What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-09 compared with 2024-05-10 · 153 added, 81 removed, 201 unchanged (54% of the section changed)

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Percentages may not add due to rounding.

Three Months Ended March 31,

(In thousands) Dollars % of Revenue Dollars % of Revenue

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

2024 2023 2024 2023

(In thousands) Dollars % of Revenue Dollars % of Revenue Dollars % of Revenue Dollars % of Revenue

Revenues $ 85,837 100.0 % $ 93,684 100.0 % $ 172,632 100.0 % $ 185,242 100.0 %

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Restructuring 493 0.6 % 4,104 4.4 % 953 0.6 % 5,102 2.8 %

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

Total expenses from operations 87,765 102.2 % 141,063 150.6 % 176,437 102.2 % 236,448 127.6 %

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Other income (expense), net 376 0.4 % 1,609 1.7 % 651 0.4 % (203) (0.1) %

Gain (loss) from foreign currency transactions 963 1.1 % (1,466) (1.6) %

(Loss) gain from foreign currency transactions (248) (0.3) % (168) (0.2) % 715 0.4 % (1,634) (0.9) %

Interest expense, net (444) (0.5) % (363) (0.4) % (1,016) (0.6) % (715) (0.4) %

Loss before income taxes (2,244) (2.6) % (46,301) (49.4) % (3,455) (2.0) % (53,758) (29.0) %

Income tax benefit (provision) 157 0.2 % (1,214) (1.3) %

Income tax benefit 536 0.6 % 1,392 1.5 % 693 0.4 % 178 0.1 %

Net loss $ (1,708) (2.0) % $ (44,909) (47.9) % $ (2,762) (1.6) % $ (53,580) (28.9) %

In the first quarter of 2024, we decided to evaluate revenue results using solution groups that better represent our evolving business and customer needs, which are largely centered around measurement and insights.

Beginning with the first quarter of 2024, we are presenting revenues in the following two solution groups:

Our products and services are organized around solution groups that address customer needs, which are largely centered around measurement and insights.

Accordingly, we evaluate revenues in the following two solution groups:

• Content & Ad Measurement represents the measurement portion of our business - measuring audiences across content and advertisements for linear TV, CTV, desktops, laptops, tablets and mobile devices.

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These costs include, but are not limited to, employee costs, purchased data, operational overhead, data storage and technology that supports multiple solution groups.

Revenues for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended March 31,

Revenues for the three months ended June 30, 2024 and 2023 were as follows:

Three Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue $ Variance % Variance

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Content & Ad Measurement revenue decreased due to lower revenue from our Syndicated Audience offerings, primarily related to lower renewals of our national TV and syndicated digital products, as well as lower variable cloud computing and processing reimbursements for certain custom TV data set deliveries.

This decrease was partially offset by an increase in cross-platform revenue primarily driven by increased usage of our Proximic and CCR products.

Research & Insight Solutions revenue decreased primarily due to lower deliveries of certain custom digital products.

As discussed above, we changed the way we evaluate and present our revenues beginning in the first quarter of 2024.

Prior to this change, through the fourth quarter of 2023, our products and services were organized in two different solution groups, as follows:

• Digital Ad Solutions provided measurement of the behavior and characteristics of audiences across digital platforms, including computers, tablets, mobile and other connected devices.

This solution group also included custom offerings that provided 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.

• Cross Platform Solutions provided measurement of content and advertising audiences across local, national and addressable television, including consumption through connected (Smart) televisions, and were designed to help customers find the most relevant viewing audience whether that viewing was linear, non-linear, online or on-demand.

This solution group also included custom offerings that provided end-to-end solutions for planning, optimization and evaluation of advertising campaigns across platforms.

In addition, this solution group included products that measured movie viewership and box office results by capturing movie ticket sales in real time or near real time and included box office analytics, trend analysis and insights for movie studios and movie theater operators worldwide.

Revenues for the three months ended March 31, 2024 and 2023 based on the old solution groups would have been as follows:

Three Months Ended March 31,

Revenues for the six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue $ Variance % Variance

Digital Ad Solutions $ 49,667 57.2 % $ 50,447 55.1 % $ (780) (1.5) %

Cross Platform Solutions 37,128 42.8 % 41,111 44.9 % (3,983) (9.7) %

Content & Ad Measurement

Syndicated Audience $ 128,789 74.6 % $ 139,605 75.4 % $ (10,816) (7.7) %

Cross-Platform 16,020 9.3 % 14,453 7.8 % 1,567 10.8 %

Total Content & Ad measurement 144,809 83.9 % 154,058 83.2 % (9,249) (6.0) %

Research & Insight Solutions 27,823 16.1 % 31,184 16.8 % (3,361) (10.8) %

Total revenues $ 172,632 100.0 % $ 185,242 100.0 % $ (12,610) (6.8) %

This decrease was partially offset by an increase in Cross-Platform revenue primarily driven by increased usage of our Proximic products.

