NERDWALLET, INC. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q, and with our audited consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Overview NerdWallet provides trustworthy financial guidance to consumers and small and mid-sized businesses (SMBs). Our mission is to provide clarity for all of life’s financial decisions. Our vision is a world where everyone makes financial decisions with confidence. As a personal finance website and app, NerdWallet provides consumers—both individuals and SMBs—with trustworthy and knowledgeable financial information so they can make smart money moves. From finding the best credit card to buying a house, NerdWallet is there to help consumers make financial decisions with confidence. Consumers have free access to our expert content and comparison shopping marketplaces, plus a data-driven app, which helps them stay on top of their finances and save time and money, giving them the freedom to do more. NerdWallet is available for consumers in the U.S., United Kingdom, Canada and Australia. Restructuring Plan On July 30, 2024, we committed to a restructuring plan, effective August 1, 2024, intended to reduce our operating expenses and better position us to execute our long-term strategic initiatives (the Restructuring Plan). The Restructuring Plan was substantially completed during the three months ended September 30, 2024 and reduced the size of our workforce by approximately 15% of our full-time employees, as compared to our headcount as of December 31, 2023. We incurred a pre-tax restructuring charge of $7.8 million for the three and nine months ended September 30, 2024 in connection with the Restructuring Plan, which primarily consisted of severance payments, employee benefits and related expenses for impacted employees, and is presented in our condensed consolidated statement of operations as $5.6 million of research and development expenses, $1.2 million of sales and marketing expenses and $1.0 million of general and administrative expenses. We expect to realize approximately $30 million of annualized cost savings as a result of the Restructuring Plan. The charges that we have incurred and the savings we expect to realize are subject to several assumptions, including, but not limited to, compliance with legal requirements in various jurisdictions, the impact of the workforce reduction on our business results of operations, and future investment opportunities. Actual results may differ materially from the estimates disclosed above. Key Operating Metric and Non-GAAP Financial Measures We collect, review and analyze operating and financial data of our business to assess our ongoing performance and compare our results to prior period results. In addition to revenue, net income (loss) and other results under generally accepted accounting principles (GAAP), the following sets forth the key operating metric and non-GAAP financial measures we use to evaluate our business. Monthly Unique Users We define a Monthly Unique User (MUU) as a unique user with at least one session in a given month as determined by a unique device identifier. We measure MUUs during a time period longer than one month by averaging the MUUs of each month within that period. We track MUUs to frame the number of users who may transact with our financial services partners on our platform during a given period. We had 22 million and 25 million average MUUs for the three and nine months ended September 30, 2024, which was down 7% and up 9% compared to the three and nine months ended September 30, 2023, respectively. We saw broad pressure from organic traffic declines partially offset by strong engagement in areas such as investing and insurance for the three months ended September 30, 2024, and saw strong engagement in areas such as investing, travel products and insurance for the nine months ended September 30, 2024. While we expect MUUs to grow over time, the metric may fluctuate from period to period based on economic conditions, trends in consumer behavior and our strategic marketing decisions. 17 Table of Contents Non-GAAP Financial Measures We use non-GAAP operating income (loss) and adjusted EBITDA in conjunction with GAAP measures as part of our overall assessment of our performance, including the preparation of our annual operating budget and quarterly forecasts, to evaluate the effectiveness of our business strategies, and to communicate with our Board of Directors concerning our financial performance. Non-GAAP operating income (loss): We define non-GAAP operating income (loss) as income (loss) from operations adjusted to exclude depreciation and amortization, and further exclude (1) impairment of right-of-use asset, (2) losses (gains) on disposals of assets, (3) change in fair value of contingent consideration related to earnouts, (4) deferred compensation related to earnouts, (5) acquisition-related costs, and (6) restructuring charges. We also reduce