What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2021-02-25 compared with 2020-02-27 · 572 added, 275 removed, 685 unchanged (55% of the section changed)

Financial Statements and Supplementary Data

The Rubicon Project, Inc.

MAGNITE, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the stockholders and the Board of Directors of The Rubicon Project, Inc.

To the stockholders and the Board of Directors of Magnite, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of The Rubicon Project, Inc.

and subsidiaries (the "Company") as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the two years in the period ended December 31, 2019 and the related notes (collectively referred to as the "financial statements").

We have audited the accompanying consolidated balance sheets of Magnite, Inc.

and subsidiaries (the "Company") as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive loss, stockholders' equity, and cash flows for each of the three years in the period ended December 31, 2020 and the related notes (collectively referred to as the "financial statements").

We also have audited the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

Change in Accounting Principle

As discussed in Note 2 to the financial statements, effective January 1, 2019, the Company adopted the FASB’s new standard related to leases using the modified retrospective approach.

As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment of internal control over financial reporting certain elements related to Telaria, Inc., which was acquired on April 1, 2020.

The excluded elements of the Telaria business represented 25% of the Company’s revenue and 25% of the Company’s total assets as of and for the year ended December 31, 2020.

Accordingly, our audit did not include the internal control over financial reporting for certain elements related to Telaria, Inc.

Basis for Opinions

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Business Combinations – Telaria, Inc.

Merger – Technology, Customer Relationships, and In-process Research and Development Intangible Assets — Refer to Note 10 to the financial statements

Critical Audit Matter Description

On April 1, 2020, the Company completed a stock for stock merger with Telaria, Inc.

whereby each share of Telaria common stock issued and outstanding was converted into 1.082 shares of the Company’s common stock.

This resulted in the issuance of 52,098,945 shares of the Company’s common stock.

The Company accounted for the acquisition using the acquisition method of accounting for business combinations and the fair value of the purchase price of $287,417,460 was allocated to the assets acquired and liabilities assumed based on their respective fair values, including the technology, customer relationships, and in-process research and development intangible assets of $58,000,000, $36,300,000, and $8,030,000, respectively.

Management estimated the fair value of technology, customer relationships, and in-process research and development intangible assets using a discounted cash flow approach, which included an analysis of future cash flows expected to be generated by each intangible asset.

The fair value of the acquired technology and in-process research and development was valued using The Revenue Split Method.

The Company used the Loss‐of‐Revenue and Income Method in its valuation of the existing Customer Relationships.

The fair value determination of these intangible assets required management to make significant, subjective estimates and assumptions related to forecasted future cash flows and the selected discount rate.

We identified the aforementioned intangible assets as a critical audit matter because of the significant estimates and assumptions management makes to determine the fair value of these intangible assets.

This required a high degree of auditor judgment and an increased extent of effort when performing audit procedures, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the forecasts of future cash flows and the selection of the discount rate for the technology, customer relationships, and in-process research and development intangible assets included the following, among others:

• We tested the effectiveness of controls over the valuation of intangible assets, including management’s controls over forecasts of future cash flows and the determination of the discount rate.

• We assessed the reasonableness of management’s forecasts of future cash flows by comparing the revenue and disaggregated cost projections to historical results, certain peer companies, third-party industry forecasts, as well as performing inquiries with certain members of management.

• With the assistance of our fair value specialists, we evaluated the valuation methodology used to determined fair value along with the reasonableness of the discount rate, including independently estimating the discount rate using a process consistent with generally accepted valuation practices.

• We evaluated whether the estimated future cash flows were consistent with evidence obtained in other areas of the audit.

Revenue — Highly Automated Systems to Process and Record Revenue - Refer to Note 4 to the financial statements .

Critical Audit Matter Description

The Company’s revenue consists of transaction-based fees and is made up of a significant volume of low-dollar transactions, sourced from multiple systems, databases, and other tools.

Due to the fact that revenue transactions do not consist of the transfer of physical goods, but are web- or app-based, the processing and recording of revenue is highly automated and is based on contractual terms with advertisers and publishers.

Because of the nature of the Company’s transaction-based fees, the Company uses automated systems to process and record its revenue transactions.

We identified revenue as a critical audit matter because the of the information technology (IT)-dependent nature of the Company’s revenue stream and the significant audit effort required in performing our audit procedures, including involvement of professionals with expertise in IT to identify, test, and evaluate the Company’s systems, software applications, and automated controls related to the revenue cycle.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s systems to process revenue transactions included the following, among others:

• With the assistance of our IT specialists, we:

◦ Identified the significant systems used to process revenue transactions and tested the effectiveness of general IT controls over the systems, including testing of user access controls, change management controls, and IT operations controls.

◦ We tested the effectiveness of system interface controls and automated controls within the revenue process, as well as controls designed to ensure the accuracy and completeness of revenue.

• We tested the effectiveness of controls within the relevant revenue business processes, including those in place to reconcile the various systems to the Company’s general ledger.

• We evaluated recorded revenue and revenue trends and used data analytics to analyze transactional revenue data.

• We tested revenue for completeness and accuracy by confirming related accounts receivable selections.

• We performed a proof of cash reconciliation that reconciled cash to revenue and related revenue accounts.

/s/ Deloitte & Touche LLP

Los Angeles, California

February 26, 2020

Los Angeles, California February 24, 2021

We have served as the Company's auditor since 2018.

THE RUBICON PROJECT, INC.

MAGNITE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

Current assets:

Cash and cash equivalents $ 117,676 $ 88,888

Marketable securities

Accounts receivable, net 471,666 217,571

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TOTAL CURRENT ASSETS

607,071 313,050

Property and equipment, net 23,681 23,667

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Intangible assets, net 89,884 11,386

Goodwill 158,125 7,370

Other assets, non-current 4,440 2,103

$ 938,960 $ 395,120

LIABILITIES AND STOCKHOLDERS' EQUITY

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Accounts payable and accrued expenses

$ 509,315 $ 259,439

Lease liabilities - current portion 9,813 7,282

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TOTAL CURRENT LIABILITIES

522,198 267,499

Lease liabilities - non-current portion 32,278 15,231

Deferred tax liability, net

Other liabilities, non-current

TOTAL LIABILITIES

557,347 283,184

Commitments and contingencies (Note 17)

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Additional paid-in capital 777,084 453,064

Accumulated other comprehensive loss

Accumulated other comprehensive income (loss) ( 957 ) ( 45 )

Accumulated deficit ( 394,516 ) ( 341,084 )

TOTAL STOCKHOLDERS' EQUITY

381,613 111,936

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 938,960 $ 395,120

The accompanying notes to consolidated financial statements are an integral part of these statements.

THE RUBICON PROJECT, INC.

MAGNITE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

Revenue $ 221,628 $ 156,414 $ 124,685

Cost of revenue 77,747 57,391 60,003

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General and administrative 52,987 39,750 42,431

Restructuring and other exit costs

Merger and restructuring costs 17,552 2,041 3,440

Total expenses 275,862 183,997 188,293

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Other (income) expense:

Interest income, net

Interest (income) expense, net ( 50 ) ( 789 ) ( 988 )

Other income ( 3,665 ) ( 285 ) ( 766 )

Foreign exchange (gain) loss, net 2,220 481 ( 389 )

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Provision (benefit) for income taxes 693 ( 1,512 ) 357

Net loss $ ( 53,432 ) $ ( 25,478 ) $ ( 61,822 )

Net loss per share:

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The accompanying notes to consolidated financial statements are an integral part of these statements.

THE RUBICON PROJECT, INC.

MAGNITE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

Net loss $ ( 53,432 ) $ ( 25,478 ) $ ( 61,822 )

Other comprehensive income (loss):

Unrealized gain on investments

Unrealized gain (loss) on investments — 2 27

Foreign currency translation adjustments ( 912 ) 212 ( 327 )

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The accompanying notes to consolidated financial statements are an integral part of these statements.

THE RUBICON PROJECT, INC.

MAGNITE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

Accumulated Other

Common Stock Additional

Capital Accumulated Other

Comprehensive

Income (Loss)

Income (Loss) Accumulated

Deficit Total

Stockholders’

Balance at December 31, 2017

Balance at Balance at December 31, 2017

50,239 $ — $ 418,354 $ 41 $ ( 253,784 ) $ 164,611

Exercise of common stock options

50 — 45 — — 45

Restricted stock awards, net

( 156 ) — — — — —

Issuance of common stock related to employee stock purchase plan 174 — 314 — — 314

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Shares withheld related to net share settlement

( 515 ) — ( 1,638 ) — — ( 1,638 )

Stock-based compensation

— — 16,802 — — 16,802

Other comprehensive loss

Balance at December 31, 2018

— — — ( 300 ) — ( 300 )

— — — — ( 61,822 ) ( 61,822 )

Balance at Balance at December 31, 2018 51,159 $ 1 $ 433,877 $ ( 259 ) $ ( 315,606 ) $ 118,013

Exercise of common stock options

285 — 588 — — 588

Restricted stock awards, net

( 182 ) — — — — —

Issuance of common stock related to employee stock purchase plan

227 — 1,054 — — 1,054

Issuance of common stock related to RSU vesting 2,858 — — — — —

Shares withheld related to net share settlement

( 459 ) — ( 1,847 ) — — ( 1,847 )

Stock-based compensation

— — 19,392 — — 19,392

Other comprehensive income

— — — 214 — 214

— — — — ( 25,478 ) ( 25,478 )

Balance at December 31, 2019 53,888 1 453,064 ( 45 ) ( 341,084 ) 111,936

Exercise of common stock options 3,359 — 13,548 — — 13,548

Issuance of common stock related to employee stock purchase plan 381 — 1,660 — — 1,660

Issuance of common stock related to RSU vesting 5,126 — — — — —

Shares withheld related to net share settlement ( 824 ) — ( 7,854 ) — — ( 7,854 )

Issuance of common stock associated with the Merger 52,099 1 275,772 — — 275,773

Exchange of stock options and RSU related to Merger — — 11,646 — — 11,646

Stock-based compensation — — 29,248 — — 29,248

Other comprehensive loss — — — ( 912 ) — ( 912 )

Net loss — — — — ( 53,432 ) ( 53,432 )

Balance at December 31, 2020 114,029

$ ( 394,516 )

The accompanying notes to consolidated financial statements are an integral part of these statements.

THE RUBICON PROJECT, INC.

MAGNITE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

OPERATING ACTIVITIES:

Net loss $ ( 53,432 ) $ ( 25,478 ) $ ( 61,822 )

Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

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Stock-based compensation 28,491 18,825 16,282

Loss on disposal of property and equipment

(Gain) loss on disposal of property and equipment ( 22 ) 114 243

Provision for doubtful accounts ( 138 ) 2,060 758

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Taxes paid related to net share settlement ( 7,854 ) ( 1,847 ) ( 1,638 )

Net cash used in financing activities

Net cash provided by (used in) financing activities 7,354 ( 205 ) ( 1,279 )

EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH 918 46 ( 172 )

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CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period $ 117,731 $ 88,888 $ 80,452

RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO CONSOLIDATED BALANCE SHEETS

Cash and cash equivalents $ 117,676 $ 88,888 $ 80,452

Restricted cash included in other asset, non-current 55 — —

Total cash, cash equivalents and restricted cash $ 117,731 $ 88,888 $ 80,452

The accompanying notes to consolidated financial statements are an integral part of these statements.

MAGNITE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS-(Continued)

(In thousands)

SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION:

December 31, 2020 December 31, 2019 December 31, 2018

Cash paid for income taxes $ 1,614 $ 291 $ 379

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Operating lease right-of-use assets obtained in exchange for new operating lease liabilities $ 2,036 $ 13,533 $ —

The accompanying notes to consolidated financial statements are an integral part of these statements.

