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Item 1. Financial Statements

2023-11-08 compared with 2023-08-09 · 146 added, 123 removed, 481 unchanged (36% of the section changed)

2 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In thousands, except share and par value data) (Unaudited)

26 unchanged sentences

Current operating lease liabilities 7,954 7,639

Warrants liability 945 718

Other current liabilities 4,742 5,501

9 unchanged sentences

Convertible redeemable preferred stock, $ 0.001 par value;

100,000,000 shares authorized and 82,527,609 shares issued and outstanding as of June 30, 2023 and 82,527,609 shares authorized, issued and outstanding as of December 31, 2022;

aggregate liquidation preference of $ 219,559 as of June 30, 2023, and $ 211,863 as of December 31, 2022 (related parties)

100,000,000 shares authorized and 82,527,609 shares issued and outstanding as of September 30, 2023 and 82,527,609 shares authorized, issued and outstanding as of December 31, 2022;

aggregate liquidation preference of $ 223,846 as of September 30, 2023, and $ 211,863 as of December 31, 2022 (related parties)

187,885 187,885

1 unchanged sentence

Preferred stock, $ 0.001 par value;

5,000,000 shares authorized as of June 30, 2023 and 7,472,391 shares authorized as of December 31, 2022;

no shares issued or outstanding as of June 30, 2023 or December 31, 2022

5,000,000 shares authorized as of September 30, 2023 and 7,472,391 shares authorized as of December 31, 2022;

no shares issued or outstanding as of September 30, 2023 or December 31, 2022

Common stock, $ 0.001 par value;

275,000,000 shares authorized as of June 30, 2023 and December 31, 2022;

101,851,130 shares issued and 95,086,334 shares outstanding as of June 30, 2023, and 98,869,738 shares issued and 92,104,942 shares outstanding as of December 31, 2022

275,000,000 shares authorized as of September 30, 2023 and December 31, 2022;

101,851,130 shares issued and 95,086,334 shares outstanding as of September 30, 2023, and 98,869,738 shares issued and 92,104,942 shares outstanding as of December 31, 2022

Additional paid-in capital 1,695,998 1,690,783

1 unchanged sentence

Accumulated deficit ( 1,363,734 ) ( 1,300,789 )

Treasury stock, at cost, 6,764,796 shares as of June 30, 2023 and December 31, 2022

Treasury stock, at cost, 6,764,796 shares as of September 30, 2023 and December 31, 2022

( 229,984 ) ( 229,984 )

3 unchanged sentences

COMSCORE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

Three Months Ended June 30, Six Months Ended June 30,

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands, except share and per share data) 2023 2022 2023 2022

8 unchanged sentences

12,928 12,899 39,776 48,119

Impairment of goodwill 44,100 — 44,100 —

Restructuring 4,104 — 5,102 —

Amortization of intangible assets 800 6,772 4,412 20,323

Impairment of right-of-use and long-lived assets 1,502 — 1,502 —

Restructuring 353 5,784 5,455 5,784

Impairment of goodwill — 46,300 44,100 46,300

Total expenses from operations 88,933 149,225 325,381 356,481

Loss from operations ( 47,379 ) ( 11,310 ) ( 51,206 ) ( 21,856 )

Other income (expense), net 1,609 4,557 ( 203 ) 6,990

(Loss) gain from foreign currency transactions ( 168 ) 2,527 ( 1,634 ) 2,947

Income (loss) from operations 2,067 ( 56,442 ) ( 49,139 ) ( 78,298 )

Other income, net 628 1,477 425 8,467

Gain (loss) from foreign currency transactions 1,090 2,781 ( 544 ) 5,728

Interest expense, net ( 426 ) ( 284 ) ( 1,141 ) ( 660 )

Loss before income taxes ( 46,301 ) ( 4,402 ) ( 53,758 ) ( 12,295 )

Income tax benefit (provision) 1,392 ( 648 ) 178 ( 2,031 )

Net loss $ ( 44,909 ) $ ( 5,050 ) $ ( 53,580 ) $ ( 14,326 )

Income (loss) before income taxes 3,359 ( 52,468 ) ( 50,399 ) ( 64,763 )

Income tax (provision) benefit ( 741 ) 86 ( 563 ) ( 1,945 )

Net income (loss) $ 2,618 $ ( 52,382 ) $ ( 50,962 ) $ ( 66,708 )

Net loss available to common stockholders:

Net loss $ ( 44,909 ) $ ( 5,050 ) $ ( 53,580 ) $ ( 14,326 )

Net income (loss) $ 2,618 $ ( 52,382 ) $ ( 50,962 ) $ ( 66,708 )

Convertible redeemable preferred stock dividends (1)

1 unchanged sentence

Total net loss available to common stockholders $ ( 1,668 ) $ ( 56,292 ) $ ( 62,945 ) $ ( 78,311 )

$ ( 48,781 ) $ ( 8,918 ) $ ( 61,277 ) $ ( 22,019 )

Net loss per common share:

2 unchanged sentences

Basic and diluted 97,709,191 93,347,017 95,704,106 92,380,984

Comprehensive loss:

Net loss $ ( 44,909 ) $ ( 5,050 ) $ ( 53,580 ) $ ( 14,326 )

Other comprehensive (loss) income:

Comprehensive income (loss):

Net income (loss) $ 2,618 $ ( 52,382 ) $ ( 50,962 ) $ ( 66,708 )

Other comprehensive loss:

Foreign currency cumulative translation adjustment ( 2,267 ) ( 4,553 ) ( 869 ) ( 9,638 )

Total comprehensive loss $ ( 45,028 ) $ ( 9,594 ) $ ( 52,182 ) $ ( 19,411 )

(1) Excludes amortization of intangible assets, which is presented as a separate line item.

Total comprehensive income (loss) $ 351 $ ( 56,935 ) $ ( 51,831 ) $ ( 76,346 )

(1) Transactions with related parties are included in the line items above as follows (refer to Footnote 9 , Related Party Transactions , of the Notes to Condensed Consolidated Financial Statements for additional information):

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

2 unchanged sentences

Convertible redeemable preferred stock dividends ( 4,286 ) ( 3,910 ) ( 11,983 ) ( 11,603 )

(2) Excludes amortization of intangible assets, which is presented as a separate line item.

(3) Stock-based compensation expense is included in the line items above as follows:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

33 unchanged sentences

Balance as of June 30, 2023 82,527,609 $ 187,885 95,086,334 $ 95 $ 1,695,281 $ ( 14,542 ) $ ( 1,362,066 ) $ ( 229,984 ) $ 88,784

Net income — — — — — — 2,618 — 2,618

Convertible redeemable preferred stock dividends (1)

— — — — — — ( 4,286 ) — ( 4,286 )

Amortization of stock-based compensation — — — — 717 — — — 717

Foreign currency translation adjustment — — — — — ( 2,267 ) — — ( 2,267 )

Balance as of September 30, 2023 82,527,609 $ 187,885 95,086,334 $ 95 $ 1,695,998 $ ( 16,809 ) $ ( 1,363,734 ) $ ( 229,984 ) $ 85,566

(In thousands, except share data) Convertible Redeemable Preferred Stock Common Stock Additional

22 unchanged sentences

Exercise of Common Stock options — — 745 — — — — — —

Payment for taxes related to net share settlement of equity awards — — ( 12,646 ) — ( 23 ) — — — ( 23 )

Payments for taxes related to net share settlement of equity awards — — ( 12,646 ) — ( 23 ) — — — ( 23 )

Amortization of stock-based compensation — — — — 2,011 — — — 2,011

2 unchanged sentences

Balance as of June 30, 2022 82,527,609 $ 187,885 91,773,392 $ 92 $ 1,689,596 $ ( 17,183 ) $ ( 1,240,734 ) $ ( 229,984 ) $ 201,787

Net loss — — — — — — ( 52,382 ) — ( 52,382 )

Convertible redeemable preferred stock dividends (1)

— — — — — — ( 3,910 ) — ( 3,910 )

Restricted stock units distributed — — 226,948 — — — — — —

Exercise of common stock options — — 9,269 — — — — — —

Amortization of stock-based compensation — — — — 1,013 — — — 1,013

Foreign currency translation adjustment — — — — — ( 4,553 ) — — ( 4,553 )

Balance as of September 30, 2022 82,527,609 $ 187,885 92,009,609 $ 92 $ 1,690,609 $ ( 21,736 ) $ ( 1,297,026 ) $ ( 229,984 ) $ 141,955

(1) Transactions for these line items were exclusively with related parties (refer to Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity and Footnote 9 , Related Party Transactions , of the Notes to Condensed Consolidated Financial Statements for additional information).

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2023 2022

7 unchanged sentences

Stock-based compensation expense 3,819 7,214

Impairment of right-of-use and long-lived assets 1,502 —

Amortization expense of finance leases 1,268 1,875

Deferred tax (benefit) provision ( 675 ) 781

Change in fair value of warrants liability 227 ( 6,995 )

Change in fair value of contingent consideration liability 252 2,447

Change in fair value of warrants liability ( 407 ) ( 8,471 )

Deferred tax benefit ( 61 ) ( 90 )

Other 1,295 1,456

11 unchanged sentences

Financing activities :

Contingent consideration payment at initial value ( 1,037 ) —

Principal payments on finance leases ( 1,337 ) ( 2,004 )

Contingent consideration payment at initial value ( 1,037 ) —

Payments for dividends on convertible redeemable preferred stock (1)

2 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash 25 ( 2,502 )

Net increase (decrease) in cash, cash equivalents and restricted cash 2,613 ( 2,220 )

Net increase in cash, cash equivalents and restricted cash 9,811 3,232

Cash, cash equivalents and restricted cash at beginning of period 20,442 22,279

1 unchanged sentence

(1) Transactions for this line item were exclusively with related parties (refer to Footnote 9 , Related Party Transactions , of the Notes to Condensed Consolidated Financial Statements for additional information).

As of June 30,

As of September 30,

Cash and cash equivalents $ 30,067 $ 25,086

1 unchanged sentence

Total cash, cash equivalents and restricted cash $ 30,253 $ 25,511

Six Months Ended June 30,

Nine Months Ended September 30,

Supplemental disclosures of non-cash investing and financing activities :

Convertible redeemable preferred stock dividends accrued but not yet paid (related parties) $ 11,983 $ 3,953

Right-of-use assets obtained in exchange for finance lease liabilities 3,048 1,106

Settlement of restricted stock unit liability 2,761 1,719

1 unchanged sentence

Change in accounts payable and accrued expenses related to capital expenditures 1,170 810

Right-of-use assets obtained in exchange for finance lease liabilities — 1,106

See accompanying Notes to Condensed Consolidated Financial Statements.

13 unchanged sentences

Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation.

Specifically, accrued dividends have been separated from other current liabilities on the Condensed Consolidated Balance Sheets.

Specifically, accrued dividends have been separated from other current liabilities, and warrants liability has been aggregated within other current liabilities on the Condensed Consolidated Balance Sheets.

Unaudited Interim Financial Information

4 unchanged sentences

These interim Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2022 (the "2022 10-K").

The Condensed Consolidated Results of Operations for the three and six months ended June 30, 2023 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2023 or thereafter.

All references to June 30, 2023 and 2022 in the Notes to Condensed Consolidated Financial Statements are unaudited.

The Condensed Consolidated Results of Operations for the three and nine months ended September 30, 2023 are not necessarily indicative of the results to be anticipated for the entire year ending December 31, 2023 or thereafter.

All references to September 30, 2023 and 2022 in the Notes to Condensed Consolidated Financial Statements are unaudited.

Use of Estimates and Judgments in the Preparation of the Condensed Consolidated Financial Statements

16 unchanged sentences

The Company monitors for events and circumstances that could negatively impact the key assumptions in determining fair value, including long-term revenue growth projections, profitability, discount rates, volatility in the Company's market capitalization, and general industry, market and macroeconomic conditions.

As of June 30, 2023, the Company concluded that it was more likely than not that the estimated fair value of its reporting unit was less than its carrying value.

In its assessment, the Company considered the decline in the Company's stock price and market capitalization among other factors.

The Company performed a quantitative goodwill impairment test using a discounted cash flow model, supported by a market approach.

The Company's reporting unit did not pass the goodwill impairment test, and as a result, the Company recorded a $ 44.1 million non-cash impairment charge.

In the second quarter of 2023, the Company performed a quantitative goodwill impairment test using a discounted cash flow model, supported by a market approach.

The Company's reporting unit did not pass the goodwill impairment test, and as a result, the Company recorded a $ 44.1 million non-cash impairment charge during the nine months ended September 30, 2023.

In the third quarter of 2022, the Company performed a quantitative goodwill impairment test using a discounted cash flow model, supported by a market approach.

The Company's reporting unit did not pass the goodwill impairment test, and as a result, the Company recorded a $ 46.3 million non-cash impairment charge during the three and nine months ended September 30, 2022.

For further information refer to Footnote 4 , Goodwill .

Recoverability of Other Long-Lived Assets

The Company's other long-lived assets consist primarily of property and equipment and right-of-use ("ROU") assets.

The Company evaluates its ROU and long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of such assets may not be recoverable.

The Company performed an analysis in the third quarter of 2023 related to the abandonment of two leased office spaces, which changed the extent and manner for which the ROU assets and related long-lived assets were being used.

The Company recorded an impairment charge of $ 1.5 million related to the ROU assets for the three and nine months ended September 30, 2023.

Preferred Stock

8 unchanged sentences

If the instrument meets either of these criteria, the Company will accrete the carrying value to the redemption value.

The Preferred Stock has not been adjusted to its redemption amount as of June 30, 2023 because a deemed liquidation event is not considered probable.

The Preferred Stock has not been adjusted to its redemption amount as of September 30, 2023 because a deemed liquidation event is not considered probable.

The Preferred Stock includes a change of control put option which allows the holders of the Preferred Stock to require the Company to repurchase such holders' shares in cash in an amount equal to the initial purchase price plus accrued dividends.

The change of control put option was determined to be a derivative liability.

As of June 30, 2023, the probability of a change of control was determined to be remote and the fair value of the change of control derivative was determined to be negligible.

As of September 30, 2023, the probability of a change of control was determined to be remote and the fair value of the change of control derivative was determined to be negligible.

Warrants Liability

1 unchanged sentence

("CVI") in connection with the private placement described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity .

The warrants were determined to be freestanding financial instruments that qualify for liability treatment as a result of net cash settlement features associated with a cap on the issuance of shares, under certain circumstances, or upon a change of control.

Changes in the fair value of these instruments are recorded in other income (expense), net in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

circumstances, or upon a change of control.

Changes in the fair value of these instruments are recorded in other income, net in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The fair value of each warrant is estimated utilizing an option pricing model.

Significant valuation inputs include the exercise price, price and expected volatility of the Company's Common Stock, risk-free rate, and the remaining term of the warrants.

As of June 30, 2023, the probability of a change of control was determined to be remote and did not require an enhancement to the valuation technique.

Other Income (Expense), Net

Other income (expense), net represents income and expenses incurred that are generally not recurring in nature or are not part of the Company's normal operations.

The following is a summary of the components of other income (expense), net:

Three Months Ended June 30, Six Months Ended June 30,

As of September 30, 2023, the probability of a change of control was determined to be remote and did not require an enhancement to the valuation technique.

Other Income, Net

Other income, net represents income and expenses incurred that are generally not recurring in nature or are not part of the Company's normal operations.

The following is a summary of the components of other income, net:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2023 2022 2023 2022

1 unchanged sentence

Other ( 6 ) 1 18 ( 4 )

Total other income (expense), net

Total other income, net

$ 628 $ 1,477 $ 425 $ 8,467

9 unchanged sentences

The following is a summary of the Common Stock equivalents for the securities outstanding during the respective periods that have been excluded from the computation of diluted net loss per common share, as their effect would be anti-dilutive:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2023 2022 2023 2022

11 unchanged sentences

Settlement of this liability in Common Stock could potentially dilute basic earnings per share in future periods.

The Company paid $ 3.6 million of the total $ 3.7 million first installment in cash through the second quarter of 2023.

The remaining amount of the first installment will be settled in cash and is therefore excluded from Common Stock equivalents herein.

The Company calculated a potential anti-dilutive share count based on the remaining expected payments totaling $ 4.9 million and the $ 0.81 per share closing price of the Company's Common Stock on the Nasdaq Global Select Market on June 30, 2023.

The Company calculated a potential anti-dilutive share count based on the expected payments totaling $ 8.6 million and the $ 2.06 per share closing price of the Company's Common Stock on the Nasdaq Global Select Market on June 30, 2022.

The Company paid the first installment of $ 3.7 million in cash, and it is therefore excluded from Common Stock equivalents herein.

The Company calculated a potential anti-dilutive share count based on the remaining expected payments totaling $ 4.9 million and the $ 0.61 per share closing price of the Company's Common Stock on the Nasdaq Global Select Market on September 29, 2023.

The Company calculated a potential anti-dilutive share count based on the expected payments totaling $ 8.6 million and the $ 1.65 per share closing price of the Company's Common Stock on the Nasdaq Global Select Market on September 30, 2022.

A significant portion of the Company's net operating loss carryforwards are subject to an annual limitation under Section 382 of the Internal Revenue Code.

The Company anticipates the Transactions may have triggered further limitations but has not yet reached a final conclusion as to whether an ownership change occurred and to what extent its net operating loss carryforwards are further limited.

If an ownership change occurred as a result of the Transactions, the annual limitation under Section 382 may cause a significant portion of the Company's net operating loss carryforwards to expire prior to use.

The Company has concluded that an ownership change occurred in 2021 as a result of the Transactions which has triggered further limitations on the use of its net operating loss carryforwards.

The limitation calculations are currently being finalized by the Company and are expected to cause a significant portion of the Company's net operating loss carryforwards to expire prior to use.

Due to the Company's valuation allowance position in the United States, the required revaluation of its deferred tax assets related to these limited U.S.

3 unchanged sentences

The Company attributes revenue to geographical markets based on the location of the customer.

The Company has one reportable

segment in accordance with ASC 280, Segment Reporting ;

The Company has one reportable segment in accordance with ASC 280, Segment Reporting ;

as such, the disaggregation of revenue below reconciles directly to its unique reportable segment.

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2023 2022 2023 2022

16 unchanged sentences

The following table provides information about receivables, contract assets, contract liabilities and customer advances from contracts with customers:

(In thousands) June 30, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

Accounts receivable, net $ 46,469 $ 68,457

4 unchanged sentences

Significant changes in the current contract liabilities balance are as follows:

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2023 2022

2 unchanged sentences

Remaining Performance Obligations

As of June 30, 2023, approximately $ 220 million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied) for non-cancelable contracts with an original expected duration of longer than one year.

As of September 30, 2023, approximately $ 210 million of revenue is expected to be recognized from remaining performance obligations that are unsatisfied (or partially unsatisfied) for non-cancelable contracts with an original expected duration of longer than one year.

The Company expects to recognize revenue on approximately 15 % of these remaining performance obligations during the remainder of 2023, approximately 45 % in 2024, and approximately 22 % in 2025, with the remainder recognized thereafter.

The Company tests goodwill for impairment annually during the fourth quarter as of October 1, or more frequently when events or changes in circumstances indicate that fair value is below carrying value.

As of June 30, 2023, the Company concluded that it was more likely than not that the estimated fair value of its reporting unit was less than its carrying value.

In the second quarter of 2023, the Company concluded that it was more likely than not that the estimated fair value of its reporting unit was less than its carrying value.

In its assessment, the Company considered the decline in the Company's stock price and market capitalization, among other factors.

The Company performed quantitative testing on its reporting unit using a discounted cash flow model (a form of the income approach) utilizing Level 3 unobservable inputs, supported by a market approach.

The Company relied in part on the work of an independent valuation firm engaged by the Company to provide inputs as to the fair value of the reporting unit and to assist in the related calculations and analysis.

The Company's reporting unit did not pass the goodwill impairment test, and as a result the Company recorded a $ 44.1 million impairment charge for the three months ended June 30, 2023.

The Company's reporting unit did not pass the goodwill impairment test, and as a result the Company recorded a $ 44.1 million impairment charge for the nine months ended September 30, 2023.

In the third quarter of 2022, in conjunction with its annual test as of October 1, 2022, the Company performed a quantitative goodwill impairment test as of September 30, 2022.

The Company's reporting unit did not pass the goodwill impairment test, and as a result the Company recorded a $ 46.3 million impairment charge for the three and nine months ended September 30, 2022.

The change in the carrying value of goodwill is as follows:

6 unchanged sentences

Impairment charge ( 44,100 )

Balance as of June 30, 2023

Balance as of September 30, 2023

Convertible Redeemable Preferred Stock and Stockholders' Equity

4 unchanged sentences

The conversion right is subject to certain anti-dilution adjustments and customary provisions related to partial dividend periods.

As of June 30, 2023, each share of Preferred Stock would have been convertible into 1.076270 shares of Common Stock, with such assumed conversion rate scheduled to return to 1.00 upon payment of accrued dividends.

As of June 30, 2023, no shares of Preferred Stock have been converted into Common Stock.

As of September 30, 2023, each share of Preferred Stock would have been convertible into 1.097283 shares of Common Stock, with such assumed conversion rate scheduled to return to 1.00 upon payment of accrued dividends.

As of September 30, 2023, no shares of Preferred Stock have been converted into Common Stock.

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 circumstances.

2 unchanged sentences

At an annual meeting of stockholders of the Company held on June 15, 2023 (the "Annual Meeting"), the Company's stockholders approved proposals permitting the payment of annual dividends on the Preferred Stock in the form of cash, shares of Common Stock, additional shares of Preferred Stock, or a combination thereof.

On the same date, each holder of Preferred Stock waived its right to receive on June 30, 2023 the annual dividends otherwise payable by the Company on that date (the "Waivers"), and the Company's Board of Directors elected to defer the June 30, 2023 payment.

Under the Waivers and the Certificate of Designations governing the Preferred Stock, the deferred dividends will accrue and accumulate at a rate of 9.5 % per year from June 30, 2023 until declared and paid, with payment to occur on or before December 31, 2023 subject to certain conditions.

As of June 30, 2023, accrued dividends for the Preferred Stock totaled $ 15.6 million.

As of September 30, 2023, accrued dividends for the Preferred Stock totaled $ 19.8 million.

2019 Issuance and Sale of Common Stock and Warrants

9 unchanged sentences

Upon the issuance of the Preferred Stock in 2021, the Company adjusted the exercise price of the Series A Warrants from $ 12.00 to $ 2.4719 per share, the closing price of the Transactions.

On March 15, 2023, the Company granted Common Stock awards to certain non-executive employees valued at $ 1.01 per share (the closing price of the Common Stock on March 15, 2023) under the Company's annual incentive compensation plan, resulting in a further adjustment of the Series A Warrants exercise price from $ 2.4719 to $ 1.01 per share.

incentive compensation plan, resulting in a further adjustment of the Series A Warrants exercise price from $ 2.4719 to $ 1.01 per share.

The estimated fair value of the Series A Warrants immediately after the exercise price adjustment on March 15, 2023 was $ 1.7 million, reflecting an increase of $ 1.0 million compared to the value as of December 31, 2022.

1 unchanged sentence

CVI has the right, in its discretion, to raise this threshold up to 9.99 % with 60 days' notice to the Company.

In addition, if and to the extent the exercise of any warrants would, together with the issuances of the Initial Shares and the shares

issued pursuant to the exercise of any other warrants, result in the issuance of 20.0 % or more of the outstanding Common Stock of the Company on the CVI Closing Date, the Company intends to, in lieu of issuing such shares, settle the obligation to issue such shares in cash.

The estimated fair value of the Series A Warrants as of June 30, 2023 was $ 0.9 million.

In addition, if and to the extent the exercise of any warrants would, together with the issuances of the Initial Shares and the shares issued pursuant to the exercise of any other warrants, result in the issuance of 20.0 % or more of the outstanding Common Stock of the Company on the CVI Closing Date, the Company intends to, in lieu of issuing such shares, settle the obligation to issue such shares in cash.

The estimated fair value of the Series A Warrants as of September 30, 2023 was $ 0.3 million and is classified within other current liabilities on the Condensed Consolidated Balance Sheets.

Refer to Footnote 7 , Fair Value Measurements , for further information.

17 unchanged sentences

If an event of default occurs and is continuing, the Agent or the Required Lenders may accelerate any amounts outstanding and terminate lender commitments.

The Company was in compliance with the covenants under the amended Revolving Credit Agreement as of June 30, 2023.

The Company was in compliance with the covenants under the amended Revolving Credit Agreement as of September 30, 2023.

The Revolving Credit Agreement is guaranteed by the Company and its domestic subsidiaries (other than Excluded Subsidiaries (as defined in the Revolving Credit Agreement)) and is secured by a first lien security interest in substantially all assets of the Company and its domestic subsidiaries (other than Excluded Subsidiaries), subject to certain customary exclusions.

As of June 30, 2023, the Company had outstanding borrowings of $ 16.0 million, and issued and outstanding letters of credit of $ 3.4 million, under the amended Revolving Credit Agreement, with remaining borrowing capacity of $ 20.6 million.

During the three months ended June 30, 2023, the Company reclassified the outstanding borrowings to current liabilities from non-current liabilities as the facility matures in May 2024.

As of September 30, 2023, the Company had outstanding borrowings of $ 16.0 million, and issued and outstanding letters of credit of $ 3.4 million, under the amended Revolving Credit Agreement, with remaining borrowing capacity of $ 20.6 million.

During the second quarter of 2023, the Company reclassified the outstanding borrowings to current liabilities from non-current liabilities as the facility matures in May 2024.

Fair Value Measurements

The Company's financial instruments measured at fair value in the accompanying Condensed Consolidated Balance Sheets on a recurring basis consist of the following:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

(In thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total

8 unchanged sentences

dollar-denominated money market instruments with maturities less than three months.

(2) The fair value of this liability as of June 30, 2023 and December 31, 2022 is derived from a technique which utilizes market-corroborated inputs that result in classification as a Level 2 fair value measurement as of such date.

The non-current portion of the contingent consideration liability is classified within non-current liabilities in the Condensed Consolidated Balance Sheets.

The current portion of the contingent consideration liability was $ 3.6 million and $ 7.1 million as of June 30, 2023 and December 31, 2022, respectively.

The non-current portion of the contingent consideration liability was $ 1.1 million as of June 30, 2023 and $ 1.0 million as of December 31, 2022.

(2) The fair value of this liability as of September 30, 2023 and December 31, 2022 is derived from a technique which utilizes market-corroborated inputs that result in classification as a Level 2 fair value measurement as of such date.

The non-current portion of the contingent consideration liability is classified within non-current liabilities on the Condensed Consolidated Balance Sheets.

The current portion of the contingent consideration liability was $ 3.7 million and $ 7.1 million as of September 30, 2023 and December 31, 2022, respectively.

The non-current portion of the contingent consideration liability was $ 1.1 million and $ 1.0 million as of September 30, 2023 and December 31, 2022, respectively.

(3) The fair value of this liability is derived from a technique which utilizes inputs, certain of which are significant and unobservable, that result in classification as a Level 3 fair value measurement.

Warrants liability includes only the Series A warrants as of June 30, 2023 and December 31, 2022 .

The elimination of the option pricing model used to value the contingent consideration liability reflected a change in the Company's valuation technique during the three and six months ended June 30, 2022.

There were no changes to the Company's valuation techniques or methodologies during the three and six months ended June 30, 2023.

The following tables present the changes in the Company's recurring Level 3 fair valued instruments for the six months ended June 30, 2023 and 2022, respectively:

Warrants liability includes only the Series A warrants as of September 30, 2023 and December 31, 2022.

Warrants liability is classified within other current liabilities on the Condensed Consolidated Balance Sheets.

The elimination of the option pricing model used to value the contingent consideration liability reflected a change in the Company's valuation technique during the nine months ended September 30, 2022.

There were no other changes to the Company's valuation techniques or methodologies during the three and nine months ended September 30, 2023 and 2022.

The following tables present the changes in the Company's recurring Level 3 fair valued instruments for the nine months ended September 30, 2023 and 2022, respectively:

(In thousands) Warrants Liability

Balance as of December 31, 2022 $ 718

Total loss recognized due to remeasurement (1)

Balance as of June 30, 2023 $ 945

(1) The loss on remeasurement of the warrants liability was recorded in other income (expense), net, in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Total gain recognized due to remeasurement (1)

Balance as of September 30, 2023 $ 311

(1) The gain on remeasurement of the warrants liability was recorded in other income, net, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

(In thousands) Contingent Consideration Liability Warrants Liability

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Transfer to Level 2 (2)

Balance as of June 30, 2022 $ — $ 3,525

(1) The loss due to remeasurement of the contingent consideration liability was recorded in general and administrative expense, and the gain on remeasurement of the warrants liability was recorded in other income (expense), net, in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

Balance as of September 30, 2022 $ — $ 2,049

(1) The loss due to remeasurement of the contingent consideration liability was recorded in general and administrative expense, and the gain on remeasurement of the warrants liability was recorded in other income, net, in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

(2) The contingent consideration liability was transferred from Level 3 to Level 2 at the beginning of the second quarter of 2022 due to the resolution of the contingency regarding the amount of consideration payable.

The following table displays the valuation technique and the significant inputs, certain of which are unobservable, for the Company's Level 3 liabilities that existed as of June 30, 2023 and December 31, 2022 that are measured at fair value on a recurring basis:

The following table displays the valuation technique and the significant inputs, certain of which are unobservable, for the Company's Level 3 liabilities that existed as of September 30, 2023 and December 31, 2022 that are measured at fair value on a recurring basis:

Fair Value Measurements

Significant Valuation Technique Significant Valuation Inputs June 30, 2023 December 31, 2022

Significant Valuation Technique Significant Valuation Inputs September 30, 2023 December 31, 2022

Warrants liability Option pricing Stock price $ 0.61 $ 1.16

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Fair Value Measurements on a Nonrecurring Basis

For the three months ended June 30, 2023, the Company recorded a goodwill impairment charge of $ 44.1 million.

For the nine months ended September 30, 2023, the Company recorded a goodwill impairment charge of $ 44.1 million.

For the three and nine months ended September 30, 2022, the Company recorded a goodwill impairment charge of $ 46.3 million.

Refer to Footnote 4 , Goodwill for further details.

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Accrued Expenses

(In thousands) June 30, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

Accrued data costs $ 17,419 $ 18,515

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Transactions with WPP

As of June 30, 2023 (based on public filings), WPP plc and its affiliates ("WPP") owned 11,319,363 shares of the Company's outstanding Common Stock, representing 11.9 % of the outstanding Common Stock.

As of September 30, 2023 (based on public filings), WPP plc and its affiliates ("WPP") owned 11,319,363 shares of the Company's outstanding Common Stock, representing 11.9 % of the outstanding Common Stock.

The Company provides WPP, in the normal course of business, services amongst its different product lines and receives various services from WPP supporting the Company's data collection efforts.

The Company's results from transactions with WPP, as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Loss, are as follows:

Three Months Ended June 30, Six Months Ended June 30,

The Company's results from transactions with WPP, as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), are as follows:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2023 2022 2023 2022

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The Company has the following balances related to transactions with WPP, as reflected in the Condensed Consolidated Balance Sheets:

(In thousands) June 30, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

Accounts receivable, net $ 1,695 $ 825

4 unchanged sentences

Through May 15, 2023, Charter, Qurate, and Pine each held 33.3 % of the outstanding shares of Preferred Stock.

On May 16, 2023, Qurate sold its Preferred Stock to Liberty, and as of June 30, 2023, Charter, Liberty and Pine each hold 33.3 % of the outstanding shares of Preferred Stock.

On May 16, 2023, Qurate sold its Preferred Stock to Liberty, and as of September 30, 2023, Charter, Liberty and Pine each hold 33.3 % of the outstanding shares of Preferred Stock.

Charter, Liberty and Pine are entitled to convert the Preferred Stock into shares of Common Stock and to vote as a single class with the holders of the Common Stock as set forth in the Certificate of Designations.

As of June 30, 2023 (based on public filings), Pine also owned 2,193,088 shares of the Company's outstanding Common Stock, representing 2.3 % of the outstanding Common Stock.

As of September 30, 2023 (based on public filings), Pine also owned 2,193,088 shares of the Company's outstanding Common Stock, representing 2.3 % of the outstanding Common Stock.

In addition, Charter, Liberty and Pine each designated two members of the Company's Board in accordance with the Stockholders Agreement.

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The deferred dividends will accrue at a rate of 9.5 % per year from June 30, 2023 until declared and paid, with payment to occur on or before December 31, 2023 subject to certain conditions.

As of June 30, 2023, Charter, Liberty and Pine each owned 27,509,203 shares of Preferred Stock.

As of June 30, 2023, total accrued dividends to the holders of Preferred Stock were $ 15.6 million.

As of September 30, 2023, Charter, Liberty and Pine each owned 27,509,203 shares of Preferred Stock.

As of September 30, 2023, total accrued dividends to the holders of Preferred Stock were $ 19.8 million.

As of December 31, 2022, Charter, Qurate and Pine each owned 27,509,203 shares of Preferred Stock.

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In response, Charter Operating denied the Company's concerns and notified the Company of alleged breaches of the DLA by the Company.

Charter Operating demanded that the Company cure the alleged breaches and pay outstanding balances to Charter Operating by August 6, 2023.

If either party were to terminate the DLA, all amounts then due to Charter Operating would be immediately due and payable, and Charter Operating could seek liquidated damages as set forth in the DLA.

To date, however, neither party has indicated that it intends to terminate the DLA, and the parties are discussing a resolution to the matter.

The Company's results from transactions with Charter and its affiliates, as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Loss, are detailed below:

Three Months Ended June 30, Six Months Ended June 30,

The Company's results from transactions with Charter and its affiliates, as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss), are detailed below:

Three Months Ended September 30, Nine Months Ended September 30,

(In thousands) 2023 2022 2023 2022

2 unchanged sentences

The Company has the following liability balances related to transactions with Charter and its affiliates, as reflected in the Condensed Consolidated Balance Sheet:

(In thousands) June 30, 2023 December 31, 2022

(In thousands) September 30, 2023 December 31, 2022

Accounts payable $ 11,138 $ 9,693

1 unchanged sentence

Non-current portion of accrued data costs 20,154 15,471

The Company recognized revenues of $ 0.2 million during the three months ended June 30, 2023 and 2022, and $ 0.4 million during the six months ended June 30, 2023 and 2022 from transactions with Qurate and its affiliates in the normal course of business as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Loss.

The Company had no transactions with Liberty and Pine for the three and six months ended June 30, 2023 and 2022.

In the third quarter of 2023, the Company entered into a finance lease with a third-party vendor that is not a related party.

In conjunction with this transaction, the third-party vendor purchased equipment for $ 2.5 million from a Pine affiliate (related party).

The Company had no additional transactions with Pine for the three and nine months ended September 30, 2023 and 2022.

The Company recognized revenues of $ 0.2 million during the three months ended September 30, 2023 and 2022, and $ 0.6 million during the nine months ended September 30, 2023 and 2022, from transactions with Qurate and its affiliates in the normal course of business as reflected in the Condensed Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company had no transactions with Liberty for the three and nine months ended September 30, 2023 and 2022.

Organizational Restructuring

8 unchanged sentences

The Company expects implementation of the Restructuring Plan, including cash payments, to be substantially complete in the fourth quarter of 2023.

The table below summarizes the activity and balance of the restructuring liability as of June 30, 2023 and December 31, 2022, which is recorded in accrued expenses in the Condensed Consolidated Balance Sheets, and the changes in the accrued amounts for the six months ended June 30, 2023:

The table below summarizes the activity and balance of the restructuring liability as of September 30, 2023 and December 31, 2022, which is recorded in accrued expenses in the Condensed Consolidated Balance Sheets, and the changes in the accrued amounts for the nine months ended September 30, 2023:

(In thousands) Severance and Related Costs Other Total Restructuring

4 unchanged sentences

Foreign exchange ( 25 ) — ( 25 )

Balance as of June 30, 2023

Balance as of September 30, 2023

$ 1,934 $ — $ 1,934

2 unchanged sentences

These agreements have remaining terms of less than one year to eight years .

As of June 30, 2023, the total fixed payment obligations related to set-top box and connected television data agreements are $ 286.0 million and $ 4.4 million, respectively.

The information set forth below summarizes the contractual obligations, by year, as of June 30, 2023:

As of September 30, 2023, the total fixed payment obligations related to set-top box and connected television data agreements are $ 279.5 million and $ 2.5 million, respectively.

The information set forth below summarizes the contractual obligations, by year, as of September 30, 2023:

(In thousands)

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Vendor Contract Dispute

In April 2023, the Company received correspondence from counsel to a TV data provider disputing the manner in which payments by the Company to the data provider are calculated under a 2018 data license agreement between the parties.

The aggregate amount in dispute for periods through June 30, 2023 is approximately $ 2.9 million.

The Company disagrees with the data provider's interpretation of the license agreement and believes it has a strong position with respect to the calculation of payments during the term.

As of June 30, 2023, the Company cannot reasonably estimate the potential loss, if any, that may be incurred in this matter.

In April 2023, the Company received correspondence from counsel to a TV data provider disputing the manner in which payments by the Company to the data provider were calculated under a 2018 data license agreement between the parties.

Subsequent to September 30, 2023, the Company and the data provider entered into a new data license agreement, and the Company considers this matter resolved.

Other Matters

3 unchanged sentences

Indemnification

The Company has entered into indemnification agreements with each of the Company's directors and certain officers, and the Company's amended and restated certificate of incorporation requires it to indemnify each of its directors and officers, to the fullest extent permitted by Delaware law, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that he or she is or was a director or officer of the Company.

reason of the fact that he or she is or was a director or officer of the Company.

The Company has paid and may in the future pay legal counsel fees incurred by current and former directors and officers who are involved in legal proceedings that require indemnification.

1 unchanged sentence

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

What changed 10-Q

Item 1. Financial Statements