Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, or 10-K. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events in future periods may differ materially from those anticipated or implied in these forward-looking statements as a result of many factors, including those discussed under Item 1A , "Risk Factors," and elsewhere in this 10-K. See also " Cautionary Note Regarding Forward-Looking Statements " at the beginning of this 10-K.
Overview
We are a global information and analytics company that measures advertising, content, and the consumer audiences of each, across media platforms. We create our products using a global data platform that combines information on digital platforms (connected (Smart) televisions, mobile devices, tablets and computers), TV, direct to consumer applications and movie screens with demographics and other descriptive information. We have developed proprietary data science that enables measurement of person-level and household-level audiences, removing duplicated viewing across devices and over time. This combination of data and methods enables a common standard for buyers and sellers to transact on advertising. This helps companies across the media ecosystem better understand and monetize their audiences and develop marketing plans and products to more efficiently and effectively reach those audiences. Our ability to unify behavioral and other descriptive data enables us to provide audience ratings, advertising verification, and granular consumer segments that describe hundreds of millions of consumers. Our customers include digital publishers, television networks, movie studios, content owners, brand advertisers, agencies and technology providers.
The platforms we measure include televisions, mobile devices, computers, tablets, CTV devices and movie theaters. The information we analyze crosses geographies, types of content and activities, including websites, mobile and over-the-top applications, video games, television and movie programming, e-commerce, and advertising.
Results of Operations
The following table sets forth selected Consolidated Statements of Operations and Comprehensive Loss data as a percentage of revenues for each of the periods indicated. Percentages may not add due to rounding.
Years Ended December 31,
2023 2022 2021
(In thousands) Dollars % of Revenue Dollars % of Revenue Dollars % of Revenue
Revenues $ 371,343 100.0 % $ 376,423 100.0 % $ 367,013 100.0 %
Cost of revenues 205,580 55.3 % 205,294 54.5 % 203,044 55.3 %
Selling and marketing 63,322 17.1 % 68,453 18.2 % 66,937 18.2 %
Research and development 33,701 9.1 % 36,987 9.8 % 39,123 10.7 %
General and administrative 51,192 13.8 % 61,200 16.3 % 61,736 16.8 %
Amortization of intangible assets 5,213 1.4 % 27,096 7.2 % 25,038 6.8 %
Impairment of goodwill 78,200 21.0 % 46,300 12.3 % — — %
Restructuring 6,234 1.7 % 5,810 1.5 % — — %
Impairment of right-of-use and long-lived assets 1,502 0.4 % 156 — % — — %
Total expenses from operations 444,944 119.8 % 451,296 119.9 % 395,878 107.9 %
Loss from operations (73,601) (19.8) % (74,873) (19.9) % (28,865) (7.9) %
Interest expense, net (1,445) (0.4) % (915) (0.2) % (7,801) (2.1) %
Other income (expense), net 42 — % 9,785 2.6 % (5,778) (1.6) %
(Loss) gain from foreign currency transactions (2,824) (0.8) % 1,166 0.3 % 2,895 0.8 %
Loss on extinguishment of debt — — % — — % (9,629) (2.6) %
Loss before income taxes (77,828) (21.0) % (64,837) (17.2) % (49,178) (13.4) %
Income tax provision (1,533) (0.4) % (1,724) (0.5) % (859) (0.2) %
Net loss $ (79,361) (21.4) % $ (66,561) (17.7) % $ (50,037) (13.6) %
Revenues
Our products and services are organized around solution groups that address customer needs. Accordingly, we evaluate revenues around two solution groups:
• Digital Ad Solutions provide measurement of the behavior and characteristics of audiences across digital platforms, including computers, tablets, mobile and other connected devices. This solution group also includes custom offerings that provide end-to-end solutions for planning, optimization and evaluation of advertising campaigns and brand protection across digital platforms, including transactional outcome-based measurement driven by our Activation and CCR products.
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• Cross Platform Solutions provide measurement of content and advertising audiences across local, national and addressable television, including consumption through connected (Smart) televisions, and are designed to help customers find the most relevant viewing audience whether that viewing is linear, non-linear, online or on-demand. This solution group also includes custom offerings that provide end-to-end solutions for planning, optimization and evaluation of advertising campaigns across platforms. In addition, this solution group includes products that measure movie viewership and box office results by capturing movie ticket sales in real time or near real time and includes box office analytics, trend analysis and insights for movie studios and movie theater operators worldwide.
We categorize our revenue along these solution groups; however, our cost structure is tracked at the corporate level and not by our solution groups. These costs include, but are not limited to, employee costs, purchased data, operational overhead, data storage and technology that supports multiple solution groups.
Revenues for the years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance
Digital Ad Solutions $ 208,833 56.2 % $ 212,510 56.5 % $ (3,677) (1.7) %
Cross Platform Solutions 162,510 43.8 % 163,913 43.5 % (1,403) (0.9) %
Total revenues $ 371,343 100.0 % $ 376,423 100.0 % $ (5,080) (1.3) %
Total revenues decreased by $5.1 million, or 1.3%, for the year ended December 31, 2023 as compared to 2022.
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 and CCR revenue driven by higher usage from multiple customers. We believe that macroeconomic factors (including inflation, interest rates and supply chain disruptions) continued to cause reductions and delays in advertising expenditures in 2023, which impacted demand for certain digital products.
Cross Platform Solutions revenue decreased primarily due to lower national TV revenue from lower renewals and a one-time custom deliverable in the first quarter of 2022. These decreases were partially offset by increases in revenue from local TV and movies due to higher renewals and new business.
