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Item 7. Management’s Discussion and Analysis

2026-02-25 compared with 2025-02-26 · 151 added, 96 removed, 370 unchanged (40% of the section changed)

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We believe that we are well positioned to take advantage of a number of favorable market trends in CTV.

In particular, as the pace of consumer adoption has accelerated and the streaming market has proliferated, the largest streaming publishers have adopted ad-supported models leading to a significant increase in the amount of CTV inventory available for advertisers.

In particular, as the pace of adoption has accelerated and the streaming market has proliferated, the largest streaming publishers have adopted ad-supported models leading to a significant increase in the amount of CTV inventory available for advertisers.

Despite the proliferation of CTV advertising inventory, CTV sellers have been slower to embrace biddable environments with multiple buyers compared to desktop and mobile sellers.

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These publishers have continued to increase their focus and investment in programmatic CTV, and in recent periods have grown as a percentage of our CTV business.

As the industry matures, we anticipate that market dynamics will lead CTV sellers to make a greater percentage of inventory available through biddable auction environments in order to attract a broader set of advertisers that have not historically advertised on linear TV.

As the industry matures, we anticipate that market dynamics will lead CTV sellers to make a greater percentage of inventory available through biddable auction environments with multiple buyers rather than programmatic guaranteed, in order to accommodate a broader set of advertisers that have not historically advertised on linear TV.

We believe that this shift, if it were to occur, would likely be beneficial to our CTV growth as biddable transactions tend to require a higher level of service and therefore carry a higher take-rate compared to reserve auctions.

At the same time, we expect CTV advertisers that have historically transacted on our platform through managed service insertion orders to continue to shift budgets towards more automated solutions, which tend to carry a lower take rate;

to carry a lower take rate;

and as a result, we expect transactions through managed service insertion orders to become a smaller component of our overall business.

We have made and plan to continue to make significant investments in technology, sales and support related to our CTV growth initiatives, and believe CTV will be a significant driver of our revenue growth for the foreseeable future.

In April 2025, we announced the introduction of our next generation SpringServe CTV platform.

The new SpringServe platform combines the features and functionalities of our streaming SSP and ad server to provide a more efficient connection for buyers to premium CTV supply, while offering powerful tools and streamlined workflow for sellers through a single user interface.

In addition to CTV, we track mobile and desktop channels.

We expect our revenue and Contribution ex-TAC from each of these channels to grow at a slower rate compared to CTV, with mobile expected to grow at a higher rate than desktop.

As such, we expect our desktop business to continue to decline as an overall percentage of our revenue in future periods;

however, we expect that it will continue to represent a significant percentage of our revenue in the near term.

Therefore, the mix of our desktop business will continue to have a negative effect on our overall growth rate.

In particular, we believe growth rates for open web display will be lower across both mobile and desktop, consistent with the overall decline in search referral traffic.

We expect our desktop and mobile web business to continue to decline as an overall percentage of our revenue in future periods;

however, we expect that contributions from these channels will continue to represent a significant percentage of our revenue in the near term.

Therefore, the mix of our desktop and mobile web business will continue to have a negative effect on our overall growth rate.

Our mobile channel consists of mobile web and mobile applications, with mobile applications expected to be a larger driver of our growth in future periods.

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developing alternative identity solutions to increase the value of seller inventory, as the industry shifts away from third-party cookies;

and leveraging our machine learning and big data set to improve traffic shaping and generate higher-quality matching between buyers and sellers.

Our results for the year-ended December 31, 2024, were negatively impacted by challenges in the fourth quarter in our desktop and mobile channels, where we experienced a significant drop in advertising demand following the election and through year-end.

We believe this drop was temporary in nature and was likely due to fears of macro and political uncertainty due to the election.

We anticipate that our operating expenses will continue to increase in the foreseeable future as we invest in technology and development to enhance our product features, in particular CTV, as well as sales and marketing to acquire new clients and reinforce our relationships with existing clients.

leveraging our machine learning and big data set to improve traffic shaping and generate higher-quality matching between buyers and sellers;

and increasing adoption of our proprietary SDK for mobile in-app advertising.

We anticipate that our operating expenses will continue to increase in absolute dollars for the foreseeable future as we invest in technology and development to enhance our product features, in particular CTV, as well as sales and marketing to acquire new clients and reinforce our relationships with existing clients.

At the same time, we are making additional investments in on-prem data centers to support a higher percentage of CTV transactions, with the goal of increasing the operational efficiency of our platform in order to realize long-term cost savings.

Regulatory Developments and Google Litigation

On April 17, 2025, the United States District Court for the Eastern District of Virginia (the "Court") ruled that Google LLC ("Google") had violated federal antitrust laws by willfully acquiring and maintaining monopoly power in the display publisher ad server market and display ad exchange (also called an SSP) market, and had unlawfully tied its display ad server and ad exchange.

Having found Google liable, the Court held closing arguments in November 2025 to determine what remedies are appropriate to restore competition to the affected markets.

While the specific timing and nature of these remedies remains uncertain, and Google has indicated its intent to appeal the decision, we expect this ruling to have a significant positive impact on our industry and business prospects.

Our mobile and desktop SSP competes directly with Google's ad exchange for the placement of display ads within the Google display ad server, which is estimated to be used by approximately 90% of open-web publishers.

We believe that the conduct found to be unlawful by the Court provided Google's ad exchange with an unfair advantage relative to rival exchanges, such as our SSP, and artificially depressed our ability to win impressions within the Google display ad server.

Moreover, we believe that Google's illegal conduct foreclosed the ability of publishers to freely choose what SSPs or exchanges they worked with to monetize inventory.

As such, any remedy that creates a more level playing field and increases publisher choice is likely to improve our ability to monetize a greater share of display inventory while growing our market share in open-web display.

On September 16, 2025, in light of the Court's decision, we filed a lawsuit against Google in the U.S.

District Court of the Eastern District of Virginia, seeking damages and other remedies (the "Google Action").

Our complaint alleges that Google engaged in anticompetitive conduct in the ad exchange and ad server markets in violation of federal antitrust laws, including actions that restrict publishers' ability to use competing services and favor Google's own advertising exchange, which caused us substantial harm and lost opportunity.

Refer to "Our litigation with Google LLC presents potential risks that could adversely affect our business, results of operations and financial condition" in Item 1A.

"Risk Factors".

Macroeconomic Developments

Macroeconomic challenges, such as inflation, the interest rate environment, global conflicts, the risk of a recession, and labor strikes, generally have a negative impact on ad budgets, which in turn may lead to slower ad spend growth through our platform.

Macroeconomic challenges, such as inflation, tariffs and trade wars, the interest rate environment, global conflicts, the risk of a recession, and labor strikes, generally have a negative impact on ad budgets, which in turn may lead to slower ad spend growth through our platform.

Any worsening of macroeconomic conditions in future periods would likely have a negative effect on our financial results, the magnitude of which is difficult to predict.

In addition, continued inflation could result in an increase in our cost base relative to our revenue.

In addition, inflation and tariffs could result in an increase in our cost

base relative to our revenue and increased cost associated with our infrastructure investments.

Moreover, in response to U.S.

tariffs, foreign countries in which we operate may enact additional or new taxes that are applicable to our business.

Refer to Item 1A.

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For the majority of transactions executed through our platform, we act as an agent on behalf of the publisher that is monetizing its inventory, and revenue is recognized net of any advertising inventory costs that we remit to sellers.

With respect to certain revenue streams for managed advertising campaigns that are transacted through insertion orders, we report revenue on a gross basis, based primarily on our determination that the Company acts as the primary obligor in the delivery of advertising campaigns for our buyer clients with respect to such transactions.

With respect to managed advertising campaigns that are transacted through insertion orders, we report revenue on a gross basis, based primarily on our determination that the Company acts as the primary obligor in the delivery of advertising campaigns for our buyer clients with respect to such transactions.

For the years ended December 31, 2025, 2024, and 2023, our revenue reported on a gross basis was 10%, 14%, and 18% of total revenue for the respective periods.

Any mix shift that causes an increase in the relative percentage of our revenue accounted for on a gross basis would result in a higher revenue contribution and an associated decrease in our gross margin percentage (with no underlying impact on gross profit or Contribution ex-TAC, as defined in section "Key Operating and Financial Performance Metrics").

The decline in our revenue reported on a gross basis as a percentage of our revenue is primarily due to declines in our managed service business, which is accounted for on a gross basis, as advertisers continue to shift budgets towards more automated solutions.

Our revenue recognition policies are discussed in more detail in Note 2 of the "Notes to the Consolidated Financial Statements."

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Sales and Marketing .

Our sales and marketing expenses primarily consists of personnel costs, including salaries, bonuses, and stock-based compensation, as well as marketing expenses such as brand marketing, travel expenses, trade shows and marketing materials, amortization expense associated with client relationships, and non-compete agreements from our business acquisitions, professional services, facilities-related costs, and depreciation expense.

Our sales and marketing expenses primarily consist of personnel costs, including salaries, bonuses, and stock-based compensation, as well as marketing expenses such as brand marketing, travel expenses, trade shows and marketing materials, amortization expense associated with client relationships, and non-compete agreements from our business acquisitions, professional services, facilities-related costs, and depreciation expense.

Our sales and support organization focuses on increasing the adoption of our solution by existing and new buyers and sellers and supports ongoing client relationships.

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Technology and Development .

Our technology and development expenses primarily consists of personnel costs, including salaries, bonuses, and stock-based compensation, as well as professional services associated with the ongoing development and maintenance of our solution, software costs, facilities-related costs, and depreciation and amortization expense.

Our technology and development expenses primarily consist of personnel costs, including salaries, bonuses, and stock-based compensation, as well as professional services associated with the ongoing development and maintenance of our solution, software costs, facilities-related costs, and depreciation and amortization expense.

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

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General and Administrative .

Our general and administrative expenses primarily consists of personnel costs, including salaries, bonuses, and stock-based compensation, associated with our executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees, facilities-related costs, depreciation expense, bad debt expense, and other corporate-related expenses.

Our general and administrative expenses primarily consist of personnel costs, including salaries, bonuses, and stock-based compensation, associated with our executive, finance, legal, human resources, compliance, and other administrative personnel, as well as accounting and legal professional services fees, facilities-related costs, depreciation expense, bad debt expense, and other corporate-related expenses.

Merger, Acquisition, and Restructuring Costs.

Our merger, acquisition, and restructuring costs primarily consists of professional service fees associated with merger and acquisition activities, cash-based employee termination costs, related stock-based compensation charges, and other restructuring activities, including facility closures, relocation costs, contract termination costs, and impairment costs of abandoned technology associated with restructuring activities.

Our merger, acquisition, and restructuring costs primarily consist of professional service fees associated with merger and acquisition activities, cash-based employee termination costs, related stock-based compensation charges, and other restructuring activities, including facility closures, relocation costs, contract termination costs, and impairment costs of abandoned technology associated with restructuring activities.

Other (Income) Expense

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Our primary foreign currency exposures are currencies other than the U.S.

Dollar, principally the Australian Dollar, British Pound, Canadian Dollar, Euro, Japanese Yen, and New Zealand Dollar.

Dollar, principally the Australian Dollar, British Pound, Euro, Japanese Yen, and New Zealand Dollar.

(Gain) Loss on Extinguishment of Debt .

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(federal and state) and numerous foreign jurisdictions.

Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without

notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.

Tax laws, regulations, administrative practices, principles, and interpretations in various jurisdictions may be subject to significant change, with or without notice, due to economic, political, and other conditions, and significant judgment is required in evaluating and estimating our provision and accruals for these taxes.

There are many transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain.

Our effective tax rates could be affected by numerous factors, such as changes in our business operations, acquisitions, investments, entry into new businesses and geographies, intercompany transactions, the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, losses incurred in jurisdictions for which we are not able to realize related income tax benefits, the applicability of special tax regimes, changes in foreign currency exchange rates, changes in our stock price, changes in our deferred tax assets ("DTAs") and liabilities and their valuation, changes in the laws, regulations, administrative practices, principles, and interpretations related to tax, including changes to the global tax framework, competition, and other laws and accounting rules in various jurisdictions.

During the year ended December 31, 2025, we recorded an income tax benefit primarily driven by the release of our U.S.

federal valuation allowances, the majority of our state valuation allowances, and certain foreign valuation allowances on deferred tax assets.

The release was supported by sustained profitability and our cumulative three-year pre-tax income position, together with forecasts of future taxable income.

As a result of this release, our effective tax rate for 2025 differs significantly from prior periods.

A material valuation allowance release is not expected to recur in future periods.

Results of Operations

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General and administrative 93,191 96,860 89,048 (4) % 9 %

Merger, acquisition, and restructuring costs — 7,465 7,468 (100) % — %

Merger, acquisition, and restructuring costs 162 — 7,465 NM (100) %

Total expenses 616,352 617,083 774,719 — % (20) %

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70,627 26,484 (157,547) 167 % NM

Provision (benefit) for income taxes 3,698 1,637 (5,274) 126 % NM

Provision (benefit) for income taxes

(73,986) 3,698 1,637 NM 126 %

Net income (loss) $ 144,613 $ 22,786 $ (159,184) 535 % NM

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Revenue increased $48.5 million, or 8%, for the year ended December 31, 2024 compared to the prior year.

Our revenue growth was driven primarily by growth in mobile and CTV, which was partially offset by a decrease in desktop.

Revenue from mobile and CTV increased by $39.7 million, or 21%, and $13.6 million, or 5%, respectively, while desktop decreased by $10.6

million, or 9%.

During 2023, our growth rate in CTV was negatively impacted, in part, by a mix shift towards large CTV sellers that transacted primarily through reserve auctions, which carry a lower overall take rate compared to other transaction types.

Our revenue growth was driven primarily by growth in CTV and mobile.

Revenue from CTV, mobile, and desktop increased by $35.3 million, or 13%, $12.1 million, or 5%, and $1.0 million, or 1%, respectively.

Our CTV revenue growth for the year ended December 31, 2025 compared to the respective prior year period was negatively impacted by a decline in the relative percentage of transactions reported on a gross basis, compared to on a net basis.

Transactions reported on a gross basis generally result in a higher revenue contribution with an associated increase in our traffic acquisition costs.

See "Key Operating and Financial Performance Metrics" below for a discussion of Contribution ex-TAC, which presents a year-over-year comparison of our CTV growth, without considering the impact of traffic acquisition costs related to revenue reported on a gross basis.

Our revenue is largely a function of the number of advertising transactions and the price, or CPM, at which the inventory is sold, which results in total advertising spend on our platform, and, with respect to our revenue reported on a net basis, the take rate we charge for our services.

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Cost of Revenue

Cost of revenue increased $7.8 million, or 3%, for the year ended December 31, 2025 compared to the prior year, primarily due to increases of $11.5 million in cloud hosting, data center, and bandwidth expenses, $9.1 million in software costs, and $4.0 million in personnel costs.

These increases were partially offset by decreases of $16.9 million in traffic acquisition costs due to a decrease in revenue reported on a gross basis.

Cost of revenue decreased $151.1 million , or 37%, for the year ended December 31, 2024 compared to the prior year, primarily due to decreases of $164.4 million in depreciation and amortization, which was primarily driven by certain acquired intangible assets becoming fully amortized in the third quarter of 2023.

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Based on the related asset balance as of December 31, 2023 and those placed in service during the year ended December 31, 2024, the effect of this change reduced depreciation expense by $12.6 million for the full year ending December 31, 2024 when compared to what depreciation expense would have been based on the original expected useful lives of three years.

Cost of revenue increased $102.7 million , or 33%, for the year ended December 31, 2023 compared to the prior year, primarily due to increases of $69.3 million in depreciation and amortization.

These increases were primarily driven by incremental amortization due to the acceleration of the remaining lives of certain acquired intangible assets and capitalized software from the integration of our legacy Magnite CTV and SpotX CTV platforms, which started in the fourth quarter of 2022 and was completed in the third quarter of 2023.

The year over year increase in amortization due to the acceleration was $64.0 million.

Cost of revenue also included increases of $26.2 million in cloud hosting, data center, and bandwidth expenses and $8.1 million in traffic acquisition costs, both primarily due to revenue growth and an associated increase in the volume of transactions processed on our platform.

Cost of revenue may fluctuate from quarter to quarter and period to period, on an absolute dollar basis and as a percentage of revenue, depending on revenue levels and the volume of transactions we process supporting those revenues, and the timing and amounts of depreciation and amortization of equipment and software.

Cost of revenue may fluctuate from quarter to quarter and period to period, on an absolute dollar basis and as a percentage of revenue, depending on revenue levels and the volume of transactions we process supporting those revenues, whether transactions are reported on a gross or net basis, and the timing and amounts of depreciation and amortization of equipment and software.

Sales and Marketing

Sales and marketing expenses increased $5.5 million, or 3%, for the year ended December 31, 2025 compared to the prior year, primarily due to increases of $10.2 million in personnel costs.

These increases were partially offset by decreases of $6.6 million in depreciation and amortization, which were primarily driven by certain acquired intangible assets becoming fully amortized in 2025.

Sales and marketing expenses decreased $7.8 million, or 5%, for the year ended December 31, 2024 compared to the prior year, primarily due to decreases of $17.4 million in depreciation and amortization, which were primarily driven by certain acquired intangible assets becoming fully amortized in 2023.

These decreases were partially offset by increases of $9.5 million in personnel costs.

Sales and marketing expenses decreased $26.1 million, or 13%, for the year ended December 31, 2023 compared to the prior year, primarily due to decreases of $44.3 million in depreciation and amortization, which were primarily driven by certain acquired intangible assets becoming fully amortized in 2022 and 2023.

These decreases were partially offset by increases of $9.5 million of personnel costs.

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Technology and Development

Technology and development expenses increased $0.9 million, or 1%, for the year ended December 31, 2024 compared to the prior year.

Technology and development expenses decreased $10.5 million, or 11%, for the year ended December 31, 2025 compared to the prior year, primarily due to decreases of $4.6 million in personnel costs and $4.1 million in software costs.

Technology and development expenses increased $0.9 million, or 1%, for the year ended December 31, 2024 compared to the prior year.

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General and Administrative

General and administrative expenses increased $7.8 million, or 9%, for the year ended December 31, 2024 compared to the prior year, primarily due to increases of $5.9 million in personnel costs, $4.1 million in expenses associated with refinancing our 2021 Credit Agreement (defined below) in February 2024 and repricing our 2024 Term Loan B Facility (defined below) in September 2024, and $3.7 million in insurance and business taxes.

General and administrative expenses decreased $3.7 million, or 4%, for the year ended December 31, 2025 compared to the prior year, primarily due to decreases of $4.0 million in insurance and business taxes and $3.1 million in refinancing expenses associated with our 2024 Term Loan B Facility (defined below).

These decreases were partially offset by increases of $2.0 million in personnel costs.

General and administrative expenses increased by $7.8 million, or 9%, for the year ended December 31, 2024 compared to the prior year, primarily due to increases of $5.9 million in personnel costs, $4.1 million in expenses associated with refinancing our 2021 Credit Agreement (defined below) in February 2024 and repricing our 2024 Term Loan B Facility (defined below) in September 2024, and $3.7 million in insurance and business taxes.

These increases were partially offset by decreases of $4.1 million in bad debt expense and $2.7 million in facilities-related costs.

The higher bad debt expense in 2023 as compared to 2024 was primarily due to a buyer defaulting on payment obligations and filing for bankruptcy, resulting in bad debt expense of $4.2 million.

General and administrative expenses increased by $7.7 million, or 9%, for the year ended December 31, 2023 compared to the prior year, primarily due to increases of $4.8 million in bad debt expense, as described above, and $4.2 million in personnel costs.

General and administrative expenses may fluctuate from quarter to quarter and period to period based on the timing and amounts of expenditures in our general and administrative functions as they vary in scope and scale over periods.

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Merger, Acquisition, and Restructuring Costs

We did not incur any merger, acquisition, and restructuring costs for the year ended December 31, 2024.

We incurred merger, acquisition, and restructuring costs of $7.5 million and $7.5 million during the years ended December 31, 2023 and 2022, respectively, primarily related to the acquisitions of SpotX, Inc.

and SpringServe, LLC, which were completed on April 30, 2021 and July 1, 2021, respectively.

In 2023, these costs primarily included $3.4 million of severance related expenses, $2.2 million of facilities related loss contracts, and $1.4 million of exit costs, all due to restructuring activities as a result of consolidating our legacy CTV and SpotX CTV platforms following the SpotX acquisition.

In 2022, these costs primarily included $3.3 million of impairment costs associated with abandoned technology, $2.0 million non-cash stock-based compensation expense associated with the acceleration of unvested equity awards, and $1.2 million of one-time cash-based employee termination costs due to restructuring activities related to the integration of our acquisitions.

We incurred $0.2 million of merger, acquisition, and restructuring costs for the year ended December 31, 2025 and did not incur any merger, acquisition, and restructuring costs for the year ended December 31, 2024.

For the year ended December 31, 2023, we incurred $7.5 million of merger, acquisition, and restructuring costs consisting of $3.4 million of severance related expenses, $2.2 million of facilities related loss contracts, and $1.4 million of exit costs all due to restructuring activities as a result of consolidating our legacy CTV and SpotX CTV platforms following the SpotX, Inc.

acquisition in 2021.

Other (Income) Expense, Net

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Total other expense, net $ 26,974 $ 24,603 $ 2,538

Interest expense, net decreased by $5.3 million during the year ended December 31, 2024 compared to the prior year.

The net decrease is primarily due to an increase in interest income and a decrease in interest expense as a result of lower Convertible Senior Notes (defined below) outstanding throughout 2024 as compared to the prior year period and the lower interest incurred under the 2024 Term Loan B Facility (defined below) compared to the 2021 Term Loan B Facility (defined below).

Interest expense, net increased by $3.1 million during the year ended December 31, 2023 compared to the prior year, mainly due to increased interest expense of $11.3 million as a result of increased interest rates on our 2021 Term Loan B Facility (defined below), partially offset by an increase in interest income of $8.2 million.

Interest expense, net decreased by $8.1 million during the year ended December 31, 2025 compared to the prior year primarily due to a decrease in interest expense as a result of the refinancing and repricing of our term loan facilities.

Interest expense, net decreased by $5.3 million during the year ended December 31, 2024 compared to the prior year primarily due to an increase in interest income and a decrease in interest expense as a result of lower Convertible Senior Notes (defined below) outstanding throughout 2024 as compared to the prior year period and the lower interest incurred under the 2024 Term Loan B Facility (defined below) compared to the 2021 Term Loan B Facility (defined below).

Foreign exchange (gain) loss, net changed by $12.1 million during the year ended December 31, 2025 compared to the prior year, due to movements in foreign currency exchange rates and the amount of foreign currency-denominated cash, receivables, and payables, which were impacted by our billings to buyers, payments to sellers, and intercompany balances.

Foreign exchange (gain) loss, net changed by $7.0 million during the year ended December 31, 2024 compared to the prior year, for the same reasons above.

The loss on extinguishment of debt of $7.7 million for the year ended December 31, 2024 was due to the refinancing of our 2021 Credit Agreement (defined below) in February 2024 and the repricing of our 2024 Term Loan B Facility (defined below) in September 2024, which are further discussed below.

The loss on extinguishment of debt of $2.2 million for the year ended December 31, 2025 was due to the March 2025 repricing of our 2024 Term Loan B Facility (defined below) and the loss on extinguishment of debt of $7.7 million for the year ended December 31, 2024 was due to the refinancing of our 2021 Credit Agreement (defined below) in February 2024 and the repricing of our 2024 Term Loan B Facility (defined below) in September 2024.

Our refinancing and repricing activities are further discussed below.

The gain on extinguishment of debt of $26.5 million for the year ended December 31, 2023 was due to the repurchase of portions of our Convertible Senior Notes (defined below).

Other income decreased by $4.0 million for year ended December 31, 2025 compared to the prior year primarily due to decreases in rental income from real estate leases for which we sublease to other tenants.

Other income was relatively flat for the year ended December 31, 2024 compared to the prior year as we had similar levels of sublease activity in each of the respective periods.

Provision (Benefit) for Income Taxes

We recorded an income tax expense of $3.7 million for the year ended December 31, 2024 compared to an income tax expense of $1.6 million and an income tax benefit $5.3 million for the years ended December 31, 2023 and 2022, respectively.

income tax expense for the year ended December 31, 2024 was primarily the result of our ability to recognize DTAs subject to the domestic valuation allowance and the state and foreign income tax provisions.

We continue to maintain a valuation allowance for our domestic deferred tax assets.

We recorded an income tax benefit of $74.0 million for the year ended December 31, 2025 compared to an income tax expense of $3.7 million and $1.6 million for the years ended December 31, 2024 and 2023, respectively.

The income tax benefit for the year ended December 31, 2025 was primarily driven by the release of our U.S.

federal valuation allowances, the majority of our state valuation allowances, and certain of our foreign valuation allowances on deferred tax assets.

The release was supported by sustained profitability and our cumulative three-year pre-tax income position, together with forecasts of future taxable income.

As a result of the valuation allowance release, our effective tax rate for 2025 differs significantly from prior periods.

A material valuation allowance release is not expected to recur in future periods.

On July 4, 2025, the President of the United States signed H.R.

1, commonly referred to as the "One Big Beautiful Bill Act" into law.

These changes were reflected in the income tax provision for the year ended December 31, 2025.

We have evaluated the tax law as it relates to our financials and determined there is no material impact on the period presented above.

Based on current projections, the continuing impact will be a deferral of the payment of current income taxes over multiple years;

however, we expect the net impact to our effective tax rate for 2026 to be immaterial.

We will continue to monitor for any impact of future guidance.

The income tax expense for the year ended December 31, 2024 was primarily the result of the domestic valuation allowance and the federal, state, and foreign income tax liabilities.

The income tax benefit for the year ended December 31, 2022 was primarily the result of recognizing the benefit of deferred tax assets previously subject to the domestic valuation allowance and the foreign income tax liability.

The net deferred tax liabilities recorded in connection with prior acquisitions and current taxable income for the year provided sources of taxable income to support the realization of pre-existing deferred tax assets.

The income tax expense for the year ended December 31, 2023 was primarily the result of the domestic valuation allowance and the federal, state, and foreign income tax liabilities.

Key Operating and Financial Performance Metrics

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Our non-GAAP financial measures are discussed below.

Revenue and net income (loss) are discussed above under the headings "Components of Our Results of Operations" and "Results of Operations."

Revenue, cost of revenue, and net income (loss) are discussed above under the headings "Components of Our Results of Operations" and "Results of Operations."

Contribution ex-TAC

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Contribution ex-TAC increased $62.7 million, or 10%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue.

Contribution ex-TAC increased $57.8 million, or 11%, for the year ended December 31, 2024 compared to the year ended December 31, 2023.

The increase in Contribution ex-TAC was primarily due to the growth drivers described above for revenue.

For 2026, we expect Contribution ex-TAC will increase compared to the prior year period, and we expect CTV will be our biggest growth driver in 2026.

Adjusted EBITDA

We define Adjusted EBITDA as net income (loss) adjusted to exclude stock-based compensation expense, depreciation and amortization, amortization of acquired intangible assets, impairment charges, interest income or expense, and other cash and non-cash based income or expenses that we do not consider indicative of our core operating performance, including, but not limited to foreign exchange gains and losses, acquisition and related items, gains or losses on extinguishment of debt, other debt refinancing expenses, non-operational real estate and other expenses (income), net, and provision (benefit) for income taxes.

We define Adjusted EBITDA as net income (loss) adjusted to exclude stock-based compensation expense, depreciation and amortization, including amortization of acquired intangible assets, impairment charges, interest income or expense, provision (benefit) for income taxes, and certain cash and non-cash based income or expenses that we do not consider indicative of our core operating performance, including, but not limited to foreign exchange gains and losses, acquisition and related items, gains or losses on extinguishment of debt, other debt refinancing expenses, certain litigation expenses, and non-operational real estate and other expenses (income), net.

We believe Adjusted EBITDA is useful to investors in evaluating our performance for the following reasons:

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• Impairment charges are non-cash charges related to goodwill, intangible assets and/or long-lived assets.

• Adjusted EBITDA does not reflect certain cash and non-cash charges related to acquisition and related items, such as amortization of acquired intangible assets, merger, acquisition, or restructuring related severance costs, and changes in the fair value of contingent consideration.

• Adjusted EBITDA does not reflect cash and non-cash charges and changes in, or cash requirements for, acquisition and related items, such as certain transaction expenses.

• Adjusted EBITDA does not reflect cash and non-cash charges related to certain financing transactions such as gains or losses on extinguishment of debt or other debt refinancing expenses.

• Adjusted EBITDA does not reflect certain non-operational real estate and other (income) and expense, net, which consists of transactions or expenses that are typically by nature non-operating, one-time items, or unrelated to our core operations.

• Adjusted EBITDA does not reflect changes in our working capital needs, capital expenditures, or contractual commitments.

• Adjusted EBITDA does not reflect certain cash and non-cash charges related to acquisition and related items, such as amortization of acquired intangible assets, merger, acquisition, or restructuring related severance costs, certain transaction expenses, and changes in the fair value of contingent consideration.

• Adjusted EBITDA does not reflect cash and non-cash charges related to interest income and interest expense and certain financing transactions such as gains or losses on extinguishment of debt or other debt refinancing expenses.

• Adjusted EBITDA does not reflect cash requirements for income taxes and the cash impact of other income or expense.

• Adjusted EBITDA does not reflect litigation expenses for specific proceedings.

• Adjusted EBITDA does not reflect certain non-operational real estate and other (income) and expense, net.

• Adjusted EBITDA does not reflect changes in our working capital needs, capital expenditures, or contractual commitments.

• Other companies may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

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Net income (loss)

$ 144,613 $ 22,786 $ (159,184)

Add back (deduct):

Stock-based compensation expense 76,648 76,519 72,617

Depreciation and amortization expense, excluding amortization of acquired intangible assets 38,528 28,376 38,330

Amortization of acquired intangibles 15,146 30,134 202,490

Stock-based compensation expense 76,519 72,617 64,118

Merger, acquisition, and restructuring costs, excluding stock-based compensation expense 162 — 7,322

Non-operational real estate and other expense, net 1,579 310 622

Interest expense, net 18,923 27,032 32,369

Provision (benefit) for income taxes (73,986) 3,698 1,637

Foreign exchange (gain) loss, net 6,972 (5,083) 1,953

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Other debt refinancing expense

Provision (benefit) for income taxes 3,698 1,637 (5,274)

Litigation expense (1)

Non-operational real estate and other expense, net 890 1,579 310

Adjusted EBITDA $ 232,131 $ 196,850 $ 171,364

Adjusted EBITDA increased by $25.5 million during the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to increases in revenue, described above, which were partially offset by increases in expenses to support this revenue growth.

Refer to discussion in section "Comparison of the Years Ended December 31, 2024, 2023, and 2022."

Adjusted EBITDA decreased by $7.4 million during the year ended December 31, 2023 compared to the year ended December 31, 2022, primarily due to increases in expenses being greater than increases in revenue.

Refer to discussion in section "Comparison of the Years Ended December 31, 2024, 2023, and 2022."

(1) Litigation expense includes professional and legal expenses related to the Google Action and defense costs relating to class action privacy litigation, net of insurance recoveries.

For additional information, see the "Regulatory Developments and Google Litigation" section and Part I, Item 3.

"Legal Proceedings."

Adjusted EBITDA increased by $35.3 million during the year ended December 31, 2025 compared to the year ended December 31, 2024 and increased by $25.5 million during the year ended December 31, 2024 compared to the year ended December 31, 2023.

Liquidity and Capital Resources

At December 31, 2024, we had cash and cash equivalents of $483.2 million, of which $54.4 million was held in foreign currency denominated cash accounts, and an aggregate gross principal amount of $568.2 million of indebtedness outstanding under our 2024 Term Loan B Facility (as defined below) and our Convertible Senior Notes (as defined below).

At December 31, 2025, we had cash and cash equivalents of $553.4 million, of which $74.5 million was held in foreign currency denominated cash and cash equivalents accounts, and an aggregate gross principal amount of $565.5 million of indebtedness outstanding under our 2024 Term Loan B Facility (as defined below) and our Convertible Senior Notes (as defined below).

In addition, we were party to a $175.0 million 2024 Revolving Credit Facility (as defined below), of which approximately $4.0 million was assigned to outstanding but undrawn letters of credit.

See "Capital Resources" below for further information about our outstanding debt.

Our principal cash requirements for the twelve-month period following this report primarily consists of personnel costs, contractual payment obligations, including office leases, data center costs and cloud hosting costs, capital expenditures, payment of interest and required principal payments on our Convertible Senior Notes and our 2024 Term Loan B Facility, cash outlays for income taxes, and cash requirements to fund working capital.

In the longer term, we would expect to have similar cash requirements, with increases in absolute dollars associated with the continued growth of our business and expansion of operations.

Our known principal cash requirements for the twelve-month period following this report primarily consist of personnel costs, contractual payment obligations, including office leases, cloud hosting, data center, and bandwidth expenses, capital expenditures, payment of interest, required principal payments on our Convertible Senior Notes, which mature in March 2026, and our 2024 Term Loan B Facility, cash outlays for income taxes, and cash requirements to fund working capital.

We plan to repay the outstanding Convertible Senior Notes upon maturity with our cash and cash equivalents balance.

In the longer term, we would expect to have similar cash requirements, excluding the one-time payment related to the maturity of our Convertible Senior Notes, with increases in absolute dollars associated with the continued growth of our business and expansion of operations.

See "Contractual Obligations and Known Future Cash Requirements" for a further discussion of our known material contractual obligations.

On February 1, 2024, the Board of Directors approved a new repurchase plan (the "February 2024 Repurchase Plan"), which fully replaced the prior repurchase plan, pursuant to which we are authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $125.0 million, through February 1, 2026.

During the year ended December 31, 2024, we repurchased 1,160,496 shares of the Company's common stock for an aggregate amount of $14.6 million.

As of December 31, 2024, $110.4 million remains available under the February 2024 Repurchase Plan.

On February 1, 2024, the Board of Directors approved a repurchase plan (the "February 2024 Repurchase Plan"), which fully replaced the prior repurchase plan, pursuant to which we were authorized to repurchase common stock or Convertible Senior Notes, with an aggregate market value of up to $125.0 million, through February 1, 2026.

During the year ended December 31, 2025, we repurchased 3.4 million shares of the Company's common stock for an aggregate amount of $46.3 million.

As of December 31, 2025, $64.1 million remained available under the February 2024 Repurchase Plan.

We repurchased 33,800 shares in

January 2026 before the expiration of the February 2024 Repurchase Plan on February 1, 2026.

On February 23, 2026, the Board of Directors approved a new repurchase plan (the "February 2026 Repurchase Plan"), which authorized the repurchase of common stock with a value up to $200.0 million, through February 29, 2028.

Our working capital needs and cash conversion cycle, which is influenced by seasonality and by the mix of terms among our buyers and sellers and which may be negatively impacted as a result of pandemics, inflationary, recessionary and other macroeconomic challenges, can have large fluctuations due to the timing of receipts from buyers and timing of disbursements to sellers.

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The initial conversion rate is 15.6539 shares per $1,000 principal amount of notes, which represents an initial conversion price of approximately $63.88 per share of the Company’s common stock and is subject to adjustment as described in the Offering Memorandum.

At December 31, 2024, the balance of the Convertible Senior Notes was $203.6 million, net of unamortized debt issuance costs of $1.4 million.

At December 31, 2025, the balance of the Convertible Senior Notes was $204.8 million, net of unamortized debt issuance costs of $0.3 million, and was reflected as debt, current, net of debt issuance costs in the Company's balance sheet.

In conjunction with the issuance of the Convertible Senior Notes, we entered into capped call transactions to reduce the Company's exposure to additional cash payments above principal balances in the event of a cash conversion of the Convertible Senior Notes.

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1 to the 2024 Credit Agreement ("Amendment No.

1"), which reduced the interest rate of the 2024 Term Loan B Facility by 75 basis points to Term SOFR plus a margin of 3.75% from the previous rate of Term SOFR plus a margin of 4.50%.

The remaining terms of the 2024 Term Loan B Facility and the 2024 Revolving Credit Facility were substantially unchanged.

1"), which reduced the interest rate of the 2024 Term Loan B Facility by 75 basis points to Term SOFR plus a margin of 3.75% from the previous rate of Term SOFR plus a margin of 4.50% and on March 18, 2025, we entered into Amendment No.

2 to the 2024 Credit Agreement ("Amendment No.

2"), which reduced the interest rate of the 2024 Term Loan B Facility by an additional 75 basis points to Term SOFR plus a margin of 3.00%.

The remaining terms of the 2024 Term Loan B Facility and the 2024 Revolving Credit Facility were substantially unchanged by these amendments.

At December 31, 2025, the balance of the 2024 Term Loan B Facility was $351.3 million, net of unamortized debt discount and debt issuance costs of $9.2 million, and amounts available under the 2024 Revolving Credit Facility were $171.0 million, net of letters of credit outstanding in the amount of $4.0 million.

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The timing of cash receipts from buyers and payments to sellers can significantly impact our cash flows from operating activities and our liquidity for, and within, any period presented.

Our collection and payment cycle can vary from period to period depending upon various circumstances,

including seasonality, and may be negatively impacted by certain macroeconomic challenges, such as capital market disruptions and instability of financial institutions.

Our collection and payment cycle can vary from period to period depending upon various circumstances, including seasonality, and may be negatively impacted by certain macroeconomic challenges, such as capital market disruptions and instability of financial institutions.

The following table summarizes our cash flows for the periods presented:

5 unchanged sentences

(75,084) (28,904) (177,842)

Effects of exchange rate changes on cash, cash equivalents and restricted cash (1,794) 575 (1,417)

Change in cash, cash equivalents and restricted cash $ 157,001 $ (283) $ 95,809

Effects of exchange rate changes on cash and cash equivalents

1,823 (1,794) 575

Change in cash and cash equivalents

$ 70,142 $ 157,001 $ (283)

Operating Activities

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During the year ended December 31, 2025, net cash provided by operating activities was $236.2 million, compared to net cash provided by operating activities of $235.2 million and $214.4 million during the years ended December 31, 2024 and 2023, respectively.

Our operating activities included net income of $22.8 million, net loss of $159.2 million, and net loss of $130.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.

Our operating activities included net income of $144.6 million, net income of $22.8 million, and net loss of $159.2 million for the years ended December 31, 2025, 2024, and 2023, respectively.

Non-cash adjustments of $63.2 million, $135.8 million, and $298.1 million increased cash provided by operating activities in 2025, 2024, and 2023 respectively.

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Investing Activities

Our primary investing activities have consisted of acquisitions of businesses, purchases of property and equipment, and capital expenditures in support of creating and enhancing our technology infrastructure.

Our primary investing activities have consisted of purchases of property and equipment, capital expenditures in support of creating and enhancing our technology infrastructure, and acquisitions of businesses.

Purchases of property and equipment and investments in internal use software development may vary from period-to-period due to the timing of the expansion of our operations, changes to headcount, and the cycles of our internal use software development.

During the year ended December 31, 2025, net cash used in investing activities was $92.8 million, compared to net cash used in investing activities of $47.5 million and $37.4 million during the years ended December 31, 2024 and 2023, respectively.

During the year ended December 31, 2024, 2023, and 2022, we used cash for purchases of property and equipment of $32.8 million, $26.8 million, and $30.8 million, respectively, and used cash for investments in our internally developed software of $14.3 million, $10.6 million, and $13.6 million, respectively.

During the year ended December 31, 2022, we used net cash of $20.8 million to acquire Carbon.

During the year ended December 31, 2025, 2024, and 2023, we primarily used cash for purchases of property and equipment of $70.5 million, $32.8 million, and $26.8 million, respectively, and used cash for investments in our internally developed software of $13.8 million, $14.3 million, and $10.6 million, respectively.

During the year ended December 31, 2025, we also used cash of $8.1 million to acquire Streamrai, Inc.

(the "Streamr.ai Acquisition").

We anticipate cash flows used in our investing activities will decrease in 2026 compared to 2025.

Financing Activities

Our financing activities consisted of our debt refinancing and repricing activities, Convertible Senior Notes transactions, repayment of amounts borrowed under our 2024 Term Loan B Facility and our 2021 Term Loan B Facility, and transactions related to our share repurchases and equity plans.

Our financing activities primarily consisted of our debt refinancing and repricing activities, Convertible Senior Notes transactions, repayment of amounts borrowed under our 2024 Term Loan B Facility and our 2021 Term Loan B Facility, and transactions related to our share repurchases and equity plans.

During the year ended December 31, 2025, net cash used in financing activities was $75.1 million, compared to net cash used in financing activities of $28.9 million and $177.8 million for the years ended December 31, 2024 and 2023, respectively.

Cash outflows from financing activities for the year ended December 31, 2025 primarily included $92.6 million of payments to certain 2024 Term Loan B Facility lenders related to our Amendment No.

2 repricing activity, $46.3 million of payments related to share repurchases, and $32.9 million for taxes paid related to net share settlement of stock-based awards.

The outflows were partially offset by cash proceeds primarily consisting of $92.6 million from certain 2024 Term Loan B Facility lenders related to our Amendment No.

2 repricing activity, cash proceeds from the employee stock purchase plan of $3.9 million, and cash proceeds from stock options exercised of $3.1 million.

In connection with Amendment No.

2, $270.6 million of principal debt balance from Amendment No.

1 was rolled over as part of non-cash financing activities while the remaining $92.6 million principal balance from Amendment No.

1 was repaid and then reissued under Amendment No.

2 as mentioned above.

Cash outflows from financing activities for the year ended December 31, 2024 primarily included $403.1 million of payments related to paying off our 2021 Term Loan B Facility in February 2024 and repricing our 2024 Term Loan B Facility in September 2024, $22.5 million for taxes paid related to net share settlement of stock-based awards, $14.6 million of payments related to share repurchases, and $4.5 million of payments related to debt issuance costs related to the issuance of our 2024 Term Loan B Facility and 2024 Revolver Facility in February 2024.

The outflows were partially offset by cash proceeds primarily consisting of $413.5 million from the issuance of our 2024 Term Loan B Facility, net of debt discount, and the repricing of our 2024 Term Loan B Facility in September 2024, and cash proceeds from the employee stock purchase plan of $3.6 million.

In connection with the September 2024 repricing, most lenders decided to roll their loan balances over from the original 2024 Term Loan B Facility to the amended 2024 Term Loan B Facility, while some decided to cash out and reassign their loan balances.

On September 18, 2024, $312.0 million of the 2024 Term Loan B Facility principal balance was rolled over as part of non-cash financing activities while the remaining lenders who were repaid and then had their loans reissued were included in the $403.1 million cash outflows and the $413.5 million cash proceeds mentioned above.

In connection with Amendment No.

1 in September 2024, $312.0 million of the principal balance was rolled over as part of non-cash financing activities while the remaining $52.1 million principal debt balance was repaid and reissued as mentioned above.

Cash outflows from financing activities for the year ended December 31, 2023 primarily included $165.5 million of payments related to repurchasing our Convertible Senior Notes, $11.8 million for taxes paid related to net share settlement of stock-based awards, $3.6 million for repayment of our 2021 Term Loan B Facility, and $2.3 million for payment of our indemnification claims holdback related to a historical acquisition.

These outflows for the year ended December 31, 2023 were partially offset by cash proceeds from issuance of common stock under our employee stock purchase plan of $3.5 million and from stock options exercised of $2.2 million.

Cash outflows from financing activities for the year ended December 31, 2022 included $15.7 million for payments related to share repurchases, $14.5 million for taxes paid related to net share settlement of stock-based awards, and $3.6 million for repayment of our 2021 Term Loan B Facility.

These outflows for the year ended December 31, 2022 were partially offset by cash proceeds from issuance of common stock under our employee stock purchase plan of $3.7 million and from stock options exercised of $2.2 million.

Contractual Obligations and Known Future Cash Requirements

Our principal commitments as of December 31, 2024 consist of obligations under our Convertible Senior Notes, 2024 Term Loan B Facility, 2024 Revolving Credit Facility, leases for our various office facilities, including our corporate headquarters in New York, New York and offices in Los Angeles, California, and operating lease agreements, including data centers and cloud hosting services that expire at various times through 2033.

Our principal commitments as of December 31, 2025 consist of obligations under our Convertible Senior Notes, 2024 Term Loan B Facility, 2024 Revolving Credit Facility, leases for our various office facilities, including our corporate headquarters in New York, New York and offices in Los Angeles, California, and operating lease agreements, including data centers and cloud hosting services that expire at various times through 2038, and the indemnification holdback associated with the Streamr.ai Acquisition.

In certain cases, the terms of the lease agreements provide for rental payments on a graduated basis.

14 unchanged sentences

645 645 645 242 38 — 2,215

Indemnification claims holdback

1,000 1,000 — — — — 2,000

Other non-cancelable obligations 122,494 69,934 10,712 458 447 37 204,082

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Obligations for leases not included in the lease liabilities as of December 31, 2025 include commitments under agreements for office space and data centers that have not commenced as of December 31, 2025.

Payments associated with our Convertible Senior Notes, 2024 Term Loan B, and 2024 Revolving Credit Facility are based on contractual terms and intended timing of repayments of long-term debt and associated interest and required fees.

Payments associated with our Convertible Senior Notes, 2024 Term Loan B, and 2024 Revolving Credit Facility are based on contractual terms and intended timing of repayments of current and long-term debt and associated interest and required fees.

Other non-cancelable obligations above consist of agreements in the normal course of business that are in excess of one year as of December 31, 2025.

In addition, the amounts above exclude commitments due within a year for a cloud-managed services agreement, under which the Company has a remaining non-cancelable minimum spend commitment from January 2025 to June 2025 of $15.9 million.

The amounts above include commitments under a cloud-managed services agreement, under which we have a non-cancelable commitment from July 2025 to June 2028 containing minimum spend amounts for each twelve-month period (i.e.

July 2025 to June 2026, July 2026 to June 2027, and July 2027 to June 2028) as well as an additional minimum spend amount over the entire three-year term.

The table above approximates the manner in which we expect to fulfill the obligation.

In the ordinary course of business, we enter into agreements with sellers, buyers, and other third parties pursuant to which we agree to indemnify buyers, sellers, vendors, lessors, business partners, lenders, stockholders, and other parties with respect to certain matters, including, but not limited to, losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, or other liabilities.

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We evaluate our estimates and assumptions on an ongoing basis.

Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances.

Our estimates are based on

historical experience and various other assumptions that we believe to be reasonable under the circumstances.

Our actual results could differ from these estimates.

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Costs incurred in the application and infrastructure development stages, including significant enhancements and upgrades, are capitalized.

Capitalization ends once a project is substantially complete and the software and technologies are ready for their intended purpose.

There is judgment involved in estimating the stage of

development as well as estimating time allocated to a particular project.

Capitalization ends once a project is substantially complete and

the software and technologies are ready for their intended purpose.

There is judgment involved in estimating the stage of development as well as estimating time allocated to a particular project.

A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis