What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-12 compared with 2024-08-09 · 129 added, 121 removed, 233 unchanged (52% of the section changed)

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Results of Operations

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

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

Percentages may not add due to rounding.

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

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

2024 2023 2024 2023

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Amortization of intangible assets 764 0.9 % 800 0.9 % 2,365 0.9 % 4,412 1.6 %

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

Impairment of goodwill 63,000 71.2 % — — % 63,000 24.1 % 44,100 16.0 %

Impairment of right-of-use and long-lived assets 1,397 1.6 % 1,502 1.7 % 1,397 0.5 % 1,502 0.5 %

Restructuring 15 — % 353 0.4 % 968 0.4 % 5,455 2.0 %

Total expenses from operations 148,084 167.4 % 88,933 97.7 % 324,521 124.3 % 325,381 117.8 %

Loss from operations (1,928) (2.2) % (47,379) (50.6) % (3,805) (2.2) % (51,206) (27.6) %

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

(Loss) income from operations (59,605) (67.4) % 2,067 2.3 % (63,410) (24.3) % (49,139) (17.8) %

Other income, net — — % 628 0.7 % 651 0.2 % 425 0.2 %

(Loss) gain from foreign currency transactions (2,223) (2.5) % 1,090 1.2 % (1,508) (0.6) % (544) (0.2) %

Interest expense, net (424) (0.5) % (426) (0.5) % (1,440) (0.6) % (1,141) (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 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) %

(Loss) income before income taxes (62,252) (70.4) % 3,359 3.7 % (65,707) (25.2) % (50,399) (18.2) %

Income tax benefit (provision) 1,622 1.8 % (741) (0.8) % 2,315 0.9 % (563) (0.2) %

Net (loss) income $ (60,630) (68.5) % $ 2,618 2.9 % $ (63,392) (24.3) % $ (50,962) (18.4) %

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

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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 June 30, 2024 and 2023 were as follows:

Three Months Ended June 30,

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

Three Months Ended September 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 offset by an increase in Cross-Platform revenue driven by increased usage of our Proximic products.

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

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

Six Months Ended June 30,

Revenues for the nine months ended September 30, 2024 and 2023 were as follows:

Nine Months Ended September 30,

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

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

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

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

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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 June 30, 2024 and 2023 were as follows:

Three Months Ended June 30,

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

Three Months Ended September 30,

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

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Employee costs 8,582 9.7 % 8,763 9.6 % (181) (2.1) %

Systems and bandwidth costs 6,548 7.6 % 10,321 11.0 % (3,773) (36.6) %

Lease expense and depreciation 7,354 8.3 % 5,782 6.4 % 1,572 27.2 %

Systems and bandwidth costs 7,131 8.1 % 9,257 10.2 % (2,126) (23.0) %

Panel costs 3,372 3.8 % 2,938 3.2 % 434 14.8 %

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

Royalties and resellers 1,870 2.1 % 867 1.0 % 1,003 115.7 %

Sample and survey costs 1,557 1.8 % 1,662 1.8 % (105) (6.3) %

Professional fees 1,464 1.7 % 2,049 2.3 % (585) (28.6) %

Technology 1,090 1.2 % 1,003 1.1 % 87 8.7 %

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Total cost of revenues $ 52,005 58.8 % $ 50,473 55.5 % $ 1,532 3.0 %

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,

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

Data costs increased primarily due to higher data licensing costs to expand our data footprint and data rights.

Costs for royalties and resellers increased primarily due to increased sales for products in which we pay royalties.

These increases were partially offset by a decrease in systems and bandwidth costs due to lower cloud computing and processing costs attributable to certain custom TV data set deliveries.

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

Nine Months Ended September 30,

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

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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.

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.

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

Royalties and resellers costs increased primarily due to increased sales for products in which we pay royalties.

