COMSCORE, INC. 10-Q

ITEM 1. FINANCIAL STATEMENTS COMSCORE, INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of As of September 30, 2023 December 31, 2022 (In thousands, except share and par value data) (Unaudited) Assets Current assets: Cash and cash equivalents $ 30,067 $ 20,044 Restricted cash 186 398 Accounts receivable, net of allowances of $ 496 and $ 798 , respectively ($ 1,912 and $ 1,034 of accounts receivable attributable to related parties, respectively) 46,469 68,457 Prepaid expenses and other current assets 13,893 15,922 Total current assets 90,615 104,821 Property and equipment, net 41,401 36,367 Operating right-of-use assets 19,750 23,864 Deferred tax assets 3,075 3,351 Intangible assets, net 8,915 13,327 Goodwill 343,542 387,973 Other non-current assets 11,541 10,883 Total assets $ 518,839 $ 580,586 Liabilities, Convertible Redeemable Preferred Stock and Stockholders' Equity Current liabilities: Accounts payable ($ 12,632 and $ 12,090 attributable to related parties, respectively) $ 32,382 $ 29,090 Accrued expenses ($ 4,862 and $ 4,297 attributable to related parties, respectively) 35,777 43,393 Contract liabilities ($ 2,075 and $ 1,341 attributable to related parties, respectively) 50,901 52,944 Revolving line of credit 16,000 — Accrued dividends (related parties) 19,846 7,863 Customer advances 7,595 11,527 Current portion of contingent consideration 3,676 7,134 Current operating lease liabilities 7,954 7,639 Other current liabilities 4,742 5,501 Total current liabilities 178,873 165,091 Non-current operating lease liabilities 24,903 29,588 Non-current portion of accrued data costs ($ 20,154 and $ 15,471 attributable to related parties, respectively) 30,647 25,106 Non-current revolving line of credit — 16,000 Deferred tax liabilities 1,832 2,127 Other non-current liabilities 9,133 10,627 Total liabilities 245,388 248,539 Commitments and contingencies Convertible redeemable preferred stock, $ 0.001 par value; 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 Stockholders' equity: Preferred stock, $ 0.001 par value; 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 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 95 92 Additional paid-in capital 1,695,998 1,690,783 Accumulated other comprehensive loss ( 16,809 ) ( 15,940 ) Accumulated deficit ( 1,363,734 ) ( 1,300,789 ) Treasury stock, at cost, 6,764,796 shares as of September 30, 2023 and December 31, 2022 ( 229,984 ) ( 229,984 ) Total stockholders' equity 85,566 144,162 Total liabilities, convertible redeemable preferred stock and stockholders' equity $ 518,839 $ 580,586 See accompanying Notes to Condensed Consolidated Financial Statements. 1 Table of Contents COMSCORE, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, (In thousands, except share and per share data) 2023 2022 2023 2022 Revenues (1) $ 91,000 $ 92,783 $ 276,242 $ 278,183 Cost of revenues (1) (2) (3) 50,473 51,530 155,360 155,915 Selling and marketing (2) (3) 14,794 17,199 48,984 51,850 Research and development (2) (3) 8,083 8,741 25,792 28,190 General and administrative (2) (3) 12,928 12,899 39,776 48,119 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 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 ) 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 income (loss) $ 2,618 $ ( 52,382 ) $ ( 50,962 ) $ ( 66,708 ) Convertible redeemable preferred stock dividends (1) ( 4,286 ) ( 3,910 ) ( 11,983 ) ( 11,603 ) Total net loss available to common stockholders $ ( 1,668 ) $ ( 56,292 ) $ ( 62,945 ) $ ( 78,311 ) Net loss per common share: Basic and diluted $ ( 0.02 ) $ ( 0.60 ) $ ( 0.66 ) $ ( 0.85 ) Weighted-average number of shares used in per share calculation - Common Stock: Basic and diluted 97,709,191 93,347,017 95,704,106 92,380,984 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 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 September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Revenues $ 2,856 $ 3,527 $ 8,802 $ 12,125 Cost of revenues 7,178 7,938 22,251 23,379 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 September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Cost of revenues $ 113 $ 155 $ 435 $ 877 Selling and marketing 96 132 411 804 Research and development 85 116 333 627 General and administrative 747 1,013 2,640 4,906 Total stock-based compensation expense $ 1,041 $ 1,416 $ 3,819 $ 7,214 See accompanying Notes to Condensed Consolidated Financial Statements. 