THE RUBICON PROJECT, INC.

Common stock and options issued for Merger $ 287,418 $ — $ —

MAGNITE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Company Overview

The Rubicon Project, Inc., or Rubicon Project (the "Company"), was formed on April 20, 2007 in Delaware and began operations in April 2007.

Magnite, Inc.

("Magnite" or the "Company"), formerly known as The Rubicon Project, Inc., was formed in Delaware and began operations on April 20, 2007.

On April 1, 2020, Magnite completed a stock-for-stock merger ("Merger") with Telaria, Inc., ("Telaria"), a leading provider of connected television ("CTV") technology.

The Company operates a sell side advertising platform that offers buyers and sellers of digital advertising a single partner for transacting globally across all channels, formats, and auction types.

The Company is headquartered in Los Angeles, California.

On June 8, 2020, the Company voluntarily delisted its common stock from the New York Stock Exchange ("NYSE") and commenced listing on The Nasdaq Global Select Market of The Nasdaq Stock Market LLC ("Nasdaq").

On June 30, 2020, the Company changed its name from "The Rubicon Project, Inc." to "Magnite, Inc." In connection with the name change, the Company also changed its ticker symbol from "RUBI" to "MGNI." Magnite has its principal offices in Los Angeles, New York City, London, and Sydney, and additional offices in Europe, Asia, North America, and South America.

The Company provides a technology solution to automate the purchase and sale of digital advertising inventory for buyers and sellers.

The Company's platform features applications and services for digital advertising sellers, including websites, mobile applications and other digital media properties, and their representatives, to sell their digital advertising inventory;

applications and services for buyers, including advertisers, agencies, agency trading desks, and demand side platforms ("DSPs") to buy digital advertising inventory;

and a marketplace over which such transactions are executed.

In the second quarter of 2019, the Company announced the beta program for Demand Manager.

Demand Manager helps sellers effectively monetize their advertising inventory through configuration tools and analytics to make it easier to deploy, configure, and optimize Prebid-based header bidding solutions.

Prebid is a free and open source suite of software products designed by advertising community developers to enable publishers to implement header bidding on their websites and from within their apps.

Together, these features power and enhance a comprehensive, transparent, independent advertising marketplace that brings buyers and sellers together and facilitates intelligent decision making and automated transaction execution for the advertising inventory managed on the Company's platform.

See related acquisition of rtk.io described in Note 10-Business Acquisitions.

Advertising inventory takes different forms, referred to as advertising units, including display, audio, and video;

is purchased and sold through real-time bidding, which includes (i) direct sale of premium inventory, which the Company refers to as private marketplaces ("PMP"), and (ii) open auction bidding, which the Company refers to as open marketplace ("OMP");

and is accessed by users through different channels, including mobile web, mobile application, desktop, and connected televisions ("CTV"), as well as across various out-of-home channels such as digital billboards.

The Company's platform features applications and services for sellers of digital advertising inventory, or publishers, that own or operate websites, applications, CTV channels, and other digital media properties, to manage and monetize their inventory;

applications and services for buyers, including advertisers, agencies, agency trading desks, and demand side platforms, to buy digital advertising inventory;

and a transparent, independent marketplace that brings buyers and sellers together and facilitates intelligent decision making and automated transaction execution at scale.

The Company's clients include many of the world's leading sellers and buyers of digital advertising inventory.

Sellers monetize their inventory through the Company’s platform by seamlessly connecting to a global market of integrated buyers that transact through real-time bidding, which includes direct sale of premium inventory to a buyer, referred to as private marketplace, and open auction bidding, where buyers bid against each other in a real-time auction for the right to purchase a publisher’s inventory, referred to as open marketplace.

At the same time, buyers leverage the Company’s platform to manage their advertising spending and reach their target audiences, simplify order management and campaign tracking, obtain actionable insights into audiences for their advertising, and access impression-level purchasing from thousands of sellers.

Note 2— Organization and Summary of Significant Accounting Policies

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The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, and include the operations of the Company and its wholly owned subsidiaries.

All significant inter-company transactions and balances have been eliminated in consolidation.

All significant intercompany transactions and balances have been eliminated in consolidation.

Reclassifications

Amounts for merger and restructuring costs incurred in the year ended December 31, 2019 have been reclassified to conform to the presentation for the year ended December 31, 2020 consolidated statements of operations.

Reclassifications consist of $ 2.0 million from general and administrative expenses to merger and restructuring costs in the consolidated statement of operations for the year ended December 31, 2019.

These expenses were related to professional services associated with the Merger with Telaria.

The Merger with Telaria was announced during December 2019, during which period the Company was incurring such expenses;

however, the Company did not separately present the expenses in the 2019 consolidated statement of operations.

Management has determined that the Company operates as one segment.

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The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported and disclosed financial statements and accompanying footnotes.

Due to the economic

uncertainty as a result of the COVID-19 pandemic, it has become more difficult to apply certain assumptions and judgments into these estimates.

The extent of the impact of COVID-19 pandemic on the Company's operational and financial performance will depend on future developments, which are highly uncertain and cannot be predicted, including but not limited to, the duration and spread of the pandemic, its severity, including any resurgence, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.

As of the date of issuance of these financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments, or revise the carrying value of its assets or liabilities.

These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known.

Actual results could differ materially from these estimates.

On an ongoing basis, management evaluates its estimates, primarily those related to:

(i) revenue recognition criteria, including the determination of revenue reporting as net versus gross in the Company’s revenue arrangements, (ii) accounts receivable and allowances for doubtful accounts, (iii) the useful lives of intangible assets and property and equipment, (iv) valuation of long-lived assets and their recoverability, including goodwill, (v) the realization of tax assets and estimates of tax liabilities, (vi) assumptions used in valuation models to determine the fair value of stock-based awards, (vii) fair value of financial instruments, (viii) the recognition and disclosure of contingent liabilities, and (ix) the assumptions used in valuing acquired assets and assumed liabilities in business combinations.

(i) revenue recognition criteria, including the determination of revenue reporting as net versus gross in the Company’s revenue arrangements, (ii) accounts receivable and allowances for doubtful accounts, (iii) the useful lives of intangible assets, internal use software development costs, and property and equipment, (iv) valuation of long-lived assets and their recoverability, including goodwill, (v) the realization of tax assets and estimates of tax liabilities, (vi) assumptions used in valuation models to determine the fair value of stock-based awards, (vii) fair value of financial instruments, (viii) the recognition and disclosure of contingent liabilities, and (ix) the assumptions used in valuing acquired assets and assumed liabilities in business combinations.

These estimates are based on historical data and experience, as well as various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

Estimates relating to the valuation of stock and business combinations, as well as the recoverability of long-lived assets and goodwill, require the selection of appropriate valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs.

results may differ materially from those estimates under different assumptions or circumstances.

Estimates relating to the estimated useful lives of internal-use software development costs, assumptions used in the valuation models to determine the fair value of stock options and stock-based compensation expense, business combinations, estimated useful lives of long-lived assets, recoverability of intangible assets and goodwill, the assumptions used in the valuation of acquired assets and liabilities in business combinations, and income taxes, including the realization of tax assets and estimates of tax liabilities.

require the selection of appropriate valuation methodologies and models, and significant judgment in evaluating ranges of assumptions and financial inputs.

Actual results may differ materially from those estimates under different assumptions or circumstances.

Revenue Recognition

The Company generates revenue from the purchase and sale of digital advertising inventory through its marketplace.

On January 1, 2018, the Company adopted Accounting Standards Update 2014-09—Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09") using a modified retrospective approach applied to all contracts that generated revenue in the preceding year.

The adoption of this guidance did not have an impact on the amount or timing of revenue recognized by the Company.

The Company generates revenue from transactions where it provides a platform for the purchase and sale of digital advertising inventory.

The Company also generates revenue from the fee it charges clients for use of its Demand Manager product, which generally is a percentage of the client's advertising spending on any advertising marketplace.

The Company's platform dynamically connects sellers and buyers of advertising inventory in a digital marketplace.

The Company's solution incorporates proprietary machine-learning algorithms, sophisticated data processing, high-volume storage, detailed analytics capabilities, and a distributed infrastructure.

Digital advertising inventory is created when consumers access sellers’ content.

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The fee that the Company retains from the gross advertising spend on its platform is recognized as revenue.

The fee earned on each transaction is based on the pre-existing agreement with the seller and the clearing price of the winning bid.

The fee earned on each transaction is based on the pre-existing agreement between the Company and the seller and the clearing price of the winning bid.

The Company recognizes revenue upon fulfillment of its performance obligation to a client, which occurs at the point in time an ad renders and is counted as a paid impression, subject to a contract existing with the client and a fixed or determinable transaction price.

Performance obligations for all transactions are satisfied, and the corresponding revenue is recognized, at a distinct point in time;

the Company has no arrangements with multiple performance obligations.

The Company does not have arrangements with multiple performance obligations.

The Company considers the following when determining if a contract exists (i) contract approval by all parties, (ii) identification of each party’s rights regarding the goods or services to be transferred, (iii) specified payment terms, (iv) commercial substance of the contract, and (v) collectability of substantially all of the consideration is probable.

The Company evaluates whether it acts as the principal in the purchase and sale of digital advertising inventory to determine whether revenue should be reported on a gross or net basis.

The Company has determined that it does not act as the principal in the purchase and sale of digital advertising inventory because it does not have control of the digital advertising inventory and does not set prices agreed upon within the auction marketplace, and therefore reports revenue on a net basis.

See Note 4 for additional disclosure of the Company's revenue policies and disaggregated presentation of the Company's revenues.

The determination of whether revenue should be reported on a gross or net basis is based on an assessment of whether the Company is acting as the principal or an agent in the transaction.

In determining whether the Company is acting as the principal or an agent, the Company follows the accounting guidance for principal-agent considerations.

Making such determinations involves

judgment and is based on an evaluation of the terms of each arrangement, none of which are considered presumptive or determinative.

The Company classifies its expenses into the following categories:

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Technology and Development.

The Company's technology and development expenses consist primarily of personnel costs, including salaries, bonuses, and stock-based compensation, and professional services associated with the ongoing development and maintenance of the Company's solution and, to a lesser extent, facilities-related costs and depreciation and amortization, including amortization expense associated with acquired intangible assets from the Company's business acquisitions that are related to technology and development functions.

These expenses include costs incurred in the development, implementation and maintenance of internal use software, including platform and related infrastructure.

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The Company amortizes internal use software development costs that relate to its revenue-producing activities on the Company's platform to cost of revenue and amortizes other internal use software development costs to technology and development costs or general and administrative expenses, depending on the nature of the related project.

The Company amortizes acquired intangibles associated

with technology and development functions from its business acquisitions over their estimated useful lives.

The Company amortizes acquired intangibles associated with technology and development functions from its business acquisitions over their estimated useful lives.

General and Administrative.

The Company's general and administrative expenses consist primarily of personnel costs, including salaries, bonuses, and stock-based compensation, associated with the Company's executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees, facilities-related costs and depreciation, and other corporate-related expenses.

General and administrative expenses also include amortization of internal use software development costs and acquired intangible assets from the Company's business acquisitions over their estimated useful lives that relate to general and administrative functions.

Restructuring and Other Exit Costs.

The Company's restructuring and other exit costs are cash and non-cash charges consisting primarily of employee termination costs, including stock-based compensation charges, facility closure and relocation costs, and contract termination costs.

Merger and Restructuring Costs.

The Company's merger and restructuring costs consist primarily of professional service fees associated with Merger and acquisition activities, and of cash-based employee termination costs and stock-based compensation charges associated with Merger or restructuring activities, and of other restructuring activities, including facility closures and relocation costs.

Stock-Based Compensation

Compensation expense related to stock-based awards is measured and recognized in the consolidated financial statements based on the fair value of the awards granted.

The Company has granted restricted stock awards, restricted stock units, and stock option awards that vest based solely on continued service, or service conditions, to employees and non-employees.

The fair value of each share-based award containing service conditions is based on the Company's closing price of the Company's common stock as reported on the New York Stock Exchange, or the NYSE, on the grant date for restricted stock awards and restricted stock units and is estimated using the Black-Scholes option-pricing model for stock option awards.

For service condition awards, stock-based compensation expense is recognized on a straight-line basis over the requisite service periods of the awards, or the vesting period, which is generally four years .

Compensation expense related to employee stock-based awards is measured and recognized in the consolidated financial statements based on the fair value of the awards granted.

The Company granted awards to employees that vest based solely on continued service, or service conditions, awards that vest based on the achievement of performance targets, or performance conditions, and awards that vest based on our stock price exceeding a peer index, or market conditions.

The fair value of each option award containing service and/or performance conditions is estimated on the grant date using the Black-Scholes option-pricing model.

The fair value of awards containing market conditions is estimated using a Monte-Carlo lattice model.

For service condition awards, stock-based compensation expense is recognized on a straight-line basis over the requisite service periods of the awards, which is generally four years .

For performance condition and market condition awards, stock-based compensation expense is recognized using a graded vesting model over the requisite service period of the awards.

For market condition awards, expense recognized is not subsequently reversed if the market conditions are not achieved.

Stock-based awards issued to non-employees are accounted for at fair value determined by using the Black-Scholes option-pricing model.

We believe that the fair value of the stock options is more reliably measured than the fair value of the services received.

The fair value of each non-employee stock-based compensation award is re-measured each period until a commitment date is reached, which is generally the vesting date.

The assumptions and estimates used in the Black-Scholes pricing model are as follows:

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The expected term of employee stock options that contain performance conditions represents the weighted-average period that the stock options are estimated to remain outstanding.

Because the Company does not have significant trading history for the Company’s common stock, the Company determines the price volatility based on the historical volatilities of a publicly traded peer group based on daily price observations over a period equivalent to the expected term of the stock option grants.

For grants issued in periods in which the Company did not have significant trading history for the Company’s common stock, the Company determined the price volatility based on the historical volatilities of a publicly traded peer group based on daily price observations over a period equivalent to the expected term of the stock option grants.

For those grants issued in periods in which the Company has sufficient history, the computation of the expected volatility assumption is based on the historical volatility of the Company’s common stock.

Dividend Yield.

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The Company has not issued any shares of its preferred stock subsequent to the Company's IPO and does not have any preferred stock outstanding.

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock such number of shares sufficient to effect the conversion of all shares granted and available for grant under the Company’s stock award plans.

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock such number of shares sufficient to affect the conversion of all shares granted and available for grant under the Company’s stock award plans.

The number of shares of the Company's stock reserved for these purposes at December 31, 2020 was 27,882,222 .

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The Company classifies certain restricted cash balances within prepaid expenses and other current assets on the consolidated balance sheets based upon the term of the remaining restrictions.

At December 31, 2019 and 2018 the Company had no restricted cash.

At December 31, 2020, the Company had restricted cash of $ 0.1 million, and at December 31, 2019, the Company had no restricted cash.

Accounts Receivable Allowance for Doubtful Accounts

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The allowance for doubtful accounts is based on the best estimate of the amount of probable credit losses in existing accounts receivable.

The allowance for doubtful accounts is determined based on historical collection experience and the review in each period of the status of the then-outstanding accounts receivable, while taking into consideration current client information, subsequent collection history and other relevant data.

and other relevant data.

The Company reviews the allowance for doubtful accounts on a quarterly basis.

Account balances are charged off against the allowance when the Company believes it is probable the receivable will not be recovered.

The Company’s allowance for doubtful accounts was approximately $ 3.4 million and $ 1.3 million at December 31, 2019 and 2018 , respectively.

During the years ended December 31, 2019 and 2018 , the Company wrote off $ 3.3 million and $ 0.6 million , respectively, of accounts receivable.

Property and Equipment, Net

3 unchanged sentences

Computer equipment and network hardware 3

Furniture, fixtures and office equipment

Leasehold improvements

Shorter of useful life or life of lease

Computer equipment under leases

Shorter of useful life or life of lease

Furniture, fixtures and office equipment 5 to 7

Leasehold improvements Shorter of useful life or life of lease

Computer equipment under right-of-use finance arrangements Shorter of useful life or life of lease

Repair and maintenance costs are charged to expense as incurred, while renewals and improvements are capitalized.

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The Company does not transfer ownership of its software, or lease its software, to third parties.

Capitalized Costs Incurred in Cloud Computing Arrangements

Cloud computing arrangements, such as software as a service and other hosting arrangements, are evaluated for capitalized implementation costs in a similar manner as capitalized software development costs.

If a cloud computing arrangement includes a software license, the software license element of the arrangement is accounted for in a manner consistent with the acquisition of other software licenses.

If a cloud computing arrangement does not include a software license, the service element of the arrangement is accounted for as a service contract.

The Company capitalized certain implementation costs for its cloud computing arrangements that are service contracts, which are included within prepaid expenses and other current assets and other assets, non-current within the consolidated balance sheet.

The Company amortizes capitalized implementation costs in a cloud computing arrangement over the life of the service contract.

Intangible Assets

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Developed technology 5

Client relationships

In-process research and development 3 to 5

Customer relationships 2 to 3

Non-compete agreements 2

Other intangible assets

Other intangible assets 0.25 to 1.5

Intangible assets are reviewed for impairment indicators at least annually and whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable.

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The Company estimates the fair value of intangible assets acquired generally using a discounted cash flow approach, which includes an analysis of the future cash flows expected to be generated by the asset and the risk associated with achieving these cash flows.

The key assumptions used in the discounted cash flow model include the discount rate that is applied to the forecasted future cash flows to calculate the present value of those cash flows and the estimate of future cash flows attributable to the acquired

intangible asset, which include revenue, expenses and taxes.

The carrying value of acquired working capital assets and liabilities approximates its fair value, given the short-term nature of these assets and liabilities.

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The Company recognizes revenue from its contracts with sellers.

No seller of advertising inventory accounted for 10% or more of revenue during the year ended December 31, 2019 and year ended December 31, 2018 .

At December 31, 2019 and 2018 , no seller of advertising inventory comprised 10% or more of accounts payable.

No seller of advertising inventory accounted for 10% or more of revenue during the years ended December 31, 2020, 2019, and 2018.

At December 31, 2020 one seller of adverting inventory accounted for 18 % of accounts payable, and at December 31, 2019, no seller of advertising inventory comprised 10.0% or more of accounts payable.

Foreign Currency Transactions and Translation

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Foreign exchange gains or losses were included in foreign exchange (gain) loss, net in the accompanying consolidated statements of operations.

To the extent that the functional currency is different than the U.S Dollar, the financial statements have then been translated into U.S.

Dollars using period-end exchange rates for assets and liabilities and average exchanges rates for the results of operations.

To the extent that the functional currency is different from the U.S.

Dollar, the financial statements have then been translated into U.S.

Dollars using period-end exchange rates for assets and liabilities and average exchange rates for the results of operations.

Foreign currency translation gains and losses are included as a component of accumulated other comprehensive income (loss) on the consolidated balance sheet.

Recent Accounting Pronouncements

Under the Jumpstart Our Business Startups Act, or the JOBS Act, the Company met the definition of an emerging growth company for the year ended December 31, 2018 and irrevocably elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.

For the year ended December 31, 2019, the Company no longer meets the definition of an emerging growth company due to the time limitation of five fiscal years since the Company's initial public offering.

Recently Adopted Accounting Standards

In June 2016, the FASB issued ASU 2016-13— Financial Instruments - Credit Losses (Topic 326):

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The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

The Company will adopt ASU 2016-13 as of January 1, 2020.

The Company is currently evaluating the impact the standard may have on our consolidated financial statements.

The Company adopted ASU 2016-13 as of January 1, 2020.

The standard did not have a material impact on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13— Fair Value Measurement (Topic 820):

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The provisions of ASU 2018-13 are required to be adopted retrospectively, with the exception of disclosure of the range and weighted average of significant unobservable inputs used to develop Level 3 measurements, which can be adopted prospectively.

The Company is currently evaluating the effect this guidance will have on its consolidated financial statements and related disclosures.

The Company adopted ASU 2018-13 as of January 1, 2020.

The standard did not have a material impact on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-15— Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40):

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ASU 2018-15 can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

The Company is adopting the guidance on January 1, 2020 and does not expect the adoption of this standard to have a material impact on its consolidated financial statements.

In December 2018, the FASB issued ASU 2018-20— Leases (Topic 842):

Narrow-Scope Improvements for Lessors ("ASU 2018-20").

ASU 2018-20 was issued to clarify the requirements for lessors under ASC 842— Leases ("ASC 842").

The ASU clarifies the recognition timing and requirements of certain payments made by lessees to either the lessor or a third party.

This ASU is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with its adoption aligned with the adoption of ASU 2016-02.

The Company functions as the sublessor for a limited number of real estate leases, however ASU 2018-20 is not applicable to these subleases.

The Company adopted ASU 2018-15 as of January 1, 2020 on a prospective basis.

The standard did not have a material impact on its consolidated financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12— Simplifying the Accounting for Income Taxes ("ASU 2019-12") .

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Early adoption is permitted.

The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements and related disclosures.

The Company is evaluating the impact of adopting this new accounting guidance on its consolidated financial statements and related disclosures but the impact is not expected to be material.

In January 2020, the FASB issued ASU 2020-01, Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) ("ASU 2020-01"), which clarifies the interaction of the accounting for equity securities under Topic 321, the accounting for equity method investments in Topic 323, and the accounting for certain forward contracts and purchased options in Topic 815.

This guidance is effective for fiscal years beginning after December 15, 2020, including interim reporting periods within those fiscal years.

Early adoption is permitted, including early adoption in an interim period, The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (ASU "2020-06"), which simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments.

This guidance also eliminates the treasury stock method to calculate diluted earnings per share for convertible instruments and requires the use of the if-converted method.

This guidance is effective for fiscal years beginning after December 15, 2021, including interim reporting periods within those fiscal years.

Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

The Company does not expect the adoption of this guidance to have a material impact on the Company's consolidated financial statements.

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force) and the SEC did not or are not expected to have a material impact on our present or future consolidated financial statements.

Note 3— Net Income (Loss) Per Share

The following table presents the basic and diluted net loss per share:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

Basic and Diluted EPS:

Net loss $ ( 53,432 ) $ ( 25,478 ) $ ( 61,822 )

Weighted-average common shares outstanding 96,700 52,634 50,602

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The following weighted-average shares have been excluded from the calculation of diluted net loss per share attributable to common stockholders for each period presented because they are anti-dilutive:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

(in thousands)

2 unchanged sentences

Unvested restricted stock units 4,713 4,211 2,029

Unvested performance awards 40 — —

ESPP 50 34 55

Total shares excluded from net loss per share 7,120 5,051 2,430

Note 4— Revenues

On January 1, 2018, the Company adopted Accounting Standards Update 2014-09— Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09") using a modified retrospective approach applied to all contracts that generated revenue in the preceding year.

The adoption of this guidance did not have an impact on the amount or timing of revenue recognized by the Company.

The Company generates revenue from transactions where it provides a platform for the purchase and sale of digital advertising inventory.

The Company’s advertising automation solution is a marketplace for sellers of digital advertising inventory (providers of websites, mobile applications and other digital media properties, and their representatives) and buyers of digital advertising inventory (including advertisers, agencies, agency trading desks, and demand-side platforms).

This solution incorporates proprietary machine-learning algorithms, sophisticated data processing, high-volume storage, detailed analytics capabilities, and a distributed infrastructure.

Together, these features form the basis for the Company’s automated advertising solution that brings buyers and sellers together and facilitates intelligent decision-making and automated transaction execution for the digital advertising inventory managed on the Company's platform.

Digital advertising inventory is created when consumers access sellers’ content.

Sellers provide digital advertising inventory to the Company’s platform in the form of advertising requests, or ad requests.

When the Company receives ad requests from sellers, it sends bid requests to buyers, which enable buyers to bid on sellers’ digital advertising inventory.

Winning bids can create advertising, or paid impressions, for the seller to present to the consumer.

The total volume of spending between buyers and sellers on the Company’s platform is referred to as advertising spend.

The Company keeps a percentage of that advertising spend as a fee, and remits the remainder to the seller.

The fee that the Company retains from the gross advertising spend on its platform is recognized as revenue.

The fee earned on each transaction is based on the pre-existing agreement between the Company and the seller and the clearing price of the winning bid.

The Company recognizes revenue upon fulfillment of its performance obligation to a client, which occurs at the point in time an ad renders and is counted as a paid impression, subject to an underlying agreement existing with the client and a fixed or determinable transaction price.

Performance obligations for all transactions are satisfied, and the corresponding revenue is recognized, at a distinct point in time when an ad renders.

The Company does not have arrangements with multiple performance obligations.

The Company reports revenue on a net basis as it does not act as the principal in the purchase and sale of digital advertising inventory because it does not have control of the digital advertising inventory and does not set prices agreed upon within the auction marketplace.

For substantially all transactions on the Company's platform, the Company reports revenue on a net basis as it does not act as the principal in the purchase and sale of digital advertising inventory because it does not have control of the digital advertising inventory and does not set prices agreed upon within the auction marketplace.

However, for certain transactions related to revenue streams acquired in connection with the Merger with Telaria, the Company reports revenue on a gross basis, based primarily on its determination that the Company acts as the primary obligor in the delivery of advertising campaigns for buyers with respect to such transactions.

For the year ended December 31, 2020, revenue reported on a gross basis was less than 2% of total revenue.

The following table presents our revenue by channel for the years ended December 31, 2020 and 2019:

December 31, 2020 December 31, 2019 December 31, 2018

CTV $ 34,319 15 % $ — — % $ — — %

Desktop 78,956 36 68,302 44 59,039 47

Mobile 108,353 49 88,112 56 65,646 53

Total $ 221,628 100 % $ 156,414 100 % $ 124,685 100 %

The following table presents the Company's revenue disaggregated by geographic location, based on the location of the Company's sellers:

December 31, 2020 December 31, 2019 December 31, 2018

(in thousands)

United States $ 161,570 $ 108,385 $ 83,020

International 60,058 48,029 41,665

Total $ 221,628 $ 156,414 $ 124,685

Payment terms are specified in agreements between the Company and the buyers and sellers on its exchange platform.

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Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis.

The following table presents our revenue by channel for the years ended December 31, 2019 and 2018:

December 31, 2019

December 31, 2018

The following table presents the Company's revenue disaggregated by geographic location, based on the location of the Company's sellers:

December 31, 2019

December 31, 2018

Accounts receivable are recorded at the invoiced amount, are unsecured, and do not bear interest.

The allowance for doubtful accounts is reviewed quarterly, requires judgment, and is based on the best estimate of the amount of probable credit losses in existing accounts receivable.

The Company reviews the status of the then-outstanding accounts receivable on a customer-by-customer basis, taking into consideration the aging schedule of receivables, its historical collection experience, current information regarding the client, subsequent collection history, and other relevant data, in establishing the allowance for doubtful accounts.

Accounts receivable is presented net of an allowance for doubtful accounts of $ 2.4 million at December 31, 2020, and $ 3.4 million at December 31, 2019.

Accounts receivable are written off against the allowance for doubtful accounts when the Company determines amounts are no longer collectible.

The Company reviews the associated payable to sellers for recovery of buyer receivable allowance and write-offs;

in some cases, the Company can reduce the payable to sellers.

The reduction of seller payables related to recovery of uncollected buyer receivables is netted against allowance expense.

The contra seller payables related to recoveries were $ 1.5 million and $ 0.9 million as of December 31, 2020 and December 31, 2019, respectively.

The following is a summary of activity in the allowance for doubtful accounts for the years ended December 31, 2020, 2019 and 2018, respectively:

December 31, 2020 December 31, 2019 December 31, 2018

(in thousands)

United States

International

Allowance for doubtful accounts, Beginning Balance $ 3,400 $ 1,340 $ 500

Allowance for doubtful accounts, Merger-assumed 1,033 — —

Write-offs ( 3,054 ) ( 3,282 ) ( 815 )

Increase (decrease) in provision for expected credit losses 870 5,328 1,285

Recoveries of previous write-offs 111 14 370

Allowance for doubtful accounts, December 31 $ 2,360 $ 3,400 $ 1,340

During the year ended December 31, 2020, 2019 and 2018, the provision for expected credit losses associated with accounts receivable and the offset by increases of contra seller payables related to recoveries of uncollected buyer receivables resulted in a net amount of bad debt each year.

During the year ended December 31, 2020, the provision for expected credit losses associated with accounts receivable of $ 0.9 million was offset by increases of contra seller payables related to recoveries of uncollected buyer receivables of $ 1.0 million, which resulted in $ 0.1 million of bad debt recoveries.

During the year ended December 31, 2019, the provision for expected credit losses associated with accounts receivable of $ 5.3 million was offset by increases of contra seller payables related to recoveries of uncollected buyer receivables of $ 4.1 million, which resulted in bad debt expense of $ 1.2 million.

During the year ended December 31, 2018, the provision for expected credit losses associated with accounts receivable of $ 1.3 million was offset by increases of contra seller payables related to recoveries of uncollected buyer receivables of $ 0.5 million, which resulted in bad debt expense of $ 0.8 million.

Note 5— Fair Value Measurements

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The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at December 31, 2020:

Quoted Prices in

Total Quoted Prices in

Active Markets for

Identical Assets

Significant Other

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant

Unobservable Inputs

1 unchanged sentence

Cash equivalents

$ 7,868 $ 7,868 $ — $ —

The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at December 31, 2019:

Quoted Prices in

Total Quoted Prices in

Active Markets for

Identical Assets

Significant Other

(Level 1) Significant Other

Observable Inputs

(Level 2) Significant

Unobservable Inputs

1 unchanged sentence

Cash equivalents

Treasury, government and agency debt securities

$ 13,501 $ 13,501 $ — $ —

At December 31, 2020 and 2019, cash equivalents of $ 7.9 million and $ 13.5 million, respectively, consisted of money market funds and commercial paper, with original maturities of three months or less.

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Note 6— Investments

Investments in marketable securities as of December 31, 2018 consisted of the following:

(in thousands)

Available-for-sale—short-term:

Treasury, government and agency debt securities

The Company had no investments in marketable securities at December 31, 2020 and December 31, 2019.

During the year ended December 31, 2019, $ 7.5 million of available-for-sale investments matured, on which the realized gains were de minimis and there were no unrealized holding gains (losses) reclassified out of accumulated other comprehensive loss into the consolidated statements of operations.

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During the year ended December 31, 2018, the Company sold $ 9.2 million of available-for-sale investments, on which the realized gains were de minimis and there were no unrealized holding gains (losses) reclassified out of accumulated other comprehensive loss into the consolidated statements of operations.

In addition, during the year ended December 31, 2018, the Company had net maturities of investments in available-for-sale securities of $ 38.7 million.

Note 7— Property and Equipment

Major classes of property and equipment were as follows:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

(in thousands)

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Net property and equipment $ 23,681 $ 23,667

Depreciation expense on property and equipment totaled $ 21.3 million and $ 25.0 million for the years ended December 31, 2019 and 2018 , respectively.

Depreciation expense on property and equipment totaled $ 16.0 million, $ 21.3 million, and $ 25.0 million for the years ended December 31, 2020, 2019, and 2018, respectively.

There were no impairment charges to property and equipment for the years ended December 31, 2020, 2019, and 2018.

At December 31, 2019 , the Company had $ 21.5 million of ROU assets and no property and equipment under finance leases.

At December 31, 2018 , the Company had no property and equipment under capital leases.

At December 31, 2020 and 2019, the Company had $ 39.6 million and $ 21.5 million of ROU assets and no property and equipment under finance leases.

The Company's property and equipment, net by geographical region was as follows:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

(in thousands)

1 unchanged sentence

International 10,177 9,121

Total $ 23,681 $ 23,667

Note 8— Internal Use Software Development Costs

Internal use software development costs were as follows:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

(in thousands)

2 unchanged sentences

Internal use software development costs, net $ 16,160 $ 16,053

During the years ended December 31, 2019 and 2018 , the Company capitalized $ 9.0 million and $ 9.0 million , respectively, of internal use software development costs.

Amortization expense was $ 7.5 million and $ 7.2 million for the years ended December 31, 2019 and 2018 , respectively.

In the years ended December 31, 2019 and 2018 , amortization expense included the write-off of software development costs of $ 0.5 million and $ 0.5 million , in the respective periods.

Based on the Company’s internal use software development costs at December 31, 2019 , estimated amortization expense of $ 7.5 million , $ 5.3 million , $ 2.9 million , and $ 0.3 million is expected to be recognized in 2020 , 2021 , 2022 , and 2023 respectively.

There were no impairment charges to internal use software development costs for the year ended December 31, 2019 and 2018 .

Note 9—G oodwill and Intangible Assets

During the years ended December 31, 2020, 2019, and 2018, the Company capitalized $ 9.2 million, $ 9.0 million, and $ 9.0 million, respectively, of internal use software development costs.

Amortization expense was $ 8.3 million, $ 7.5 million, and $ 7.2 million for the years ended December 31, 2020, 2019, and 2018, respectively.

In the years ended December 31, 2020, 2019, and 2018, amortization expense included the write-off of software development costs of $ 0.1 million, $ 0.5 million, and $ 0.5 million, in the respective periods, related to the abandonment of the associated projects.

Based on the Company’s internal use software development costs at December 31, 2020, excluding projects that are not yet complete and not yet ready for their intended use with a value of $ 0.4 million, estimated amortization expense of $ 7.8 million, $ 5.6 million, $ 2.2 million, and $ 0.1 million is expected to be recognized in 2021, 2022, 2023, and 2024 respectively.

There were no impairment charges to internal use software development costs for the year ended December 31, 2020, 2019 and 2018 with the exception of the write-offs mentioned above.

Note 9— Goodwill, Intangible Assets, and Capitalized Costs Incurred in Cloud Computing Arrangements

Details of the Company’s goodwill were as follows:

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(in thousands)

Beginning balance

Beginning balance at December 31, 2018

Additions from the acquisition of RTKio (Note 10) 7,370

Ending balance

Ending balance at December 31, 2019

Additions for Merger with Telaria (Note 10) 150,755

Ending balance at December 31, 2020

The Company’s intangible assets as of December 31, 2020 and 2019 included the following:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

(in thousands)

1 unchanged sentence

Developed technology

$ 77,658 $ 19,658

Customer relationships

In-process research and development 8,030 —

Non-compete agreements

Total identifiable intangible assets, gross

123,708 21,398

Accumulated amortization—intangible assets:

Developed technology

( 21,905 ) ( 9,823 )

Customer relationships

( 11,877 ) ( 162 )

Non-compete agreements

Total accumulated amortization—intangible assets

( 33,824 ) ( 10,012 )

Total identifiable intangible assets, net

Amortization of intangible assets for the years ended December 31, 2019 and 2018 was $ 3.3 million and $ 3.2 million , respectively.

During the year ended December 31, 2019 , the Company wrote off fully amortized intangible assets with a historical cost of $ 0.7 million .

$ 89,884 $ 11,386

Amortization of intangible assets for the years ended December 31, 2020, 2019, and 2018 was $ 24.9 million, $ 3.3 million, and $ 3.2 million, respectively.

During the year ended December 31, 2020 and 2019, the Company wrote off fully amortized intangible assets with a historical cost of $ 1.1 million and $ 0.7 million, respectively.

During the year ended December 31, 2018, the Company had no write-offs of fully amortized intangible assets.

The estimated remaining amortization expense associated with the Company's intangible assets was as follows as of December 31, 2020:

Fiscal Year Amount

(in thousands)

The Company's qualitative assessment in the fourth quarter of 2019 did not indicate that it is more likely than not that the fair value of its goodwill and intangible assets is less than the aggregate carrying amount.

2021 $ 31,048

Thereafter 558

Total $ 89,884

The Company adopted ASU 2018-15 as of January 1, 2020 on a prospective basis and as a result, the Company capitalized certain costs associated with cloud computing arrangements and will recognize the costs over the length of the service arrangements, which generally are three years .

During the year ended December 31, 2020, the Company capitalized $ 0.9 million related to cloud computing arrangements.

These costs are related to arrangements for infrastructure as a service, platform as a service, and software as a service.

Capitalized costs associated with these arrangements as of December 31, 2020 are included within prepaid expenses and other current assets and other assets, non-current within the consolidated balance sheet in the amounts of $ 0.7 million and $ 0.2 million, respectively.

The amortization of these agreements were insignificant for the year ended December 31, 2020.

The Company's qualitative assessment in the fourth quarter of 2020 did not indicate that it is more likely than not that the fair value of its goodwill, intangible assets, and other long-lived assets is less than the aggregate carrying amount.

Note 10— Business Combinations

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On October 21, 2019, the Company completed the acquisition of RTK.io for total purchase consideration of $ 11.4 million, which includes cash paid of $ 11.0 million, cash acquired of $ 0.6 million, and a working capital adjustment of $ 0.2 million.

RTK.io is a leading provider of tools and services that bring simplicity and control to header bidding for publishers.

RTK.io is a leading provider of tools and services that bring simplicity and control to header bidding for sellers.

RTK’s solution is built on Prebid, the same open source framework as Demand Manager, the header bidding solution the Company launched in May 2019.

7 unchanged sentences

Intangible assets 4,520

Goodwill 7,370

Total assets acquired 14,934

3 unchanged sentences

Total net assets acquired $ 11,395

The following table summarizes the components of the acquired intangible assets and estimated useful lives (in thousands, except for estimated useful life):

December 31, 2019

Estimated Useful Life

Developed technology

Customer relationships

Non-compete agreements

Trademark & trade name

The following table summarizes the components of the acquired intangible assets and estimated useful lives (in thousands, except for estimated useful life) as of the acquisition date:

Amount Estimated Useful Life

Developed technology $ 2,780 5 years

Customer relationships 1,650 2 years

Non-compete agreements 70 2 years

Trademark & trade name 20 < 0.5 years

Total intangible assets acquired $ 4,520

7 unchanged sentences

2020 Merger—Telaria

On December 19, 2019, the Company entered into an Agreement and Plan of Merger with Telaria, Inc.

("Telaria"), pursuant to which, subject to the approval of the Company's stockholders and Telaria stockholders, the Company and Telaria will combine in an all-stock merger (the "Merger").

At the completion of the Merger, Telaria will become a wholly owned subsidiary of the Company.

The Merger will create a combined company offering a single platform for transacting CTV, desktop display, video, audio, and mobile inventory across all geographies and auction types.

The Merger has not been completed as of December 31, 2019 and is expected to be completed in early April 2020.

Refer to "Item 1.

Business" for additional information.

On April 1, 2020, (the "Acquisition Date"), the Company completed the Merger with Telaria.

Upon completion of the Merger, each share of Telaria common stock issued and outstanding was converted into 1.082 shares of Magnite common stock.

As a result, the Company issued 52,098,945 shares of Magnite common stock.

In connection with the Merger, Magnite also assumed Telaria’s 2013 Equity Incentive Plan, as amended;

2008 Stock Plan, as amended;

and the ScanScout, Inc.

2009 Equity Incentive Plan, as amended.

As of the Acquisition Date, former holders of Telaria common stock owned approximately 48 % and pre-merger holders of Magnite common stock owned approximately 52 % of the common stock of the combined company on a fully diluted basis.

The Merger was accounted for using the acquisition method of accounting in accordance with Accounting Standards Codification, referred to as ASC 805, Business Combinations .

Magnite management determined that Magnite was the acquiror for financial accounting purposes.

In identifying Magnite as the accounting acquiror, management considered the structure of the transaction and other actions contemplated by the merger agreement, relative outstanding share ownership and market values, the composition of the combined company’s board of directors, the relative size of Magnite and Telaria, and the designation of certain senior management positions of the combined company.

In accordance with ASC 805, the Company recorded the acquisition based on the fair value of the consideration transferred and then allocated the purchase price to the identifiable assets acquired and liabilities assumed based on their respective fair values as of the Acquisition Date.

The excess of the value of consideration transferred over the aggregate fair value of those net assets was recorded as goodwill.

Any identified definite lived intangible assets will be amortized over their estimated useful lives and any identified intangible assets with indefinite useful lives and goodwill will not be amortized but will be tested for impairment at least annually or more frequently when certain indicators are present.

Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, estimates of future revenues and cash flows, discount rates, and selection of comparable companies.

Management's purchase price allocation is preliminary and subject to change pending finalization of tax attributes and tax related liabilities.

Under the acquisition method of accounting for business combinations, if the Company identifies changes to acquired deferred tax asset ("DTA") valuation allowances or liabilities related to uncertain tax positions during the measurement period, and they are related to new information obtained about facts and circumstances that existed as of the acquisition date, those changes are considered a measurement-period adjustment, and the Company will record the offset to goodwill.

The Company records all other changes to DTA valuation allowances and liabilities related to uncertain tax positions in current- period income tax expense.

During the three months ended December 31, 2020, the Company adjusted the preliminary purchase price allocation for Telaria based on updated fair values associated with the acquired intangibles.

Changes in projected revenues and costs increased the technology and customer relationships intangible while lengthened timeline for software development reduced in process research and development projects value.

Except for the valuation related changes in intangible assets and adjustments to acquisition related

tax accruals and deferred tax liabilities, adjustments to the fair value of opening balance sheet acquired assets and assumed liabilities resulted in minimal changes and refinements by management as of, and for the year-ended, December 31, 2020.

For purposes of measuring the estimated fair value, where applicable, of the assets acquired and the liabilities assumed, the Company applied the guidance in ASC 820, Fair Value Measurement, which establishes a framework for measuring fair value.

In accordance with ASC 820, fair value is an exit price and is defined as "the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date." Under ASC 805, acquisition-related transaction costs and acquisition-related restructuring charges are not included as components of consideration transferred but are accounted for as expenses in the period in which the costs are incurred.

As part of the Merger, existing outstanding restricted stock units of Telaria common stock and stock options to purchase common stock of Telaria were exchanged for 1.082 restricted stock units of the Company and options to purchase the Company's common stock, respectively.

The fair value of stock options exchanged on the date of the Merger attributable to pre-acquisition services was recorded as purchase consideration.

The fair value of the restricted stock units and stock options exchanged on the date of the Merger attributable to post-acquisition services will be recorded as additional stock-based compensation expense in the Company's consolidated statements of operations over their remaining requisite service (vesting) periods.

The following table summarizes the total purchase consideration (in thousands):

Shares of Magnite common stock $ 274,604

Fair value of stock-based awards exchanged 11,646

Acceleration of single trigger equity awards, converted 1,168

Total purchase consideration $ 287,418

The purchase consideration for the acquisition included 52,008,316 shares of the Company's common stock with a fair value of approximately $ 274.6 million, based on the Company's stock price as reported on the NYSE on the Acquisition Date.

The fair value of stock options and restricted stock units exchanged on the Acquisition Date attributable to pre-acquisition services of approximately $ 10.4 million and $ 1.2 million, respectively, have been recorded as purchase consideration.

In addition, the Company recorded additional purchase consideration associated with acceleration of 90,629 shares of common stock issued associated with single-trigger equity awards in the amount of $ 1.2 million.

The fair value of stock options and restricted stock units exchanged on the Acquisition Date attributable to post-acquisition services of $ 4.7 million and $ 12.2 million, respectively, will be recorded as additional stock-based compensation expense on the Company's consolidated statement of operations over their remaining requisite service (vesting) periods.

The fair value of the purchase price was allocated to the identifiable assets acquired and liabilities assumed based upon their estimated fair values as of the date of the acquisition as set forth below:

Cash and cash equivalents $ 51,848

Accounts receivable, net 150,924

Prepaid expenses and other current assets 3,054

Property and equipment, net 1,814

Right-of-use lease asset 26,627

Intangible assets 103,410

Restricted cash 2,747

Other assets, non-current 369

Deferred tax assets, non-current 103

Goodwill 150,755

Total assets acquired 491,651

Accounts payable and accrued expenses 172,751

Lease liabilities - current portion 5,322

Deferred revenue 11

Other current liabilities 365

Lease liabilities - non-current portion 23,323

Other liabilities, non-current 194

Deferred tax liability 2,267

Total liabilities assumed 204,233

Total purchase price $ 287,418

The Company believes the amount of goodwill resulting from the purchase price allocation is primarily attributable to expected synergies from assembled workforce, an increase in development capabilities, increased offerings to customers, and enhanced opportunities for growth and innovation.

Goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if certain indicators of impairment are present.

In the event that goodwill has become impaired, the Company will record an expense for the amount impaired during the quarter in which the determination is made.

The acquired intangibles and goodwill resulting from the Merger are not amortizable for tax purposes.

The following table summarizes the components of the intangible assets and estimated useful lives as of the Acquisition Date (dollars in thousands):

Estimated Useful Life

Technology $ 58,000 5 years

In-process research and development 8,030 4.7 years*

Customer relationships 36,300 2.5 years

Backlog 880 0.75 years

Trademarks 200 0.25 years

Total intangible assets acquired $ 103,410

* In-process research and development consists of two projects with a weighted-average useful life of 4.7 years.

Amortization begins once associated projects are completed and it is determined the projects have alternative future use.

The fair value of the acquired technology and in-process research and development was valued using The Revenue Split Method.

This methodology included allocating future revenue projections to the existing technologies and applying decay rates and appropriate discount rates that reflect the respective intangible asset's relative risk profile when compared to other intangible assets as well as considering the risk associated with the overall business.

At the Acquisition Date, Telaria had existing Customer Relationships.

To the extent that future cash flows of the business would be negatively affected in the absence of these relationships, they would be deemed to have economic value.

The Company used the Loss‐of‐Revenue and Income Method in its valuation of the existing Customer Relationships.

This method attempts to quantify the scenario whereby the owner loses the right to the intangible asset and the resulting losses of revenue and income.

Under this analysis, the value of the cash flows with the intangible asset is compared to the value of the cash flows without the intangible asset and the difference represents the value of the intangible asset.

This methodology included applying a discount rate and the expected timing it would take to further enhance customer relationships.

The fair value of the backlog was based on the Excess Earnings Model, taking into consideration the existing contracts as of the Acquisition Date and the respective cost to complete the servicing of the existing agreements.

The resulting stream of after tax earnings were discounted to present value by applying an appropriate discount rate for the asset.

The discount rate was selected based on the intangible asset’s relative risk profile when compared to the other intangible assets as well as the discount rate for the overall business.

Intangible assets are generally amortized on a straight-line basis, which approximates the pattern in which the economic benefits are consumed, over their estimated useful lives.

Amortization of developed technology is included in cost of revenues and the amortization of customer relationships, backlog, and trademarks is included in sales and marketing expenses in the consolidated statement of operations.

Once the projects associated with acquired in-process research and development are completed, amortization will be included in cost of revenues in the consolidated statement of operations.

The intangible assets generated in the Merger are not tax deductible.

As such, as part of the Merger, deferred tax liabilities of $ 24.0 million were established related to the acquired intangible assets, which were fully offset by the estimated income tax effect of the partial release of Telaria's valuation allowance.

The deferred tax liability was calculated based on an estimated combined tax rate of 23.3 %.

The Company recognized approximately $ 17.6 million of acquisition related costs during the year ended December 31, 2020 (see Note 14).

In addition, as part of the Merger, the Company acquired Telaria's U.S.

federal NOLs of approximately $ 126.1 million and state NOLs of approximately $ 87.6 million.

Pursuant to Section 382 of the Internal Revenue Code, Telaria, Inc.

underwent an ownership change for tax purposes.

As a result, the use of the NOLs will be subject to annual Section 382 use limitations.

The Company believes the ownership change will not impact the Company's ability to utilize substantially all of the NOLs to the extent it generates taxable income that can be offset by such losses.

Unaudited Pro Forma Information

The following table provides unaudited pro forma information as if Telaria had been merged with the Company as of January 1, 2019.

The unaudited pro forma information reflects adjustments for additional amortization resulting from the fair value adjustments to assets acquired and liabilities assumed, adjustments for alignment of accounting policies, and transaction expenses as if the Merger occurred on January 1, 2019.

The pro forma results do not include any anticipated cost synergies or other effects of the integration merged companies.

Accordingly, pro forma amounts are not necessarily indicative of the results that actually would have occurred had the acquisition been completed on the dates indicated, nor is it indicative of the future operating results of the combined company.

December 31, 2020 December 31, 2019

Pro Forma Revenue $ 236,666 $ 224,452

Pro Forma Net Loss $ ( 64,030 ) $ ( 78,585 )

During the year ended December 31, 2020, post-Merger revenue on a stand-alone basis for Telaria was $ 60.1 million.

During the year ended December 31, 2020, due to the process of integrating the operations of Telaria into the operations of the Company, the determination of Telaria's post-Merger operating results on a standalone basis was impracticable.

Note 11— Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses included the following:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

(in thousands)

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Accrued employee-related payables 12,442 6,726

Total $ 509,315 $ 259,439

Note 12— Accumulated Other Comprehensive Income (Loss)

The components of accumulated other comprehensive income (loss) were as follows (in thousands):

Unrealized Gain (Loss) on Investments, net of tax

Foreign Currency Translation

Accumulated Other Comprehensive Income (Loss)

Unrealized Gain (Loss) on Investments, net of tax Foreign Currency Translation Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2017 $ ( 29 ) $ 70 $ 41

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Balance at December 31, 2019 — ( 45 ) ( 45 )

Other comprehensive loss — ( 912 ) ( 912 )

Balance at December 31, 2020 $ — $ ( 957 ) $ ( 957 )

Note 13— Stock-Based Compensation

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("nToggle") it assumed the existing employee equity award plans, the 2009 Chango Stock Option Plan (the "Chango Plan"), the iSocket 2009 Equity Incentive Plan (the "iSocket Plan"), and the nToggle 2014 Equity Incentive Plan (the "nToggle Plan").

All compensatory equity awards outstanding at

December 31, 2019 were issued pursuant to the 2014 Equity Incentive Plan, the iSocket Plan, the Chango Plan, the nToggle Plan, the Inducement Plan, or the Company's 2007 Stock Incentive Plan.

In connection with the Merger with Telaria, the Company assumed Telaria's 2013 Equity Incentive Plan, as amended (the "Telaria Plan");

2008 Stock Plan, as amended (the "2008 Stock Plan");

and the ScanScout, Inc.

2009 Equity Incentive Plan, as amended (the "ScanScout Plan").

All compensatory equity awards outstanding at December 31, 2020 were issued pursuant to the 2014 Equity Incentive Plan, the iSocket Plan, the Chango Plan, the nToggle Plan, the Telaria Plan, the 2008 Stock Plan, the ScanScout Plan, the Inducement Plan, or the Company's 2007 Stock Incentive Plan.

The Company’s equity incentive plans provide for the grant of equity awards, including non-statutory or incentive stock options, restricted stock awards, and restricted stock units, to the Company's employees, officers, directors, and consultants.

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Options outstanding vest based upon continued service at varying rates, but generally over four years from issuance with 25 % vesting after one year of service and the remainder vesting monthly thereafter.

Restricted stock awards and restricted stock units vest at varying rates, typically approximately 25 % vesting after approximately one year of service and the remainder vesting semi-annually thereafter.

The restricted stock units granted in 2019 and 2018 included 1.8 million and 2.8 million, respectively, restricted stock units that vest 50 % on each of the first and second anniversaries of the grant date.

Restricted stock units granted in 2020 will typically have approximately 25 % of the award vesting after approximately one year of service and the remainder vesting quarterly thereafter.

Options, restricted stock awards, and restricted stock units granted under the plans accelerate under certain circumstances for certain participants upon on a change in control, as defined in the governing plan.

The restricted stock units granted in 2020, 2019, and 2018, included 0.7 million, 1.8 million, and 2.8 million, respectively, restricted stock units that vest 50 % on each of the first and second anniversaries of the grant date.

Options, restricted stock awards, and restricted stock units granted under the plans accelerate under certain circumstances for certain participants upon a change in control, as defined in the governing plan.

No further awards were made under the iSocket Plan, the Chango Plan, or the nToggle Plan from the date of acquisition and no further awards were made under the 2007 Stock Incentive Plan since the IPO.

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A summary of stock option activity for the year ended December 31, 2020 is as follows:

Shares Under Option

Weighted- Average Exercise Price

Weighted- Average Contractual Life

Aggregate Intrinsic Value

(in thousands)

Outstanding at December 31, 2018

Shares Under Option Weighted- Average Exercise Price Weighted- Average Contractual Life Aggregate Intrinsic Value

(in thousands) (in thousands)

Outstanding at December 31, 2019 4,262 $ 6.82

Exercisable at December 31, 2019

Granted 1,145 $ 5.32

Options assumed in Merger 4,998 $ 3.80

Exercised ( 3,359 ) $ 4.03

Expired ( 150 ) $ 13.22

Forfeited ( 201 ) $ 5.09

Outstanding at December 31, 2020 6,695 $ 5.61 6.4 years $ 168,025

Exercisable at December 31, 2020 4,044 $ 6.03 5.1 years $ 99,803

The total intrinsic value of options exercised during the year ended December 31, 2020 was $ 21.5 million.

At December 31, 2020, the Company had unrecognized employee stock-based compensation expense relating to nonvested stock options of approximately $ 7.0 million, which is expected to be recognized over a weighted-average period of 2.4 years.

The weighted-average grant date fair value per share of stock options granted during the year ended December 31, 2019 was $ 2.85 .

The grant date fair value of options granted and assumed during the year ended December 31, 2020 was $ 3.17 per share.

The weighted-average grant date fair value per share of stock options granted during the year ended December 31, 2020 was $ 3.22 per share and the fair value of options assumed in the Merger was $ 3.16 per share.

Total fair value of options vested during the year ended December 31, 2020 was $ 4.7 million.

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The weighted-average input assumptions used by the Company were as follows:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

Expected term (in years) 6.3 6.1 6.0

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Dividend yield — % — % — %

Restricted Stock Awards

A summary of restricted stock activity for the year ended December 31, 2019 is as follows:

Number of Shares

Weighted-Average Grant Date Fair Value

(in thousands)

Nonvested shares of restricted stock outstanding at December 31, 2018

Nonvested shares of restricted stock outstanding at December 31, 2019

The aggregate fair value of restricted stock awards with service conditions that vested during the year ended December 31, 2019 was $ 0.1 million .

At December 31, 2019 , the Company had unrecognized stock-based compensation expense for restricted stock awards with service conditions of $ 18.9 thousand , which is expected to be recognized over a weighted-average period of 0.4 years .

Restricted Stock Units

A summary of restricted stock unit activity for the year ended December 31, 2020 is as follows:

Number of Shares

Weighted-Average Grant Date Fair Value

Number of Shares Weighted-Average Grant Date Fair Value

(in thousands)

Nonvested restricted stock units outstanding at December 31, 2019 8,077 $ 4.46

Granted 4,954 $ 5.52

Restricted stock units assumed in Merger 2,416 $ 5.40

Canceled ( 1,035 ) $ 5.17

Vested ( 5,126 ) $ 4.26

Nonvested restricted stock units outstanding at December 31, 2020 9,286 $ 5.30

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At December 31, 2020, the Company had unrecognized stock-based compensation expense relating to nonvested restricted stock units of approximately $ 36.9 million, which is expected to be recognized over a weighted-average period of 2.3 years.

Performance Stock Units

In April 2020, the Company granted the Company's CEO 146,341 restricted stock units that vest based on certain stock price performance metrics with a fair value of $ 0.9 million.

The grant date fair value per share of restricted stock was $ 6.15 , which was estimated using a Monte-Carlo lattice model.

During the year ended December 31, 2020, the Company recognized $ 0.2 million of stock-based compensation related to these performance stock units based on a performance measurement of 150 %.

At December 31, 2020, the Company had unrecognized employee stock-based compensation expense of approximately $ 0.7 million, which is expected to be recognized over the remaining 2.25 years.

Between 0 % and 150 % of the performance stock units will vest on the third anniversary of its grant date.

The compensation expense will not be reversed if the performance metrics are not met.

Employee Stock Purchase Plan

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Total stock-based compensation expense recorded in the consolidated statements of operations was as follows:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

(in thousands)

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General and administrative 10,416 8,009 8,139

Restructuring and other exit costs

Merger and restructuring costs 1,870 — 398

Total stock-based compensation expense $ 28,491 $ 18,825 $ 16,282

Note 14— Restructuring and Other Exit Costs

In the first quarter of 2018, the Company announced its restructuring plan to reduce headcount to bring the Company's general and administrative operations into better alignment with the current size of the business and de-layer certain functions, and to reduce its investment in unprofitable projects (the "2018 Restructuring Events").

During the year ended December 31, 2018 the Company incurred restructuring and other exit costs expenses of $ 3.4 million for severance and one-time termination benefits and as of December 31, 2018, the Company had $ 0.1 million accrued restructuring and other exit costs remaining and are included within other liabilities on the Company's consolidated balance sheets.

No restructuring and other exit costs were incurred during the year ended December 31, 2019 , and all remaining accrued costs associated with the 2018 restructuring events were paid in the first quarter of 2019.

Note 14— Merger and Restructuring, Costs

Merger and restructuring costs consist primarily of professional services fees and employee termination costs, including stock-based compensation charges, associated with the Merger and restructuring activities.

For the year ended December 31, 2018, Merger and restructuring costs also included relocation costs.

The following table summarizes Merger and restructuring cost activity (in thousands):

December 31, 2020 December 31, 2019 December 31, 2018

(in thousands)

Professional Service (investment banking advisory, legal and other professional services) $ 9,935 $ 2,041 $ —

Personnel related (severance and one-time termination benefit costs) 5,747 $ — $ 3,042

Non-cash stock-based compensation (double-trigger acceleration and severance) 1,870 $ — $ 398

Total merger and restructuring costs $ 17,552 $ 2,041 $ 3,440

During the years ended December 31, 2020 and December 31, 2019, the Company incurred costs of $ 17.6 million and $ 2.0 million, respectively, primarily related to the Merger with Telaria.

All of the expenses incurred in the year ended December 31, 2019 were incurred during the fourth quarter (refer to "reclassification" note within Note 2).

In the first quarter of 2018, the Company announced its restructuring plan to reduce headcount to bring the Company's general and administrative operation s into better alignment with the current size of the business and de-layer certain functions, and to reduce its investment in unprofitable projects (the "2018 Restructuring Events").

During the year ended December 31, 2018, the Company incurred restructuring co sts of $ 3.4 million for severance and one-time termination benefits.

Accrued restructuring costs related to the Merger were $ 2.9 million at December 31, 2020.

Accrued restructuring costs associated with personnel costs are included within accounts payable and accrued expenses and accruals related to Merger assumed loss contracts are included within other current liabilities and other liabilities, non-current on the Company's consolidated balance sheet.

(in thousands)

December 31, 2020 December 31, 2019 December 31, 2018

Accrued Merger and restructuring costs at beginning of period $ — $ 67 $ —

Restructuring costs (personnel related and non-cash stock-based compensation) 7,617 — 3,440

Restructuring costs (Merger assumed loss contracts) 3,543 — —

Cash paid for restructuring costs ( 6,355 ) ( 67 ) ( 2,975 )

Non-cash stock-based compensation ( 1,870 ) — ( 398 )

Accrued Merger and restructuring costs at end of period $ 2,935 $ — $ 67

The accrued balance as of December 31, 2020 does not include an additional $ 0.1 million of personnel related expenses expected to be incurred in 2021 associated with the 2020 restructuring activities as a result of the Merger.

Note 15— Income Taxes

The following are the domestic and foreign components of the Company’s income (loss) before income taxes for the years ended December 31, 2020, 2019, and 2018:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

(in thousands)

Domestic $ ( 57,253 ) $ ( 28,063 ) $ ( 62,292 )

International 4,514 1,073 827

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The following are the components of the provision (benefit) for income taxes for the years ended December 31, 2020, 2019, and 2018:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

(in thousands)

Federal $ ( 144 ) $ ( 153 ) $ ( 23 )

State 15 28 41

Foreign 1,117 281 388

Total current provision 988 156 406

Federal 9 ( 762 ) —

State ( 12 ) ( 174 ) 2

Foreign ( 292 ) ( 732 ) ( 51 )

Total deferred benefit ( 295 ) ( 1,668 ) ( 49 )

Total provision (benefit) for income taxes $ 693 $ ( 1,512 ) $ 357

The Company recorded an income tax benefit of $ 1.5 million for the year ended December 31, 2019 and an income tax expense of $ 0.4 million for the year ended December 31, 2018 .

The tax benefit for the year ended December 31, 2019 is the result of a deferred tax liability associated with the RTKio acquisition, the release of a foreign valuation allowance resulting from a change to a cost-plus arrangement for a foreign subsidiary, the domestic valuation allowance and the tax liability associated with foreign subsidiaries.

The Company recorded an income tax expense of $ 0.7 million for the year ended December 31, 2020 compared to an income tax benefit of $ 1.5 million and income tax expense of $ 0.4 million for the years ended December 31, 2019 and 2018, respectively.

The tax expense for the years ended December 31, 2020 and December 31, 2018 was primarily the result of the domestic valuation allowance and the tax liability associated with the foreign subsidiaries.

The tax benefit for the year ended December 31, 2019 was the result of a deferred tax liability associated with the RTKio acquisition, the release of a foreign valuation allowance resulting from a change to a cost-plus arrangement for a foreign subsidiary, the domestic valuation allowance, and the tax liability associated with foreign subsidiaries.

Set forth below is a reconciliation of the components that caused the Company’s provision (benefit) for income taxes to differ from amounts computed by applying the U.S.

Federal statutory rate of 21% for the years ended December 31, 2020, 2019, and 2018:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019 December 31, 2018

federal statutory income tax rate 21.0 % 21.0 % 21.0 %

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Foreign income (loss) at other than U.S.

rates ( 0.5 ) % ( 4.3 ) % — %

Stock-based compensation expense 11.4 % 3.5 % ( 5.3 ) %

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Set forth below are the tax effects of temporary differences that give rise to a significant portion of the deferred tax assets and deferred tax liabilities as of December 31, 2020 and 2019:

December 31, 2019

December 31, 2018

December 31, 2020 December 31, 2019

(in thousands)

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Accrued liabilities $ 1,568 $ 1,396

Lease liabilities 8,943 —

Stock-based compensation 3,559 3,666

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Tax credit carryovers 4,882 13,055

Other 1,263 1,537

Total deferred tax assets 137,922 95,507

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Deferred Tax Liabilities:

Fixed assets ( 824 ) ( 570 )

Intangible assets ( 18,584 ) ( 298 )

Right of use lease asset ( 8,283 ) —

Total deferred tax liabilities ( 27,691 ) ( 868 )

Net deferred tax assets (liability) $ 239 $ 1,028

The change in valuation allowance for the years ended December 31, 2019 and 2018 was $ 2.7 million and $ 9.2 million , respectively.

The change in valuation allowance for the years ended December 31, 2020, 2019, and 2018 was $ 16.4 million, $ 2.7 million, and $ 9.2 million, respectively.

At December 31, 2020, the Company had U.S.

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At December 31, 2020, the Company had foreign NOLs of approximately $ 25.0 million, which will begin to expire in 2026.

At December 31, 2019 , the Company had federal research and development tax credit carryforwards, or credit carryforwards, of approximately $ 10.2 million , which will begin to expire in 2027 .

At December 31, 2020, the Company had state research and development tax credits of approximately $ 8.0 million, which carry forward indefinitely.

No amounts for any federal or state research and development tax credits for the year ended December 31, 2019 or December 31, 2020 are included herein.

Utilization of certain NOLs and credit carryforwards may be subject to an annual limitation due to ownership change limitations set forth in the Internal Revenue Code of 1986, as amended, or the Code, and comparable state income tax laws.

Any future annual limitation may result in the expiration of NOLs and credit carryforwards before utilization.

A prior ownership change and certain acquisitions resulted in the Company having NOLs subject to insignificant annual limitations.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"), in response to the COVID-19 pandemic.

The CARES Act is meant to infuse negatively affected companies with various tax cash benefits to ease the impact of the COVID-19 pandemic.

The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer-side social security payments, and net operating loss carryback periods.

The Company has determined the tax implications of the CARES Act will not be material.

To date, the Company has not taken advantage of any relief under the Cares Act.

On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act, 2021 ("CAA").

The CAA is meant to provide additional relief and support to those impacted by the COVID-19 pandemic.

The CAA includes provisions relating to payroll tax deferrals, family leave, and a five-year extension of a myriad of tax provisions that were set to expire.

The company is evaluating the potential tax implications of the CAA on the Company for 2021.

In addition, various foreign jurisdictions where the Company has activity have enacted or are considering enacting a variety of measures.

The Company has not received any relief that will impact its tax liabilities.

The Company is monitoring new legislation and evaluating the potential tax implications of these measures globally.

Pursuant to Section 382 of the Internal Revenue Code, the Company and Telaria, Inc.

both underwent ownership changes for tax purposes (i.e.

a more than 50% change in stock ownership in aggregated 5% shareholders) on April 1, 2020 due to the Merger.

As a result, the use of the Company’s total domestic NOL carryforwards and tax credits generated prior to the ownership change will be subject to annual use limitations under Section 382 and 383 of the Code and comparable state income tax laws.

The Company believes that the ownership change will not impact its ability to utilize substantially all of its NOLs and state research and development carryforward tax credits to the extent it will generate taxable income that can be offset by such losses.

The Company reasonably expects its federal research and development carryforward tax credits will not be recovered prior to expiration.

Additionally, for tax years beginning after December 31, 2017, the Tax Cuts and Jobs Act limits the NOL deduction to 80% of taxable income, repeals carryback of all NOLs arising in a tax year ending after 2017, and permits indefinite carryforward for all such NOLs.

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Balance as of December 31, 2018 $ 4,717

Increases related to 2018 tax positions

Decreases related to prior year tax positions

Balance as of December 31, 2018

Increases related to current year tax positions —

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Balance as of December 31, 2019 4,720

Decreases related to prior year tax positions ( 2,294 )

Increases related to prior year tax positions 788

Balance as of December 31, 2020 $ 3,214

Interest and penalties related to the Company’s unrecognized tax benefits accrued at December 31, 2020, 2019, and 2018 were not material.

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In addition, for the year ended December 31, 2020, the Company recognized expenses of $ 20.4 million of cloud-based services related to data centers and $ 1.0 million of lease expense related to short-term leases that are not included in the ROU asset or lease liability balances.

For the year ended December 31, 2019, the Company recognized $ 7.8 million of lease expense under ASC 842, which included operating lease expenses associated with leases included in the lease liability and ROU asset on the consolidated balance sheet.

In addition, for the year ended December 31, 2019, the Company recognized expenses of $ 10.0 million of cloud-based services related to data centers and $ 1.2 million of lease expense related to short-term leases that are not included in the ROU asset or lease liability balances.

For the year ended December 31, 2018, the Company recognized rental expenses of $ 19.7 million under ASC 840, which included expenses related to short-term leases, and also included certain non-lease components including variable capacity related expenses for cloud-based services related to data centers of $ 7.1 million.

The maturity of the Company's lease liabilities associated with leases included in the lease liability and ROU asset were as follows as of December 31, 2020 (in thousands):

2021 $ 11,653

Thereafter 11,403

Total lease payments (undiscounted) 49,167

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Lease liabilities—total (discounted) $ 42,091

The following table summarizes the Company's future minimum lease payments under non-cancelable operating leases and related sublease income at December 31, 2018 based on the lease accounting guidance prior to the adoption of ASC 842:

(in thousands)

Operating lease expense

Operating sublease income

The Company also received rental income of $ 0.3 million and $ 0.8 million for real estate leases for which it subleases the property to a third party during the year ended December 31, 2019 and 2018 , respectively.

The Company also received rental income of $ 3.7 million, $ 0.3 million, and $ 0.8 million for real estate leases for which it subleases the property to a third party during the year ended December 31, 2020, 2019, and 2018, respectively.

Rental income is included in other income in the consolidated statement of operations.

In addition to the lease liabilities included in these consolidated financial statements at December 31, 2020, during the three months ended December 31, 2020, the Company entered into agreements for an office lease for its corporate headquarters in Los Angeles and a data center in Singapore which have not commenced as of December 31, 2020, therefore, not included in the lease liability on the balance sheet.

The Company has future commitments totaling $ 23.2 million over the course of 10 years for the office lease and $ 5.6 million over the course of four years for the data center in Singapore.

Note 17— Commitments and Contingencies

The Company has commitments under non-cancelable operating leases for facilities, certain equipment, and its managed data center facilities (Note 16).

In addition, during the year ended December 31, 2020, the Company entered into an agreement for third-party cloud-managed services.

As part of the agreement, the Company has a minimum commitment to pay $ 20.0 million over the course of five years , with no annual minimum commitment.

As of December 31, 2020, the Company's commitment is $ 18.0 million.

As of December 31, 2020 and 2019, the Company had $ 6.3 million and $ 2.5 million, respectively, of letters of credit associated with office leases available for borrowing, on which there were no outstanding borrowings as of either date.

Guarantees and Indemnification

The Company’s agreements with sellers, buyers, and other third parties typically obligate it to provide indemnity and defense for losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, or other liabilities.

Generally, these indemnity and defense obligations relate to the Company’s own business operations, obligations, and acts or omissions.

The Company’s agreements with sellers, buyers, and other third parties typically obligate the Company to provide indemnity and defense for losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, or other liabilities.

Generally, these indemnity and defense obligations relate to the Company’s own business

operations, obligations, and acts or omissions.

However, under some circumstances, the Company agrees to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations, and acts or omissions, or the business operations, obligations, and acts or omissions of third parties.

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These limits sometimes do not apply to certain liabilities, including indemnity obligations.

These indemnity and limitation of liability provisions generally survive termination or expiration of the agreements in which they

These indemnity and limitation of liability provisions generally survive termination or expiration of the agreements in which they appear.

The Company has also entered into indemnification agreements with its directors, executive officers and certain other officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers or employees.

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However, based on management’s knowledge as of December 31, 2020, management believes that the final resolution of these matters known at such date, individually and in the aggregate, will not have a material adverse effect upon the Company’s consolidated financial position, results of operations or cash flows.

On February 13, 2020, a complaint (captioned Sebatini v.

The Rubicon Project, Inc.

et al.) was filed in the United States District Court for the District of Delaware by a putative stockholder of Telaria challenging the proposed merger.

The complaint names as defendants Rubicon Project, Madison Merger Corp., Telaria, and each member of the Telaria board of directors.

The complaint asserts violations of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder against all defendants other than Rubicon Project and Madison Merger Corp., and asserts violations of Section 20(a) of the Exchange Act against Rubicon Project and the individual defendants.

The plaintiff contends that the Registration Statement on Form S-4 filed with the SEC by Rubicon Project on February 7, 2020, and serving as an amended preliminary joint proxy statement/prospectus for the Telaria merger, omitted or misrepresented material information regarding the merger.

The complaint seeks injunctive relief, rescission, or rescissory damages, and an award of plaintiff’s costs, including attorneys’ fees and expenses.

The Company believes the claims asserted in the complaint are without merit.

Employment Contracts

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Note 18— Debt

In September 2018, the Company amended and restated its loan and security agreement with Silicon Valley Bank (the "Loan Agreement"), which was scheduled to expire on September 27, 2018.

The Loan Agreement provides a senior secured revolving credit facility of up to $ 40.0 million with a maturity date of September 26, 2020.

The amount available for borrowing as of December 31, 2019 is $ 40.0 million .

On September 25, 2020, the Company amended and restated its loan and security agreement with Silicon Valley Bank ("SVB") (the "Loan Agreement"), which was scheduled to expire on September 26, 2020.

The Loan Agreement provides a senior secured revolving credit facility of up to the lesser of $ 60.0 million and 85 % of eligible accounts receivable, with a maturity date of September 25, 2022.

The Loan Agreement includes a letter of credit, foreign exchange and cash management facility with a sublimit up to $ 10.0 million, of which $ 6.3 million was utilized for letters of credit related to leases as of December 31, 2020 (see Note 17).

As of December 31, 2020, the amount available for borrowing is $ 53.7 million.

The Company incurred $ 0.1 million of debt issuance fees that were capitalized and are being amortized over the term of the Loan Agreement.

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The Company may elect for advances to bear interest calculated by reference to prime or LIBOR.

If the Company elects LIBOR, amounts outstanding under the amended credit facility bear interest at a rate per annum equal to LIBOR plus 2.50 % if a streamline period applies or LIBOR plus 4.00 % if a streamline period does not apply.

If the Company elects prime, advances bear interest at a rate of prime plus 0.50 % if a streamline period applies or prime plus 2.00 % if a streamline period does not apply.

A streamline period is any period during which an event of default does not exist and the Company's Adjusted Quick Ratio (as defined in the Loan Agreement) is at least 1.05 for each day in the preceding month.

If the Company elects LIBOR, amounts outstanding under the amended credit facility bear interest at a rate per annum equal to LIBOR plus 2.25 %, with LIBOR having a floor of 3.5 %.

If the Company elects prime, advances bear interest at a rate of prime plus 0.25 %, with prime having a floor of 3.5 %.

The Loan Agreement is collateralized by security interests in substantially all of the Company's assets.

Subject to certain exceptions, the Loan Agreement restricts the Company's ability to, among other things, pay dividends, sell assets, make changes to the nature of the business, engage in mergers or acquisitions, incur, assume or permit to exist, additional indebtedness and guarantees, create or permit to exist, liens, make distributions or redeem or repurchase capital stock, or make other investments, engage in transactions with affiliates, make payments with respect to subordinated debt, and enter into certain transactions without the consent of the financial institution.

If a streamline period is not in effect, the Company is required to maintain a lockbox arrangement where clients payments received in the lockbox will immediately reduce the amounts outstanding on the credit facility.

The Loan Agreement requires the Company to comply with financial covenants, including a minimum Adjusted Quick Ratio and the achievement of certain Adjusted EBITDA targets.

On a monthly basis, or quarterly if there were no advances outstanding during the calendar quarter, the Company is required to maintain a minimum Adjusted Quick Ratio of:

(i) 1.00 if the trailing six month adjusted EBITDA is $ 0 or less, or (ii) 0.90 if the trailing six month adjusted EBITDA is greater than $ 0 .

If the Company’s Adjusted Quick Ratio is 1.05 or greater, a streamline period applies.

As of December 31, 2019 , the Company's Adjusted Quick Ratio was 1.13 , which is in compliance with its covenant requirement and is higher than the minimum Adjusted Quick Ratio required to qualify for a streamline period.

The Company must also maintain the following trailing twelve month Adjusted EBITDA targets as of the end of each quarter as follows:

(1) September 30, 2018 through June 30, 2019 Adjusted EBITDA must be within 20 % of the Adjusted EBITDA projections that were delivered to Silicon Valley Bank;

(2) September 30, 2019 Adjusted EBITDA of $ 1 or greater;

and (3) December 31, 2019 and thereafter, Adjusted EBITDA of $ 5.0 million or greater.

As of December 31, 2019 , the Company was in compliance with the Adjusted EBITDA covenant.

The Company is required to maintain a lockbox arrangement where clients payments received in the lockbox will be deposited daily into the Company's operating bank accounts.

The Loan Agreement requires the Company to comply with financial covenants, measured quarterly, with respect to a minimum liquidity ratio and maximum quarterly cash burn.

The Company is required to maintain a minimum liquidity ratio of at least 1.25 on the last day of each quarter and not exceed, on an absolute basis, a maximum quarterly cash burn for specific periods, as defined in the Loan Agreement.

The Liquidity Ratio is defined as Cash and Cash Equivalents, plus Accounts Receivable, less Accounts Payable - Seller, divided by all obligations the Company has to pay to SVB, including all debt balances, interest, service

fees, and unused credit line fees, net of outstanding letters of credit as of the balance sheet date.

Cash Burn is defined as Adjusted EBITDA less Capital Expenditures during the trailing periods as outlined in the Loan Agreement.

The Loan Agreement defines Capital Expenditures as the current period unfinanced cash expenditures that are capitalized and amortized, including but not limited to property and equipment and capitalized labor costs as they relate to internal use software development costs.

As of December 31, 2020, the Company was in compliance with its financial covenants.

The Loan Agreement also includes customary representations and warranties, affirmative covenants, and events of default, including events of default upon a change of control and material adverse change (as defined in the Loan Agreement).

Following an event of default, SVB would be entitled to, among other things, accelerate payment of amounts due under the credit facility and exercise all rights of a secured creditor.

As of December 31, 2019 , there were no amounts outstanding under the Loan Agreement.

As of December 31, 2020, there were no amounts outstanding under the Loan Agreement (other than with respect to the letters of credit).

Future availability under the credit facility is dependent on several factors including the available borrowing base and compliance with future covenant requirements.

Note 19— Related Party Transactions

As of December 31, 2019 and 2018 , there were no holders of more than 10% of the Company’s outstanding common stock that were considered to be related parties.

During the years ended December 31, 2019 and 2018 , the Company did not enter into transactions with any of its related parties.

During the years ended December 31, 2020, 2019, and 2018, the Company did not enter into any transactions with its related parties or affiliates of its related parties requiring disclosure pursuant to the applicable rules of the Financial Accounting Standards Boards or the U.S.

Securities and Exchange Commission.

Note 20— Quarterly Financial Data (Unaudited)

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Three Months Ended

June 30, 2018

June 30, 2019

31, 2019 June 30, 2019 Sept.

30, 2019 Dec.

31, 2019 Mar.

31, 2020 June 30, 2020 Sept.

30, 2020 Dec.

(in thousands, except per share amounts)

Revenue $ 32,416 $ 37,870 $ 37,642 $ 48,486 $ 36,295 $ 42,348 $ 60,982 $ 82,003

Cost of revenue 15,116 15,085 13,869 13,321 14,003 21,545 $ 21,031 21,168

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General and administrative 10,280 10,027 9,121 10,322 9,127 15,780 $ 13,314 14,766

Restructuring and other exit costs

Merger and restructuring costs — — — 2,041 1,930 12,493 $ 2,254 875

Total expenses 45,704 46,470 44,323 47,500 47,022 82,910 $ 71,922 74,008

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Net income (loss) per share:

$ ( 0.24 ) $ ( 0.16 ) $ ( 0.12 ) $ 0.03 $ ( 0.18 ) $ ( 0.36 ) $ ( 0.10 ) $ 0.05

Weighted-average shares used to compute net income (loss) per share:

51,577 52,358 53,023 53,473 54,866 108,530 110,416 112,746

51,577 52,358 53,023 59,595 54,866 108,530 110,416 124,376

Note 21— Subsequent Events

On February 4, 2021, the Company entered into a Stock Purchase Agreement (the "Purchase Agreement") with RTL to purchase all of the issued and outstanding shares of capital stock of SpotX, Inc., (SpotX"), a Delaware corporation and wholly owned subsidiary of RTL, for a purchase price equal to $ 560 million in cash ("Cash Consideration") and 14 million shares of the Company's common stock.

The Cash Consideration is subject to customary working capital and other adjustments.

The board of directors of the Company has approved the transactions contemplated by the Purchase Agreement.

The transactions are not subject to approval by the stockholders of the Company.

The Purchase Agreement includes customary representations, warranties and covenants of the parties, including covenants with respect to actions taken prior to the closing and cooperation with respect to seeking regulatory approvals.

The Company intends to finance the Cash Consideration in part from cash on its balance sheet and in part through borrowings under certain proposed new credit facilities.

In connection with entering into the Purchase Agreement, the Company entered into the Commitment letter, dated as of February 4, 2021, with Goldman Sachs Bank USA (the "Commitment Party"), pursuant to which, subject to the terms and conditions set forth therein, the Commitment Party has committed to provide a senior secured term loan facility in an aggregate principal amount of up to $ 560 million.

The funding of the Term Loan Facility provided for in the Commitment Letter is contingent on the satisfaction of customary conditions, including the execution and delivery of definitive documentation with respect to credit facilities in accordance with the terms set forth in the Commitment Letter and the consummation of the SpotX acquisition in accordance with the Purchase Agreement.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data