Selling and Marketing

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

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

Three Months Ended June 30,

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

Three Months Ended September 30,

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

Employee costs $ 9,691 11.0 % $ 11,515 12.7 % $ (1,824) (15.8) %

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

Technology 811 0.9 % 796 0.9 % 15 1.9 %

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

Professional fees 616 0.7 % 808 0.9 % (192) (23.8) %

Lease expense and depreciation 546 0.6 % 815 0.9 % (269) (33.0) %

Marketing and advertising 479 0.5 % 557 0.6 % (78) (14.0) %

Other 372 0.4 % 303 0.3 % 69 22.8 %

Total selling and marketing expenses $ 12,515 14.1 % $ 14,794 16.3 % $ (2,279) (15.4) %

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,

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

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

Nine Months Ended September 30,

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

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Total selling and marketing expenses $ 42,691 16.3 % $ 48,984 17.7 % $ (6,293) (12.8) %

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

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

Research and Development

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

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

Three Months Ended June 30,

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

Three Months Ended September 30,

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

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Total research and development expenses $ 7,272 8.2 % $ 8,083 8.9 % $ (811) (10.0) %

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,

Employee costs decreased primarily due to a decrease in employee bonus expense.

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

Nine Months Ended September 30,

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

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Technology 2,298 0.9 % 2,541 0.9 % (243) (9.6) %

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

Professional fees 1,919 0.7 % 562 0.2 % 1,357 241.5 %

Lease expense and depreciation 1,725 0.7 % 1,833 0.7 % (108) (5.9) %

Other 338 0.1 % 421 0.2 % (83) (19.7) %

Total research and development expenses $ 24,412 9.3 % $ 25,792 9.3 % $ (1,380) (5.4) %

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

Employee costs decreased primarily due to an increase in employee compensation that was capitalized in 2024 in relation to capitalized software projects as we allocated more resources to product development, as well as a decrease in employee bonus expense.

This decrease was partially offset by an increase in professional fees primarily due to a change in cost allocation to better align costs with the services provided.

General and Administrative

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

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

Three Months Ended June 30,

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

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

Three Months Ended September 30,

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

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Total general and administrative expenses $ 11,116 12.6 % $ 12,928 14.2 % $ (1,812) (14.0) %

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

Six Months Ended June 30,

Employee costs decreased primarily due to a decrease in employee bonus expense.

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

Nine Months Ended September 30,

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

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Total general and administrative expenses $ 35,663 13.7 % $ 39,776 14.4 % $ (4,113) (10.3) %

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

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

Additionally, professional fees decreased primarily due to a decrease in corporate insurance costs.

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 $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.

Amortization of intangible assets was $0.8 million and $2.4 million during the three and nine months ended September 30, 2024 and $0.8 million and $4.4 million during the three and nine months ended September 30, 2023, respectively.

The decrease of $2.0 million for the nine months ended September 30, 2024 versus the nine months ended September 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 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 incurred $15 thousand and $1.0 million of restructuring expense during the three and nine months ended September 30, 2024 and $0.4 million and $5.5 million during the three and nine months ended September 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.

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Impairment of Goodwill

In the third quarter of 2024, as a result of changes in our stock price, market and equity capitalization, operating results and projections, we performed an interim impairment review of our goodwill in conjunction with our October 1, 2024 annual testing date.

Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $63.0 million non-cash impairment charge in the three and nine months ended September 30, 2024.

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.

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 nine months ended September 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 and six months ended June 30, 2024 and 2023:

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

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

In the third quarter of 2024, we recorded an impairment charge of $1.4 million related to certain office space lease right-of-use assets and associated leasehold improvements.

The impairment charge was driven by the execution of a sublease for an office space for which expected cash receipts are less than the cash disbursements for the primary lease.

In the third quarter of 2023, we recorded an impairment charge of $1.5 million 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 .

Other Income, Net

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

The following is a summary of other income, net for the three and nine months ended September 30, 2024 and 2023:

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

(In thousands) 2024 2023 2024 2023

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Other — (6) (18) 18

Total other income (expense), net

Total other income, net

$ — $ 628 $ 651 $ 425

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.

The change in other income, net for the three and nine months ended September 30, 2024 as compared to the three and nine months ended September 30, 2023 was primarily driven by changes in the fair value of our warrants liability.

The gain on the warrants liability for the nine months ended September 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 (Deficit) .

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

The gain on the warrants liability for the nine months ended September 30, 2023 was primarily due to the decrease in the trading price of our Common Stock during the second and third quarter, offset by an exercise price adjustment during the first quarter of 2023.

(Loss) Gain From Foreign Currency Transactions

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Dollars are in a net asset position.

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.

For the three and nine months ended September 30, 2024, the loss from foreign currency transactions was $2.2 million and $1.5 million, respectively.

For the three and nine months ended September 30, 2023, the gain (loss) from foreign currency transactions was $1.1 million and $(0.5) million, respectively.

The losses incurred during the three and nine months ended September 30, 2024 were primarily driven by fluctuations in the Euro, Chilean Peso, Brazilian Real, and U.S.

Dollar exchange rates.

The gain (loss) incurred during the three and nine months ended September 30, 2023 was primarily driven by fluctuations between the Chilean Peso, Euro, and U.S.

Dollar exchange rates.

Interest Expense, Net

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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 $0.4 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

We incurred interest expense, net of $0.4 million during the three months ended September 30, 2024 and 2023, and $1.4 million and $1.1 million during the nine months ended September 30, 2024 and 2023, respectively.

Income Tax Benefit (Provision)

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 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.

For the three months ended September 30, 2024 and 2023, we recorded an income tax benefit of $1.6 million and an income tax provision of $0.7 million, respectively, resulting in effective tax rates of 2.6% and 22.1%, respectively.

For the nine months ended September 30, 2024 and 2023, we recorded an income tax benefit of $2.3 million and an income tax provision of $0.6 million, respectively, resulting in effective tax rates of 3.5% and 1.1%, 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.

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

A deferred income tax benefit of $1.8 million and $1.3 million related to the impairment of goodwill is included in the amounts recorded in the three and nine months ended September 30, 2024 and the nine months ended September 30, 2023, respectively.

Liquidity and Capital Resources

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

Six Months Ended June 30,

Nine Months Ended September 30,

(In thousands) 2024 2023

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

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.

As of September 30, 2024, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $20.2 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 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.

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 September 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.

On November 1, 2024, we repaid the outstanding principal balance of $10.0 million under the Revolving Credit Agreement.

On November 5, 2024, we entered into an amendment to the Revolving Credit Agreement to extend the maturity date with respect to the outstanding letters of credit under the facility to January 31, 2025.

The amendment reduced the aggregate lender commitments under the Revolving Credit Agreement to equal the outstanding letters of credit (totaling $3.2 million) and limited the purpose of, and use of proceeds under, the Revolving Credit Agreement to the issuance of letters of credit.

We are evaluating alternative financing options for the Company, including a replacement of the Revolving Credit Agreement, and have engaged outside advisors to assist in our evaluation.

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.

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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.

In recent 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 in the second half of 2024.

We expect that softness in the advertising market will continue to affect our business through the end of 2024 and into 2025.

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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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 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.

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

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).

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 .

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 (Deficit) .

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 and pay dividends.

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.

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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.

On July 24, 2024, we issued 13,257,294 additional shares of Preferred Stock (the "2024 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 July 24, 2024, the 2024 Preferred Stock was 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 2024 Preferred Stock has 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).

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.

As of September 30, 2024, each share of Preferred Stock (including each share of 2024 Preferred Stock) was convertible into 0.050934 shares of Common Stock, with such conversion rate scheduled to return to 0.05 upon payment of accrued dividends.

Any payment of dividends (annual or special) in the form of cash could significantly impact our financial position and liquidity.