2 Table of Contents COMSCORE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CONVERTIBLE REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (Unaudited) (In thousands, except share data) Convertible Redeemable Preferred Stock Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Treasury stock, at cost Total Stockholders' Equity Shares Amount Shares Amount Balance as of December 31, 2022 82,527,609 $ 187,885 92,104,942 $ 92 $ 1,690,783 $ ( 15,940 ) $ ( 1,300,789 ) $ ( 229,984 ) $ 144,162 Net loss — — — — — — ( 8,671 ) — ( 8,671 ) Convertible redeemable preferred stock dividends (1) — — — — — — ( 3,825 ) — ( 3,825 ) Restricted stock units distributed — — 286,038 — — — — — — Exercise of Common Stock options — — 3,000 — 3 — — — 3 Payments for taxes related to net share settlement of equity awards — — ( 34,452 ) — ( 48 ) — — — ( 48 ) Amortization of stock-based compensation — — — — 879 — — — 879 Settlement of restricted stock unit liability — — — — 2,761 — — — 2,761 Foreign currency translation adjustment — — — — — 1,517 — — 1,517 Balance as of March 31, 2023 82,527,609 $ 187,885 92,359,528 $ 92 $ 1,694,378 $ ( 14,423 ) $ ( 1,313,285 ) $ ( 229,984 ) $ 136,778 Net loss — — — — — — ( 44,909 ) — ( 44,909 ) Convertible redeemable preferred stock dividends (1) — — — — — — ( 3,872 ) — ( 3,872 ) Restricted stock units distributed — — 2,735,991 3 — — — — 3 Payments for taxes related to net share settlement of equity awards — — ( 9,185 ) — ( 12 ) — — — ( 12 ) Amortization of stock-based compensation — — — — 915 — — — 915 Foreign currency translation adjustment — — — — — ( 119 ) — — ( 119 ) 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 3 Table of Contents (In thousands, except share data) Convertible Redeemable Preferred Stock Common Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Accumulated Deficit Treasury stock, at cost Total Stockholders' Equity Shares Amount Shares Amount Balance as of December 31, 2021 82,527,609 $ 187,885 90,407,290 $ 90 $ 1,683,883 $ ( 12,098 ) $ ( 1,218,715 ) $ ( 229,984 ) $ 223,176 Net loss — — — — — — ( 9,276 ) — ( 9,276 ) Convertible redeemable preferred stock dividends (1) — — — — — — ( 3,825 ) — ( 3,825 ) Restricted stock units distributed — — 212,246 — — — — — — Exercise of Common Stock options — — 86,941 1 102 — — — 103 Payments for taxes related to net share settlement of equity awards — — ( 474 ) — ( 1 ) — — — ( 1 ) Amortization of stock-based compensation — — — — 1,908 — — — 1,908 Settlement of restricted stock unit liability — — — — 1,719 — — — 1,719 Foreign currency translation adjustment — — — — — ( 541 ) — — ( 541 ) Other — — ( 661 ) — ( 3 ) — — — ( 3 ) Balance as of March 31, 2022 82,527,609 $ 187,885 90,705,342 $ 91 $ 1,687,608 $ ( 12,639 ) $ ( 1,231,816 ) $ ( 229,984 ) $ 213,260 Net loss — — — — — — ( 5,050 ) — ( 5,050 ) Convertible redeemable preferred stock dividends (1) — — — — — — ( 3,868 ) — ( 3,868 ) Restricted stock units distributed — — 958,594 1 — — — — 1 Exercise of Common Stock options — — 745 — — — — — — Payments for taxes related to net share settlement of equity awards — — ( 12,646 ) — ( 23 ) — — — ( 23 ) Amortization of stock-based compensation — — — — 2,011 — — — 2,011 Foreign currency translation adjustment — — — — — ( 4,544 ) — — ( 4,544 ) Other — — 121,357 — — — — — — 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). See accompanying Notes to Condensed Consolidated Financial Statements. 4 Table of Contents COMSCORE, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Nine Months Ended September 30, (In thousands) 2023 2022 Operating activities : Net loss $ ( 50,962 ) $ ( 66,708 ) Adjustments to reconcile net loss to net cash provided by operating activities: Impairment of goodwill 44,100 46,300 Depreciation 14,613 12,542 Amortization of intangible assets 4,412 20,323 Non-cash operating lease expense 4,196 4,540 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 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 Changes in operating assets and liabilities: Accounts receivable 21,899 22,143 Prepaid expenses and other assets 132 ( 1,081 ) Accounts payable, accrued expenses and other liabilities ( 2,779 ) 3,159 Contract liabilities and customer advances ( 7,013 ) ( 3,448 ) Operating lease liabilities ( 5,981 ) ( 5,665 ) Net cash provided by operating activities 30,285 36,536 Investing activities : Capitalized internal-use software costs ( 16,609 ) ( 12,402 ) Purchases of property and equipment ( 1,240 ) ( 823 ) Net cash used in investing activities ( 17,849 ) ( 13,225 ) Financing activities : 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) — ( 15,512 ) Other ( 276 ) ( 61 ) Net cash used in financing activities ( 2,650 ) ( 17,577 ) Effect of exchange rate changes on cash, cash equivalents and restricted cash 25 ( 2,502 ) 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 Cash, cash equivalents and restricted cash at end of period $ 30,253 $ 25,511 (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 September 30, 2023 2022 Cash and cash equivalents $ 30,067 $ 25,086 Restricted cash 186 425 Total cash, cash equivalents and restricted cash $ 30,253 $ 25,511 5 Table of Contents Nine Months Ended September 30, 2023 2022 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 Right-of-use assets obtained in exchange for operating lease liabilities 1,211 847 Change in accounts payable and accrued expenses related to capital expenditures 1,170 810 See accompanying Notes to Condensed Consolidated Financial Statements. 6 Table of Contents COMSCORE, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Organization comScore, Inc., together with its consolidated subsidiaries (collectively, "Comscore" or the "Company"), headquartered in Reston, Virginia, is a global information and analytics company that measures audiences, consumer behavior and advertising across media platforms. Operating segments are defined as components of a business that can earn revenues and incur expenses for which discrete financial information is available that is evaluated on a regular basis by the chief operating decision maker ("CODM"). The Company's CODM is its Chief Executive Officer ("CEO"), who decides how to allocate resources and assess performance. The Company has one operating segment. A single management team reports to the CODM, who manages the entire business. The Company's CODM reviews consolidated results of operations to make decisions, allocate resources and assess performance and does not evaluate the profit or loss from any separate geography or product line. 2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned domestic and foreign subsidiaries. All intercompany transactions and balances are eliminated upon consolidation. Reclassification 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, and warrants liability has been aggregated within other current liabilities on the Condensed Consolidated Balance Sheets. Unaudited Interim Financial Information The interim Condensed Consolidated Financial Statements included in this quarterly report have been prepared by the Company and are unaudited, pursuant to the rules and regulations of the United States Securities and Exchange Commission ("SEC"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States ("GAAP") have been condensed or omitted pursuant to such rules and regulations. However, the Company believes that the disclosures contained in this quarterly report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), for a quarterly report on Form 10-Q and are adequate to make the information presented not misleading. The interim Condensed Consolidated Financial Statements included herein reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. 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 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 The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expense during the reporting periods. Significant estimates and judgments are inherent in the analysis and the measurement of management's standalone selling price, principal versus agent revenue recognition, determination of performance obligations, determination of transaction price, including the determination of variable consideration and allocation of transaction price to performance obligations, deferred tax assets and liabilities, including the identification and quantification of income tax liabilities due to uncertain tax positions, the valuation and recoverability of goodwill, intangible and other long-lived assets, the determination of appropriate discount rates for lease accounting, the probability of exercising either lease renewal or termination clauses, the assessment of potential loss from contingencies, the fair value determination of contingent consideration from business combinations, financing-related liabilities and warrants, and the valuation of options, performance-based and market-based stock awards. Management bases its estimates and assumptions on historical experience and on various other factors that are believed to be reasonable under the circumstances. Due to the inherent uncertainty involved in making estimates, actual results reported in future periods may be affected by changes in those estimates. The Company evaluates its estimates and assumptions on an ongoing basis. Goodwill 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. The Company has a single reporting unit. Accordingly, the impairment assessment for goodwill is performed 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 7 Table of Contents value of the reporting unit below its carrying value. The Company has the option to first perform qualitative testing to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. The qualitative evaluation is an assessment of factors, including operating results and cost factors, as well as industry, market and macroeconomic conditions, to determine whether it is more likely than not that the fair value of the reporting unit is less than the respective carrying amount, including goodwill. If the Company chooses not to complete a qualitative assessment or if the initial assessment indicates that it is more likely than not that the carrying value of the reporting unit exceeds its estimated fair value, additional quantitative testing is required. The fair value of the reporting unit is determined utilizing a discounted cash flow model, and a market value approach is utilized to supplement the discounted cash flow model. The estimated fair value of a reporting unit is determined based on assumptions regarding estimated future cash flows, discount rates, long-term growth rates and market values. Additionally, the Company considers income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment charge. 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. 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 In January 2021, the Company entered into separate Securities Purchase Agreements with each of Charter Communications Holding Company, LLC ("Charter"), Qurate Retail, Inc. (together with its affiliate Qurate SCOR, LLC, "Qurate") and Pine Investor, LLC ("Pine") (the "Securities Purchase Agreements") for the issuance and sale of shares of Series B Convertible Preferred Stock, par value $ 0.001 ("Preferred Stock") described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity . The issuance of the Preferred Stock pursuant to the Securities Purchase Agreements (the "Transactions") and related matters were approved by the Company's stockholders on March 9, 2021 and completed on March 10, 2021. On May 16, 2023, Qurate sold 27,509,203 shares of Preferred Stock to Liberty Broadband Corporation ("Liberty") in a privately negotiated transaction. The Preferred Stock is contingently redeemable upon certain deemed liquidation events, such as a change in control. Because a deemed liquidation event could constitute a redemption event outside of the Company's control, all shares of Preferred Stock have been presented outside of permanent equity in mezzanine equity on the Condensed Consolidated Balance Sheets. The instrument was initially recognized at fair value net of issuance costs. The Company reassesses whether the Preferred Stock is currently redeemable, or probable to become redeemable in the future, as of each reporting date. 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 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 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 In June 2019, the Company issued warrants to CVI Investments, Inc. ("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 8 Table of Contents 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 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 Change in fair value of warrants liability $ 634 $ 1,476 $ 407 $ 8,471 Other ( 6 ) 1 18 ( 4 ) Total other income, net $ 628 $ 1,477 $ 425 $ 8,467 Loss Per Share The Company uses the two-class method to calculate net loss per share. The two-class method is an earnings allocation formula that treats a participating security as having rights to earnings that otherwise would have been available to common stockholders. Under the two-class method, earnings for the period are allocated between common stockholders and participating security holders based on their respective rights to receive dividends as if all undistributed book earnings for the period were distributed. Basic loss per share is computed by dividing total net loss available to common stockholders by the weighted-average number of common shares outstanding for the period. This includes the effect of vested and deferred stock units granted to members of the Company's Board of Directors ("Board") and certain employees. These awards are expected to be settled in shares of Common Stock and generally distributed upon the earlier of the individual's separation from service or a change of control. Diluted loss per share includes the effect of potential common shares, such as the Company's Preferred Stock, warrants, stock options and restricted stock units, and contingent consideration liability to the extent the effect is dilutive. In periods with a net loss available to common stockholders, the anti-dilutive effect of these potential common shares is excluded and diluted net loss per share is equal to basic net loss per share. 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 September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Preferred stock (1) 88,821,995 82,544,802 85,708,361 85,708,361 Warrants 5,457,026 5,457,026 5,457,026 5,457,026 Stock options and restricted stock units 5,816,833 5,244,552 5,926,755 4,899,973 Contingent consideration (2) 8,026,230 5,212,121 8,026,230 5,212,121 Total 108,122,084 98,458,501 105,118,372 101,277,481 (1) Includes the effect of potential Common Stock that would be issued to settle unpaid dividends accrued to holders of the Preferred Stock if they elected to convert their shares at the beginning of the period. (2) A contingent consideration liability was recognized as part of the Company's acquisition of Shareablee, Inc. ("Shareablee") in December 2021. The liability payments may be settled in any combination of cash or shares of Common Stock (at the Company's election) based on the volume-weighted average trading price of the Common Stock for the ten trading days prior to the date of each payment. Settlement of this liability in Common Stock could potentially dilute basic earnings per share in future periods. 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. Income Taxes 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 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. federal and state net operating loss carryforwards is not expected to have a material impact on the Condensed Consolidated Financial Statements or related disclosures. 9 Table of Contents 3. Revenue Recognition The following table presents the Company's revenue disaggregated by solution group, geographical market and timing of transfer of products and services. 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 ; as such, the disaggregation of revenue below reconciles directly to its unique reportable segment. Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2023 2022 2023 2022 By solution group: Digital Ad Solutions $ 50,501 $ 52,360 $ 153,597 $ 157,127 Cross Platform Solutions 40,499 40,423 122,645 121,056 Total $ 91,000 $ 92,783 $ 276,242 $ 278,183 By geographical market: United States $ 82,192 $ 83,780 $ 249,832 $ 249,493 Europe 4,617 4,497 13,845 14,179 Latin America 1,745 1,839 5,170 5,765 Canada 1,408 1,675 4,249 5,668 Other 1,038 992 3,146 3,078 Total $ 91,000 $ 92,783 $ 276,242 $ 278,183 By timing of revenue recognition: Products and services transferred over time $ 78,179 $ 77,264 $ 234,803 $ 231,946 Products and services transferred at a point in time 12,821 15,519 41,439 46,237 Total $ 91,000 $ 92,783 $ 276,242 $ 278,183 Contract Balances The following table provides information about receivables, contract assets, contract liabilities and customer advances from contracts with customers: As of As of (In thousands) September 30, 2023 December 31, 2022 Accounts receivable, net $ 46,469 $ 68,457 Current and non-current contract assets 7,669 6,736 Current contract liabilities 50,901 52,944 Current customer advances 7,595 11,527 Non-current contract liabilities 93 887 Significant changes in the current contract liabilities balance are as follows: Nine Months Ended September 30, (In thousands) 2023 2022 Revenue recognized that was included in the opening contract liabilities balance $ ( 46,883 ) $ ( 47,662 ) Cash received or amounts billed in advance and not recognized as revenue 43,651 46,969 Remaining Performance Obligations 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. 4. Goodwill 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. 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 10 Table of Contents 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 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: (In thousands) Balance as of December 31, 2021 $ 435,711 Translation adjustments ( 1,438 ) Impairment charge ( 46,300 ) Balance as of December 31, 2022 $ 387,973 Translation adjustments ( 331 ) Impairment charge ( 44,100 ) Balance as of September 30, 2023 $ 343,542 5. Convertible Redeemable Preferred Stock and Stockholders' Equity 2021 Issuance of Preferred Stock On March 10, 2021, the Company issued and sold 82,527,609 shares of Preferred Stock in exchange for aggregate gross proceeds of $ 204.0 million. Net proceeds from the Transactions totaled $ 187.9 million after deducting issuance costs. The Preferred Stock is convertible at the option of the holders at any time into shares of Common Stock based on a conversion rate set in accordance with the Certificate of Designations of the Preferred Stock. The conversion right is subject to certain anti-dilution adjustments and customary provisions related to partial dividend periods. 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. In addition, such holders are entitled to request, and the Company will take all actions reasonably necessary to pay, a one-time dividend ("Special Dividend") equal to the highest dividend that the Company's Board determines can be paid at the applicable time (or a lesser amount agreed upon by the holders), subject to additional conditions and limitations set forth in a Stockholders Agreement entered into by the Company and the holders on March 10, 2021 (the "Stockholders Agreement"). As set forth in the Stockholders Agreement, the Company may be obligated to obtain debt financing in order to effectuate the Special Dividend. 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 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 September 30, 2023, accrued dividends for the Preferred Stock totaled $ 19.8 million. 2019 Issuance and Sale of Common Stock and Warrants On June 23, 2019, the Company entered into a Securities Purchase Agreement with CVI, pursuant to which CVI agreed to purchase (i) 2,728,513 shares of Common Stock (the "Initial Shares"), at a price of 7.33 per share and (ii) Series A Warrants, Series B-1 Warrants, Series B-2 Warrants and Series C Warrants, for aggregate gross proceeds of $ 20.0 million (the "Private Placement"). The Private Placement closed on June 26, 2019 (the "CVI Closing Date"). The Series B-1 Warrants and Series B-2 Warrants expired in 2020. The Series C Warrants were exercised on October 10, 2019. As a result of this exercise, the Company issued 2,728,513 shares of Common Stock to CVI on October 14, 2019. In addition, the number of shares issuable under the Company's Series A Warrants was increased by 2,728,513 . The Series A Warrants are exercisable by the holders for a period of five years from the CVI Closing Date and are currently exercisable into 5,457,026 shares of Common Stock. The Series A Warrants may be exercised for cash or through a net settlement feature under certain circumstances. The exercise price for the Series A Warrants is subject to anti-dilution adjustment in certain circumstances, including upon certain issuances of capital stock. 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 11 Table of Contents 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. CVI will not have the right to exercise any warrant that would result in CVI beneficially owning more than 4.99 % of the outstanding Common Stock after giving effect to such exercise. 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 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. 6. Debt Revolving Credit Agreement On May 5, 2021, the Company entered into a senior secured revolving credit agreement (the "Revolving Credit Agreement") among the Company, as borrower, certain subsidiaries of the Company, as guarantors, Bank of America N.A., as administrative agent (in such capacity, the "Agent"), and the lenders from time to time party thereto. The Revolving Credit Agreement had an original borrowing capacity equal to $ 25.0 million and bore interest on borrowings at a Eurodollar Rate (as defined in the Revolving Credit Agreement) that was based on LIBOR. The Company 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 facility has a maturity of three years from the closing date of the agreement. On February 25, 2022, the Company entered into an amendment (the "2022 Amendment") to the Revolving Credit Agreement to expand its aggregate borrowing capacity from $ 25.0 million to $ 40.0 million. The 2022 Amendment also replaced the Eurodollar Rate with a SOFR-based interest rate and modified the Applicable Rate definition in the Revolving Credit Agreement to increase the Applicable Rate payable on SOFR-based loans to 2.50 %. Finally, the amendment modified certain financial covenants under the Revolving Credit Agreement. On February 24, 2023, the Company entered into an additional amendment (the "2023 Amendment") to the Revolving Credit Agreement. Among other things, the 2023 Amendment (i) increased the minimum Consolidated EBITDA and Consolidated Asset Coverage Ratio financial covenant requirements under the Revolving Credit Agreement, (ii) modified the measurement periods for certain financial covenants contained in the Revolving Credit Agreement, (iii) introduced a minimum liquidity covenant, and (iv) modified the Applicable Rate definition in the Revolving Credit Agreement to increase the Applicable Rate payable on SOFR-based loans to 3.50 %. As modified, the Revolving Credit Agreement requires the Company to maintain: • minimum Consolidated EBITDA (as defined in the Revolving Credit Agreement) of not less than $ 22.0 million, $ 24.0 million, $ 32.0 million and $ 35.0 million for the most recently ended four fiscal quarter period, tested as of the last day of the fiscal quarters ending on March 31, June 30, September 30 and December 31, 2023, respectively; • a minimum Consolidated Asset Coverage Ratio (as defined in the Revolving Credit Agreement) of not less than 2.0 to 1.0, tested as of the last day of each calendar month through maturity of the Revolving Credit Agreement; • a minimum Consolidated Fixed Charge Coverage Ratio (as defined in the Revolving Credit Agreement) of not less than 1.25 to 1.0 for the most recently ended four fiscal quarter period, tested as of the last day of each fiscal quarter ending on or after March 31, 2024; and • minimum Liquidity (as defined in the Revolving Credit Agreement) of $ 28.0 million, tested as of the last business day of each calendar month through maturity of the Revolving Credit Agreement. The Revolving Credit Agreement contains restrictive covenants that limit the Company's ability to, among other things, incur additional indebtedness or liens, make investments and loans, enter into mergers and acquisitions, make or declare dividends and other payments, enter into certain contracts, sell assets and engage in transactions with affiliates. The Revolving Credit Agreement is also subject to customary events of default, including a change in control. 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 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 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. 12 Table of Contents 7. 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: As of As of September 30, 2023 December 31, 2022 (In thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Assets Money market funds (1) $ 110 $ — $ — $ 110 $ 2,455 $ — $ — $ 2,455 Liabilities Contingent consideration liability (2) $ — $ 4,747 $ — $ 4,747 $ — $ 8,158 $ — $ 8,158 Warrants liability (3) — — 311 311 — — 718 718 Total liabilities $ — $ 4,747 $ 311 $ 5,058 $ — $ 8,158 $ 718 $ 8,876 (1) Level 1 cash equivalents are invested in money market funds that are intended to maintain a stable net asset value of $ 1.00 per share by investing in liquid, high quality U.S. dollar-denominated money market instruments with maturities less than three months. (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 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 gain recognized due to remeasurement (1) ( 407 ) 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 Balance as of December 31, 2021 $ 5,600 $ 10,520 Total loss (gain) recognized due to remeasurement (1) 2,348 ( 8,471 ) Transfer to Level 2 (2) ( 7,948 ) — 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 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 September 30, 2023 December 31, 2022 Warrants liability Option pricing Stock price $ 0.61 $ 1.16 Exercise price $ 1.01 $ 2.47 Volatility 70.0 % 65.0 % Term 0.74 years 1.49 years Risk-free rate 5.5 % 4.6 % The primary sensitivities in the valuation of the warrants liability are driven by the exercise price, the Common Stock price at the measurement date and the expected volatility of the Common Stock over the remaining term. 13 Table of Contents Fair Value Measurements on a Nonrecurring Basis 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. The remeasurement of goodwill is classified as a non-recurring Level 3 fair value assessment due to the significance of unobservable inputs developed in the determination of the fair value. The Company used a discounted cash flow model to determine the estimated fair value of the reporting unit. The Company made estimates and assumptions regarding future cash flows, discount rates, long-term growth rates and market values to determine the reporting unit's estimated fair value. It is possible that future changes in such circumstances, or in the variables associated with the judgments, assumptions and estimates used in assessing the fair value of the reporting unit, would require the Company to record additional non-cash impairment charges. 8. Accrued Expenses As of As of (In thousands) September 30, 2023 December 31, 2022 Accrued data costs $ 17,419 $ 18,515 Payroll and payroll-related 10,762 15,118 Professional fees 1,901 2,410 Restructuring accrual 1,934 1,288 Other 3,761 6,062 Total accrued expenses $ 35,777 $ 43,393 9. Related Party Transactions Transactions with WPP 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 Income (Loss), are as follows: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2023 2022 2023 2022 Revenues $ 2,048 $ 2,782 $ 6,472 $ 9,492 Cost of revenues 2,199 2,417 7,322 6,791 The Company has the following balances related to transactions with WPP, as reflected in the Condensed Consolidated Balance Sheets: As of As of (In thousands) September 30, 2023 December 31, 2022 Assets Accounts receivable, net $ 1,695 $ 825 Liabilities Accounts payable $ 1,494 $ 2,398 Accrued expenses 519 1,108 Contract liabilities 1,780 1,132 Transactions with Charter, Qurate, Liberty and Pine 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 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 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. At the Annual Meeting on June 15, 2023, 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 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. 14 Table of Contents 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. Accrued dividends to the holders of Preferred Stock as of December 31, 2022 were $ 7.9 million. Concurrent with the closing of the Transactions on March 10, 2021, the Company entered into a ten-year Data License Agreement ("DLA") with Charter Communications Operating, LLC ("Charter Operating"), an affiliate of Charter. Under the DLA, Charter Operating will bill the Company for license fees according to a payment schedule that gradually increases from $ 10.0 million in the first year of the term to $ 32.3 million in the tenth year of the term. The Company recognizes expense for the license fees ratably over the term. On November 6, 2022, the Company and Charter Operating entered into an amendment to the DLA, pursuant to which the Company will receive license fee credits totaling $ 7.0 million. In June 2023, the Company exchanged correspondence with counsel to Charter Operating regarding Charter Operating's compliance with certain terms of the DLA. In response, Charter Operating denied the Company's concerns and notified the Company of alleged breaches of the DLA by the Company. 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 Income (Loss), are detailed below: Three Months Ended September 30, Nine Months Ended September 30, (In thousands) 2023 2022 2023 2022 Revenues $ 501 $ 501 $ 1,500 $ 1,773 Cost of revenues 4,979 5,521 14,929 16,588 The Company has the following liability balances related to transactions with Charter and its affiliates, as reflected in the Condensed Consolidated Balance Sheet: As of As of (In thousands) September 30, 2023 December 31, 2022 Accounts payable $ 11,138 $ 9,693 Accrued expenses 4,343 3,189 Non-current portion of accrued data costs 20,154 15,471 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. 10. Organizational Restructuring On September 29, 2022, the Company communicated a workforce reduction as part of its broader efforts to improve cost efficiency and better align its operating structure and resources with strategic priorities (collectively, the "Restructuring Plan"). In addition to employee terminations, the Restructuring Plan is expected to include the reallocation of commercial and product development resources; reinvestment in and modernization of key technology platforms; consolidation of data storage and processing activities to reduce the Company's data center footprint; and reduction of other operating expenses, including software and facility costs. The Company may also determine to exit certain activities in certain geographic regions in order to more effectively align resources with business priorities. In connection with the Restructuring Plan, which was authorized by the Board on September 19, 2022, the Company will incur certain exit-related costs. These costs are estimated to range between $ 10 million and $ 15 million. The Company expects implementation of the Restructuring Plan, including cash payments, to be substantially complete in the fourth quarter of 2023. 15 Table of Contents 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 Balance as of December 31, 2022 $ 1,288 $ — $ 1,288 Restructuring expense 4,831 624 5,455 Payments ( 4,160 ) ( 624 ) ( 4,784 ) Foreign exchange ( 25 ) — ( 25 ) Balance as of September 30, 2023 $ 1,934 $ — $ 1,934 11. Commitments and Contingencies Commitments The Company has certain long-term contractual arrangements that have fixed and determinable payment obligations including unconditional purchase obligations with multichannel video programming distributors ("MVPDs") and other providers for set-top box and connected (Smart) television data. These agreements have remaining terms of less than one year to eight years . 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) 2023 (remaining) $ 9,995 2024 29,966 2025 29,756 2026 37,006 2027 37,506 Thereafter 137,699 Total $ 281,928 In addition, the Company expects to make variable payments related to a set-top box data agreement totaling an estimated $ 1.9 million by the end of 2023. Contingencies The Company is involved in various legal proceedings from time to time. The Company establishes reserves for specific legal proceedings when management determines that the likelihood of an unfavorable outcome is probable, and the amount of loss can be reasonably estimated. The Company has also identified certain other legal matters where an unfavorable outcome is reasonably possible and/or for which no estimate of possible losses can be made. In these cases, the Company does not establish a reserve until it can reasonably estimate the loss. Legal fees related to contingencies are expensed as incurred. The outcomes of legal proceedings are inherently unpredictable, subject to significant uncertainties, and could be material to the Company's operating results and cash flows for a particular period. 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 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 The Company is, and may become, a party to a variety of legal proceedings from time to time that arise in the normal course of the Company's business. While the results of such legal proceedings cannot be predicted with certainty, management believes that, based on current knowledge, the final outcome of any such current pending matters will not have a material effect on the Company's financial position, results of operations or cash flows. Regardless of the outcome, legal proceedings can have an adverse effect on the Company because of defense costs, diversion of management resources and other factors. 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 16 Table of Contents 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. Similarly, certain of the Company's commercial contracts require it to indemnify contract counterparties under specified circumstances, and the Company may incur legal counsel fees and other costs in connection with these obligations. 17 Table of Contents