What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2023-11-08 compared with 2023-08-09 · 112 added, 111 removed, 226 unchanged (50% of the section changed)

14 unchanged sentences

Results of Operations

The following table sets forth selected Condensed Consolidated Statements of Operations and Comprehensive Loss data as a percentage of total revenues for each of the periods indicated.

The following table sets forth selected Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) data as a percentage of total revenues for each of the periods indicated.

Percentages may not add due to rounding.

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

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

2023 2022 2023 2022

5 unchanged sentences

General and administrative 12,928 14.2 % 12,899 13.9 % 39,776 14.4 % 48,119 17.3 %

Impairment of goodwill 44,100 47.1 % — — % 44,100 23.8 % — — %

Restructuring 4,104 4.4 % — — % 5,102 2.8 % — — %

Amortization of intangible assets 800 0.9 % 6,772 7.3 % 4,412 1.6 % 20,323 7.3 %

Impairment of right-of-use and long-lived assets 1,502 1.7 % — — % 1,502 0.5 % — — %

Restructuring 353 0.4 % 5,784 6.2 % 5,455 2.0 % 5,784 2.1 %

Impairment of goodwill — — % 46,300 49.9 % 44,100 16.0 % 46,300 16.6 %

Total expenses from operations 88,933 97.7 % 149,225 160.8 % 325,381 117.8 % 356,481 128.1 %

Loss from operations (47,379) (50.6) % (11,310) (12.4) % (51,206) (27.6) % (21,856) (11.8) %

Other income (expense), net 1,609 1.7 % 4,557 5.0 % (203) (0.1) % 6,990 3.8 %

(Loss) gain from foreign currency transactions (168) (0.2) % 2,527 2.8 % (1,634) (0.9) % 2,947 1.6 %

Income (loss) from operations 2,067 2.3 % (56,442) (60.8) % (49,139) (17.8) % (78,298) (28.1) %

Other income, net 628 0.7 % 1,477 1.6 % 425 0.2 % 8,467 3.0 %

Gain (loss) from foreign currency transactions 1,090 1.2 % 2,781 3.0 % (544) (0.2) % 5,728 2.1 %

Interest expense, net (426) (0.5) % (284) (0.3) % (1,141) (0.4) % (660) (0.2) %

Loss before income taxes (46,301) (49.4) % (4,402) (4.8) % (53,758) (29.0) % (12,295) (6.6) %

Income tax benefit (provision) 1,392 1.5 % (648) (0.7) % 178 0.1 % (2,031) (1.1) %

Net loss $ (44,909) (47.9) % $ (5,050) (5.5) % $ (53,580) (28.9) % $ (14,326) (7.7) %

Income (loss) before income taxes 3,359 3.7 % (52,468) (56.5) % (50,399) (18.2) % (64,763) (23.3) %

Income tax (provision) benefit (741) (0.8) % 86 0.1 % (563) (0.2) % (1,945) (0.7) %

Net income (loss) $ 2,618 2.9 % $ (52,382) (56.5) % $ (50,962) (18.4) % $ (66,708) (24.0) %

Our products and services are organized around solution groups that address customer needs.

8 unchanged sentences

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 three months ended June 30, 2023 and 2022 were as follows:

Three Months Ended June 30,

Revenues for the three months ended September 30, 2023 and 2022 were as follows:

Three Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance

2 unchanged sentences

Total revenues $ 91,000 100.0 % $ 92,783 100.0 % $ (1,783) (1.9) %

Digital Ad Solutions revenue increased primarily due to higher usage of our Activation product, as well as an increase in certain custom digital product deliveries to multiple customers.

These increases were partially offset by lower revenue from our syndicated digital products primarily driven by lower renewals.

Cross Platform Solutions revenue increased primarily due to higher local TV from renewals and new business, partially offset by lower national TV revenue due to lower renewals.

Movies revenue also increased from the continued return of consumers to theaters in markets worldwide.

Revenues for the six months ended June 30, 2023 and 2022 were as follows:

Six Months Ended June 30,

Digital Ad Solutions revenue decreased primarily due to lower revenue from our syndicated digital products driven by lower renewals and lower deliveries of certain custom digital products.