Revenues for the years ended December 31, 2022 and 2021 are as follows:
Years Ended December 31,
(In thousands) 2022 % of Revenue 2021 % of Revenue $ Variance % Variance
Digital Ad Solutions $ 212,510 56.5 % $ 221,979 60.5 % $ (9,469) (4.3) %
Cross Platform Solutions 163,913 43.5 % 145,034 39.5 % 18,879 13.0 %
Total revenues $ 376,423 100.0 % $ 367,013 100.0 % $ 9,410 2.6 %
Total revenues increased by $9.4 million, or 2.6%, for the year ended December 31, 2022 as compared to 2021.
Digital Ad Solutions revenue decreased primarily due to lower usage of our Activation product as well as a decline in our syndicated digital products and custom digital deliveries. Additionally, we recognized $2.4 million in license revenue under a multi-year contract in 2021 (related to delivery of our digital measurement products in Europe) that did not recur in 2022.
Cross Platform Solutions revenue increased primarily due to higher TV revenues from new partnerships, higher contract values from renewals and increased agency adoption. In addition, we recognized $4.1 million more revenue related to cost reimbursements of cloud computing and processing costs attributable to certain custom TV data set deliveries during 2022 compared to 2021. Our movies revenue increased due to the continued return of consumers to theaters in markets worldwide in 2022.
Revenues by Geographic Location
Revenue from outside of the United States was $35.6 million, $38.6 million and $45.1 million for the years ended December 31, 2023, 2022, and 2021, respectively. Non-U.S. revenue declined in 2023 primarily due to a decline in revenue from our syndicated digital products.
We generate the majority of our revenues from the sale and delivery of our products within the United States. For information with respect to sales by geographic markets, refer to Footnote 4 , Revenue Recognition , of the Notes to Consolidated Financial Statements. Our chief operating decision maker (our CEO) does not evaluate the profit or loss from any separate geography.
We anticipate that revenues from our U.S. sales will continue to constitute a substantial and increasing portion of our revenues in future periods. We expect our non-U.S. revenues to continue to decline as a percentage of our total revenues as a result of relative growth in our domestic product offerings.
WPP Related Party Revenue
We provide WPP plc ("WPP") and its affiliates, in the normal course of business, services relating to our different product lines and receive various services from WPP and its affiliates in supporting our data collection efforts. For the years ended December 31, 2023, 2022, and 2021, related party revenues with WPP and its affiliates were $8.3 million, $11.7 million and $13.6 million, respectively.
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Cost of Revenues
Cost of revenues consists primarily of expenses related to producing our products, operating our network infrastructure, the recruitment, maintenance and support of our consumer panels and amortization of capitalized fulfillment costs. These expenses include employee costs for salaries, benefits, stock-based compensation and other related personnel costs of network operations, survey operations, custom analytics and technical support, all of which are expensed as they are incurred. Cost of revenues also includes costs to obtain multichannel video programming distributor ("MVPD") data sets and panel, census-based and other data sets used in our products as well as operational costs associated with our data centers, including depreciation expense associated with computer equipment and internally developed software that supports our panels and systems. Additionally, cost of revenues includes allocated overhead, lease expense and other facilities-related costs and depreciation expense generated by general purpose equipment and software.
Cost of revenues for the years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue
$ Variance % Variance
Data costs $ 72,420 19.5 % $ 70,707 18.8 % $ 1,713 2.4 %
Employee costs 37,049 10.0 % 41,003 10.9 % (3,954) (9.6) %
Systems and bandwidth costs 36,268 9.8 % 34,526 9.2 % 1,742 5.0 %
Lease expense and depreciation 23,051 6.2 % 21,016 5.6 % 2,035 9.7 %
Panel costs 13,370 3.6 % 15,747 4.2 % (2,377) (15.1) %
Professional fees 7,734 2.1 % 5,954 1.6 % 1,780 29.9 %
Sample and survey costs 6,452 1.7 % 7,013 1.9 % (561) (8.0) %
Technology 4,114 1.1 % 4,701 1.2 % (587) (12.5) %
Royalties and resellers 4,095 1.1 % 3,534 0.9 % 561 15.9 %
Other 1,027 0.3 % 1,093 0.3 % (66) (6.0) %
Total cost of revenues $ 205,580 55.4 % $ 205,294 54.5 % $ 286 0.1 %
Cost of revenues increased by $0.3 million, or 0.1%, for the year ended December 31, 2023 as compared to 2022. Lease expense and depreciation increased due to higher depreciation primarily driven by an increase in capitalized internal-use software costs. Professional fees increased primarily due to an increase in consulting services related to our transformation initiatives. Systems and bandwidth costs increased primarily due to cloud computing and processing costs attributable to certain custom TV data set deliveries. Data costs increased primarily due to an amendment to our data licensing agreement with Charter Communications, which resulted in a credit of $4.5 million recognized in 2022 compared to a credit of $2.5 million recognized in 2023. Employee costs decreased primarily due to an increase in employee compensation capitalized in 2023 related to capitalized software projects as we are allocating more resources to product development, as well as a decrease in employee headcount related to our restructuring plan. Panel costs decreased primarily due to lower recruitment and support costs for our desktop and mobile panels.
Cost of revenues for the years ended December 31, 2022 and 2021 are as follows:
Years Ended December 31,
(In thousands) 2022 % of Revenue 2021 % of Revenue
$ Variance % Variance
Data costs $ 70,707 18.8 % $ 74,196 20.2 % $ (3,489) (4.7) %
Employee costs 41,003 10.9 % 41,386 11.3 % (383) (0.9) %
Systems and bandwidth costs 34,526 9.2 % 27,565 7.5 % 6,961 25.3 %
Lease expense and depreciation 21,016 5.6 % 18,946 5.2 % 2,070 10.9 %
Panel costs 15,747 4.2 % 15,198 4.1 % 549 3.6 %
Sample and survey costs 7,013 1.9 % 7,008 1.9 % 5 0.1 %
Professional fees 5,954 1.6 % 5,109 1.4 % 845 16.5 %
Technology 4,701 1.2 % 5,689 1.6 % (988) (17.4) %
Royalties and resellers 3,534 0.9 % 4,039 1.1 % (505) (12.5) %
Other 1,093 0.3 % 3,908 1.1 % (2,815) (72.0) %
Total cost of revenues $ 205,294 54.5 % $ 203,044 55.3 % $ 2,250 1.1 %
Cost of revenues increased by $2.3 million, or 1.1%, for the year ended December 31, 2022 as compared to 2021. Systems and bandwidth costs increased primarily due to cloud computing and processing costs attributable to certain custom TV data set deliveries, including $4.1 million that was recognized as revenue in 2022 as described above. Lease expense and depreciation increased due to higher depreciation primarily driven by the addition of capitalized internal-use software costs as a result of our acquisition of Shareablee in 2021. These increases were offset by a decrease in data costs primarily due to the amendment of our data licensing agreement with Charter Communications, which resulted in a credit of $4.5 million recognized in 2022. Additionally, other expenses decreased primarily due to higher contract fulfillment costs associated with the delivery of our cross-platform products in Europe in 2021.
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Selling and Marketing
Selling and marketing expenses consist primarily of employee costs, including salaries, benefits, commissions, stock-based compensation and other related costs for personnel associated with sales and marketing activities, as well as costs related to online and offline advertising, industry conferences, promotional materials, public relations, other sales and marketing programs and allocated overhead, which is comprised of lease expense and other facilities-related costs, and depreciation expense generated by general purpose equipment and software.
Selling and marketing expenses for the years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance
Employee costs $ 50,337 13.6 % $ 55,416 14.7 % $ (5,079) (9.2) %
Technology 3,149 0.8 % 3,360 0.9 % (211) (6.3) %
Professional fees 3,120 0.8 % 2,464 0.7 % 656 26.6 %
Lease expense and depreciation 3,106 0.9 % 3,849 1.0 % (743) (19.3) %
Marketing and advertising 2,155 0.6 % 1,751 0.5 % 404 23.1 %
Other 1,455 0.4 % 1,613 0.4 % (158) (9.8) %
Total selling and marketing expenses $ 63,322 17.1 % $ 68,453 18.2 % $ (5,131) (7.5) %
Selling and marketing expenses decreased by $5.1 million, or 7.5%, for the year ended December 31, 2023 as compared to 2022. Employee costs decreased primarily due to a decrease in employee headcount related to our restructuring plan and lower commissions.
Selling and marketing expenses for the years ended December 31, 2022 and 2021 are as follows:
Years Ended December 31,
(In thousands) 2022 % of Revenue 2021 % of Revenue $ Variance % Variance
Employee costs $ 55,416 14.7 % $ 55,966 15.2 % $ (550) (1.0) %
Lease expense and depreciation 3,849 1.0 % 4,217 1.1 % (368) (8.7) %
Technology 3,360 0.9 % 2,621 0.7 % 739 28.2 %
Professional fees 2,464 0.7 % 2,024 0.6 % 440 21.7 %
Marketing and advertising 1,751 0.5 % 953 0.3 % 798 83.7 %
Other 1,613 0.4 % 1,156 0.3 % 457 39.5 %
Total selling and marketing expenses $ 68,453 18.2 % $ 66,937 18.2 % $ 1,516 2.3 %
Selling and marketing expenses increased by $1.5 million, or 2.3%, for the year ended December 31, 2022 as compared to 2021. Marketing and advertising expense increased primarily due to increased participation in marketing events during 2022.
Research and Development
Research and development expenses include product development costs, consisting primarily of employee costs including salaries, benefits, stock-based compensation and other related costs for personnel associated with research and development activities, third-party expenses to develop new products and third-party data costs and allocated overhead, which is comprised of lease expense and other facilities-related costs, and depreciation expense related to general purpose equipment and software.
Research and development expenses for the years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance
Employee costs $ 26,628 7.2 % $ 28,955 7.7 % $ (2,327) (8.0) %
Technology 3,367 0.9 % 3,685 1.0 % (318) (8.6) %
Lease expense and depreciation 2,523 0.7 % 2,783 0.7 % (260) (9.3) %
Professional fees 640 0.2 % 1,002 0.3 % (362) (36.1) %
Other 543 0.1 % 562 0.1 % (19) (3.4) %
Total research and development expenses $ 33,701 9.1 % $ 36,987 9.8 % $ (3,286) (8.9) %
Research and development expenses decreased by $3.3 million, or 8.9%, for the year ended December 31, 2023 as compared to 2022. 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, as well as a decrease in employee headcount related to our restructuring plan.
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Research and development expenses for the years ended December 31, 2022 and 2021 are as follows:
Years Ended December 31,
(In thousands) 2022 % of Revenue 2021 % of Revenue $ Variance % Variance
Employee costs $ 28,955 7.7 % $ 29,116 7.9 % $ (161) (0.6) %
Technology 3,685 1.0 % 4,264 1.2 % (579) (13.6) %
Lease expense and depreciation 2,783 0.7 % 3,555 1.0 % (772) (21.7) %
Professional fees 1,002 0.3 % 1,664 0.5 % (662) (39.8) %
Other 562 0.1 % 524 0.1 % 38 7.3 %
Total research and development expenses $ 36,987 9.8 % $ 39,123 10.7 % $ (2,136) (5.5) %
Research and development expenses decreased by $2.1 million, or 5.5%, for the year ended December 31, 2022 as compared to 2021. Lease and depreciation expense decreased primarily due to lower rent as we reduced our office footprint. Professional fees decreased primarily due to a decrease in consulting services. Technology expenses decreased due to decreases in various license and maintenance agreements compared to 2021.
General and Administrative
General and administrative expenses consist primarily of employee costs including salaries, benefits, stock-based compensation and other related costs, and related expenses for executive management, finance, human capital, legal and other administrative functions, as well as professional fees, overhead, including allocated overhead, which is comprised of lease expense and other facilities-related costs, depreciation expense related to general purpose equipment and software, 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 years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance
Employee costs $ 26,770 7.2 % $ 31,298 8.3 % $ (4,528) (14.5) %
Professional fees 14,341 3.9 % 15,706 4.2 % (1,365) (8.7) %
Technology 3,385 0.9 % 3,379 0.9 % 6 0.2 %
Lease expense and depreciation 1,444 0.4 % 1,668 0.4 % (224) (13.4) %
Other 5,252 1.4 % 9,149 2.4 % (3,897) (42.6) %
Total general and administrative expenses $ 51,192 13.8 % $ 61,200 16.3 % $ (10,008) (16.4) %
General and administrative expenses decreased by $10.0 million, or 16.4%, for the year ended December 31, 2023 as compared to 2022. Employee costs decreased primarily due to lower stock-based compensation expense in 2023 and severance expense related to the retirement of our former CEO which was recognized in 2022. Other expense decreased primarily due to change in fair value of the contingent consideration recognized as part of our acquisition of Shareablee in 2021, as described in Footnote 2 , Summary of Significant Accounting Policies . In addition, Other expense decreased due to lower recruiting expense and operating tax expense. Professional fees decreased primarily due to a decrease in audit fees.
General and administrative expenses for the years ended December 31, 2022 and 2021 are as follows:
Years Ended December 31,
(In thousands) 2022 % of Revenue 2021 % of Revenue $ Variance % Variance
Employee costs $ 31,298 8.3 % $ 33,571 9.1 % $ (2,273) (6.8) %
Professional fees 15,706 4.2 % 16,194 4.4 % (488) (3.0) %
Technology 3,379 0.9 % 2,922 0.8 % 457 15.6 %
Lease expense and depreciation 1,668 0.4 % 1,888 0.5 % (220) (11.7) %
Other 9,149 2.4 % 7,161 2.0 % 1,988 27.8 %
Total general and administrative expenses $ 61,200 16.3 % $ 61,736 16.8 % $ (536) (0.9) %
General and administrative expenses decreased by $0.5 million, or 0.9%, for the year ended December 31, 2022 as compared to 2021. Employee costs decreased primarily due to lower stock-based compensation expense as a result of various executive departures in 2022 offset by an increase in salary costs. These decreases were partially offset by an increase in Other expense primarily related to change in fair value of the contingent consideration recognized as part of our acquisition of Shareablee.
Amortization of Intangible Assets
Amortization expense consists of charges related to the amortization of intangible assets associated with acquisitions, primarily our 2016 Rentrak merger. Amortization of intangible assets decreased by $21.9 million, or 80.8%, for 2023 as compared to 2022 primarily due to amortization related to certain customer relationships, methodologies and technology intangibles related to the Rentrak merger reaching the end
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of their useful lives. Amortization of intangible assets increased by $2.1 million, or 8.2%, for 2022 as compared to 2021 due primarily to amortization related to certain software and customer relationships, methodologies and technology acquired as part of the Shareablee acquisition in December 2021.
Impairment of Goodwill
We performed a quantitative impairment test on our annual testing date as of October 1, 2023. Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $34.1 million non-cash impairment charge in the quarter ended December 31, 2023.
In the second quarter of 2023, 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 quarter ended June 30, 2023.
As of September 30, 2022, 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 in the quarter ended September 30, 2022.
For further information refer to Footnote 10 , Goodwill and Intangible Assets and Item 7 , Critical Accounting Estimates .
Organizational Restructuring
We incurred restructuring expenses of $6.2 million and $5.8 million for the years ended December 31, 2023 and 2022, respectively, related to the implementation of a restructuring plan that included a workforce reduction communicated in 2022. We expect the 2022 restructuring plan to be substantially complete in 2024. For further information refer to Footnote 15 , Organizational Restructuring . No restructuring expenses were incurred during 2021.
Impairment of Right-of-use and Long-lived Assets
In 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. For further information refer to Footnote 2 , Summary of Significant Accounting Policies .
Loss on Extinguishment of Debt
Loss on extinguishment of debt represents the difference between the carrying value of our debt instruments and any consideration paid to our creditors in the form of cash or shares of our Common Stock on the extinguishment date.
In 2021, we recorded a $9.6 million loss on debt extinguishment related to the payoff of our senior secured convertible notes issued to Starboard Value LP (the "Notes") and a subsidiary-issued secured promissory note (the "Secured Term Note") on March 10, 2021. The primary drivers of the extinguishment loss were the write-off of unamortized deferred financing costs and issuance discounts, the issuance of additional shares of Common Stock in connection with the extinguishment, and the derecognition of the interest rate reset derivative liability on the Notes. These components are described in Footnote 6 , Debt .
Interest Expense, Net
Interest expense, net consists of interest income and interest expense. Interest income primarily consists of interest earned from our cash and cash equivalent balances. Interest expense relates to interest on our Notes, Secured Term Note, Revolving Credit Agreement, sale-leaseback agreement, and our finance leases.
Interest expense, net, increased $0.5 million during 2023 to $1.4 million as compared to $0.9 million in 2022. The increase in interest expense for the year ended December 31, 2023 as compared to 2022 was primarily due to a higher interest rate on debt under our Revolving Credit Agreement, as described in Footnote 6 , Debt.
Interest expense, net, decreased $6.9 million during 2022 to $0.9 million as compared to $7.8 million in 2021. The decrease in interest expense for the year ended December 31, 2022 as compared to 2021 was primarily due to the extinguishment of the Notes and the Secured Term Note in March 2021, as described in Footnote 6 , Debt .
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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 normal operations.
The following is a summary of other income (expense), net:
Years Ended December 31,
(In thousands) 2023 2022 2021
Change in fair value of financing derivatives $ — $ — $ 1,800
Change in fair value of warrants liability 49 9,802 (7,689)
Other (7) (17) 111
Total other income (expense), net $ 42 $ 9,785 $ (5,778)
Total other income, net for the year ended December 31, 2023 was negligible as compared to total other income, net of $9.8 million in 2022. The decrease in other income, net was primarily driven by larger gains from the change in fair value of warrants liability recognized in 2022 compared to 2023, due to a decrease in the trading price of our Common Stock in 2022 and an exercise price adjustment in 2023. For additional information about the change in fair value of warrants liability, refer to Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity .
Total other income, net for the year ended December 31, 2022 was $9.8 million as compared to total other expense, net of $5.8 million in 2021. The increase in other income, net was primarily driven by gains from the change in fair value of warrants liability due to a decrease in the trading price of our Common Stock during 2022. This compared to other expense, net for 2021 due to an exercise price adjustment described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity , and an increase in the trading price of our Common Stock during 2021.
(Loss) Gain 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. Our foreign currency exposures that relate to the translation to U.S. Dollars are in a net liability position, and our foreign currency exposures that relate to the translation from U.S. Dollars are in a net asset position.
For the year ended December 31, 2023, the loss from foreign currency transactions was $2.8 million. The loss was primarily driven by fluctuations in the Chilean Peso against the U.S. Dollar and Euro and the U.S. Dollar against the Euro and Argentine Peso.
For the year ended December 31, 2022, the gain from foreign currency transactions was $1.2 million. The gain was primarily driven by fluctuations in the Euro and Chilean Peso against the U.S. Dollar and U.S. Dollar against the Canadian Dollar and Argentine Peso.
For the year ended December 31, 2021, the gain from foreign currency transactions was $2.9 million. The gain was primarily driven by fluctuations in the Euro and Chilean Peso against the U.S. Dollar and Chilean Peso against the Euro.
Income Tax Provision
A valuation allowance has been established against our net U.S. federal and state deferred tax assets, and certain foreign deferred tax assets, including net operating loss carryforwards. As a result, our income tax position is primarily related to foreign tax activity and U.S. deferred taxes for tax deductible goodwill and other indefinite-lived liabilities.
During the years ended December 31, 2023, 2022, and 2021, we recorded an income tax provision of $1.5 million, $1.7 million, and $0.9 million, resulting in an effective tax rate of 2.0%, 2.7%, and 1.7%, 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.
Included within tax expense for the year ended December 31, 2023 is an income tax adjustment of $20.9 million related to the impairment of goodwill. Also included in the total tax expense is an income tax expense of $15.1 million for an increase in the valuation allowance recorded against our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions. Income tax expense of $0.7 million has also been included for permanent differences in the book and tax treatment of certain stock-based compensation, executive compensation, and other nondeductible expenses. These tax adjustments, along with state and local taxes, are the primary drivers of the annual effective income tax rate.
Included within tax expense for the year ended December 31, 2022 is income tax benefit of $2.6 million for permanent differences in the book and tax treatment of nontaxable gain on fair market value adjustment of stock warrants, offset by certain nondeductible stock-based compensation and executive compensation. Also included in the total tax expense is an income tax adjustment of $12.7 million related to the impairment of goodwill. Income tax expense of $18.5 million has also been included for an increase in the valuation allowance recorded against our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions. These tax adjustments, along with state and local taxes and book losses in foreign jurisdictions where the income tax rate is substantially lower than the U.S. federal statutory rate, are the primary drivers of the annual effective income tax rate.
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Included within tax expense for the year ended December 31, 2021 are income tax adjustments of $9.2 million for permanent differences in the book and tax treatment of certain stock-based compensation, limitations on the deductibility of certain executive compensation, nondeductible interest expense on debt instruments and associated derivatives, and other nondeductible expenses. Also included is a favorable return to provision true-up adjustment of $8.3 million for a prior year permanent difference related to foreign earnings taxable in the U.S. as a result of a tax restructuring that occurred during 2020. Tax expense of $16.3 million has also been included for an increase in the valuation allowance recorded against our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions. This increase was offset by a tax benefit of $2.8 million for the release of a portion of our U.S. valuation allowance as a result of the Shareablee acquisition.
Liquidity and Capital Resources
The following table summarizes our cash flows for each of the periods identified:
Years Ended December 31,
(In thousands) 2023 2022 2021
Net cash provided by operating activities $ 28,926 $ 34,937 $ 9,856
Net cash used in investing activities (23,786) (17,822) (14,648)
Net cash used in financing activities (3,394) (18,132) (22,452)
Effect of exchange rate changes on cash, cash equivalents and restricted cash 748 (820) (1,218)
Net increase (decrease) in cash, cash equivalents and restricted cash 2,494 (1,837) (28,462)
Overview
Our principal uses of cash consist of cash paid for data, payroll and other operating expenses, including restructuring-related costs and expenses incurred in prior periods; payments related to investments in equipment, primarily to support our consumer panels and technical infrastructure required to deliver our products and services and support our customers; service of our debt and lease facilities; and dividend payment obligations with respect to our Preferred Stock.
As of December 31, 2023, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $22.9 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 June 30, 2022, we made cash dividend payments totaling $15.5 million to the holders of our Preferred Stock, representing dividends accrued for the period from June 30, 2021 through June 29, 2022. In 2023, each holder of Preferred Stock waived its right to receive on June 30, 2023 (and subsequently on December 31, 2023) the annual dividends otherwise payable by us on that date. The deferred dividends will continue to accrue and accumulate at a rate of 9.5% per year until declared and paid, with payment to occur on or before June 30, 2024. As of December 31, 2023, accrued dividends for the Preferred Stock totaled $24.1 million.
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, subject to conditions set forth in the Certificate of Designations governing the Preferred Stock.
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 December 31, 2023, we had outstanding borrowings of $16.0 million and outstanding letters of credit totaling $3.2 million under the Revolving Credit Agreement, leaving a remaining borrowing capacity of $20.8 million. The outstanding borrowings under the Revolving Credit Agreement are classified within current liabilities as the facility matures in May 2024. We do not currently have an agreement in place to extend or refinance the facility upon its maturity.
Macroeconomic Factors
Over the past two years, macroeconomic challenges such as inflation, rising interest rates, capital market disruptions and recession concerns have caused some advertisers to reduce or delay advertising expenditures. 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 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
On March 10, 2021, we issued 82,527,609 shares of Preferred Stock in exchange for gross cash proceeds of $204.0 million. Net proceeds from the issuance totaled $187.9 million after deducting issuance costs. Shares of Preferred Stock are convertible into Common Stock as described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity . As of December 31, 2023, each share of Preferred Stock was convertible into 0.055915 shares of Common Stock, with such conversion rate scheduled to return to 0.05 upon payment of accrued dividends.
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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 (including in connection with the 2023 dividend waivers described below). In addition, such holders are entitled to request, and we must take all actions reasonably necessary to pay, a one-time special dividend on the Preferred Stock equal to the highest dividend that our Board of Directors determines can be paid at the applicable time (or a lesser amount agreed by the holders), subject to additional conditions and limitations described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity . We may be obligated to obtain debt financing in order to effectuate the special dividend, which could significantly impact our financial position and liquidity depending on the timing and scope of the dividend payment and related financing. Moreover, this obligation could lead us to refinance or terminate the Revolving Credit Agreement prior to its maturity, due to its restrictions on our ability to incur additional debt.
At the Annual Meeting held on June 15, 2023, 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, subject to conditions set forth in the Certificate of Designations governing the Preferred Stock. On the same date, each holder of Preferred Stock waived its right to receive on June 30, 2023 the annual dividends otherwise payable by us on that date. Upon receipt of the waivers, our Board unanimously agreed to defer the June 2023 payment in order to provide flexibility to our management team to continue to execute our strategic plan and consider dividend payment options later in the year. Under the waivers and the Certificate of Designations, the deferred dividends would 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.
On December 26, 2023, at our request, each holder of our Preferred Stock waived its right to receive the deferred dividends on or before December 31, 2023. Under these most recent waivers and the Certificate of Designations, the deferred dividends will continue to accrue at a rate of 9.5% per year until paid, with payment to occur on or before June 30, 2024, subject to certain conditions. Payment of annual dividends (including deferred dividends) in the form of cash could significantly impact our financial position and liquidity.
The proceeds from the Preferred Stock issuance were used to repay the Notes. In connection with the closing, we also repaid the Secured Term Note and certain transaction-related expenses with cash from our balance sheet. For additional information on the Preferred Stock issuance and related debt extinguishments, refer to Footnote 6 , Debt and Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity.
Revolving Credit Agreement
On May 5, 2021, we entered into the Revolving Credit Agreement, which matures in May 2024. The Revolving Credit Agreement provides a borrowing capacity equal to $40.0 million (increased from $25.0 million on February 25, 2022). We may also request the issuance of letters of credit under the Revolving Credit Agreement in an aggregate amount up to $5.0 million, which reduces the amount of available borrowings by the amount of such issued and outstanding letters of credit.
On February 25, 2022, we entered into an amendment to the Revolving Credit Agreement to expand our aggregate borrowing capacity from $25.0 million to $40.0 million. The 2022 amendment also replaced the previous Eurodollar Rate (as defined in the Revolving Credit Agreement) 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%. On February 24, 2023, we entered into an additional amendment to the Revolving Credit Agreement that further increased the Applicable Rate payable on SOFR-based loans to 3.50%.
The amount we are able to borrow under the Revolving Credit Agreement is subject to compliance with the financial covenants, satisfaction of various conditions precedent to borrowing and other provisions of the Revolving Credit Agreement. Notably, the Revolving Credit Agreement (as amended) contains financial covenants that require us to maintain a minimum Consolidated Asset Coverage Ratio and minimum Liquidity through maturity, 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 December 31, 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 December 31, 2023, we had outstanding borrowings of $16.0 million and outstanding letters of credit totaling $3.2 million under the Revolving Credit Agreement, leaving a remaining borrowing capacity of $20.8 million. The borrowed funds were used to reduce our accounts payable balances, primarily related to expenses incurred in prior periods, and support our working capital position. While we continue to take steps to reduce our outstanding trade payables and improve our working capital position, our liquidity could be negatively affected if we are unable to generate sufficient cash from operations to satisfy outstanding payables and meet our other financial obligations as they come due. Our liquidity could also be negatively affected if we are unable to repay or refinance our outstanding borrowings under the Revolving Credit Agreement upon its maturity in May 2024.
For additional information on the Revolving Credit Agreement, refer to Footnote 6 , Debt .
Sale of Common Stock and Warrants
On June 23, 2019, we entered into a Securities Purchase Agreement with CVI Investments, Inc. ("CVI") pursuant to which we sold to CVI for aggregate gross proceeds of $20.0 million (i) 136,425 shares of Common Stock and (ii) Series A Warrants, Series B-1 Warrants, Series B-2 Warrants and Series C Warrants to initially purchase up to 582,701 shares of Common Stock (the "Private Placement"). On October 14, 2019, we issued 136,425 shares of Common Stock to CVI upon exercise by CVI of the Series C Warrants. As a result of this exercise, the number of
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shares issuable under our Series A Warrants was increased by 136,425. On January 29, 2020, the Series B-1 Warrants expired unexercised. On August 3, 2020, the Series B-2 Warrants expired unexercised.
The exercise price of our Series A warrants was adjusted in connection with the Preferred Stock transactions in March 2021 and further adjusted in connection with shares issued to non-executive employees under our annual incentive compensation plan in March 2023. For additional information on the Private Placement and the adjustments to our Series A Warrants (which adjustments could reduce the cash proceeds we receive upon exercise of the Series A Warrants), refer to Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity .
Restricted Cash
Restricted cash represents security deposits for subleased office space. As of December 31, 2023 and 2022, we had $0.2 million and $0.4 million of restricted cash, respectively.
Operating Activities
Our primary source of cash provided by operating activities is revenues generated from sales of our products and services. Our primary uses of cash from operating activities include personnel costs and costs related to data and infrastructure used to develop and maintain our products and services.
Cash 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, impairment of right-of-use assets and goodwill, stock-based compensation, deferred tax provision, change in the fair value of financing derivatives, warrants liability and contingent consideration liability, loss on extinguishment of debt, non-cash interest expense on the Notes, accretion of debt discount, and amortization of deferred financing costs.
Net cash provided by operating activities in 2023 was $28.9 million compared to $34.9 million in 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 $10.5 million of cash used for the year ended December 31, 2023 as compared to $0.3 million of cash generated for the year ended December 31, 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. Other contributors to the decrease in cash provided by operating activities were lower revenue, lower adjustments for amortization and stock-based compensation expense and change in fair value of contingent consideration in 2023, offset by the change in fair value of our warrants liability and depreciation.
Net cash provided by operating activities in 2022 was $34.9 million compared to $9.9 million in 2021. The increase in cash provided by operating activities was primarily reflective of higher revenues, shorter billing cycles, and improved cash collections during 2022 as compared to 2021. These increases were partially offset by payments of $4.6 million related to our organizational restructuring during 2022.
Investing Activities
Cash used in investing activities primarily consists of payments related to capitalized internal-use software costs, purchases of computer and network equipment to support our technical infrastructure, and furniture and equipment. The extent of these investments will be affected by our ability to expand relationships with existing customers, grow our customer base and introduce new digital formats, as well as constraints on cash expenditures due to our financial position and the current economic environment.
Net cash used in investing activities in 2023 was $23.8 million compared to $17.8 million in 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.
Net cash used in investing activities in 2022 was $17.8 million compared to $14.6 million in 2021. The increase in cash used in investing activities was primarily due to an increase in cash paid for capitalized internally developed software offset by cash acquired from our 2021 acquisition of Shareablee.
Financing Activities
Net cash used in financing activities in 2023 was $3.4 million compared to $18.1 million in 2022. The decrease in cash used for financing activities was primarily due to the deferral of accrued dividends due to holders of the Preferred Stock in 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 in 2023.
Net cash used in financing activities in 2022 was $18.1 million compared to $22.5 million in 2021. The decrease in cash used for financing activities was primarily due to repayment of the Notes and the Secured Term Note in 2021, which outflows were partially offset by cash proceeds received from the issuance of the Preferred Stock (net of related transaction costs) in the same year. These decreases were partially offset by a net increase of $10.8 million in cash dividends paid to holders of the Preferred Stock in 2022, reflecting a full annual dividend period, as compared to 2021, which included only a partial dividend period.
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Contractual Payment Obligations
We have certain long-term contractual arrangements that have fixed and determinable payment obligations including purchase obligations with MVPDs and connected (Smart) TV data providers, operating and financing leases, and data storage and bandwidth arrangements.
We have data licensing agreements with a number of MVPDs and other providers for set-top box and connected TV data. These agreements have remaining terms from one to seven years. As of December 31, 2023, the total fixed payment obligations related to set-top box and connected TV data agreements are $298.5 million and $30.4 million, respectively.
We have both operating and financing leases related to corporate office space and equipment. Our leases have remaining terms from less than one to four years. As of December 31, 2023, the total fixed payment obligation related to these agreements is $41.6 million.
We have an agreement for cloud-based data storage and bandwidth to help process and store our data. The remaining term for this agreement is two years. As of December 31, 2023, the total fixed payment obligation related to this agreement is $28.8 million.
Future Capital Requirements
Our ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors, including the timing of cash collections from our customers, data costs and other trade payables, service of our debt and lease facilities, dividend payment obligations, and expenses from ongoing compliance efforts and legal matters. To the extent that our existing cash, cash equivalents and operating cash flow, together with savings from repayment of prior debt arrangements and cost-reduction initiatives undertaken by our management, are insufficient to fund our future activities and requirements, we may need to raise additional funds through public or private equity or debt financing. We may also be required to raise additional funds in order to repay our Revolving Credit Agreement upon maturity or pay a special dividend to holders of our Preferred Stock, as described above. Our history of net losses, as well as disruption and volatility in global capital and credit markets, could impact our ability to access capital resources on terms acceptable to us or at all. If we issue additional equity securities in order to raise additional funds, pay dividends or for other purposes, further dilution to existing stockholders may occur.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"). The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the amounts reported in our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial condition and results of operations because they involve significant judgments and uncertainties. Actual results in these areas could differ from management's estimates. Refer to Footnote 2 , Summary of Significant Accounting Policies, for further information on our most significant accounting policies.
Revenue Recognition
We recognize revenue under the core principle of depicting the transfer of promised goods and services to our customers in an amount that reflects the consideration to which we expect to be entitled. Significant judgments used in the determination of the amount and timing of our revenue recognition include the identification of distinct performance obligations and the allocation of contract consideration among individual performance obligations based on their relative standalone selling price ("SSP").
Performance obligations are identified by evaluating whether the promised goods and services are capable of being distinct and distinct within the context of the contract. We have a limited number of monetary contracts with MVPDs that involve both the purchase and sale of services with a single counterparty. Each contract is assessed to determine if the goods and services exchanged between the two parties represent distinct performance obligations which can entail significant judgment. The conclusion regarding whether goods and services exchanged are distinct determines whether consideration received from the counterparty is recognized as revenues (up to the SSP of the distinct goods or services), or as a reduction to the purchase price of the goods or services recorded in our cost of revenues.
The transaction price is allocated to each performance obligation based on its relative SSP. In most sales contracts, we bundle multiple products and very few are sold on a standalone basis. As a result, our SSP is not directly observable and we have to develop internal estimates using information that is reasonably available to us. Our SSP is primarily developed using an adjusted market approach supported by rate cards and pricing calculators that are periodically reviewed and updated to reflect the best available information. Bundled arrangements may include a combination of distinct goods and services where some are satisfied over time and others are satisfied at a point in time. Changes to the SSP will impact the amount of consideration allocated to each performance obligation, which could have an impact on the timing and amount of revenues recognized in future periods as our performance obligations are satisfied. The determination of SSP also impacts the amount of revenues we can recognize in transactions where consideration is exchanged with counterparties as described above.
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Goodwill
The valuation of goodwill involves the use of management's estimates and assumptions and can have a significant impact on future operating results. Goodwill is not amortized but is evaluated for impairment at least annually, as of October 1, by comparing the fair value of a reporting unit to its carrying value including goodwill recorded by the reporting unit.
We have one reporting unit. As such, we perform the impairment assessment for goodwill at the enterprise level. Goodwill is reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below the carrying value. In assessing the possibility that our reporting unit's fair value has been reduced below its carrying value due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence including, but not limited to: (i) the results of our impairment testing from the most recent testing date (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts, if any, (iii) declines in market capitalization below book value (and the magnitude and duration of those declines), if any, and (iv) changes in general industry, market and macroeconomic conditions.
We determine the fair value of our reporting unit using a combination of the income and market approaches. The results from each of these approaches are weighted appropriately taking into account the relevance and availability of data at the time we perform the valuation.
Under the income approach, the fair value is determined using a discounted cash flow model based on projected financial performance and discount rates that take into account an appropriate risk-adjusted return. The discounted cash flow model requires the use of various assumptions in developing the present value of projected cash flows, the following of which are significant to our analysis:
Projected financial performance: expected future cash flows and growth rates are based upon assumptions of our future revenue growth and operating costs. Actual results of operations and cash flows will likely differ from those utilized in our discounted cash flow analysis, and it is possible that those differences could be material.
Long-term growth rate: the long-term growth rate represents the rate at which our single reporting unit's earnings are expected to grow or losses to decrease. Our assumed long-term growth rate was based on projected long-term inflation and gross domestic product growth estimates for the countries in which we operate and a long-term growth estimate for our business and the industry in which we operate. The long-term growth rate selected for the 2023, 2022 and 2021 annual impairment analyses was 3.0%.
Discount rate: our reporting unit's future cash flows are discounted at a rate that is consistent with our average weighted cost of capital that is likely to be utilized by market participants. The weighted-average cost of capital is our estimate of the overall returns required by both debt and equity investors, weighted by their respective contributions of capital. We use discount rates that are commensurate with the risks and uncertainty inherent in our business and in our internally-developed forecasts. The discount rates selected for the 2023, 2022 and 2021 annual impairment analyses were 22.0%, 27.0% and 19.0%, respectively. Our selected discount rate was lower in 2023 in comparison to 2022 primarily due to the decrease in unlevered beta assumptions and company-specific risk premium ("CSRP"). The decrease in CSRP was related to the utilization of lower growth rates in earnings before interest, taxes, depreciation, and amortization.
Under the market approach, the fair value is determined using certain financial metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses requires judgment and is based on the markets in which we operate giving consideration to, amongst other things, risk profiles, size and geography. The market approach may also be limited in instances where there is a lack of recently executed transactions of comparable businesses. We determine fair value primarily based on selected market multiples based on current and projected revenues compared to business enterprise value, with an estimated control premium as applicable.
As of October 1, 2023, we concluded that it was more likely than not that the estimated fair value of our reporting unit was less than its carrying value. In our assessment, we considered the decline in our revenue, stock price, and market capitalization among other factors. We performed a quantitative goodwill impairment test in conjunction with the annual test using a discounted cash flow model, supported by a market approach. Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $34.1 million non-cash impairment charge in the quarter ended December 31, 2023.
As of June 30, 2023, we concluded that it was more likely than not that the estimated fair value of our reporting unit was less than its carrying value. In our assessment, we considered the decline in our stock price and market capitalization among other factors. We performed a quantitative goodwill impairment test using a discounted cash flow model, supported by a market approach. 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 quarter ended June 30, 2023.
Goodwill allocated to our single reporting unit as of December 31, 2023 was $310.4 million. The projected long-term cash flows used in our fair value estimate are consistent with our most recent operating plan and are dependent on the successful execution of our business plan, overall industry growth rates and the competitive environment.
We monitor for events and circumstances that could negatively impact the key assumptions in determining the fair value of our goodwill, including long-term growth projections, profitability, discount rates, volatility in our market capitalization, and general industry, market and macroeconomic conditions. The judgments and estimates described above could change in future periods. If the reporting unit's future performance falls below our expectations, or if there are negative revisions to our fair value assumptions, including those that are significant and discussed above, we may need to record a material, non-cash goodwill impairment charge in a future period.
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