COMSCORE, INC. 10-K

ITEM 7. 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 Consolidated Financial Statements and the related Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, or 10-K. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events in future periods may differ materially from those anticipated or implied in these forward-looking statements as a result of many factors, including those discussed under Item 1A , "Risk Factors," and elsewhere in this 10-K. See also " Cautionary Note Regarding Forward-Looking Statements " at the beginning of this 10-K. Overview We are a global information and analytics company that measures advertising, content, and the consumer audiences of each, across media platforms. We create our products using a global data platform that combines information on digital platforms (connected (Smart) televisions, mobile devices, tablets and computers), TV, OTT devices, direct to consumer applications and movie screens with demographics and other descriptive information. We have developed proprietary data science that enables measurement of person-level and household-level audiences, removing duplicated viewing across devices and over time. This combination of data and methods enables a common standard for buyers and sellers to transact on advertising. This helps companies across the media ecosystem better understand and monetize their audiences and develop marketing plans and products to more efficiently and effectively reach those audiences. Our ability to unify behavioral and other descriptive data enables us to provide audience ratings, advertising verification, and granular consumer segments that describe hundreds of millions of consumers. Our customers include digital publishers, television networks, movie studios, content owners, brand advertisers, agencies and technology providers. The platforms we measure include televisions, mobile devices, computers, tablets, OTT devices and movie theaters. The information we analyze crosses geographies, types of content and activities, including websites, mobile and OTT apps, video games, television and movie programming, e-commerce, and advertising. Results of Operations The following table sets forth selected Consolidated Statements of Operations and Comprehensive Loss data as a percentage of revenues for each of the periods indicated. Years Ended December 31, 2021 2020 2019 (In thousands) Dollars % of Revenue Dollars % of Revenue Dollars % of Revenue Revenues $ 367,013 100.0 % $ 356,036 100.0 % $ 388,645 100.0 % Cost of revenues 203,044 55.3 % 180,712 50.8 % 199,622 51.4 % Selling and marketing 66,937 18.2 % 70,220 19.7 % 89,145 22.9 % Research and development 39,123 10.7 % 38,706 10.9 % 61,802 15.9 % General and administrative 61,736 16.8 % 55,783 15.7 % 66,419 17.1 % Amortization of intangible assets 25,038 6.8 % 27,219 7.6 % 30,076 7.7 % Impairment of right-of-use and long-lived assets — — % 4,671 1.3 % — — % Impairment of goodwill — — % — — % 224,272 57.7 % Impairment of intangible asset — — % — — % 17,308 4.5 % Investigation and audit related — — % — — % 4,305 1.1 % Restructuring — — % — — % 3,263 0.8 % Settlement of litigation, net — — % — — % 2,900 0.7 % Total expenses from operations 395,878 107.9 % 377,311 106.0 % 699,112 179.9 % Loss from operations (28,865) (7.9) % (21,275) (6.0) % (310,467) (79.9) % Loss on extinguishment of debt (9,629) (2.6) % — — % — — % Interest expense, net (7,801) (2.1) % (35,805) (10.1) % (31,526) (8.1) % Other (expense) income, net (5,778) (1.6) % 14,554 4.1 % 1,654 0.4 % Gain (loss) from foreign currency transactions 2,895 0.8 % (4,490) (1.3) % 336 0.1 % Loss before income taxes (49,178) (13.4) % (47,016) (13.2) % (340,003) (87.5) % Income tax (provision) benefit (859) (0.2) % (902) (0.3) % 1,007 0.3 % Net loss $ (50,037) (13.6) % $ (47,918) (13.5) % $ (338,996) (87.2) % 31 Table of Conte nt s Revenues Our products and services are organized around solution groups that address customer needs. We evaluated revenues around three solution groups for the years ended December 31, 2021, 2020 and 2019: • Ratings and Planning provides measurement of the behavior and characteristics of audiences of content and advertising, across television and digital platforms including connected (Smart) televisions, computers, tablets, mobile devices, and other connected devices. These products and services are designed to help customers find the most relevant viewing audience, whether that viewing is linear, non-linear, online or on-demand. • Analytics and Optimization includes custom solutions, activation, lift and survey-based products that provide end-to-end solutions for planning, optimization and evaluation of advertising campaigns and brand protection. • Movies Reporting and Analytics measures movie viewership and box office results by capturing movie ticket sales in real time or near real time and includes box office analytics, trend analysis and insights for movie studios and movie theater operators worldwide. We categorize our revenue along these solution groups; however, our cost structure is tracked at the corporate level and not by our solution groups. These costs include, but are not limited to employee costs, purchased data, operational overhead, data storage and technology that supports multiple solution groups. Revenues for the years ended December 31, 2021 and 2020 are as follows: Year Ended December 31, (In thousands) 2021 % of Revenue 2020 % of Revenue $ Variance % Variance Ratings and Planning (1) $ 255,073 69.5 % $ 253,652 71.2 % $ 1,421 0.6 % Analytics and Optimization (1) 81,306 22.2 % 69,080 19.4 % 12,226 17.7 % Movies Reporting and Analytics 30,634 8.3 % 33,304 9.4 % (2,670) (8.0) % Total revenues $ 367,013 100.0 % $ 356,036 100.0 % $ 10,977 3.1 % (1) In the second quarter of 2020, we began classifying revenue from certain new and extended custom agreements for services that utilize our syndicated data set, previously classified under Analytics and Optimization, as Ratings and Planning. The impact was not material to either solution group. Total revenues increased by $11.0 million, or 3.1%, for the year ended December 31, 2021 as compared to 2020. Ratings and Planning revenue is comprised of revenue from our digital, television and cross-platform products. Ratings and Planning increased by $1.4 million for the year ended December 31, 2021 as compared to 2020. The increase was driven by higher revenue from our TV products, offset by lower revenue from our syndicated digital products. TV revenue was higher primarily due to new partnerships, increased agency adoption and higher deliveries of custom TV data. TV revenue increased to 43% of Ratings and Planning revenue in 2021 as compared to 40% in 2020. Syndicated digital revenue was lower primarily due to our smaller customers who continued to be impacted by ongoing industry changes in ad buying and consolidations. While retention of syndicated digital enterprise customers remained high, revenue from our syndicated digital products represented 45% and 48% of our Ratings and Planning revenue for the years ended December 31, 2021 and 2020, respectively. Analytics and Optimization revenue increased by $12.2 million for the year ended December 31, 2021 as compared to 2020. The increase was related to higher revenue across our product offerings, including activation, custom solutions, lift and survey. Activation experienced double-digit year-over-year growth as we continued to bring new solutions to market. Movies Reporting and Analytics revenue decreased by $2.7 million for the year ended December 31, 2021 as compared to 2020. The decrease was primarily driven by lower revenues during the first quarter of 2021, which reflected the full impact of the COVID-19 pandemic and its effect on theater closures, movie releases and consumer behavior worldwide. Based on more recent trends, we believe revenue from the movies business should experience sequential quarterly increases as consumers return to theaters. Revenues for the years ended December 31, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2020 % of Revenue 2019 % of Revenue $ Variance % Variance Ratings and Planning (1) $ 253,652 71.2 % $ 271,623 69.9 % $ (17,971) (6.6) % Analytics and Optimization (1) 69,080 19.4 % 74,725 19.2 % (5,645) (7.6) % Movies Reporting and Analytics 33,304 9.4 % 42,297 10.9 % (8,993) (21.3) % Total revenues $ 356,036 100.0 % $ 388,645 100.0 % $ (32,609) (8.4) % (1) In the second quarter of 2020, we began classifying revenue from certain new and extended custom agreements for services that utilize our syndicated data set, previously classified under Analytics and Optimization, as Ratings and Planning. The impact was not material to either solution group. Total revenues decreased by $32.6 million, or 8.4%, for the year ended December 31, 2020 as compared to 2019. Ratings and Planning revenue is comprised of revenue from our digital, television and cross-platform products. Ratings and Planning decreased by $18.0 million for the year ended December 31, 2020 as compared to 2019. The decrease was largely driven by lower revenue from our syndicated digital products due in part to the COVID-19 pandemic. Additionally, revenue from our smaller and international syndicated digital customers continued to be impacted by ongoing industry changes in ad buying and consolidations. While retention of syndicated digital 32 Table of Conte nt s enterprise customers remained high, revenue from our syndicated digital products represented 48% and 51% of our Ratings and Planning revenue for the years ended December 31, 2020 and 2019, respectively. Cross-platform revenue decreased due to fewer deliveries of data in 2020 versus 2019. TV revenue was higher primarily due to new partnerships, additional deliveries of local and addressable TV solutions, and increased deliveries on contracts with political customers. TV revenue increased to 40% of Ratings and Planning revenue in 2020 as compared to 36% in 2019. Analytics and Optimization revenue decreased by $5.6 million for the year ended December 31, 2020 as compared to 2019. The decrease was primarily due to fewer deliveries of custom solutions, lift and survey deliverables, and branded content, due in part to the COVID-19 pandemic. These decreases were partially offset by higher activation usage during the year. Movies Reporting and Analytics revenue decreased by $9.0 million for the year ended December 31, 2020 as compared to 2019. Revenue was impacted by theater closures, delayed releases and shifts in consumer behavior as a result of the COVID-19 pandemic. New Solution Groups In the first quarter of 2022, management decided to evaluate future revenue results around solution groups that better represent our evolving business and customer needs. Beginning with the first quarter of 2022, we plan to present revenue in two solution groups: • Digital Ad Solutions; and • Cross Platform Solutions, which includes the movies business. If we had evaluated revenue based on these solution groups for the year ended December 31, 2021, our revenue from Digital Ad Solutions and Cross Platform Solutions would have been approximately 60% and 40% of total revenue, respectively. Revenues by Geographic Location Revenue from outside of the United States was $45.1 million, $45.3 million and $52.6 million for the years ended December 31, 2021, 2020, and 2019, respectively. Non-U.S. revenue declined due in part to our exit from certain countries as part of restructuring activities in prior years, as well as the impact of the COVID-19 pandemic. We generate the majority of our revenues from the sale and delivery of our products within the United States. For information with respect to sales by geographic markets, refer to Footnote 4 , Revenue Recognition , of the Notes to Consolidated Financial Statements. Our chief operating decision maker (our CEO) does not evaluate the profit or loss from any separate geography. We anticipate that revenues from our U.S. sales will continue to constitute a substantial and increasing portion of our revenues in future periods. We expect our non-U.S. revenues to continue to decline as a percentage of our total revenues as a result of relative growth in our domestic product offerings. WPP Related Party Revenue We provide WPP and its affiliates, in the normal course of business, services relating to our different product lines and receive various services from WPP and its affiliates in supporting our data collection efforts. For the years ended December 31, 2021, 2020, and 2019, related party revenues with WPP and its affiliates were $13.6 million, $13.3 million and $15.9 million, respectively. Cost of Revenues Cost of revenues consists primarily of expenses related to producing our products, operating our network infrastructure, the recruitment, maintenance and support of our consumer panels and amortization of capitalized fulfillment costs. These expenses include employee costs for salaries, benefits, stock-based compensation and other related personnel costs of network operations, survey operations, custom analytics and technical support, all of which are expensed as they are incurred. Cost of revenues also includes costs to obtain multichannel video programming distributor ("MVPD") data sets and panel, census based and other data sets used in our products as well as operational costs associated with our data centers, including depreciation expense associated with computer equipment and internally developed software that supports our panels and systems. Additionally, cost of revenues includes allocated overhead, lease expense and other facilities-related costs. 33 Table of Conte nt s Cost of revenues for the years ended December 31, 2021 and 2020 are as follows: Year Ended December 31, (In thousands) 2021 % of Revenue 2020 % of Revenue $ Variance % Variance Data costs $ 74,196 20.2 % $ 63,598 17.9 % $ 10,598 16.7 % Employee costs 41,386 11.3 % 38,920 10.9 % 2,466 6.3 % Systems and bandwidth costs 27,565 7.5 % 24,349 6.8 % 3,216 13.2 % Lease expense and depreciation 18,946 5.2 % 16,970 4.8 % 1,976 11.6 % Panel costs 15,198 4.1 % 19,075 5.4 % (3,877) (20.3) % Sample and survey costs 7,008 1.9 % 5,133 1.4 % 1,875 36.5 % Technology 5,689 1.6 % 5,710 1.6 % (21) (0.4) % Professional fees 5,109 1.4 % 4,272 1.2 % 837 19.6 % Royalties and resellers 4,039 1.1 % (33) — % 4,072 NM (1) Other 3,908 1.1 % 2,718 0.8 % 1,190 43.8 % Total cost of revenues $ 203,044 55.3 % $ 180,712 50.8 % $ 22,332 12.4 % (1) Calculation is not meaningful. Cost of revenues increased by $22.3 million, or 12.4%, for the year ended December 31, 2021 as compared to 2020. Data costs increased by $10.6 million primarily due to higher TV data licensing costs to expand our data footprint and data rights, including our expanded data license with Charter. Royalties and resellers expenses increased $4.1 million primarily due to a $2.0 million one-time, non-cash benefit related to certain revenue share arrangements recorded in the fourth quarter of 2020, lower costs during 2020 due to less revenue associated with revenue sharing arrangements, and a reclassification of costs historically captured in data costs to better reflect the nature of the services provided. Systems and bandwidth costs increased $3.2 million primarily due to increases in cloud-based data storage and bandwidth capacity. Employee costs increased $2.5 million as we allocated more employee resources towards support of our products and operating infrastructure and modified certain employee incentive compensation. Lease expense and depreciation increased $2.0 million primarily due to higher depreciation driven by previously capitalized internal-use software costs. Sample and survey costs increased $1.9 million primarily due to higher sales and deliveries of digital marketing solutions. Other expenses increased by $1.2 million primarily due to higher contract fulfillment costs associated with the delivery of our cross-platform products in Europe. Offsetting these increases was a decrease in panel costs of $3.9 million primarily due to lower recruitment and support costs for our mobile panels. Cost of revenues for the years ended December 31, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2020 % of Revenue 2019 % of Revenue $ Variance % Variance Data costs $ 63,598 17.9 % $ 60,165 15.5 % $ 3,433 5.7 % Employee costs 38,920 10.9 % 50,996 13.1 % (12,076) (23.7) % Systems and bandwidth costs 24,349 6.8 % 25,023 6.4 % (674) (2.7) % Panel costs 19,075 5.4 % 20,901 5.4 % (1,826) (8.7) % Lease expense and depreciation 16,970 4.8 % 15,052 3.9 % 1,918 12.7 % Technology 5,710 1.6 % 5,887 1.5 % (177) (3.0) % Sample and survey costs 5,133 1.4 % 7,225 1.9 % (2,092) (29.0) % Professional fees 4,272 1.2 % 6,985 1.8 % (2,713) (38.8) % Royalties and resellers (33) — % 4,027 1.0 % (4,060) NM (1) Other 2,718 0.8 % 3,361 0.9 % (643) (19.1) % Total cost of revenues $ 180,712 50.8 % $ 199,622 51.4 % $ (18,910) (9.5) % (1) Calculation is not meaningful. Cost of revenues decreased by $18.9 million, or 9.5%, for the year ended December 31, 2020 as compared to 2019. Employee costs decreased $12.1 million primarily due to lower headcount. Royalties and resellers costs decreased $4.1 million primarily due to a $2.0 million one-time, non-cash benefit related to certain revenue share arrangements recorded in the fourth quarter of 2020 and lower costs due to less revenue associated with revenue sharing arrangements. Professional fees decreased $2.7 million primarily due to a decrease in consulting services. Sample and survey costs decreased $2.1 million primarily due to lower sales and deliveries of digital marketing solutions. Panel costs decreased $1.8 million driven by lower recruitment and support costs for our mobile panels. Offsetting these decreases was an increase in data costs of $3.4 million primarily due to increases in data licensing agreements as we continued to invest in product solution offerings through the acquisition of additional TV data. Lease expense and depreciation increased $1.9 million primarily due to increased depreciation driven by previously capitalized internal-use software costs. Selling and Marketing Selling and marketing expenses consist primarily of employee costs, including salaries, benefits, commissions, stock-based compensation and other related costs for personnel associated with sales and marketing activities, as well as costs related to online and offline advertising, 34 Table of Conte nt s industry conferences, promotional materials, public relations, other sales and marketing programs and allocated overhead, which is comprised of lease expense and other facilities-related costs, and depreciation expense generated by general purpose equipment and software. Selling and marketing expenses for the years ended December 31, 2021 and 2020 are as follows: Year Ended December 31, (In thousands) 2021 % of Revenue 2020 % of Revenue $ Variance % Variance Employee costs $ 55,966 15.2 % $ 57,629 16.2 % $ (1,663) (2.9) % Lease expense and depreciation 4,217 1.1 % 4,980 1.4 % (763) (15.3) % Technology 2,621 0.7 % 2,579 0.7 % 42 1.6 % Professional fees 2,024 0.6 % 2,651 0.7 % (627) (23.7) % Travel 333 0.1 % 720 0.2 % (387) (53.8) % Other 1,776 0.5 % 1,661 0.5 % 115 6.9 % Total selling and marketing expenses $ 66,937 18.2 % $ 70,220 19.7 % $ (3,283) (4.7) % Selling and marketing expenses decreased by $3.3 million, or 4.7%, for the year ended December 31, 2021 as compared to 2020. Employee costs decreased $1.7 million primarily due to lower commission expense and a decrease in employee headcount. Lease and depreciation expense decreased $0.8 million primarily due to lower rent as we reduced our office footprint and sublet two locations during 2020. Selling and marketing expenses for the years ended December 31, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2020 % of Revenue 2019 % of Revenue $ Variance % Variance Employee costs $ 57,629 16.2 % $ 71,979 18.5 % $ (14,350) (19.9) % Lease expense and depreciation 4,980 1.4 % 5,690 1.5 % (710) (12.5) % Professional fees 2,651 0.7 % 2,521 0.6 % 130 5.2 % Technology 2,579 0.7 % 2,726 0.7 % (147) (5.4) % Travel 720 0.2 % 3,260 0.8 % (2,540) (77.9) % Other 1,661 0.5 % 2,969 0.8 % (1,308) (44.1) % Total selling and marketing expenses $ 70,220 19.7 % $ 89,145 22.9 % $ (18,925) (21.2) % Selling and marketing expenses decreased by $18.9 million, or 21.2%, for the year ended December 31, 2020 as compared to 2019. Employee costs decreased $14.4 million primarily as a result of lower headcount and a decrease in sales commissions. Travel costs decreased $2.5 million, and other costs decreased $1.3 million, primarily due to a reduction in travel and lower marketing and event costs as a result of the COVID-19 pandemic. Research and Development Research and development expenses include product development costs, consisting primarily of employee costs including salaries, benefits, stock-based compensation and other related costs for personnel associated with research and development activities, third-party expenses to develop new products and third-party data costs and allocated overhead, which is comprised of lease expense and other facilities-related costs, and depreciation expense related to general purpose equipment and software. Research and development expenses for the years ended December 31, 2021 and 2020 are as follows: Year Ended December 31, (In thousands) 2021 % of Revenue 2020 % of Revenue $ Variance % Variance Employee costs $ 29,116 7.9 % $ 28,512 8.0 % $ 604 2.1 % Technology 4,264 1.2 % 4,322 1.2 % (58) (1.3) % Lease expense and depreciation 3,555 1.0 % 3,999 1.1 % (444) (11.1) % Professional fees 1,664 0.5 % 1,258 0.4 % 406 32.3 % Other 524 0.1 % 615 0.2 % (91) (14.8) % Total research and development expenses $ 39,123 10.7 % $ 38,706 10.9 % $ 417 1.1 % Research and development expenses increased by $0.4 million, or 1.1%, for the year ended December 31, 2021 as compared to 2020. Employee costs increased $0.6 million primarily due to higher stock-based compensation expense and the modification of certain employee incentive compensation. 35 Table of Conte nt s Research and development expenses for the years ended December 31, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2020 % of Revenue 2019 % of Revenue $ Variance % Variance Employee costs $ 28,512 8.0 % $ 47,626 12.3 % $ (19,114) (40.1) % Technology 4,322 1.2 % 4,164 1.1 % 158 3.8 % Lease expense and depreciation 3,999 1.1 % 5,958 1.5 % (1,959) (32.9) % Professional fees 1,258 0.4 % 2,860 0.7 % (1,602) (56.0) % Other 615 0.2 % 1,194 0.3 % (579) (48.5) % Total research and development expenses $ 38,706 10.9 % $ 61,802 15.9 % $ (23,096) (37.4) % Research and development expenses decreased by $23.1 million, or 37.4%, for the year ended December 31, 2020 as compared to 2019. Employee costs decreased $19.1 million primarily due to lower headcount. Lease expense and depreciation decreased $2.0 million primarily due to lower rent as we reduced our office footprint and sublet two locations during 2020. Professional fees decreased $1.6 million primarily due to a decrease in consulting services. General and Administrative General and administrative expenses consist primarily of employee costs including salaries, benefits, stock-based compensation and other related costs, and related expenses for executive management, finance, human capital, legal and other administrative functions, as well as professional fees, overhead, including allocated overhead, which is comprised of lease expense and other facilities-related costs, depreciation expense related to general purpose equipment and software, and expenses incurred for other general corporate purposes. General and administrative expenses for the years ended December 31, 2021 and 2020 are as follows: Year Ended December 31, (In thousands) 2021 % of Revenue 2020 % of Revenue $ Variance % Variance Employee costs $ 33,571 9.1 % $ 28,205 7.9 % $ 5,366 19.0 % Professional fees 16,194 4.4 % 12,922 3.6 % 3,272 25.3 % Technology 2,922 0.8 % 2,246 0.6 % 676 30.1 % Lease expense and depreciation 1,888 0.5 % 2,114 0.6 % (226) (10.7) % Bad debt (benefit) expense (80) — % 1,693 0.5 % (1,773) NM (1) Other 7,241 2.0 % 8,603 2.4 % (1,362) (15.8) % Total general and administrative expenses $ 61,736 16.8 % $ 55,783 15.7 % $ 5,953 10.7 % (1) Calculation is not meaningful. General and administrative expenses increased by $6.0 million, or 10.7%, for the year ended December 31, 2021 as compared to 2020. Employee costs increased $5.4 million primarily due to higher stock-based compensation expense and the modification of certain employee incentive compensation. Professional fees increased $3.3 million primarily due to increased consulting and audit fees in 2021 related to implementation support for our new ERP system. These increases were offset by a decrease in bad debt expense of $1.8 million primarily due to the increase in our allowance in the first half of 2020 as a result of the COVID-19 pandemic. General and administrative expenses for the years ended December 31, 2020 and 2019 are as follows: Year Ended December 31, (In thousands) 2020 % of Revenue 2019 % of Revenue $ Variance % Variance Employee costs $ 28,205 7.9 % $ 34,435 8.9 % $ (6,230) (18.1) % Professional fees 12,922 3.6 % 18,385 4.7 % (5,463) (29.7) % Lease expense and depreciation 2,114 0.6 % 2,491 0.6 % (377) (15.1) % Bad debt expense 1,693 0.5 % 727 0.2 % 966 132.9 % Transition services agreement — — % 667 0.2 % (667) (100.0) % Other 10,849 3.0 % 9,714 2.5 % 1,135 11.7 % Total general and administrative expenses $ 55,783 15.7 % $ 66,419 17.1 % $ (10,636) (16.0) % General and administrative expenses decreased by $10.6 million, or 16.0%, for the year ended December 31, 2020 as compared to 2019. Employee costs decreased $6.2 million primarily due to $3.3 million in severance costs for certain executives who exited in 2019, as well as lower headcount and a decrease in stock-based compensation expense. Professional fees decreased $5.5 million primarily due to reduced audit and legal fees in 2020 as compared to 2019, and fees related to the issuance of Common Stock and warrants in 2019. These decreases were offset by an increase in bad debt expense of $1.0 million primarily due to increased reserves related to customers impacted by the current economic environment. 36 Table of Conte nt s Loss on Extinguishment of Debt Loss on extinguishment of debt represents the difference between the carrying value of our debt instruments and any consideration paid to our creditors in the form of cash or shares of our Common Stock on the extinguishment date. In 2021, we recorded a $9.6 million loss on debt extinguishment related to the payoff of the Notes and the Secured Term Note on March 10, 2021. The primary drivers of the extinguishment loss were the write-off of unamortized deferred financing costs and issuance discounts, the issuance of additional shares of Common Stock in connection with the extinguishment, and the derecognition of the interest rate reset derivative liability on the Notes. These components are described in Footnote 6 , Debt . Amortization of Intangible Assets Amortization expense consists of charges related to the amortization of intangible assets associated with acquisitions, primarily our Rentrak merger in which we acquired $170.3 million of finite-lived intangible assets. Amortization of intangible assets decreased by $2.2 million, or 8.0%, for 2021 as compared to 2020 due primarily to certain acquired software and customer relationship intangibles having reached the end of their useful lives. Amortization of intangible assets decreased by $2.9 million, or 9.5%, for 2020 as compared to 2019 due primarily to the impairment of an intangible asset as described below. Impairment of Right-of-use and Long-lived Assets In 2020, we recorded a $4.7 million impairment charge related to our facility lease right-of-use assets and associated leasehold improvements for certain properties on the market for sublease. The impairment charge was driven by changes in our projected undiscounted cash flows for certain properties, primarily as a result of changes in the real estate market related to the COVID-19 pandemic, that led to an increase in the estimated marketing time and a reduction of expected receipts. Impairment of Goodwill and Intangible Asset In 2019, as a result of a sustained decline in our stock price and market capitalization, changes in management, and lower revenue, among other factors, we performed an interim impairment review of our goodwill and long-lived assets. Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $224.3 million impairment charge. We also recorded an impairment charge related to our strategic alliance intangible asset during 2019. Changes in our projected revenue in certain non-U.S. geographic markets due to the changing international competitive landscape, as well as significant reductions in international staffing, resulted in a change in our long-term view of the viability of the intangible asset. As such, our assessment yielded that the benefit of the strategic alliance would not be realized. The fair value of the strategic alliance intangible asset was estimated using an income approach, resulting in an impairment charge for the full carrying value of the long-lived asset of $17.3 million. While this was a non-cash charge, it reduced amortization expense by approximately $3.0 million on an annualized basis. For further information refer to Footnote 10 , Goodwill and Intangible Assets and Item 7 , Critical Accounting Estimates . Investigation and Audit Related Investigation and audit related expenses were $4.3 million for the year ended December 31, 2019. No similar costs were incurred during the years ended December 31, 2021 and 2020. Investigation expenses include professional fees associated with legal and forensic accounting services rendered in connection with the previously disclosed internal Audit Committee investigation into matters related to the Company's revenue recognition practices, disclosures, internal controls, corporate culture and employment practices prior to 2017. Audit related expenses consist of professional fees associated with accounting related consulting services and external auditor fees associated with the audit of our Consolidated Financial Statements for the prior years. Litigation related expenses include legal fees associated with various lawsuits or investigations, including those initiated either directly or indirectly as a result of the Audit Committee's investigation. The decrease in investigation and audit related expenses was due to the conclusion of the Audit Committee investigation and multi-year audit in 2018, as well as the resolution of related legal proceedings. We resolved the related SEC investigation in September 2019, and as such, incurred no investigation and audit related expenses during 2021 and 2020. Restructuring We incurred restructuring expenses $3.3 million for the year ended December 31, 2019, related to significant reductions in headcount and reorganization of our business. No such expenses were incurred during 2021 or 2020. Settlement of Litigation, Net Settlement of litigation, net consists of gains and losses from the settlement of various litigation matters. The $2.9 million net settlement of litigation expense for 2019 relates to the conclusion of the SEC investigation. 37 Table of Conte nt s Interest Expense, Net Interest expense, net consists of interest income and interest expense. Interest income primarily consists of interest earned from our cash and cash equivalent balances. Interest expense relates to interest on our Notes, Secured Term Note, Revolving Credit Agreement, sale-leaseback agreement, and our finance leases. Interest expense, net, decreased $28.0 million during 2021 to $7.8 million as compared to $35.8 million in 2020. The decrease in interest expense for the year ended December 31, 2021 as compared to 2020 was primarily due to the extinguishment of the Notes and the Secured Term Note in March 2021, as described in Footnote 6 , Debt. Interest expense, net, increased $4.3 million during 2020 to $35.8 million as compared to $31.5 million in 2019. Interest expense increased in 2020 primarily as a result of the interest rate reset feature on the Notes, and the issuance of the Secured Term Note in December 2019. Refer to Footnote 6 , Debt for information on our debt and related extinguishments. Other (Expense) Income, Net Other (expense) income, net represents income and expenses incurred that are generally not recurring in nature or are not part of our normal operations. The following is a summary of other (expense) income, net: Years Ended December 31, (In thousands) 2021 2020 2019 Change in fair value of financing derivatives $ 1,800 $ 10,287 $ 5,100 Change in fair value of warrants liability (7,689) 4,894 (2,411) Change in fair value of investment in equity securities — — (2,324) Other 111 (627) 1,289 Total other (expense) income, net $ (5,778) $ 14,554 $ 1,654 Total other expense, net for the year ended December 31, 2021 was $5.8 million as compared to total other income, net of $14.6 million in 2020. The shift from other income, net was largely driven by a loss from the change in the fair value of our warrants liability, partially offset by lower gains from the change in fair value of our financing derivatives. The loss on the warrants liability for 2021 was due primarily to the exercise price adjustment described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity , and an increase in the trading price of our Common Stock during 2021 . The gain on the financing derivatives was primarily due to the passage of time as our remaining future interest obligations declined over the term of the Notes prior to their extinguishment in March 2021. Total other income, net for the year ended December 31, 2020 was $14.6 million as compared to total other income, net of $1.7 million in 2019. The increase in other income, net was primarily driven by gains from the change in fair value of warrants liability and financing derivatives. Additionally, we had no loss on equity securities in 2020 compared with a decline in the fair value of equity securities that were sold in 2019. Gain (Loss) from Foreign Currency Transactions Our foreign currency transactions are recorded as a result of fluctuations in the exchange rate between the transactional currency and the functional currency of foreign subsidiary transactions. For the year ended December 31, 2021, the gain from foreign currency transactions was $2.9 million. The gain was primarily driven by fluctuations in the Euro and Chilean Peso against the U.S. Dollar and Chilean Peso against the Euro. For the year ended December 31, 2020, the loss from foreign currency transactions was $4.5 million. The loss was primarily driven by fluctuations in the Chilean Peso against both the U.S. Dollar and Brazilian Real and the U.S. Dollar against the Euro. For the year ended December 31, 2019, the gain from foreign currency transactions was $0.3 million. The gain was primarily driven by fluctuations of the average Chilean Peso against the U.S. Dollar. Income Tax (Provision) Benefit A valuation allowance has been established against our net U.S. federal and state deferred tax assets, and certain foreign deferred tax assets, including net operating loss carryforwards. As a result, our income tax position is primarily related to foreign tax activity and U.S. deferred taxes for tax deductible goodwill and other indefinite-lived liabilities. During the years ended December 31, 2021, 2020, and 2019, we recorded an income tax (provision) benefit of $(0.9) million, $(0.9) million, and $1.0 million, resulting in an effective tax rate of (1.7)%, (1.9)%, and 0.3%, respectively. These effective tax rates differ from the U.S. federal statutory rate primarily due to the effects of certain permanent items, foreign tax rate differences, and increases in the valuation allowance against our domestic deferred tax assets. 38 Table of Conte nt s Included within tax expense for the year ended December 31, 2021 are income tax adjustments of $9.2 million for permanent differences in the book and tax treatment of certain stock-based compensation, limitations on the deductibility of certain executive compensation, nondeductible interest expense on debt instruments and associated derivatives, and other nondeductible expenses. Also included is a favorable return to provision true-up adjustment of $8.3 million for a prior year permanent difference related to foreign earnings taxable in the U.S. as a result of a tax restructuring that occurred during 2020. Tax expense of $16.3 million has also been included for an increase in the valuation allowance recorded against our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions. This increase was offset by a tax benefit of $2.8 million for the release of a portion of our U.S. valuation allowance as a result of the Shareablee acquisition. Included within tax expense for the year ended December 31, 2020 are income tax adjustments of $8.9 million for permanent differences in the book and tax treatment of certain stock-based compensation, limitations on the deductibility of certain executive compensation, nondeductible interest expense on debt instruments and associated derivatives, and other nondeductible expenses. Also included is an adjustment of $11.2 million for a permanent difference related to foreign earnings taxable in the U.S. as a result of a tax restructuring that occurred during the year. Included within tax benefit for the year ended December 31, 2019 are income tax adjustments of $58.6 million related to the impairment of goodwill and $15.2 million for permanent differences in the book and tax treatment of certain stock-based compensation, limitations on the deductibility of certain executive compensation, nondeductible interest expense on debt instruments and associated derivatives, and other nondeductible expenses. Income tax expense of $17.3 million has also been included for increases in the valuation allowance recorded against our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions. The COVID-19 pandemic has a global reach, and many countries have introduced measures that provide relief to taxpayers in a variety of ways. We have evaluated these measures, including the CARES Act in the United States, and have concluded that these did not have a significant impact on our income tax provision for the year ended December 31, 2021. Liquidity and Capital Resources The following table summarizes our cash flows for each of the periods identified: Years Ended December 31, (In thousands) 2021 2020 2019 Net cash provided by (used in) operating activities $ 9,856 $ 717 $ (4,636) Net cash used in investing activities (14,648) (15,555) (10,460) Net cash (used in) provided by financing activities (22,452) (2,096) 31,973 Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,218) 902 (302) Net (decrease) increase in cash, cash equivalents and restricted cash (28,462) (16,032) 16,575 Overview Our principal uses of cash consist of cash paid for data, payroll and other operating expenses, including expenses incurred in prior periods; payments related to investments in equipment, primarily to support our consumer panels and technical infrastructure required to deliver our products and services and support our customers; service of our debt and lease facilities; and, beginning in 2021, our dividend payment obligations. As of December 31, 2021, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $22.3 million, including $0.4 million in restricted cash, as well as amounts available to us under our Revolving Credit Agreement, as described below. Our principal sources of liquidity have historically been our cash and cash equivalents, as well as cash flow generated from operations. Our operating losses and interest payments on our Notes and Secured Term Note, as well as the scheduled maturity of the Notes in January 2022, resulted in a need to secure long-term financing to extinguish the Notes and increase working capital. On March 10, 2021, we entered into separate Securities Purchase Agreements with each of Charter, Qurate and Pine. At the closing of the Transactions, we issued and sold (a) to Charter, 27,509,203 shares of Series B Convertible Preferred Stock ("Preferred Stock") in exchange for $68.0 million, (b) to Qurate, 27,509,203 shares of Preferred Stock in exchange for $68.0 million and (c) to Pine, 27,509,203 shares of Preferred Stock in exchange for $68.0 million. On June 30, 2021, in accordance with the Certificate of Designations of the Preferred Stock, we paid cash dividends totaling $4.8 million to the holders of the Preferred Stock, representing dividends accrued for the period from March 10, 2021 through June 29, 2021. As of December 31, 2021, accrued dividends for the Preferred Stock totaled $7.9 million. The proceeds from the Transactions were used to repay the Notes. See "Senior Secured Convertible Notes" below. In connection with the closing, we also repaid the Secured Term Note and certain transaction-related expenses with cash from our balance sheet. See "Secured Term Note" below. For additional information on the Transactions and related debt extinguishments, refer to Footnote 6 , Debt and Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity. On May 5, 2021, we entered into the Revolving Credit Agreement with Bank of America N.A. The Revolving Credit Agreement provides a borrowing capacity equal to $40.0 million (increased from $25.0 million on February 25, 2022). As of December 31, 2021, we had outstanding 39 Table of Conte nt s borrowings of $16.0 million under the Revolving Credit Agreement. In addition to these borrowings, we had issued and outstanding letters of credit totaling $3.3 million under the Revolving Credit Agreement as of December 31, 2021, leaving a remaining borrowing capacity of $5.7 million as of December 31, 2021. On February 25, 2022, we expanded the borrowing capacity under our Revolving Credit Agreement to $40.0 million, which increased our remaining borrowing capacity to $20.7 million. Pandemic Impact The COVID-19 pandemic and related government mandates and restrictions have had a significant impact on the media, advertising and entertainment industries in which we operate. To date, the COVID-19 pandemic has had some impact on our business, including with respect to the execution of new and renewal contracts, the impact of closed movie theaters on our customers, customer payment delays and requests to modify contractual payment terms. These conditions have negatively impacted our revenue and cash flows, particularly in our Movies Reporting and Analytics business, and could continue to have an impact in future periods. It is possible that long-term changes in consumer behavior will impact our customers' operations, and thus their demand for our services and ability to pay, even after the spread of COVID-19 has been contained and businesses are permitted to resume normal operations. While we have taken actions to mitigate the impact of the COVID-19 pandemic, control costs and improve our working capital balance, these steps may not be successful or adequate if customer demand or cash collection efforts are further impacted by the COVID-19 pandemic or other factors. Preferred Stock On March 10, 2021, in connection with the Securities Purchase Agreements described above, we issued 82,527,609 shares of Preferred Stock in exchange for gross cash proceeds of $204.0 million. The shares were issued at a par value of $0.001. Net proceeds from the Transactions totaled $187.9 million after deducting issuance costs. Shares of Preferred Stock are convertible into Common Stock as described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity . As of December 31, 2021, each share of Preferred Stock was convertible into 1.038542 shares of Common Stock, with such conversion rate scheduled to return to 1.00 upon payment of accrued dividends on June 30, 2022. The holders of Preferred Stock are entitled to participate in all dividends declared on the Common Stock on an as-converted basis and are also entitled to a cumulative dividend at the rate of 7.5% per annum, payable annually in arrears and subject to increase under certain specified circumstances. In addition, after January 1, 2022, such holders are entitled to request, and we must take all actions reasonably necessary to pay, a one-time special dividend on the Preferred Stock equal to the highest dividend that our Board of Directors determines can be paid at the applicable time (or a lesser amount agreed by the holders), subject to additional conditions and limitations described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity . We may be obligated to obtain debt financing in order to effectuate the special dividend, which could significantly impact our financial position and liquidity depending on the timing and scope of the dividend payment and related financing. Moreover, this obligation could lead us to refinance or terminate the Revolving Credit Agreement prior to its maturity, due to its restrictions on our ability to incur additional debt. Revolving Credit Agreement On May 5, 2021, we entered into the Revolving Credit Agreement, which matures on May 5, 2024. The Revolving Credit Agreement provides a borrowing capacity equal to $40.0 million (increased from $25.0 million on February 25, 2022). We may also request the issuance of letters of credit under the Revolving Credit Agreement in an aggregate amount up to $5.0 million, which reduces the amount of available borrowings by the amount of such issued and outstanding letters of credit. The amount we are able to borrow under the Revolving Credit Agreement is subject to compliance with the financial covenants, satisfaction of various conditions precedent to borrowing and other provisions of the Revolving Credit Agreement. Notably, the Revolving Credit Agreement contains financial covenants that require us to maintain minimum Consolidated EBITDA and a minimum Consolidated Asset Coverage Ratio for periods through December 31, 2022, and a minimum Consolidated Fixed Charge Coverage Ratio for periods after December 31, 2022 (each term as defined in the Revolving Credit Agreement). As of December 31, 2021, we were in compliance with our covenants under the Revolving Credit Agreement, and based on our current plans, we do not anticipate a breach of these covenants that would result in an event of default under the Revolving Credit Agreement. As of December 31, 2021, we had outstanding borrowings of $16.0 million under the Revolving Credit Agreement. In addition to these borrowings, we had issued and outstanding letters of credit totaling $3.3 million under the Revolving Credit Agreement as of December 31, 2021, leaving a remaining borrowing capacity of $5.7 million as of December 31, 2021. The borrowed funds were used to reduce our accounts payable balances, primarily related to expenses incurred in prior periods, and support our working capital position. While we continue to take steps to reduce our outstanding trade payables and improve our working capital position, our liquidity could be negatively affected if we are unable to generate sufficient cash from operations to meet our financial obligations as they come due. For additional information on the Revolving Credit Agreement, refer to Footnote 6 , Debt . 40 Table of Conte nt s Sale of Common Stock and Warrants On June 23, 2019, we entered into a Securities Purchase Agreement with CVI Investments, Inc. ("CVI") pursuant to which we sold to CVI for aggregate gross proceeds of $20.0 million (i) 2,728,513 shares of Common Stock and (ii) Series A Warrants, Series B-1 Warrants, Series B-2 Warrants and Series C Warrants to initially purchase up to 11,654,033 shares of Common Stock (the "Private Placement"). On October 14, 2019, we issued 2,728,513 shares of Common Stock to CVI upon exercise by CVI of the Series C Warrants. As a result of this exercise, the number of shares issuable under our Series A Warrants was increased by 2,728,513. On January 29, 2020, the Series B-1 Warrants expired unexercised. On August 3, 2020, the Series B-2 Warrants expired unexercised. For additional information on the Private Placement and the adjustment to the exercise price of our Series A Warrants in connection with the Transactions (which adjustment could reduce the cash proceeds we receive upon exercise of the Series A Warrants), refer to Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity . Senior Secured Convertible Notes On January 16, 2018, we entered into certain agreements with funds affiliated with or managed by Starboard Value LP (collectively "Starboard"), pursuant to which we issued and sold to Starboard $150.0 million in Notes in exchange for $85.0 million in cash and 2,600,000 shares of Common Stock. On May 17, 2018, we issued and sold to Starboard $50.0 million of Notes in exchange for $15.0 million in cash and 1,400,000 shares of Common Stock. Later in 2018 we issued an aggregate of $4.0 million in Notes to Starboard, bringing the total balance of Notes as of December 31, 2020 to $204.0 million. The proceeds from the Transactions were used to repay the Notes issued to Starboard, resulting in termination of related covenants under the Notes, including limitations on indebtedness and liens and maintenance of certain minimum cash balances that had limited our financial flexibility in prior periods. For additional information on the Notes, refer to Footnote 6 , Debt . Secured Term Note On December 31, 2019, our wholly owned subsidiary, Rentrak B.V., entered into an agreement with several third parties for the Secured Term Note in exchange for gross proceeds of $13.0 million. The Secured Term Note had an annual interest rate of 9.75% payable monthly in cash. In connection with the Transactions, we repaid the Secured Term Note and certain transaction-related expenses with cash from our balance sheet. For additional information on the Secured Term Note, refer to Footnote 6 , Debt . Restricted Cash Restricted cash represents security deposits for subleased office space. As of December 31, 2020, restricted cash also represented our requirement to collateralize the Secured Term Note and outstanding letters of credit. As of December 31, 2021 and 2020, we had $0.4 million and $19.6 million of restricted cash, respectively. Repayment of the Secured Term Note resulted in the termination of the collateralization requirement thereunder, and no cash was restricted relating to the Secured Term Note as of December 31, 2021. We also transferred outstanding letters of credit totaling $3.3 million under the Revolving Credit Agreement, which further reduced our restricted cash balance as this facility does not require letters of credit to be cash collateralized. Operating Activities Our primary source of cash provided by operating activities is revenues generated from sales of our products and services. Our primary uses of cash from operating activities include personnel costs and costs related to data and infrastructure used to develop and maintain our products and services. Cash used in operating activities is calculated by adjusting our net loss for changes in working capital, as well as by excluding non-cash items such as: depreciation, non-cash operating lease expense, amortization expense of finance leases and intangible assets, impairment of right-of-use assets, stock-based compensation, deferred tax provision, change in the fair value of financing derivatives, warrants liability and equity securities, loss on extinguishment of debt, non-cash interest expense on the Notes, accretion of debt discount, and amortization of deferred financing costs. Net cash provided by operating activities in 2021 was $9.9 million compared to net cash provided of $0.7 million in 2020. The increase in cash provided by operating activities was primarily attributable to a decrease in the cash interest paid on the Notes in 2021 of $21.4 million compared to 2020 (interest of $10.8 million on the Notes was paid in shares of Common Stock in 2021). Offsetting the reduction in cash interest paid was a net decrease in operating assets and liabilities of $23.8 million for the year ended December 31, 2021 as compared to a net decrease of $20.3 million for the year ended December 31, 2020. The decrease in operating assets and liabilities was primarily due to decreases in our accounts payable and accrued expense balances in 2021 compared to 2020 as we paid invoices related to expenses incurred in prior periods. Net cash provided by operating activities in 2020 was $0.7 million compared to net cash used of $4.6 million in 2019. The increase in cash provided by operating activities during 2020 as compared to 2019 was primarily attributable to a decrease in net loss, lower investigation and 41 Table of Conte nt s audit related expenses, decrease in headcount, and results of restructuring, offset by additional cash interest paid on the Notes of $21.4 million in 2020 in comparison to $3.0 million in 2019. Investing Activities Cash used in investing activities primarily consists of payments related to capitalized internal-use software costs, purchases of computer and network equipment to support our technical infrastructure, and furniture and equipment. The extent of these investments will be affected by our ability to expand relationships with existing customers, grow our customer base and introduce new digital formats, as well as constraints on cash expenditures due to our financial position and the current economic environment. Net cash used in investing activities in 2021 was $14.6 million compared to net cash used in investing activities of $15.6 million in 2020. The decrease in cash used in investing activities was primarily due to net cash received as part of the Shareablee acquisition in 2021. Net cash used in investing activities in 2020 was $15.6 million compared to net cash used in investing activities of $10.5 million in 2019. This increase in net cash used in investing activities was attributable to an increase of $3.6 million in payments for capitalized internally developed software and a decline of $3.8 million compared to receipts from the sale of an investment in 2019, partially offset by a $2.3 million decrease in purchases of property and equipment in 2020 compared with 2019. Financing Activities Net cash used in financing activities in 2021 was $22.5 million compared to net cash used in financing activities of $2.1 million in 2020. The increase in cash used in financing activities was primarily due to the repayment of the Notes and the Secured Term Note in March 2021, and payment of $4.8 million in cash dividends to the holders of the Preferred Stock in June 2021. These increases in cash used were partially offset by cash proceeds of $204.0 million from the issuance of the Preferred Stock discussed above (net of $16.1 million in related transaction costs) and cash proceeds of $16.0 million from borrowing under the Revolving Credit Agreement. Net cash provided by financing activities in 2020 was $2.1 million compared to net cash provided by financing activities of $32.0 million in 2019. The shift to cash used in financing activities from cash provided by financing activities was largely due to gross cash proceeds of $20.0 million from the sale of shares of Common Stock and warrants in the Private Placement, $13.0 million from the issuance of the Secured Term Note, and $4.3 million from the sale-leaseback transaction during 2019. These were offset by a decrease of $2.5 million in principal payments on finance lease and software licensing arrangements. Contractual Payment Obligations We have certain long-term contractual arrangements that have fixed and determinable payment obligations including unconditional purchase obligations with MVPDs, operating and financing leases, and data storage and bandwidth arrangements. We have data licensing agreements with a number of MVPDs for set-top box data. These agreements have remaining terms from one to nine years. As of December 31, 2021, the total fixed payment obligation related to these agreements is $325.8 million. In addition, we expect to make variable payments related to one of these arrangements totaling an estimated $26.1 million over the next two years. We have both operating and financing leases related to corporate office space and equipment. Our leases have remaining terms from one to six years. As of December 31, 2021, the total fixed payment obligation related to these agreements is $62.5 million. We have an agreement for cloud-based data storage and bandwidth to help process and store our data. The remaining term for this agreement is two years. As of December 31, 2021, the total fixed payment obligation related to this agreement is $19.7 million. Future Capital Requirements Our ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors, including the timing of cash collections from our customers, data costs and other trade payables, service of our debt and lease facilities and dividend payment obligations, and expenses from compliance efforts and legal matters. To the extent that our existing cash, cash equivalents and operating cash flow, together with savings from repayment of the Notes and Secured Term Note and cost-management initiatives undertaken by our management, are insufficient to fund our future activities and requirements, we may need to raise additional funds through public or private equity or debt financing. We may also be required to raise additional funds in order to pay a special dividend to holders of our Preferred Stock, as described above. Our history of net losses, as well as disruption and volatility in global capital and credit markets, could impact our ability to access capital resources on terms acceptable to us or allowable under applicable financing arrangements, or at all. If we issue additional equity securities in order to raise additional funds, pay dividends or for other purposes, further dilution to existing stockholders may occur. Critical Accounting Estimates Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"). The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the amounts reported in our Consolidated Financial Statements 42 Table of Conte nt s and the accompanying Notes to Consolidated Financial Statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial condition and results of operations because they involve significant judgments and uncertainties. Actual results in these areas could differ from management's estimates. Refer to Footnote 2 , Summary of Significant Accounting Policies for further information on our most significant accounting policies. Revenue Recognition We recognize revenue under the core principle of depicting the transfer of promised goods and services to our customers in an amount that reflects the consideration to which we expect to be entitled. Significant judgments used in the determination of the amount and timing of our revenue recognition include the identification of distinct performance obligations and the allocation of contract consideration among individual performance obligations based on their relative standalone selling price ("SSP"). Performance obligations are identified by evaluating whether the promised goods and services are capable of being distinct and distinct within the context of the contract. We have a limited number of monetary contracts with MVPDs that involve both the purchase and sale of services with a single counterparty. Each contract is assessed to determine if the goods and services exchanged between the two parties represent distinct performance obligations which can entail significant judgment. The conclusion regarding whether goods and services exchanged are distinct determines whether consideration received from the counterparty is recognized as revenues (up to the SSP of the distinct goods or services), or as a reduction to the purchase price of the goods or services recorded in our cost of revenues. The transaction price is allocated to each performance obligation based on its relative SSP. In most sales contracts, we bundle multiple products and very few are sold on a standalone basis. As a result, our SSP is not directly observable and we have to develop internal estimates using information that is reasonably available to us. Our SSP is primarily developed using an adjusted market approach supported by rate cards and pricing calculators that are periodically reviewed and updated to reflect the best available information. Bundled arrangements may include a combination of distinct goods and services where some are satisfied over time and others are satisfied at a point in time. Changes to the SSP will impact the amount of consideration allocated to each performance obligation, which could have an impact on the timing and amount of revenues recognized in future periods as our performance obligations are satisfied. The determination of SSP also impacts the amount of revenues we can recognize in transactions where consideration is exchanged with counterparties as described above. Goodwill The valuation of goodwill involves the use of management's estimates and assumptions and can have a significant impact on future operating results. Goodwill is not amortized but is evaluated for impairment at least annually, as of October 1, by comparing the fair value of a reporting unit to its carrying value including goodwill recorded by the reporting unit. We have one reporting unit. As such, we perform the impairment assessment for goodwill at the enterprise level. Goodwill is reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below the carrying value. In assessing the possibility that our reporting unit's fair value has been reduced below its carrying value due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence including, but not limited to: (i) the results of our impairment testing from the most recent testing date (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts, if any, (iii) declines in market capitalization below book value (and the magnitude and duration of those declines), if any, and (iv) changes in general industry, market and macro-economic conditions. We determine the fair value of our reporting unit using a combination of the income and market approaches. The results from each of these approaches are weighted appropriately taking into account the relevance and availability of data at the time we perform the valuation. Under the income approach, the fair value is determined using a discounted cash flow model based on projected financial performance and discount rates that take into account an appropriate risk-adjusted return. The discounted cash flow model requires the use of various assumptions in developing the present value of projected cash flows, the following of which are significant to our analysis: Projected financial performance: expected future cash flows and growth rates are based upon assumptions of our future revenue growth and operating costs. Actual results of operations and cash flows will likely differ from those utilized in our discounted cash flow analysis, and it is possible that those differences could be material. Long-term growth rate: the long-term growth rate represents the rate at which our single reporting unit's earnings are expected to grow or losses to decrease. Our assumed long-term growth rate was based on projected long-term inflation and gross domestic product growth estimates for the countries in which we operate and a long-term growth estimate for our business and the industry in which we operate. The long-term growth rate selected for the 2021, 2020 and 2019 annual impairment analyses was 3.0%. Discount rate: our reporting unit's future cash flows are discounted at a rate that is consistent with our average weighted cost of capital that is likely to be utilized by market participants. The weighted-average cost of capital is our estimate of the overall returns required by both debt and equity investors, weighted by their respective contributions of capital. We use discount rates that are commensurate with the risks and uncertainty inherent in our business and in our internally-developed forecasts. The discount rates selected for the 2021, 2020 and 2019 annual impairment analyses were 19.0%, 13.5% and 18.0%, respectively. Our selected discount rate was lower 43 Table of Conte nt s in 2020 primarily because we utilized a scenario-based approach that incorporated an equal weighting of two different sets of financial projections. One set of projections incorporated more conservative growth assumptions, and the selected discount rate reflected the lower level of execution risk in achieving those projections. Under the market approach, the fair value is determined using certain financial metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses requires judgment and is based on the markets in which we operate giving consideration to, amongst other things, risk profiles, size and geography. The market approach may also be limited in instances where there is a lack of recently executed transactions of comparable businesses. We determine fair value primarily based on selected market multiples based on current and projected revenues compared to business enterprise value, with an estimated control premium as applicable. Goodwill allocated to our single reporting unit as of December 31, 2021 was $435.7 million, including $19.2 million in goodwill attributable to our acquisition of Shareablee in December 2021. As of our most recent annual assessment, which was conducted as of October 1, 2021, the estimated fair value of our reporting unit exceeded its carrying value by approximately 40%. The projected long-term cash flows used in our fair value estimate are consistent with our most recent operating plan and are dependent on the successful execution of our business plan, overall industry growth rates and the competitive environment. We monitor for events and circumstances that could negatively impact the key assumptions in determining the fair value of our goodwill, including long-term growth projections, profitability, discount rates, volatility in our market capitalization, and general industry, market and macro-economic conditions. The judgments and estimates described above could change in future periods. If the reporting unit's future performance falls below our expectations, or if there are negative revisions to our fair value assumptions, including those that are significant and discussed above, we may need to record a material, non-cash goodwill impairment charge in a future period.