Revolving Credit Agreement

On May 5, 2021, we entered into the Revolving Credit Agreement, which matures in November 2024.

The Revolving Credit Agreement provides a borrowing capacity equal to $25.0 million, which was reduced from $40.0 million on May 3, 2024.

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.

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 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 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 5, 2021, we entered into the Revolving Credit Agreement.

As of September 30, 2024, the Revolving Credit Agreement provided a borrowing capacity equal to $25.0 million, which was reduced from $40.0 million on May 3, 2024.

We could also request the issuance of letters of credit under the Revolving Credit Agreement in an aggregate amount up to $5.0 million, which would reduce the amount of available borrowings by the amount of such issued and outstanding letters of credit.

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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(iii) increased the Applicable Rate payable on SOFR-based loans to 4.50%;

(iv) increased the minimum Consolidated Asset Coverage Ratio covenant and decreased the minimum Liquidity covenant;

(iv) revised certain financial covenants;

(v) limited certain restricted payments (including dividends) with respect to our equity interests;

(vi) required a repayment of $6.0 million to reduce the principal amount outstanding under the facility;

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 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.

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

As of September 30, 2024, we had outstanding borrowings of $10.0 million and outstanding letters of credit totaling $3.2 million under the Revolving Credit Agreement.

The borrowed funds were used to reduce our accounts payable balances, primarily related to expenses incurred in prior periods, and support our working capital position.

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 November 2024.

On November 1, 2024, we repaid the outstanding principal balance of $10.0 million under the Revolving Credit Agreement.

Additionally, the amendment terminated the following financial covenants:

(i) the minimum Consolidated Fixed Charge Coverage Ratio, (ii) the minimum Consolidated Asset Coverage Ratio, and (iii) the minimum Liquidity requirement, each as defined in the Revolving Credit Agreement.

The amendment maintained the same non-financial covenants, security interest and interest rate as in effect immediately prior to the amendment.

Finally, the amendment provided for certain amendment fees, including a fee of $250,000 due on the new maturity date (January 31, 2025) unless all letters of credit are terminated or cash collateralized on or prior to such date.

While we continue to take steps to obtain alternative financing, 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, or if we are unable to secure alternative financing (including a replacement for the Revolving Credit Agreement) on acceptable terms or at all.

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 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 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.

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 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.

depreciation, stock-based compensation, non-cash operating lease expense, amortization expense of finance leases and intangible assets, impairment of right-of-use and long-lived assets and goodwill, deferred tax benefit and change in the fair value of contingent consideration and warrants liability.

Net cash provided by operating activities for the nine months ended September 30, 2024 was $28.1 million compared to $30.3 million for the nine months ended September 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 $0.8 million of cash provided for the nine months ended September 30, 2024 as compared to $6.3 million of cash provided for the nine months ended September 30, 2023, primarily 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 six months ended June 30, 2024 was $12.1 million compared to $12.0 million for the six months ended June 30, 2023.

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 nine months ended September 30, 2024 was $18.8 million compared to $17.8 million for the nine months ended September 30, 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 increased our focus on product development and innovation in 2024.

Financing Activities

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.

Net cash used in financing activities during the nine months ended September 30, 2024 was $12.1 million compared to $2.7 million during the nine months ended September 30, 2023.

Contractual Payment Obligations

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

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.

As of September 30, 2024, the total fixed payment obligations related to set-top box and connected TV data agreements are $294.9 million and $25.4 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 year to five years.

As of June 30, 2024, the total fixed payment obligation related to these agreements is $43.6 million.

As of September 30, 2024, the total fixed payment obligation related to these agreements is $39.6 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 June 30, 2024, the total fixed payment obligation related to this agreement is $21.3 million.

As of September 30, 2024, the total fixed payment obligation related to this agreement is $17.5 million.

Future Capital Requirements

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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.

We may also be required to raise additional funds in order to pay dividends 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.

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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