income from operations, or increase loss from operations, for capitalized internally developed software costs. Adjusted EBITDA: We define adjusted EBITDA as net income (loss) from continuing operations adjusted to exclude depreciation and amortization, interest income (expense), net, and provision (benefit) for income taxes, and further exclude (1) impairment of right-of-use asset, (2) losses (gains) on disposals of assets, (3) change in fair value of contingent consideration related to earnouts, (4) deferred compensation related to earnouts, (5) stock-based compensation, (6) acquisition-related costs, and (7) restructuring charges. The above items are excluded from our non-GAAP operating income (loss) and adjusted EBITDA measures because these items are non-cash in nature, or because the amounts are not driven by core operating results and renders comparisons with prior periods less meaningful. We deduct capitalized internally developed software costs in our non-GAAP operating income (loss) measure to reflect the cash impact of personnel costs incurred within the time period. We believe that non-GAAP operating income (loss) and adjusted EBITDA provide useful information to investors and others in understanding and evaluating our operating results and in comparing operating results across periods. Moreover, non-GAAP operating income (loss) and adjusted EBITDA are key measurements used by our management internally to make operating decisions, including those related to analyzing operating expenses, evaluating performance, and performing strategic planning and annual budgeting. However, the use of these non-GAAP measures have certain limitations because they do not reflect all items of income and expense that affect our operations. Non-GAAP operating income (loss) and adjusted EBITDA have limitations as financial measures, should be considered as supplemental in nature, and are not meant as substitutes for the related financial information prepared in accordance with GAAP. These limitations include the following: • Non-GAAP operating income (loss) and adjusted EBITDA exclude certain recurring, non-cash charges, such as amortization of software, depreciation of property and equipment, amortization of intangible assets, impairment of right-of-use asset, and (losses) gains on disposals of assets. Although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and non-GAAP operating income (loss) and adjusted EBITDA do not reflect all cash requirements for such replacements or for new capital expenditure requirements; • Non-GAAP operating income (loss) and adjusted EBITDA exclude acquisition-related costs, including acquisition-related retention compensation under compensatory retention agreements with certain key employees, acquisition-related transaction expenses, contingent consideration fair value adjustments related to earnouts, and deferred compensation related to earnouts; • Non-GAAP operating income (loss) and adjusted EBITDA exclude restructuring charges primarily consisting of severance payments, employee benefits, and related expenses for impacted employees associated with our Restructuring Plan; • Adjusted EBITDA excludes stock-based compensation, including for acquisition-related inducement awards, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; and • Adjusted EBITDA does not reflect interest income (expense) and other gains (losses), net, which include unrealized and realized gains and losses on foreign currency exchange, as well as certain nonrecurring gains (losses). In addition, non-GAAP operating income (loss) and adjusted EBITDA as we define them may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider non-GAAP operating income (loss) and adjusted EBITDA alongside other financial performance measures, including income (loss) from operations, net income (loss) and our other GAAP results. 18 Table of Contents See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations—Non-GAAP Financial Measures” for reconciliations of non-GAAP operating income (loss) to income (loss) from operations, and adjusted EBITDA to net income (loss), the most directly comparable respective GAAP financial measures. Results of Operations The following tables set forth our results of operations for the periods presented. The following discussion should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2024 2023 2024 2023 Revenue $ 191.3 $ 152.8 $ 503.8 $ 465.7 Costs and expenses: Cost of revenue 17.7 13.3 46.8 40.2 Research and development 1 23.0 20.7 66.4 60.2 Sales and marketing 1 128.1 100.6 342.1 321.1 General and administrative 1 15.9 14.2 47.8 45.2 Total costs and expenses 184.7 148.8 503.1 466.7 Income (loss) from operations 6.6 4.0 0.7 (1.0) Other income, net: Interest income 1.3 0.9 4.2 2.7 Interest expense (0.1) (0.2) (0.5) (0.6) Other losses, net — — (0.1) (0.1) Total other income, net 1.2 0.7 3.6 2.0 Income before income taxes 7.8 4.7 4.3 1.0 Income tax provision 7.7 5.2 12.5 10.5 Net income (loss) $ 0.1 $ (0.5) $ (8.2) $ (9.5) ______________ (1) Includes stock-based compensation as follows: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2024 2023 2024 2023 Research and development $ 3.7 $ 2.9 $ 9.4 $ 8.4 Sales and marketing 2.3 3.5 7.6 10.7 General and administrative 4.2 3.0 12.2 10.2 Total stock-based compensation $ 10.2 $ 9.4 $ 29.2 $ 29.3 19 Table of Contents The following table sets forth the components of our condensed consolidated statements of operations as a percentage of revenue: Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Revenue 100 % 100 % 100 % 100 % Costs and expenses: Cost of revenue 10 9 9 8 Research and development 12 13 13 13 Sales and marketing 67 66 68 69 General and administrative 8 9 10 10 Total costs and expenses 97 97 100 100 Income (loss) from operations 3 3 — — Other income, net: Interest income 1 — 1 — Interest expense — — — — Other losses, net — — — — Total other income, net 1 — 1 — Income before income taxes 4 3 1 — Income tax provision 4 3 3 2 Net income (loss) — % — % (2 %) (2 %) Income from operations increased $2.6 million, or 64%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023, as a $38.5 million increase in revenue was partially offset by a $35.9 million increase in operating expenses, primarily attributable to increases of $27.5 million in sales and marketing expenses and $4.4 million in cost of revenue. We had income from operations of $0.7 million for the nine months ended September 30, 2024, as compared to a loss from operations of $1.0 million for the nine months ended September 30, 2023, reflecting a $38.1 million increase in revenue partially offset by a $36.4 million increase in operating expenses, primarily attributable to increases of $21.0 million in sales and marketing expenses, $6.6 million in cost of revenue, and $6.2 million in research and development expenses. We had net income of $0.1 million for the three months ended September 30, 2024, as compared to a net loss of $0.5 million for the three months ended September 30, 2023, while net loss decreased $1.3 million, or 14%, for the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, with the changes primarily attributable to the $2.6 million increase in income from operations for the three months ended September 30, 2024 and the impact of income from operations of $0.7 million for the nine months ended September 30, 2024 as compared to a loss from operations of $1.0 million for the nine months ended September 30, 2023, and increases in interest income of $0.4 million and $1.5 million, respectively, partially offset by increases in income tax provision of $2.5 million and $2.0 million, respectively. Revenue Three Months Ended September 30, Change Nine Months Ended September 30, Change (in millions) 2024 2023 $ % 2024 2023 $ % Credit cards $ 45.3 $ 54.0 $ (8.7) (16 %) $ 141.4 $ 166.5 $ (25.1) (15 %) Loans 23.8 32.9 (9.1) (28 %) 66.9 78.0 (11.1) (14 %) SMB products 27.8 24.7 3.1 12 % 84.3 73.6 10.7 14 % Emerging verticals 94.4 41.2 53.2 129 % 211.2 147.6 63.6 43 % Total revenue $ 191.3 $ 152.8 $ 38.5 25 % $ 503.8 $ 465.7 $ 38.1 8 % Revenue increased $38.5 million, or 25%, and $38.1 million, or 8%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, reflecting growth in emerging verticals and SMB products revenue, partially offset by lower credit cards and loans revenue. 20 Table of Contents Credit cards revenue consists of revenue from consumer credit cards. Credit cards revenue decreased $8.7 million, or 16%, and $25.1 million, or 15%, for the three and nine months ended September 30, 2024, respectively, primarily due to pressures in organic search traffic and reduced marketing spending by our financial services partners amidst a cautious underwriting environment. Loans revenue includes revenue from personal loans, mortgages, student loans and auto loans. Loans revenue decreased $9.1 million, or 28%, and $11.1 million, or 14%, for the three and nine months ended September 30, 2024, respectively, primarily due to decreases of 49% and 26% in personal loans revenue as we continue to work through a high interest rate environment. SMB products revenue includes revenue from loans, credit cards and other financial products and services intended for small and mid-sized businesses. SMB products revenue increased $3.1 million, or 12%, and $10.7 million, or 14%, for the three and nine months ended September 30, 2024, respectively, primarily driven by revenue growth in products such as business credit cards, banking and loan renewals, as we continue to scale our product offerings, partially offset by decreases in business loan originations. Emerging verticals revenue includes revenue from other product sources, including banking, insurance, investing and international. Emerging verticals revenue increased $53.2 million, or 129%, and $63.6 million, or 43%, for the three and nine months ended September 30, 2024, respectively, primarily driven by strong increases of 916% and 222% in insurance products revenue as carriers expanded budgets, partially offset by decreases of 26% and 20% in banking revenue as consumer demand for banking products continued to moderate. Costs and Expenses Three Months Ended September 30, Change Nine Months Ended September 30, Change (in millions) 2024 2023 $ % 2024 2023 $ % Cost of revenue $ 17.7 $ 13.3 $ 4.4 33 % $ 46.8 $ 40.2 $ 6.6 17 % Research and development 23.0 20.7 2.3 11 % 66.4 60.2 6.2 10 % Sales and marketing 128.1 100.6 27.5 27 % 342.1 321.1 21.0 7 % General and administrative 15.9 14.2 1.7 13 % 47.8 45.2 2.6 6 % Total costs and expenses $ 184.7 $ 148.8 $ 35.9 24 % $ 503.1 $ 466.7 $ 36.4 8 % Cost of revenue Cost of revenue increased $4.4 million, or 33%, and $6.6 million, or 17%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, primarily due to increases of $1.7 million and $4.4 million in amortization expense related to capitalized software development costs and $3.0 million and $3.3 million primarily related to third-party service charges, partially offset by decreases of $0.5 million and $1.5 million in amortization expense related to intangible assets. Research and development expense Research and development expenses increased $2.3 million, or 11%, and $6.2 million, or 10%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, primarily attributable to a $5.6 million restructuring charge as well as increases of $0.7 million and $1.3 million in software and technology costs related to our platform, respectively. These increases for the three months ended September 30, 2024 were partially offset by a $3.3 million decrease in personnel-related costs for our engineering, data, and product management personnel and contractors to support our continued growth and key platform capabilities. Sales and marketing expense For the three and nine months ended September 30, 2024, our total sales and marketing expense was comprised of approximately 9% and 17% for brand marketing, respectively, and 72% and 60% for performance marketing, respectively, with the remainder for organic and other marketing expenses. For the three and nine months ended September 30, 2023, our total sales and marketing expense was comprised of approximately 19% and 24% for brand marketing, respectively, and 53% and 49% for performance marketing, respectively, with the remainder for organic and other marketing expenses. We are able to adjust our marketing spend to reflect changes in external factors and consumer behavior. 21 Table of Contents Sales and marketing expenses increased $27.5 million, or 27%, and $21.0 million, or 7%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, as increases of $38.4 million and $47.3 million in performance marketing expenses were partially offset by decreases of $7.5 million and $20.8 million in brand marketing expenses, and $3.4 million and $5.5 million in organic and other marketing expenses primarily due to lower personnel-related costs partially offset by a $1.2 million restructuring charge. General and administrative expense General and administrative expenses increased $1.7 million, or 13%, and $2.6 million, or 6%, for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, respectively. The changes were primarily attributable to a $1.0 million restructuring charge as well as higher personnel-related costs mainly related to stock-based compensation. Other income, net Three Months Ended September 30, Change Nine Months Ended September 30, Change (in millions) 2024 2023 $ % 2024 2023 $ % Interest income $ 1.3 $ 0.9 $ 0.4 50 % $ 4.2 $ 2.7 $ 1.5 58 % Interest expense (0.1) (0.2) 0.1 (34 %) (0.5) (0.6) 0.1 (10 %) Other losses, net — — — NM (0.1) (0.1) — (19 %) Total other income, net $ 1.2 $ 0.7 $ 0.5 86 % $ 3.6 $ 2.0 $ 1.6 83 % Other income, net increased $0.5 million or 86%, and $1.6 million, or 83%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively, primarily attributable to higher interest income reflecting higher interest rates and, for the nine months ended September 30, 2024, higher average cash balances. Income tax provision Beginning with the three months ended June 30, 2023, our tax provision for interim periods was determined using a discrete effective tax rate method, as allowed by ASC Topic 740-270, Income Taxes, Interim Reporting . Our tax provision for interim periods was previously determined using an estimated annual effective tax rate which was adjusted for discrete items occurring during the periods presented. We determined that since small changes in estimated “ordinary” income would result in significant changes in the estimated annual effective tax rate, the historical method would not provide a reliable estimate for the three months ended September 30, 2024. We had income tax provisions of $7.7 million and $12.5 million for the three and nine months ended September 30, 2024, respectively, and $5.2 million and $10.5 million for the three and nine months ended September 30, 2023, respectively. Our effective tax rate was 99.2% and 290.7% for the three and nine months ended September 30, 2024, and 110.9% and 1,080.6% for the three and nine months ended September 30, 2023. Our effective tax rate for the three and nine months ended September 30, 2024 differs from the U.S. federal statutory income tax rate of 21% primarily due to the valuation allowance maintained against our net U.S. deferred tax assets and state taxes, partially offset by research and development credits. Our effective tax rate for the three and nine months ended September 30, 2023 differs from the U.S. federal statutory income tax rate of 21% primarily due to capitalization of research and development expenses under tax regulations effective in 2022, a full valuation allowance recorded against our net U.S. deferred tax assets, and excess tax benefits related to stock-based compensation. Based on our ongoing assessment of all available evidence, both positive and negative, including consideration of our historical profitability and the estimated impact of our operating model on future profitability, we concluded that it was more likely than not that our U.S. deferred tax assets in excess of deferred tax liabilities would not be realized and recorded a valuation allowance against these net U.S. deferred tax assets as of September 30, 2024. Our judgment regarding the likelihood of realization of these deferred tax assets could change in future periods, which could result in a material impact to our income tax provision in the period of change. Given our current earnings projections, sufficient positive evidence may become available for us to release all, or a portion, of the valuation allowance within the next twelve months. However, the timing and amounts of such valuation allowance releases are subject to change based on the level of profitability achieved in future periods. 22 Table of Contents Non-GAAP Financial Measures Non-GAAP operating income (loss) and adjusted EBITDA as we define them may not be comparable to similarly titled measures used by other companies. Because of these limitations, you should consider non-GAAP operating income (loss) and adjusted EBITDA alongside other financial performance measures, including income (loss) from operations, net income (loss) and our other GAAP results. We compensate for these limitations by reconciling non-GAAP operating income (loss) to income (loss) from operations, and adjusted EBITDA to net income (loss), the most comparable GAAP financial measures, as follows: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2024 2023 2024 2023 Income (loss) from operations $ 6.6 $ 4.0 $ 0.7 $ (1.0) Depreciation and amortization 12.9 12.1 37.0 36.0 Acquisition-related retention 0.8 1.2 3.3 4.0 Acquisition-related expenses 0.5 — 0.6 — Restructuring 7.8 — 7.8 — Capitalized internally developed software costs (5.7) (7.8) (18.6) (25.2) Non-GAAP operating income $ 22.9 $ 9.5 $ 30.8 $ 13.8 Operating income (loss) margin 3 % 3 % 0 % (0 %) Non-GAAP operating income margin 1 12 % 6 % 6 % 3 % Net income (loss) $ 0.1 $ (0.5) $ (8.2) $ (9.5) Depreciation and amortization 12.9 12.1 37.0 36.0 Stock-based compensation 8.7 9.4 27.7 29.3 Acquisition-related retention 0.8 1.2 3.3 4.0 Acquisition-related expenses 0.5 — 0.6 — Restructuring 7.8 — 7.8 — Interest income, net (1.2) (0.7) (3.7) (2.1) Other losses, net — — 0.1 0.1 Income tax provision 7.7 5.2 12.5 10.5 Adjusted EBITDA $ 37.3 $ 26.7 $ 77.1 $ 68.3 Stock-based compensation (8.7) (9.4) (27.7) (29.3) Capitalized internally developed software costs (5.7) (7.8) (18.6) (25.2) Non-GAAP operating income $ 22.9 $ 9.5 $ 30.8 $ 13.8 Net income (loss) margin 0 % (0 %) (2 %) (2 %) Adjusted EBITDA margin 2 19 % 18 % 15 % 15 % ______________ (1) Represents non-GAAP operating income (loss) as a percentage of revenue. (2) Represents adjusted EBITDA as a percentage of revenue. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” for a discussion of the changes in income (loss) from operations and net income (loss) for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023. Non-GAAP operating income increased $13.4 million, or 138%, and $17.0 million, or 120%, for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023, primarily due to a $2.6 million increase in income from operations for the three months ended September 30, 2024, and the impact of income from operations of $0.7 million for the nine months ended September 30, 2024 as compared to a loss from operations of $1.0 million for the nine months ended September 30, 2023, along with $7.8 million of restructuring charges for the three and nine months ended September 30, 2024, and decreases of $2.1 million and $6.6 million in capitalized internally developed software costs. 23 Table of Contents Adjusted EBITDA increased $10.6 million, or 39%, and $8.8 million, or 13%, for the three and nine months ended September 30, 2024 compared to the three and nine months ended September 30, 2023, respectively. The increases were primarily attributable to increases in adjustments to reconcile adjusted EBITDA to net income (loss), including $7.8 million of restructuring charges for the three and nine months ended September 30, 2024 and increases of $2.5 million and $2.0 million in income tax provision. These increases also include net income of $0.1 million for the three months ended September 30, 2024, as compared to a net loss of $0.5 million for the three months ended September 30, 2023, and a $1.3 million decrease in net loss for the nine months ended September 30, 2024. Liquidity and Capital Resources Overview Our principal sources of liquidity to meet our business requirements and plans, both in the short-term (i.e., the next twelve months from September 30, 2024) and long-term (i.e., beyond the next twelve months), have historically been cash generated from operations and, more recently, sales of our common stock, and borrowings under our credit facilities. Our primary liquidity needs are related to the funding of general business requirements, including working capital requirements, research and development, and capital expenditures, as well as other liquidity requirements including, but not limited to, business combinations. As of September 30, 2024 and December 31, 2023, we had cash and cash equivalents of $71.7 million and $100.4 million, respectively. Known Contractual and Other Obligations A description of contractual commitments as of September 30, 2024 is included in Note 5–Commitments and Contingencies in the notes to our condensed consolidated financial statements. More broadly, we also have purchase obligations under contractual arrangements with vendors and service providers, including for certain web-hosting and cloud computing services and advertising, which do not qualify for recognition on our condensed consolidated balance sheets but which we consider non-cancellable. As of September 30, 2024, amounts to be spent under non-cancellable purchase obligations were $3.2 million in the remainder of 2024, and approximately $17 million in 2025 and $9 million in 2026. Trends, Uncertainties and Anticipated Sources of Funds In order to grow our business, we intend to make significant investments in our business, which may result in increases in our personnel and related expenses. The timing and amount of these investments will vary based on our financial condition, the rate at which we add new personnel and the scale of our development, as well as the macro-economic environment. Many of these investments will occur in advance of our experiencing any direct benefit from them, which could negatively impact our liquidity and cash flows during any particular period and may make it difficult to determine if we are effectively allocating our resources. However, we expect to fund our operations, capital expenditures and other investments principally with cash flows from operations, and to the extent that our liquidity needs exceed our cash from operations, we would look to our cash on hand to satisfy those needs. We announced on May 2, 2023 that our Board of Directors authorized a plan under which we may repurchase up to $20 million of our Class A common stock and, following our utilization of such share repurchase authorization, we announced on October 26, 2023 and September 9, 2024 that our Board of Directors approved additional share repurchase authorizations under which we may repurchase up to an additional $30 million and $50 million, respectively, of our Class A common stock (collectively, the Repurchase Program). Subject to market conditions and other factors, the Repurchase Program is intended to make opportunistic repurchases of our Class A common stock to reduce our outstanding share count. Under the Repurchase Program, shares of Class A common stock may be repurchased in the open market through privately negotiated transactions or otherwise, in accordance with applicable securities laws and other restrictions. The Repurchase Program does not have fixed expiration dates and does not obligate us to acquire any specific number of shares. The timing and terms of any repurchases are at management’s discretion and depend on a variety of factors, including business, economic and market conditions, regulatory requirements, prevailing stock prices and other considerations. Additionally, we may, from time to time, enter into Rule 10b-5 trading plans to facilitate repurchases. Shares repurchased under the Repurchase Programs are retired. We expect to fund repurchases with existing cash and cash equivalents. We repurchased 5.8 million shares of Class A common stock for $72.2 million, including costs associated with the repurchases, during the nine months ended September 30, 2024. 24 Table of Contents We, including three of our wholly-owned subsidiaries, maintain a credit agreement (the Credit Agreement) with JPMorgan Chase Bank, National Association, as Administrative Agent, and a syndicate of lenders. The Credit Agreement provides for a $125.0 million senior secured revolving credit facility (the Credit Facility), with the option to increase up to an additional $75.0 million, and is available to be used by us and certain of our domestic subsidiaries for general corporate purposes, including acquisitions. On October 1, 2024, we entered into an amendment to the Credit Agreement which, among other things, permits us to acquire an unrestricted subsidiary and/or to invest up to an aggregate of $15 million in unrestricted subsidiaries in any fiscal year, subject to standard provisions and limitations for unrestricted subsidiaries. The Credit Facility matures on September 26, 2028. We had no outstanding balance on our Credit Agreement as of September 30, 2024 or December 31, 2023. The available amount to borrow under our Credit Agreement was $123.7 million at both September 30, 2024 and December 31, 2023, which was equal to the available amount under the credit agreement of $125.0 million, net of letters of credit of $1.3 million. Our Credit Agreement contains certain customary financial and non-financial covenants. We were in compliance with all covenants as of September 30, 2024 and December 31, 2023. We believe our current cash and cash equivalents and future cash flow from operations, as well as access to our Credit Agreement, will be sufficient to meet our ongoing working capital, capital expenditure and other liquidity requirements for the next twelve months and beyond. Our future capital requirements may vary materially from those planned and will depend on certain factors, such as our growth and our operating results. If we require additional capital resources to grow our business or to acquire complementary technologies and businesses in the future, we may seek to sell additional equity or raise funds through debt financing or other sources. We cannot provide assurance that additional financing will be available at all or on terms favorable to us. Sources and Uses of Capital Resources The following table summarizes our cash flows: Nine Months Ended September 30, (in millions) 2024 2023 Net cash provided by operating activities $ 61.9 $ 42.5 Net cash used in investing activities (24.4) (20.1) Net cash used in financing activities (66.3) (19.8) Effect of exchange rate changes on cash and cash equivalents 0.1 0.1 Net increase (decrease) in cash and cash equivalents $ (28.7) $ 2.7 Operating activities Net cash provided by operating activities increased $19.4 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, as decreases of $18.3 million in net cash outflow from changes in operating assets and liabilities and $1.3 million in net loss was partially offset by a $0.2 million decrease in non-cash charges. The decrease in net cash outflow from changes in operating assets and liabilities was primarily due to a $14.0 million payment in the nine months ended September 30, 2023 for contingent consideration in excess of the amounts recorded at the acquisition date, and decreases of $22.7 million in accrued expenses and other current liabilities and $9.7 million in prepaid expenses and other assets, partially offset by a $28.9 million decrease in accounts receivable. The decrease in non-cash charges was primarily due to decreases of $0.9 million in other, net and $0.4 million in non-cash lease costs, partially offset by a $1.0 million increase in depreciation and amortization. Investing activities Net cash used in investing activities increased $4.3 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to an $8.1 million purchase of an investment in the nine months ended September 30, 2024, partially offset by a $3.7 million decrease in capitalized software development costs. Financing activities Net cash used in financing activities increased $46.5 million in the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023, primarily due to a $57.7 million increase in repurchases of Class A common stock and a $3.9 million decrease from exercises of stock options, partially offset by a $16.9 million payment in the nine months ended September 30, 2023 for contingent consideration recorded at the acquisition date. 25 Table of Contents Critical Accounting Policies and Estimates Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting policies as provided within U.S. GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate our estimates and assumptions. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable. Actual results may differ from these estimates under different assumptions or conditions. During the nine months ended September 30, 2024, there have been no material changes in our critical accounting policies as disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations–Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2023.