These decreases were partially offset by an increase in Activation revenue driven by higher usage from multiple customers.

Cross Platform Solutions revenue increased primarily due to higher local TV revenue from renewals and new business, partially offset by lower national TV revenue due to lower renewals.

Movies revenue was flat compared to the prior year period.

Revenues for the nine months ended September 30, 2023 and 2022 were as follows:

Nine Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance

2 unchanged sentences

Total revenues $ 276,242 100.0 % $ 278,183 100.0 % $ (1,941) (0.7) %

Digital Ad Solutions revenue decreased primarily due to lower revenue from our syndicated digital products and certain custom digital products.

The decline in syndicated digital revenue was primarily due to lower renewals.

These decreases were offset by an increase in Activation revenue driven by higher usage from multiple customers.

Digital Ad Solutions revenue decreased primarily due to lower revenue from our syndicated digital products driven by lower renewals and lower deliveries of certain custom digital products.

These decreases were partially offset by an increase in Activation revenue driven by higher usage from multiple customers.

Cross Platform Solutions revenue increased primarily due to higher local TV and movies revenues, offset by lower national TV revenue.

7 unchanged sentences

Additionally, cost of revenues includes allocated overhead, which is comprised of lease expense and other facilities-related costs, and depreciation expense generated by general purpose equipment and software.

Cost of revenues for the three months ended June 30, 2023 and 2022 were as follows:

Three Months Ended June 30,

Cost of revenues for the three months ended September 30, 2023 and 2022 were as follows:

Three Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue

11 unchanged sentences

Total cost of revenues $ 50,473 55.5 % $ 51,530 55.5 % $ (1,057) (2.1) %

Panel costs decreased primarily due to lower recruitment and support costs for our desktop and mobile panels.

Employee costs decreased primarily due to an increase in employee compensation capitalized in 2023 in relation to capitalized software projects as we are allocating more resources to product development this year.

Data costs decreased primarily due to vendor credits recognized in the third quarter of 2023.

Systems and bandwidth costs increased primarily due to cloud computing and processing costs attributable to certain custom TV data set deliveries.

Cost of revenues for the six months ended June 30, 2023 and 2022 were as follows:

Six Months Ended June 30,

Cost of revenues for the nine months ended September 30, 2023 and 2022 were as follows:

Nine Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue

1 unchanged sentence

Data costs $ 54,126 19.5 % $ 55,980 20.1 % $ (1,854) (3.3) %

Employee costs 19,616 10.6 % 21,221 11.4 % (1,605) (7.6) %

Systems and bandwidth costs 28,455 10.3 % 24,834 8.9 % 3,621 14.6 %

Employee costs 28,379 10.3 % 31,087 11.2 % (2,708) (8.7) %

Lease expense and depreciation 16,807 6.1 % 15,809 5.7 % 998 6.3 %

6 unchanged sentences

Total cost of revenues $ 155,360 56.2 % $ 155,915 56.0 % $ (555) (0.4) %

Data costs decreased primarily due to vendor credits recognized in 2023.

Panel costs decreased primarily due to lower recruitment and support costs for our desktop and mobile panels.

Systems and bandwidth costs increased primarily due to cloud computing and processing costs attributable to certain custom TV data set deliveries.

Professional fees increased primarily due to an increase in consulting services related to our transformation initiatives.

Selling and Marketing

Selling and marketing expenses consist primarily of employee costs for 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, 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 three months ended June 30, 2023 and 2022 were as follows:

Three Months Ended June 30,

Selling and marketing expenses for the three months ended September 30, 2023 and 2022 were as follows:

Three Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue $ Change % Change

Employee costs $ 11,515 12.7 % $ 13,916 15.0 % $ (2,401) (17.3) %

Technology 777 0.8 % 850 0.9 % (73) (8.6) %

Professional fees 725 0.8 % 577 0.6 % 148 25.6 %

Lease expense and depreciation 815 0.9 % 997 1.1 % (182) (18.3) %

Professional fees 808 0.9 % 612 0.7 % 196 32.0 %

Technology 796 0.9 % 809 0.9 % (13) (1.6) %

Marketing and advertising 557 0.6 % 419 0.4 % 138 32.9 %

1 unchanged sentence

Total selling and marketing expenses $ 14,794 16.3 % $ 17,199 18.5 % $ (2,405) (14.0) %

Selling and marketing expenses for the six months ended June 30, 2023 and 2022 were as follows:

Six Months Ended June 30,

Employee costs decreased primarily due to a decrease in employee headcount and lower commissions.

Selling and marketing expenses for the nine months ended September 30, 2023 and 2022 were as follows:

Nine Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue $ Change % Change

Employee costs $ 39,266 14.2 % $ 42,211 15.2 % $ (2,945) (7.0) %

Technology 1,555 0.8 % 1,697 0.9 % (142) (8.4) %

Lease expense and depreciation 2,332 0.8 % 2,898 1.0 % (566) (19.5) %

Professional fees 2,321 0.8 % 1,697 0.6 % 624 36.8 %

Technology 2,351 0.9 % 2,506 0.9 % (155) (6.2) %

Marketing and advertising 1,662 0.6 % 1,311 0.5 % 351 26.8 %

1 unchanged sentence

Total selling and marketing expenses $ 48,984 17.7 % $ 51,850 18.6 % $ (2,866) (5.5) %

Employee costs decreased primarily due to a decrease in employee headcount and lower commissions.

Research and Development

Research and development expenses include product development costs, consisting primarily of employee costs for 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 three months ended June 30, 2023 and 2022 were as follows:

Three Months Ended June 30,

Research and development expenses for the three months ended September 30, 2023 and 2022 were as follows:

Three Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue $ Change % Change

2 unchanged sentences

Lease expense and depreciation 645 0.7 % 688 0.7 % (43) (6.3) %

Professional fees 97 0.1 % 339 0.4 % (242) (71.4) %

Other 324 0.4 % 358 0.4 % (34) (9.5) %

Total research and development expenses $ 8,083 8.9 % $ 8,741 9.4 % $ (658) (7.5) %

Research and development expenses for the six months ended June 30, 2023 and 2022 were as follows:

Six Months Ended June 30,

Research and development expenses for the nine months ended September 30, 2023 and 2022 were as follows:

Nine Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue $ Change % Change

2 unchanged sentences

Lease expense and depreciation 1,833 0.7 % 2,123 0.8 % (290) (13.7) %

Professional fees 353 0.2 % 587 0.3 % (234) (39.9) %

Other 983 0.4 % 1,230 0.4 % (247) (20.1) %

2 unchanged sentences

General and Administrative

overhead, including allocated overhead, which is comprised of lease expense and other facilities-related costs, depreciation expense related to general purpose equipment and software, amortization of cloud-computing implementation costs, changes in the fair value of our contingent consideration liability, Board of Directors compensation and expenses incurred for other general corporate purposes.

General and administrative expenses for the three months ended June 30, 2023 and 2022 were as follows:

Three Months Ended June 30,

General and administrative expenses consist primarily of employee costs for 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, amortization of cloud-computing implementation costs, changes in the fair value of our contingent consideration liability, Board of Directors compensation and expenses incurred for other general corporate purposes.

General and administrative expenses for the three months ended September 30, 2023 and 2022 were as follows:

Three Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue $ Change % Change

5 unchanged sentences

Total general and administrative expenses $ 12,928 14.2 % $ 12,899 13.9 % $ 29 0.2 %

Employee costs decreased primarily due to severance expense related to the retirement of our former CEO recognized during the three months ended June 30, 2022 and a decrease in stock-based compensation expense during the three months ended June 30, 2023.

General and administrative expenses for the six months ended June 30, 2023 and 2022 were as follows:

Six Months Ended June 30,

General and administrative expenses for the nine months ended September 30, 2023 and 2022 were as follows:

Nine Months Ended September 30,

(In thousands) 2023 % of Revenue 2022 % of Revenue $ Change % Change

5 unchanged sentences

Total general and administrative expenses $ 39,776 14.4 % $ 48,119 17.3 % $ (8,343) (17.3) %

Employee costs decreased primarily due to severance expense related to the retirement of our former CEO recognized during the six months ended June 30, 2022 and a decrease in stock-based compensation expense during the six months ended June 30, 2023.

Professional fees decreased due to a decrease in audit and other consulting fees.

Other expense decreased primarily due to a $0.2 million loss resulting from the change in fair value of contingent consideration during the six months ended June 30, 2023 compared to a $2.4 million loss during the six months ended June 30, 2022.

Impairment of Goodwill

As of June 30, 2023, as a result of a decline in our stock price and market capitalization, among other factors, we performed an interim impairment review of our goodwill.

Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $44.1 million non-cash impairment charge in the three months ended June 30, 2023.

For further information on our goodwill, refer to Footnote 4 , Goodwill in this 10-Q and Item 7 , " Critical Accounting Estimates" within our 2022 10-K .

Employee costs decreased primarily due to a decrease in stock-based compensation expense during the nine months ended September 30, 2023 and severance expense related to the retirement of our former CEO recognized during the nine months ended September 30, 2022.

Other expense decreased primarily due to a $0.3 million loss resulting from the change in fair value of contingent consideration during the nine months ended September 30, 2023 compared to a $2.4 million loss during the nine months ended September 30, 2022.

Impairment of Right-of-use and Long-lived Assets

In the third quarter of 2023, we recorded a $1.5 million impairment charge related to certain office space lease right-of-use assets and related long-lived assets.

The impairment charge was driven by our abandonment of certain leased office spaces prior to the end of the lease terms.

No impairment of right-of-use and long-lived assets was incurred during the three and nine months ended September 30, 2022.

For further information refer to Footnote 2 , Summary of Significant Accounting Policies .

Organizational Restructuring

1 unchanged sentence

Certain other initiatives are expected to be completed as part of the restructuring plan, as described in Footnote 10 , Organizational Restructuring .

We incurred $4.1 million and $5.1 million of restructuring expenses during the three and six months ended June 30, 2023, respectively, related to the plan and expect restructuring costs to continue through the remainder of 2023 as other initiatives are completed.

No restructuring expenses were incurred during the corresponding periods in 2022.

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 our regular operations.

The following is a summary of other income (expense), net for the three and six months ended June 30, 2023 and 2022:

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

We incurred $0.4 million and $5.5 million of restructuring expenses during the three and nine months ended September 30, 2023, respectively, related to the plan and expect restructuring costs to continue through the remainder of 2023 as other initiatives are completed.

We incurred $5.8 million of restructuring expenses during the three and nine months ended September 30, 2022.

Impairment of Goodwill

In the second quarter of 2023, as a result of a decline in our stock price and market capitalization, among other factors, we performed an interim impairment review of our goodwill.

Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $44.1 million non-cash impairment charge for the nine months ended September 30, 2023.

In the third quarter of 2022, as a result of a decline in our stock price and market capitalization, among other factors, we performed an interim impairment review of our goodwill in conjunction with our October 1, 2022 annual testing date.

Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $46.3 million non-cash impairment charge for the three and nine months ended September 30, 2022.

For further information on our goodwill, refer to Footnote 4 , Goodwill in this 10-Q and Item 7 , " Critical Accounting Estimates" within our 2022 10-K .

Other Income, Net

Other income, net represents income and expenses incurred that are generally not recurring in nature or are not part of our regular operations.

The following is a summary of other income, net for the three and nine months ended September 30, 2023 and 2022:

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

The change in other income (expense), net for the three and six months ended June 30, 2023 as compared to 2022 was largely driven by changes in the fair value of our warrants liability.

The gain on the warrants liability for the three months ended June 30, 2023 was primarily due to a decrease in the trading price of our Common Stock during the quarter.

The loss on the warrants liability for the six months ended June 30, 2023

was primarily due to the exercise price adjustment described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity, offset by the decrease in the trading price of our Common Stock during the second quarter.

The gain on the warrants liability during the three and six months ended June 30, 2022 was primarily due to a decrease in the trading price of our Common Stock during the respective periods.

The change in other income, net for the three and nine months ended September 30, 2023 as compared to 2022 was largely driven by changes in the fair value of our warrants liability.

The gain on the warrants liability for the three months ended September 30, 2023 was primarily due to a decrease in the trading price of our Common Stock during the quarter.

The gain on the warrants liability for the nine months ended September 30, 2023 was primarily due to the decrease in the trading price of our Common Stock during the second and third quarter, offset by the exercise price adjustment described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity .

The gain on the warrants liability during the three and nine months ended September 30, 2022 was primarily due to a decrease in the trading price of our Common Stock during the respective periods.

Interest Expense, Net

2 unchanged sentences

Interest expense relates to interest on our senior secured revolving credit agreement (the "Revolving Credit Agreement"), our sale-leaseback agreement, and our finance leases.

We incurred interest expense, net of $0.4 million and $0.2 million during the three months ended June 30, 2023 and 2022, respectively, and $0.7 million and $0.4 million during the six months ended June 30, 2023 and 2022, respectively.

(Loss) Gain From Foreign Currency Transactions

We incurred interest expense, net of $0.4 million and $0.3 million during the three months ended September 30, 2023 and 2022, respectively, and $1.1 million and $0.7 million during the nine months ended September 30, 2023 and 2022, respectively.

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.

2 unchanged sentences

Dollars are in a net asset position.

For the three months ended June 30, 2023 and 2022, the (loss) gain from foreign currency transactions was $(0.2) million and $2.5 million, respectively.

For the six months ended June 30, 2023 and 2022, the (loss) gain from foreign currency transactions was $(1.6) million and $2.9 million, respectively.

The loss during the three and six months ended June 30, 2023 was primarily driven by fluctuations between the Chilean Peso, Euro, Brazilian Lira and U.S.

Dollar exchange rates.

The gain during the three and six months ended June 30, 2022 was primarily driven by fluctuations between the Chilean Peso, Euro and U.S.

For the three months ended September 30, 2023 and 2022, the gain from foreign currency transactions was $1.1 million and $2.8 million, respectively.

For the nine months ended September 30, 2023 and 2022, the (loss) gain from foreign currency transactions was $(0.5) million and $5.7 million, respectively.

Gains and losses during these periods were primarily driven by fluctuations between the Chilean Peso, Euro, and U.S.

Dollar exchange rates.

Income Tax Benefit (Provision)

Income Tax (Provision) Benefit

A valuation allowance has been established against our net U.S.

2 unchanged sentences

deferred taxes for tax deductible goodwill and other indefinite-lived liabilities.

For the three months ended June 30, 2023 and 2022, we recorded an income tax benefit of $1.4 million and an income tax provision of $0.6 million, respectively, resulting in effective tax rates of 3.0% and 14.7%, respectively.

For the six months ended June 30, 2023 and 2022, we recorded an income tax benefit of $0.2 million and an income tax provision $2.0 million, respectively, resulting in effective tax rates of 0.3% and 16.5%, respectively.

For the three months ended September 30, 2023 and 2022, we recorded an income tax provision of $0.7 million and an income tax benefit of $0.1 million, respectively, resulting in effective tax rates of 22.1% and 0.2%, respectively.

For the nine months ended September 30, 2023 and 2022, we recorded an income tax provision of $0.6 million and $1.9 million, respectively, resulting in effective tax rates of 1.1% and 3.0%, 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.

A deferred income tax benefit of $1.3 million related to the impairment of goodwill is included in the amounts recorded in the three and six months ended June 30, 2023.

The difference in income tax position during 2023 as compared to 2022 is primarily due to the income tax benefit related to the impairment of goodwill and a decrease in estimated foreign tax expense in 2023.

federal statutory rate primarily due to the effects of certain permanent items, foreign tax rate differences, increases in the valuation allowance against our domestic deferred tax assets and deferred tax benefits related to the impairment of goodwill.

A deferred income tax benefit of $1.3 million related to the impairment of goodwill is included in the amounts recorded for the nine months ended September 30, 2023 and $1.4 million for the three and nine months ended September 30, 2022.

The difference in income tax position during 2023 as compared to 2022 is primarily due to a decrease in estimated foreign tax expense in 2023.

Liquidity and Capital Resources

The following table summarizes our cash flows for each of the periods identified:

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2023 2022

3 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

Our principal uses of cash consist of cash paid for data, payroll and other operating expenses, including expenses incurred in prior periods;

2 unchanged sentences

and dividend payment obligations with respect to our Preferred Stock.

As of June 30, 2023, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $23.1 million (including $0.4 million in restricted cash), cash flows from our operations, and amounts available to us under our Revolving Credit Agreement, as described below.

As of September 30, 2023, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $30.3 million (including $0.2 million in restricted cash), cash flows from our operations, and amounts available to us under our Revolving Credit Agreement, as described below.

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, which was increased from $25.0 million on February 25, 2022.

As of June 30, 2023, we had outstanding borrowings of $16.0 million and outstanding letters of credit totaling $3.4 million under the Revolving Credit Agreement, leaving a

remaining borrowing capacity of $20.6 million.

During the three months ended June 30, 2023, we reclassified the outstanding borrowings under the Revolving Credit Agreement to current liabilities as the facility matures in May 2024.

As of September 30, 2023, we had outstanding borrowings of $16.0 million and outstanding letters of credit totaling $3.4 million under the Revolving Credit Agreement, leaving a remaining borrowing capacity of $20.6 million.

The outstanding borrowings under the Revolving Credit Agreement are classified within current liabilities as the facility matures in May 2024.

At an annual meeting of stockholders held on June 15, 2023 (the "Annual Meeting"), our 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.

1 unchanged sentence

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, 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.

Macroeconomic Factors

During 2020 and 2021, the COVID-19 pandemic and related government mandates and restrictions had a significant impact on the media, advertising and entertainment industries in which we operate.

The pandemic also had an 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.

In response to the COVID-19 pandemic, we took actions in 2020 and 2021 to mitigate the liquidity impact, including freezing hiring, exiting non-critical consultants and contractors, terminating or negotiating reductions in vendor agreements and leases, and reducing certain travel, marketing, recruiting and other corporate activities.

Although we cannot quantify the impact that the pandemic may have on our business in the future, we saw positive recovery in 2022, including the reopening of theaters in most markets worldwide.

At the same time, however, macroeconomic factors such as inflation, rising interest rates, and supply chain disruptions caused some advertisers to reduce or delay advertising expenditures in the second half of 2022.

These declines have continued into 2023 and have had a direct impact on demand for our products, particularly those that are closely tied to discretionary ad spend for bespoke deliverables.

We expect that softness in the advertising market will continue to affect our business in the second half of 2023.

Macroeconomic challenges such as inflation, rising interest rates, capital market disruptions and recession concerns have caused some advertisers to reduce or delay advertising expenditures in recent years.

These declines have had a direct impact on demand for our products, particularly those that are tied to discretionary advertising spend.

We expect that softness in the advertising market will continue to affect our business through the end of 2023 and into 2024.

Although we cannot quantify the impact of macroeconomic factors on our future results, any worsening of ad market conditions could negatively impact our financial position and liquidity.

Preferred Stock

2 unchanged sentences

Shares of Preferred Stock are convertible into Common Stock as described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity .

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

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

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.

16 unchanged sentences

Notably, the Revolving Credit Agreement (as amended) contains financial covenants that require us to maintain a minimum Consolidated Asset Coverage Ratio and minimum Liquidity through maturity, minimum Consolidated EBITDA for periods through December 31, 2023, and a minimum Consolidated Fixed Charge Coverage Ratio for periods after December 31, 2023 (each term as defined in the Revolving Credit Agreement).

As of June 30, 2023, 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 June 30, 2023, we had outstanding borrowings of $16.0 million and outstanding letters of credit totaling $3.4 million under the Revolving Credit Agreement, leaving a remaining borrowing capacity of $20.6 million.

As of September 30, 2023, 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.

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.

14 unchanged sentences

Cash provided by 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, goodwill impairment, stock-based compensation, deferred tax provision, change in the fair value of contingent consideration and warrants liability, and amortization of deferred financing costs.

Net cash provided by operating activities for the six months ended June 30, 2023 was $16.2 million compared to $24.2 million for the six months ended June 30, 2022.

The decrease in cash provided by operating activities was partially attributable to a net decrease in cash generated from operating assets and liabilities, with $5.5 million generated for the six months ended June 30, 2023 as compared to $9.2 million for the six months ended June 30, 2022.

The lower amount of cash generated from operating assets and liabilities in 2023 is primarily due to the first payment of contingent consideration for our 2021 Shareablee acquisition and severance payments made in 2023.

Other contributors to the decrease in cash provided by operating activities were lower adjustments for amortization, stock-based compensation expense and change in fair value of contingent consideration in 2023 compared to 2022, offset by the change in fair value of our warrants liability.

depreciation, non-cash operating lease expense, amortization expense of finance leases and intangible assets, impairment of goodwill and other assets, stock-based compensation, deferred tax provision or benefit, change in the fair value of contingent consideration and warrants liability, and amortization of deferred financing costs.

Net cash provided by operating activities for the nine months ended September 30, 2023 was $30.3 million compared to $36.5 million for the nine months ended September 30, 2022.

The decrease in cash provided by operating activities was primarily attributable to a net decrease in cash generated from operating assets and liabilities, with $6.3 million generated for the nine months ended September 30, 2023 as compared to $15.1 million for the nine months ended September 30, 2022.

The lower amount of cash generated from operating assets and liabilities in 2023 was primarily due to severance payments made in 2023, as well as the first payment of contingent consideration for our 2021 Shareablee acquisition.

Investing Activities

1 unchanged sentence

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 for the six months ended June 30, 2023 was $12.0 million compared to $8.3 million for the six months ended June 30, 2022.

Net cash used in investing activities for the nine months ended September 30, 2023 was $17.8 million compared to $13.2 million for the nine months ended September 30, 2022.

The increase in cash used in investing activities was primarily due to an increase in cash paid for capitalized internally developed software as we increased our focus on product infrastructure and innovation in 2023.

Financing Activities

Net cash used in financing activities during the six months ended June 30, 2023 was $2.2 million compared to $17.0 million during the six months ended June 30, 2022.

The decrease in cash used in financing activities was primarily due to the deferral of accrued dividends due to

holders of the Preferred Stock on June 30, 2023, as described under "Preferred Stock" above.

This was offset by a portion of the first payment of contingent consideration for our 2021 Shareablee acquisition initially recorded at fair value and paid during the six months ended June 30, March 31, 2023.

Net cash used in financing activities during the nine months ended September 30, 2023 was $2.7 million compared to $17.6 million during the nine months ended September 30, 2022.

The decrease in cash used in financing activities was primarily due to the deferral of accrued dividends due to holders of the Preferred Stock in the second quarter of 2023, as described under "Preferred Stock" above.

This was offset by a portion of the first payment of contingent consideration for our 2021 Shareablee acquisition initially recorded at fair value and paid during the nine months ended September 30, 2023.

Contractual Payment Obligations

2 unchanged sentences

These agreements have remaining terms from one to eight years.

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

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

In addition, we expect to make variable payments related to a set-top box data agreement totaling an estimated $1.9 million by the end of 2023.

We have both operating and financing leases related to corporate office space and equipment.

Our leases have remaining terms from one to five years.

As of June 30, 2023, the total fixed payment obligation related to these agreements is $45.2 million.

Our leases have remaining terms from less than one to five years.

As of September 30, 2023, the total fixed payment obligation related to these agreements is $45.0 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 less than one year.

As of June 30, 2023, the total fixed payment obligation related to this agreement is $4.4 million.

As of September 30, 2023, the total fixed payment obligation related to this agreement is $1.8 million.

Future Capital Requirements

11 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis