply with such laws and any associated rules and regulations.

States and other countries have similar laws related to telemarketing and commercial emails.

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Changes in the regulation of the internet could adversely affect our business.

Laws, rules and regulations governing internet communications, advertising and e-commerce

are dynamic and the extent of future government regulation is uncertain.

Laws, rules and regulations governing internet communications, advertising and e-commerce are dynamic

and the extent of future government regulation is uncertain.

Federal and state regulations govern various aspects of our online business, including intellectual property ownership and infringement, trade secrets, the distribution of electronic communications, marketing and advertising, user privacy and data security, search engines and internet tracking technologies.

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transactions could also be imposed.

Existing or future regulation or taxation could hinder growth in or adversely affect the use of the internet generally, including the viability of internet e-commerce,

which could reduce our revenue, increase our operating expenses and expose us to significant liabilities.

Existing or future regulation or taxation could hinder growth in or adversely affect the use of the internet generally, including the viability of internet e-commerce, which could reduce our revenue, increase our operating expenses and expose us to significant liabilities.

Risks Related to Our Class A Common Stock

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The market price of our Class A common stock has been and could continue to be subject to significant fluctuations.

For example, our Class A common stock traded within a range of a high price of $63.44 per share

and a low price of $4.05 per share for the period beginning June 28, 2018, our first day of trading on the Nasdaq Global Market, through December 31, 2020.

For example, our Class A common stock traded within a range of a high price of $63.44 per share and a low price of $4.05 per share for the period beginning June 28, 2018, our first day of trading on the Nasdaq Global Market, through December 31, 2021.

Some of the factors that may cause the market price of our Class A common stock to fluctuate include:

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The dual-class structure of our common stock has the effect of concentrating voting control with the holders of our Class B common stock, including our directors, executive officers and Link Ventures and other significant stockholders, who collectively held in the aggregate approximately 78% of the voting power of our capital stock as of February 23, 2022;

and Link Ventures, directly or through a voting agreement, together with Cogo Labs, held approximately 77% of the voting power of our capital stock as of that date.

and Link Ventures, directly or through a voting agreement, together with Cogo Labs,

held approximately 77% of the voting power of our capital stock as of that date.

This concentration of voting power will limit or preclude the ability of other stockholders to influence corporate matters, including the election of directors, amendments of our organizational documents and any merger, consolidation, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.

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Our directors, executive officers and holders of more than 10% of our common stock, and their respective affiliates, held in the aggregate approximately 78% of the voting power of our capital stock as of February 23, 2022;

and Link Ventures, directly or through a voting agreement pursuant to which each of Seth Birnbaum, including through his heirs and estate, and Tomas Revesz have agreed to vote on all matters presented to our stockholders all voting capital stock held by them in the manner directed by Link Ventures, together with Cogo Labs, held in the aggregate approximately 77% of the voting power of our capital stock as of that date.

and Link Ventures, directly or through a voting agreement pursuant to which Tomas Revesz and the heirs and estate of Seth Birnbaum are obligated to vote on all matters presented to our stockholders all voting capital stock held by them in the manner directed by Link Ventures, together with Cogo Labs, held in the aggregate approximately 77% of the voting power of our capital stock as of that date.

Because of the 10-to-one voting ratio

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We have availed ourselves of certain of these exemptions and, for so long as we qualify as a “controlled company,” we will maintain the option to utilize from time to time some or all of these exemptions.

For example, we do not have a nominations committee, and director nominees might not be selected or recommended for the board’s selection by a qualifying nominations committee or by independent directors constituting a majority of the independent directors, and our compensation committee is not comprised solely of independent directors.

the independent directors, and our compensation committee is not comprised solely of independent directors.

Accordingly, should the interests of Link Ventures differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq Stock Market corporate governance standards.

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As a public company, we are subject to the reporting requirements of the Exchange Act, the listing requirements of the Nasdaq Stock Market and other applicable securities rules and regulations.

Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and increase demand on our systems and resources, particularly as we are no longer an emerging growth company.

longer an emerging growth company.

Among other things, the Exchange Act requires that we file annual, quarterly and current reports with respect to our business and operating results and maintain effective disclosure controls and procedures and internal control over financial reporting.

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These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee, and qualified executive officers.

We and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting.

If we are unable to remediate these material weaknesses, we may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect our business and the market price of our common stock.

We and our independent registered public accounting firm have identified material weaknesses in our internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We and our independent registered public accounting firm have identified deficiencies in control over certain information technology (IT) general controls for revenue-related information systems that are relevant to the preparation of our financial statements that constitute material weaknesses.

Specifically, we did not design and maintain (i) user access controls to ensure appropriate segregation of duties and that adequately restrict user and privileged access to certain financial applications, programs, and data to appropriate company personnel, (ii) program change management controls for certain financial applications to ensure that information technology program and data changes affecting financial IT applications and underlying accounting records are identified, tested, authorized and implemented appropriately, and (iii) controls over the completeness and accuracy of data relevant to certain automated revenue calculations.

These material weaknesses did not result in a misstatement to the financial statements.

However, the material weaknesses could impact the effectiveness of segregation of duties controls, as well as the effectiveness of IT-dependent

controls that could result in misstatements impacting revenue-related financial statement accounts and disclosures that would result in a material misstatement of the annual or interim consolidated financial statements that would not be prevented or detected.

As a result of these material weaknesses, our management concluded that our internal control over financial reporting was not effective as of December 31, 2021.

We are in the process of implementing a remediation plan designed to improve our internal control over financial reporting to remediate these material weaknesses, which remediation plan includes a robust risk assessment process coupled with additional controls and procedures.

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 the material weaknesses in our internal control over financial reporting or that they will prevent or avoid potential future material weaknesses.

If we are unable to successfully remediate the material weaknesses in our internal control over financial reporting, the accuracy and

timing of our financial reporting may be adversely affected, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our Class A common stock could decline, we could be subject to sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities, and our ability to access the capital markets could be limited.

We are obligated to maintain a system of effective internal control over financial reporting and any failure to maintain the adequacy of these internal controls may harm investor confidence in our company and, as a result, the value of our common stock.

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We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting.

This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting.

This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting, such as the material weaknesses described above.

Our compliance with Section 404 necessitates that we incur substantial accounting expense and expend significant management efforts.

We will continue to dedicate internal resources, engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting and to compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.

However, we cannot assure you that our independent registered public accounting firm will be able to attest to the effectiveness of our internal control over financial reporting.

We may not be able to remediate any material weaknesses that may be identified, or to complete our evaluation, testing and any required remediation in a timely fashion and our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

Any failure to maintain adequate internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.

If we are unable to assert that our internal control over financial reporting is effective, or if our auditors are unable to express an opinion on the effectiveness of our internal control when they are required to issue such opinion, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our Class A common stock could decline, and we could be subject to sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities.

Failure to remedy any material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

We will continue to dedicate internal resources, engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, including the remediation of the material weaknesses described above, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting and to compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.

We may not be able to remediate the material weaknesses described above, or any future material weaknesses that may be identified, or to complete our evaluation, testing and remediation in a timely fashion and our independent registered public accounting firm may issue further reports that are adverse in the event it is not satisfied with the level at which our controls are documented, designed or operating.

Consequently, we cannot assure you that our independent registered public accounting firm will be able to attest to the effectiveness of our internal control over financial reporting.

Our failure to maintain adequate internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.

If we are unable to assert that our internal control over financial reporting is effective, or if our auditors are unable to express an opinion on the effectiveness of our internal controls, investors could lose confidence in the accuracy and completeness of our financial reports, the market price of our Class A common stock could decline, and we could be subject to sanctions or investigations by the Nasdaq Stock Market, the SEC or other regulatory authorities.

Failure to remedy the material weaknesses described above, or any future material weaknesses in our internal control over financial reporting that may be identified, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

UNRESOLVED STAFF COMMENTS

Our principal executive offices are located in Cambridge, Massachusetts, where we lease approximately 32,000 square feet of space pursuant to a lease that expires in September 2024.

We believe that our current facilities are adequate to meet our immediate needs.

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What changed 10-K

Item 1A. Risk Factors