Research & Insight Solutions revenue decreased primarily due to lower deliveries of certain custom digital products.

Cost of Revenues

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

Cost of revenues for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended March 31,

Cost of revenues for the three months ended June 30, 2024 and 2023 were as follows:

Three Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue

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Panel costs 3,073 3.6 % 3,539 3.8 % (466) (13.2) %

Professional fees 2,048 2.4 % 1,707 1.8 % 341 20.0 %

Royalties and resellers 1,472 1.7 % 960 1.0 % 512 53.3 %

Sample and survey costs 1,438 1.7 % 1,646 1.8 % (208) (12.6) %

Technology 1,076 1.3 % 1,023 1.1 % 53 5.2 %

Other 282 0.3 % 267 0.3 % 15 5.6 %

Total cost of revenues $ 51,953 60.5 % $ 52,958 56.5 % $ (1,005) (1.9) %

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

The decrease was partially offset by an increase in data costs primarily due to higher TV data licensing costs to expand our data footprint and data rights.

Additionally, lease expense and depreciation increased due to higher depreciation primarily driven by an increase in capitalized internal-use software costs.

Cost of revenues for the six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue

$ Change % Change

Data costs $ 38,330 22.4 % $ 36,207 19.6 % $ 2,123 5.9 %

Employee costs 19,825 11.5 % 19,616 10.6 % 209 1.1 %

Systems and bandwidth costs 13,329 7.7 % 19,198 10.4 % (5,869) (30.6) %

Lease expense and depreciation 12,642 7.3 % 11,025 6.0 % 1,617 14.7 %

Panel costs 6,110 3.5 % 7,461 4.0 % (1,351) (18.1) %

Professional fees 3,305 1.9 % 3,565 1.9 % (260) (7.3) %

Sample and survey costs 3,178 1.8 % 3,226 1.7 % (48) (1.5) %

Royalties and resellers 2,675 1.5 % 1,930 1.0 % 745 38.6 %

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

Additionally, panel costs decreased primarily due to lower recruitment and support costs for our desktop and mobile panels.

These decreases were partially offset by an increase in data costs primarily due to higher TV data licensing costs to expand our data footprint and data rights.

Lease expense and depreciation increased due to higher depreciation primarily driven by an increase in capitalized internal-use software costs.

Selling and Marketing

Selling and marketing expenses consist primarily of employee costs for salaries, benefits, commissions, stock-based compensation and other related costs for personnel associated with sales and marketing activities, as well as costs related to online and offline advertising, industry conferences, promotional materials, public relations, other sales and marketing programs and allocated overhead, which is comprised of lease expense and other facilities-related costs, and depreciation expense generated by general purpose equipment and software.

Selling and marketing expenses for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended March 31,

Selling and marketing expenses for the three months ended June 30, 2024 and 2023 were as follows:

Three Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue $ Change % Change

Employee costs $ 11,508 13.4 % $ 13,904 14.9 % $ (2,396) (17.2) %

Marketing and advertising 847 1.0 % 466 0.5 % 381 81.8 %

Lease expense and depreciation 836 1.0 % 672 0.7 % 164 24.4 %

Technology 796 0.9 % 777 0.8 % 19 2.4 %

Marketing and advertising 653 0.8 % 639 0.7 % 14 2.2 %

Professional fees 519 0.6 % 725 0.8 % (206) (28.4) %

Other 500 0.6 % 319 0.3 % 181 56.7 %

Total selling and marketing expenses $ 14,812 17.3 % $ 17,036 18.2 % $ (2,224) (13.1) %

Employee costs decreased primarily due to a decrease in employee headcount related to our restructuring plan.

Selling and marketing expenses for the six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue $ Change % Change

Employee costs $ 23,436 13.6 % $ 27,751 15.1 % $ (4,315) (15.5) %

Technology 1,590 0.9 % 1,555 0.8 % 35 2.3 %

Lease expense and depreciation 1,526 0.9 % 1,517 0.8 % 9 0.6 %

Marketing and advertising 1,500 0.9 % 1,105 0.6 % 395 35.7 %

Professional fees 1,216 0.7 % 1,513 0.8 % (297) (19.6) %

Other 908 0.5 % 749 0.4 % 159 21.2 %

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Research and development expenses include product development costs, consisting primarily of employee costs for salaries, benefits, stock-based compensation and other related costs for personnel associated with research and development activities, third-party expenses to develop new products and third-party data costs and allocated overhead, which is comprised of lease expense and other facilities-related costs, and depreciation expense related to general purpose equipment and software.

Research and development expenses for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended March 31,

Research and development expenses for the three months ended June 30, 2024 and 2023 were as follows:

Three Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue $ Change % Change

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Technology 750 0.9 % 837 0.9 % (87) (10.4) %

Professional fees 691 0.8 % 97 0.1 % 594 612.4 %

Lease expense and depreciation 676 0.8 % 549 0.6 % 127 23.1 %

Other 127 0.1 % 147 0.2 % (20) (13.6) %

Total research and development expenses $ 8,373 9.8 % $ 8,790 9.4 % $ (417) (4.7) %

Employee costs decreased primarily due to a decrease in employee headcount related to our restructuring plan.

Research and development expenses for the six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue $ Change % Change

Employee costs $ 12,880 7.5 % $ 14,144 7.7 % $ (1,264) (8.9) %

Technology 1,540 0.9 % 1,718 0.9 % (178) (10.4) %

Lease expense and depreciation 1,275 0.7 % 1,188 0.6 % 87 7.3 %

Professional fees 1,217 0.7 % 353 0.2 % 864 244.8 %

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Total research and development expenses $ 17,140 9.9 % $ 17,709 9.6 % $ (569) (3.2) %

Employee costs decreased primarily due to a decrease in employee headcount related to our restructuring plan.

General and Administrative

General and administrative expenses consist primarily of employee costs for salaries, benefits, stock-based compensation and other related costs, and related expenses for executive management, finance, human capital, legal and other administrative functions, as well as professional fees, overhead, including allocated overhead, which is comprised of lease expense and other facilities-related costs, depreciation expense related to general purpose equipment and software, amortization of cloud-computing implementation costs, changes in the fair value of our contingent consideration liability, Board of Directors compensation and expenses incurred for other general corporate purposes.

General and administrative expenses for the three months ended March 31, 2024 and 2023 were as follows:

Three Months Ended March 31,

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

General and administrative expenses for the three months ended June 30, 2024 and 2023 were as follows:

Three Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue $ Change % Change

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Total general and administrative expenses $ 11,334 13.2 % $ 13,274 14.2 % $ (1,940) (14.6) %

Amortization of Intangibles

General and administrative expenses for the six months ended June 30, 2024 and 2023 were as follows:

Six Months Ended June 30,

(In thousands) 2024 % of Revenue 2023 % of Revenue $ Change % Change

Employee costs $ 12,407 7.2 % $ 14,197 7.7 % $ (1,790) (12.6) %

Professional fees 6,696 3.9 % 7,408 4.0 % (712) (9.6) %

Technology 1,693 1.0 % 1,703 0.9 % (10) (0.6) %

Lease expense and depreciation 750 0.4 % 679 0.4 % 71 10.5 %

Other 3,001 1.7 % 2,861 1.5 % 140 4.9 %

Total general and administrative expenses $ 24,547 14.2 % $ 26,848 14.5 % $ (2,301) (8.6) %

Employee costs decreased primarily due to a decrease in employee headcount related to our restructuring plan.

Amortization of Intangible Assets

Amortization expense consists of charges related to the amortization of intangible assets associated with acquisitions.

Amortization of intangible assets was $0.8 million and $2.8 million during the three months ended March 31, 2024 and 2023, respectively.

The decrease of $2.0 million was primarily due to amortization related to certain customer relationships, methodologies and technology intangibles related to our 2016 Rentrak merger reaching the end of their useful lives in 2023.

Amortization of intangible assets was $0.8 million and $1.6 million during the three and six months ended June 30, 2024 and $0.8 million and $3.6 million during the three and six months ended June 30, 2023, respectively.

The decrease of $2.0 million for the six months ended June 30, 2024 versus the six months ended June 30, 2023 was primarily due to amortization for certain customer relationships, methodologies and technology intangibles related to our 2016 Rentrak merger reaching the end of their useful lives in 2023.

Organizational Restructuring

We incurred $0.5 million and $1.0 million of restructuring expenses during the three months ended March 31, 2024 and 2023, respectively, related to the implementation of a restructuring plan that included a workforce reduction communicated in 2022.

We incurred $0.5 million and $1.0 million of restructuring expense during the three and six months ended June 30, 2024 and $4.1 million and $5.1 million of restructuring expense during the three and six months ended June 30, 2023, 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 10 , Organizational Restructuring .

Impairment of Goodwill

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

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

For further information on our goodwill, refer to Footnote 4 , Goodwill in this 10-Q and Item 7 , " Critical Accounting Estimates" within our 2023 10-K .

Other Income (Expense), Net

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

The following is a summary of other income (expense), net for the three months ended March 31, 2024 and 2023:

Three Months Ended March 31,

The following is a summary of other income (expense), net for the three and six months ended June 30, 2024 and 2023:

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

(In thousands) 2024 2023 2024 2023

Change in fair value of warrants liability $ 383 $ 1,588 $ 669 $ (227)

Other (7) 21 (18) 24

Total other income (expense), net

$ 376 $ 1,609 $ 651 $ (203)

The change in other income (expense), net for the three months ended March 31, 2024 as compared to 2023 was largely driven by changes in the fair value of our warrants liability.

The gain on the warrants liability for the three months ended March 31, 2024 was primarily due to a decrease in the trading price of our Common Stock during the quarter.

The loss on the warrants liability for the three months ended March 31, 2023 was primarily due to the exercise price adjustment described in Footnote 4 , Convertible Redeemable Preferred Stock and Stockholders' Equity and an increase in the trading price of our Common Stock during the quarter.

Gain (Loss) From Foreign Currency Transactions

The change in other income (expense), net for the three and six months ended June 30, 2024 as compared to three and six months ended June 30, 2023 was largely driven by changes in the fair value of our warrants liability.

The gain on the warrants liability for the three and six months ended June 30, 2024 was primarily due to a decrease in the trading price of our Common Stock during the first quarter of 2024 and the Series A

warrants expiring unexercised in the second quarter of 2024, as described in Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity .

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

The loss on the warrants liability for the six months ended June 30, 2023 was primarily due to an exercise price adjustment during the period , offset by the decrease in the trading price of our Common Stock during the second quarter of 2023.

(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.

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Dollars are in a net asset position.

For the three months ended March 31, 2024, the gain from foreign currency transactions was $1.0 million.

For the three months ended March 31, 2023, the loss from foreign currency transactions was $1.5 million.

The gain during the three months ended March 31, 2024 was primarily driven by fluctuations between the Chilean Peso, U.S.

Dollar and Euro exchange rates.

The loss during the three months ended March 31, 2023 was primarily driven by fluctuations between the Euro, Chilean Peso and U.S.

For the three and six months ended June 30, 2024, the (loss) gain from foreign currency transactions was $(0.2) million and $0.7 million, respectively.

For the three and six months ended June 30, 2023, the loss from foreign currency transactions was $0.2 million and $1.6 million, respectively.

The loss during the three months ended June 30, 2024 and gain during the six months ended June 30, 2024 were primarily driven by fluctuations in the Euro and Chilean Peso against the U.S.

Dollar and the Chilean Peso against the Euro.

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

Dollar exchange rates.

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

We incurred interest expense, net of $0.6 million and $0.4 million during the three months ended March 31, 2024 and 2023, respectively.

Income Tax Benefit (Provision)

We incurred interest expense, net of $0.4 million and $0.4 million during the three months ended June 30, 2024 and 2023, respectively, and $1.0 million and $0.7 million during the six months ended June 30, 2024 and 2023, respectively.

Income Tax Benefit

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

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

For the three months ended March 31, 2024 and 2023, we recorded an income tax benefit of $0.2 million and an income tax provision of $1.2 million, respectively, resulting in effective tax rates of 13.0% and 16.3%, respectively.

For the three months ended June 30, 2024 and 2023, we recorded an income tax benefit of $0.5 million and $1.4 million, respectively, resulting in effective tax rates of 23.9% and 3.0%, respectively.

For the six months ended June 30, 2024 and 2023, we recorded an income tax benefit of $0.7 million and $0.2 million, respectively, resulting in effective tax rates of 20.1% and 0.3%, respectively.

These effective tax rates differ from the U.S.

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

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

The difference in income tax position during 2024 as compared to 2023 is primarily due to the income tax benefit related to the impairment of goodwill in 2023.

Liquidity and Capital Resources

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

Three Months Ended March 31,

Six Months Ended June 30,

(In thousands) 2024 2023

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and deferred payment obligations with respect to our 2021 acquisition of Shareablee.

As of March 31, 2024, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $18.9 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.

We had outstanding borrowings of $16.0 million and issued and outstanding letters of credit of $3.2 million under the Revolving Credit Agreement as of March 31, 2024.

As of June 30, 2024, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $14.8 million (including $0.2 million in restricted cash), cash flows from our operations, and amounts available to us under our Revolving Credit Agreement, as described below.

On May 3, 2024, we entered into an amendment to the Revolving Credit Agreement.

Among other things, the amendment extended the maturity date of the facility from May 5, 2024 to November 5, 2024 and reduced our aggregate borrowing capacity under the Revolving Credit Agreement from $40.0 million to $25.0 million.

The amendment also limited our ability to make certain restricted payments (including dividends) with respect to our equity interests and required a repayment of $6.0 million to reduce the principal amount outstanding under the Revolving Credit Agreement.

As of May 3, 2024, after taking into account the $6.0 million repayment, we had borrowings of $10.0 million and letters of credit totaling $3.2 million outstanding under the Revolving Credit Agreement.

The amendment also limited our ability to make certain restricted payments (including dividends) with

respect to our equity interests and required a repayment of $6.0 million to reduce the principal amount outstanding under the Revolving Credit Agreement.

As of June 30, 2024, after taking into account the $6.0 million repayment, we had outstanding borrowings of $10.0 million and outstanding letters of credit totaling $3.2 million under the Revolving Credit Agreement, leaving a remaining borrowing capacity of $11.8 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.

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.

Pursuant to these waivers and the Certificate of Designations, 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 March 31, 2024, accrued dividends for the Preferred Stock totaled $28.4 million.

On June 27, 2024, each holder of Preferred Stock further waived its right to receive the deferred dividends on or before June 30, 2024.

In addition, each holder waived its right to receive on June 30, 2024 the annual dividends otherwise payable on that date for the dividend period ending June 29, 2024.

Under the waivers and the Certificate of Designations, the deferred dividends accrued at a rate of 9.5% per year until July 24, 2024, when we issued additional shares of Preferred Stock in exchange for cancellation of the deferred dividend obligation.

Macroeconomic Factors

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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 in 2024.

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

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

As of March 31, 2024, each share of Preferred Stock was convertible into 0.056954 shares of Common Stock, with such conversion rate scheduled to return to 0.05 upon payment of accrued dividends.

As of June 30, 2024, each share of Preferred Stock was convertible into 0.057994 shares of Common Stock, with such conversion rate scheduled to return to 0.05 upon payment of accrued dividends.

The holders of Preferred Stock are entitled to participate in all dividends declared on the Common Stock on an as-converted basis and are also entitled to a cumulative dividend at the rate of 7.5% per annum, payable annually in arrears and subject to increase under certain specified circumstances (including in connection with the dividend waivers described below).

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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.

Upon receipt of the waivers, our Board elected to defer the June 2023 payment.

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, including by requiring us to refinance or terminate the Revolving Credit Agreement.

On December 26, 2023, each holder of our Preferred Stock waived its right to receive the deferred dividends on or before December 31, 2023.

Under these waivers and the Certificate of Designations, the deferred dividends would 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.

On June 27, 2024, each holder of Preferred Stock further waived its right to receive the deferred dividends on or before June 30, 2024.

In addition, each holder waived its right to receive on June 30, 2024 the annual dividends otherwise payable on that date for the dividend period ending June 29, 2024.

Under these waivers and the Certificate of Designations, the deferred dividends for both periods (2023 and 2024) would continue to accrue and accumulate at a rate of 9.5% per year until declared and paid, with payment to occur on or before July 31, 2024, subject to certain conditions.

On July 24, 2024, we issued 13,257,294 additional shares of Preferred Stock to the existing holders of Preferred Stock in exchange for cancellation of our obligation to pay the deferred dividends described above, which totaled $32.8 million on the issuance date.

As of the issuance date, the additional shares of Preferred Stock were convertible into 662,862 shares of our Common Stock, representing an effective conversion price of $49.438 per share for the canceled dividend obligation.

The additional shares of Preferred Stock have the same terms and conditions as the Preferred Stock previously issued, including that holders are entitled to cumulative dividends at a rate of 7.5% per annum, payable annually in arrears and subject to increase under certain circumstances.

In connection with the issuance, we also entered into an amendment to the Stockholders Agreement with the holders of Preferred Stock.

Among other things, the amendment reduced the $100.0 million special dividend threshold set forth in the Stockholders Agreement by an amount equal

to the liquidation preference of the additional Preferred Stock ($32.8 million).

After further reducing the threshold by annual dividends paid in prior years, the current special dividend threshold is $47.0 million.

Any payment of dividends (annual or special) in the form of cash could significantly impact our financial position and liquidity, including by requiring us to refinance or terminate the Revolving Credit Agreement.

Revolving Credit Agreement

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

As of March 31, 2024, 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 March 31, 2024, we had outstanding borrowings of $16.0 million and outstanding letters of credit totaling $3.2 million under the Revolving Credit Agreement.

As of June 30, 2024, 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.

On May 3, 2024, we entered into an amendment to the Revolving Credit Agreement that, among other things, (i) extended the maturity date of the facility from May 5, 2024 to November 5, 2024;

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and (vii) provided for certain amendment fees, including a fee of 2.0% of aggregate commitments due on the maturity date unless all obligations are paid in full prior to such date.

As of May 3, 2024, following the $6.0 million repayment described above, we had borrowings of $10.0 million and

letters of credit totaling $3.2 million outstanding under the Revolving Credit Agreement, leaving a remaining borrowing capacity of $11.8 million .

As of June 30, 2024, we had outstanding borrowings of $10.0 million and outstanding letters of credit totaling $3.2 million under the Revolving Credit Agreement, leaving a remaining borrowing capacity of $11.8 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.

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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 and March 2024.

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 4 , Convertible Redeemable Preferred Stock and Stockholders' Equity.

On June 26, 2024, the Series A Warrants expired unexercised.

Refer to Footnote 5 , Convertible Redeemable Preferred Stock and Stockholders' Equity .

Operating Activities

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

Net cash provided by operating activities for the three months ended March 31, 2024 was $6.9 million compared to $7.3 million for the three months ended March 31, 2023.

The decrease in cash provided by operating activities was primarily attributable to lower contract liability and customer advances than in the prior year and the timing of prepaid expenses and other assets.

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

Net cash provided by operating activities for the six months ended June 30, 2024 was $15.6 million compared to $16.2 million for the six months ended June 30, 2023.

The decrease in cash provided by operating activities was partially attributable to a net decrease in cash generated from operating assets and liabilities, with $0.7 million of cash used for the six months ended June 30, 2024 as compared to $5.5 million of cash provided for the six months ended June 30, 2023, due to lower customer billings and cash receipts in 2024.

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 for the three months ended March 31, 2024 was $6.1 million compared to $5.8 million for the three months ended March 31, 2023.

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

The extent of these investments will be affected by our

ability to expand relationships with existing customers, grow our customer base and introduce new digital formats, as well as constraints on cash expenditures due to our financial position and the current economic environment.

Net cash used in investing activities for the six months ended June 30, 2024 was $12.1 million compared to $12.0 million for the six months ended June 30, 2023.

Financing Activities

Net cash used in financing activities during the three months ended March 31, 2024 was $4.4 million compared to $1.7 million during the three months ended March 31, 2023.

The increase in cash used in financing activities was primarily due to the second installment of contingent consideration for our 2021 Shareablee acquisition initially recorded at fair value being paid during the three months ended March 31, 2024.

Net cash used in financing activities during the six months ended June 30, 2024 was $11.0 million compared to $2.2 million during the six months ended June 30, 2023.

The increase in cash used in financing activities was primarily due to the repayment of $6.0 million of the principal amount outstanding under the Revolving Credit Agreement and the payment of the second installment of contingent consideration for our 2021 Shareablee acquisition initially recorded at fair value during the six months ended June 30, 2024.

Contractual Payment Obligations

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

As of March 31, 2024, the total fixed payment obligations related to set-top box and connected TV data agreements are $288.7 million and $28.3 million, respectively.

As of June 30, 2024, the total fixed payment obligations related to set-top box and connected TV data agreements are $301.8 million and $28.2 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 March 31, 2024, the total fixed payment obligation related to these agreements is $36.9 million.

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

As of June 30, 2024, the total fixed payment obligation related to these agreements is $43.6 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 less than two years.

As of March 31, 2024, the total fixed payment obligation related to this agreement is $25.0 million.

As of June 30, 2024, the total fixed payment obligation related to this agreement is $21.3 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.

To the extent that our existing cash, cash equivalents and operating cash flow, together with savings from 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 dividends to holders of our Preferred Stock, as described above.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis