Item 7. Management’s Discussion and Analysis
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our Consolidated Financial Statements and the related Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K, or 10-K. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events in future periods may differ materially from those anticipated or implied in these forward-looking statements as a result of many factors, including those discussed under Item 1A , "Risk Factors," and elsewhere in this 10-K. See also " Cautionary Note Regarding Forward-Looking Statements " at the beginning of this 10-K.
Overview
We are a global information and analytics company that measures advertising, content, and the consumer audiences of each, across media platforms. We create our products using a global data platform that combines information on digital platforms (connected televisions, mobile devices, tablets and computers), televisions, direct to consumer applications and movie screens with demographics and other descriptive information. We have developed proprietary data science that enables measurement of person-level and household-level audiences, removing duplicated viewing across devices and over time. This combination of data and methods enables a common standard for buyers and sellers to transact on advertising. This helps companies across the media ecosystem better understand and monetize their audiences and develop marketing plans and products to more efficiently and effectively reach those audiences. Our ability to unify behavioral and other descriptive data enables us to provide audience ratings, advertising verification, and granular consumer segments that describe hundreds of millions of consumers. Our customers include digital publishers, television networks, movie studios, content owners, brand advertisers, agencies and technology providers.
The platforms we measure include televisions, mobile devices, computers, tablets, CTV devices and movie theaters. The information we analyze crosses geographies, types of content and activities, including websites, mobile and over-the-top applications, video games, television and movie programming, e-commerce and advertising.
Results of Operations
The following table sets forth selected Consolidated Statements of Operations and Comprehensive Loss data as a percentage of revenues for each of the periods indicated. Percentages may not add due to rounding.
Years Ended December 31,
2024 2023 2022
(In thousands) Dollars % of Revenue Dollars % of Revenue Dollars % of Revenue
Revenues $ 356,047 100.0 % $ 371,343 100.0 % $ 376,423 100.0 %
Cost of revenues 208,708 58.6 % 205,580 55.3 % 205,294 54.5 %
Selling and marketing 57,622 16.2 % 63,322 17.1 % 68,453 18.2 %
Research and development 33,066 9.3 % 33,701 9.1 % 36,987 9.8 %
General and administrative 47,679 13.4 % 51,192 13.8 % 61,200 16.3 %
Amortization of intangible assets 3,057 0.9 % 5,213 1.4 % 27,096 7.2 %
Impairment of goodwill 63,000 17.7 % 78,200 21.0 % 46,300 12.3 %
Impairment of right-of-use and long-lived assets 1,397 0.4 % 1,502 0.4 % 156 — %
Restructuring 1,027 0.3 % 6,234 1.7 % 5,810 1.5 %
Total expenses from operations 415,556 116.7 % 444,944 119.8 % 451,296 119.9 %
Loss from operations (59,509) (16.7) % (73,601) (19.8) % (74,873) (19.9) %
Interest expense, net (1,883) (0.5) % (1,445) (0.4) % (915) (0.2) %
Other income, net 651 0.2 % 42 — % 9,785 2.6 %
Gain (loss) from foreign currency transactions 1,417 0.4 % (2,824) (0.8) % 1,166 0.3 %
Loss before income taxes (59,324) (16.7) % (77,828) (21.0) % (64,837) (17.2) %
Income tax provision (924) (0.3) % (1,533) (0.4) % (1,724) (0.5) %
Net loss $ (60,248) (16.9) % $ (79,361) (21.4) % $ (66,561) (17.7) %
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Revenues
Our products and services are organized around 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. Product offerings reported in this solution group include our legacy subscription-based syndicated offerings that measure audiences for linear TV (national and local), digital and streaming, as well as theatrical box office receipts. Also included in this solution group are our transaction-based cross-platform products, Proximic by Comscore ("Proximic"), our Activation solution suite, and Comscore Campaign Ratings ("CCR"). These syndicated and cross-platform products are used as currency to plan and execute ad campaigns, measure the outcome of ad campaigns, optimize ad campaigns that are in-flight, activate programmatic campaigns, and make content easier for programmatic advertisers to reach.
• Research & Insight Solutions represents the custom solutions we provide that are tailored to our clients' specific needs. These offerings include custom TV, digital and cross-platform data feeds, as well as other data integrations. They also include our survey business, our Consumer Brand Health business, and other bespoke research, data and insight deliverables that help our clients better understand their business, competitive landscape, clients and market.
We categorize our revenue along these two solution groups; however, our cost structure is tracked at the corporate level and not by our solution groups. These shared costs include employee costs, purchased data, operational overhead, data storage and technology that supports multiple solution groups.
Revenues for the years ended December 31, 2024 and 2023 are as follows:
Years Ended December 31,
(In thousands) 2024 % of Revenue 2023 % of Revenue $ Variance % Variance
Content & Ad Measurement
Syndicated Audience $ 260,654 73.2 % $ 276,101 74.4 % $ (15,447) (5.6) %
Cross-Platform 40,470 11.4 % 33,803 9.1 % 6,667 19.7 %
Total Content & Ad Measurement 301,124 84.6 % 309,904 83.5 % (8,780) (2.8) %
Research & Insight Solutions 54,923 15.4 % 61,439 16.5 % (6,516) (10.6) %
Total $ 356,047 100.0 % $ 371,343 100.0 % $ (15,296) (4.1) %
Total revenues decreased by $15.3 million, or 4.1%, for the year ended December 31, 2024 as compared to 2023.
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 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 years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance
Content & Ad Measurement
Syndicated Audience $ 276,101 74.4 % $ 282,238 75.0 % $ (6,137) (2.2) %
Cross-Platform 33,803 9.1 % 25,241 6.7 % 8,562 33.9 %
Total Content & Ad Measurement 309,904 83.5 % 307,479 81.7 % 2,425 0.8 %
Research & Insight Solutions 61,439 16.5 % 68,944 18.3 % (7,505) (10.9) %
Total $ 371,343 100.0 % $ 376,423 100.0 % $ (5,080) (1.3) %
Total revenues decreased by $5.1 million, or 1.3%, for the year ended December 31, 2023 as compared to 2022.
Content & Ad Measurement revenue increased due to higher revenue from our Cross-Platform offerings, driven by increased usage of our Proximic and CCR products, along with increases in local TV and movies revenue due to higher renewals and new business. This was offset by a decrease in Syndicated Audience revenue, primarily related to lower renewals of our national TV and syndicated digital products and a one-time custom deliverable in the first quarter of 2022.
Research & Insight Solutions revenue decreased primarily due to lower deliveries of certain custom digital products.
Revenues by Geographic Location
Revenue from outside of the United States was $37.7 million, $35.6 million and $38.6 million for the years ended December 31, 2024, 2023, and 2022, respectively. Non-U.S. revenue increased in 2024 primarily due to an increase in revenue from our Syndicated Audience offerings.
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We generate the majority of our revenues from the sale and delivery of our products within the United States. For information with respect to sales by geographic markets, refer to Footnote 3 , Revenue Recognition, of the Notes to Consolidated Financial Statements. Our chief operating decision maker (our CEO) does not evaluate the profit or loss from any separate geography.
We anticipate that revenues from our U.S. sales will continue to constitute a substantial and increasing portion of our revenues in future periods. We expect our non-U.S. revenues to decline as a percentage of our total revenues as a result of relative growth in our domestic product offerings.
Cost of Revenues
Cost of revenues consists primarily of expenses related to producing our products, operating our network infrastructure, and the recruitment, maintenance and support of our consumer panels. These expenses include employee costs for salaries, benefits, stock-based compensation and other related personnel costs of network operations, survey operations, custom analytics and technical support, all of which are expensed as they are incurred. Cost of revenues also includes costs to obtain multichannel video programming distributor ("MVPD") data sets and panel, census-based and other data sets used in our products as well as operational costs associated with our data centers, including depreciation expense associated with computer equipment and internally developed software that supports our panels and systems. Additionally, cost of revenues includes allocated overhead, lease expense and other facilities-related costs and depreciation expense generated by general purpose equipment and software.
Cost of revenues for the years ended December 31, 2024 and 2023 are as follows:
Years Ended December 31,
(In thousands) 2024 % of Revenue 2023 % of Revenue
$ Variance % Variance
Data costs $ 76,966 21.6 % $ 72,420 19.5 % $ 4,546 6.3 %
Employee costs 39,102 11.0 % 37,049 10.0 % 2,053 5.5 %
Systems and bandwidth costs 27,914 7.8 % 36,268 9.8 % (8,354) (23.0) %
Lease expense and depreciation 27,014 7.6 % 23,051 6.2 % 3,963 17.2 %
Panel costs 13,262 3.7 % 13,370 3.6 % (108) (0.8) %
Royalties and resellers 6,506 1.8 % 4,095 1.1 % 2,411 58.9 %
Sample and survey costs 6,286 1.8 % 6,452 1.7 % (166) (2.6) %
Professional fees 6,234 1.8 % 7,734 2.1 % (1,500) (19.4) %
Technology 4,374 1.2 % 4,114 1.1 % 260 6.3 %
Other 1,050 0.3 % 1,027 0.3 % 23 2.2 %
Total cost of revenues $ 208,708 58.6 % $ 205,580 55.4 % $ 3,128 1.5 %
Cost of revenues increased by $3.1 million, or 1.5%, for the year ended December 31, 2024 as compared to 2023. Data costs increased primarily due to higher data licensing costs to expand our data footprint and data rights, as well as a credit of $2.5 million recognized in 2023 under the data licensing agreement with Charter Communications which did not recur in 2024. 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. Employee costs increased primarily due to a shift in headcount toward supporting our products. These increases were primarily offset by a decrease in systems and bandwidth costs primarily due to lower cloud computing and processing costs attributable to certain custom TV data set deliveries. Professional fees decreased primarily due to a change in cost allocation to better align costs with the services provided.
Cost of revenues for the years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue
$ Variance % Variance
Data costs $ 72,420 19.5 % $ 70,707 18.8 % $ 1,713 2.4 %
Employee costs 37,049 10.0 % 41,003 10.9 % (3,954) (9.6) %
Systems and bandwidth costs 36,268 9.8 % 34,526 9.2 % 1,742 5.0 %
Lease expense and depreciation 23,051 6.2 % 21,016 5.6 % 2,035 9.7 %
Panel costs 13,370 3.6 % 15,747 4.2 % (2,377) (15.1) %
Professional fees 7,734 2.1 % 5,954 1.6 % 1,780 29.9 %
Sample and survey costs 6,452 1.7 % 7,013 1.9 % (561) (8.0) %
Technology 4,114 1.1 % 4,701 1.2 % (587) (12.5) %
Royalties and resellers 4,095 1.1 % 3,534 0.9 % 561 15.9 %
Other 1,027 0.3 % 1,093 0.3 % (66) (6.0) %
Total cost of revenues $ 205,580 55.4 % $ 205,294 54.5 % $ 286 0.1 %
Cost of revenues increased by $0.3 million, or 0.1%, for the year ended December 31, 2023 as compared to 2022. Lease expense and depreciation increased due to higher depreciation primarily driven by an increase in capitalized internal-use software costs. Professional fees
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increased primarily due to an increase in consulting services related to our transformation initiatives. Systems and bandwidth costs increased primarily due to cloud computing and processing costs attributable to certain custom TV data set deliveries. Data costs increased primarily due to an amendment to our data licensing agreement with Charter Communications, which resulted in a credit of $4.5 million recognized in 2022 compared to a credit of $2.5 million recognized in 2023. Employee costs decreased primarily due to an increase in employee compensation capitalized in 2023 related to capitalized software projects as we allocated more resources to product development, as well as a decrease in employee headcount related to our restructuring plan. Panel costs decreased primarily due to lower recruitment and support costs for our desktop and mobile panels.
Selling and Marketing
Selling and marketing expenses consist primarily of employee costs, including salaries, benefits, commissions, stock-based compensation and other related costs for personnel associated with sales and marketing activities, as well as costs related to online and offline advertising, industry conferences, promotional materials, public relations, other sales and marketing programs and allocated overhead, lease expense and other facilities-related costs, and depreciation expense generated by general purpose equipment and software.
Selling and marketing expenses for the years ended December 31, 2024 and 2023 are as follows:
Years Ended December 31,
(In thousands) 2024 % of Revenue 2023 % of Revenue $ Variance % Variance
Employee costs $ 44,672 12.5 % $ 50,337 13.6 % $ (5,665) (11.3) %
Technology 3,188 0.9 % 3,149 0.8 % 39 1.2 %
Lease expense and depreciation 2,820 0.8 % 3,106 0.9 % (286) (9.2) %
Marketing and advertising 2,685 0.8 % 2,155 0.6 % 530 24.6 %
Professional fees 2,550 0.7 % 3,120 0.8 % (570) (18.3) %
Other 1,707 0.5 % 1,455 0.4 % 252 17.3 %
Total selling and marketing expenses $ 57,622 16.2 % $ 63,322 17.1 % $ (5,700) (9.0) %
Selling and marketing expenses decreased by $5.7 million, or 9.0%, for the year ended December 31, 2024 as compared to 2023. 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 years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance
Employee costs $ 50,337 13.6 % $ 55,416 14.7 % $ (5,079) (9.2) %
Technology 3,149 0.8 % 3,360 0.9 % (211) (6.3) %
Professional fees 3,120 0.8 % 2,464 0.7 % 656 26.6 %
Lease expense and depreciation 3,106 0.9 % 3,849 1.0 % (743) (19.3) %
Marketing and advertising 2,155 0.6 % 1,751 0.5 % 404 23.1 %
Other 1,455 0.4 % 1,613 0.4 % (158) (9.8) %
Total selling and marketing expenses $ 63,322 17.1 % $ 68,453 18.2 % $ (5,131) (7.5) %
Selling and marketing expenses decreased by $5.1 million, or 7.5%, for the year ended December 31, 2023 as compared to 2022. Employee costs decreased primarily due to a decrease in employee headcount related to our restructuring plan and a decrease in commissions.
Research and Development
Research and development expenses include product development costs, consisting primarily of employee costs including salaries, benefits, stock-based compensation and other related costs for personnel associated with research and development activities, third-party expenses to develop new products and third-party data costs and allocated overhead, lease expense and other facilities-related costs, and depreciation expense related to general purpose equipment and software.
Research and development expenses for the years ended December 31, 2024 and 2023 are as follows:
Years Ended December 31,
(In thousands) 2024 % of Revenue 2023 % of Revenue $ Variance % Variance
Employee costs $ 24,825 7.0 % $ 26,628 7.2 % $ (1,803) (6.8) %
Technology 3,117 0.9 % 3,367 0.9 % (250) (7.4) %
Professional fees 2,425 0.7 % 640 0.2 % 1,785 278.9 %
Lease expense and depreciation 2,236 0.6 % 2,523 0.7 % (287) (11.4) %
Other 463 0.1 % 543 0.1 % (80) (14.7) %
Total research and development expenses $ 33,066 9.3 % $ 33,701 9.1 % $ (635) (1.9) %
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Research and development expenses decreased by $0.6 million, or 1.9%, for the year ended December 31, 2024 as compared to 2023. Employee costs decreased primarily due to a shift in headcount toward supporting our products. This decrease was offset by an increase in professional fees primarily due to a change in cost allocation to better align costs with the services provided.
Research and development expenses for the years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance
Employee costs $ 26,628 7.2 % $ 28,955 7.7 % $ (2,327) (8.0) %
Technology 3,367 0.9 % 3,685 1.0 % (318) (8.6) %
Lease expense and depreciation 2,523 0.7 % 2,783 0.7 % (260) (9.3) %
Professional fees 640 0.2 % 1,002 0.3 % (362) (36.1) %
Other 543 0.1 % 562 0.1 % (19) (3.4) %
Total research and development expenses $ 33,701 9.1 % $ 36,987 9.8 % $ (3,286) (8.9) %
Research and development expenses decreased by $3.3 million, or 8.9%, for the year ended December 31, 2023 as compared to 2022. Employee costs decreased primarily due to an increase in employee compensation capitalized in 2023 in relation to capitalized software projects as we allocated more resources to product development, as well as a decrease in employee headcount related to our restructuring plan.
General and Administrative
General and administrative expenses consist primarily of employee costs including salaries, benefits, stock-based compensation and other related costs, and related expenses for executive management, finance, human capital, legal and other administrative functions, as well as professional fees, overhead, including allocated overhead, lease expense and other facilities-related costs, depreciation expense related to general purpose equipment and software, amortization of cloud-computing implementation costs, changes in the fair value of our contingent consideration liability, Board of Directors compensation and expenses incurred for other general corporate purposes.
General and administrative expenses for the years ended December 31, 2024 and 2023 are as follows:
Years Ended December 31,
(In thousands) 2024 % of Revenue 2023 % of Revenue $ Variance % Variance
Employee costs $ 24,659 6.9 % $ 26,770 7.2 % $ (2,111) (7.9) %
Professional fees 12,338 3.5 % 14,341 3.9 % (2,003) (14.0) %
Technology 3,328 0.9 % 3,385 0.9 % (57) (1.7) %
Lease expense and depreciation 1,329 0.4 % 1,444 0.4 % (115) (8.0) %
Other 6,025 1.7 % 5,252 1.4 % 773 14.7 %
Total general and administrative expenses $ 47,679 13.4 % $ 51,192 13.8 % $ (3,513) (6.9) %
General and administrative expenses decreased by $3.5 million, or 6.9%, for the year ended December 31, 2024 as compared to 2023. Employee costs decreased primarily due to a decrease in employee headcount related to our restructuring plan and a decrease in employee bonus expense. Professional fees decreased primarily due to a decrease in corporate insurance costs.
General and administrative expenses for the years ended December 31, 2023 and 2022 are as follows:
Years Ended December 31,
(In thousands) 2023 % of Revenue 2022 % of Revenue $ Variance % Variance
Employee costs $ 26,770 7.2 % $ 31,298 8.3 % $ (4,528) (14.5) %
Professional fees 14,341 3.9 % 15,706 4.2 % (1,365) (8.7) %
Technology 3,385 0.9 % 3,379 0.9 % 6 0.2 %
Lease expense and depreciation 1,444 0.4 % 1,668 0.4 % (224) (13.4) %
Other 5,252 1.4 % 9,149 2.4 % (3,897) (42.6) %
Total general and administrative expenses $ 51,192 13.8 % $ 61,200 16.3 % $ (10,008) (16.4) %
General and administrative expenses decreased by $10.0 million, or 16.4%, for the year ended December 31, 2023 as compared to 2022. Employee costs decreased primarily due to lower stock-based compensation expense in 2023 and severance expense related to the retirement of our former CEO which was recognized in 2022. Other expense decreased primarily due to change in fair value of the contingent consideration recognized as part of our 2021 Shareablee acquisition. In addition, Other expense decreased due to lower recruiting expense and operating tax expense. Professional fees decreased primarily due to a decrease in audit fees.
Amortization of Intangible Assets
Amortization expense consists of charges related to the amortization of intangible assets associated with acquisitions, primarily our 2016 Rentrak merger. Amortization of intangible assets decreased by $2.2 million, or 41.4%, for 2024 as compared to 2023 and by $21.9 million, or
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80.8%, for 2023 as compared to 2022. The decrease in amortization of intangible assets in 2024 and 2023 was primarily due to amortization related to certain customer relationships, methodologies and technology intangibles related to the Rentrak merger reaching the end of their useful lives.
Impairment of Goodwill
As of September 30, 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 quarter ended September 30, 2024.
We performed a quantitative impairment test on our annual testing date as of October 1, 2023. Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $34.1 million non-cash impairment charge in the quarter ended December 31, 2023.
In the second quarter of 2023, we performed an interim impairment review of our goodwill. Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $44.1 million non-cash impairment charge in the quarter ended June 30, 2023.
As of September 30, 2022, we performed an interim impairment review of our goodwill in conjunction with our October 1, 2022 annual testing date. Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $46.3 million non-cash impairment charge in the quarter ended September 30, 2022.
For further information refer to Footnote 9 , Goodwill and Intangible Assets and Item 7 , Critical Accounting Estimates .
Impairment of Right-of-use and Long-lived Assets
In the quarter ended September 30, 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 quarter ended September 30, 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 .
Organizational Restructuring
We incurred restructuring expenses of $1.0 million, $6.2 million and $5.8 million for the years ended December 31, 2024, 2023 and 2022, respectively, related to the implementation of a restructuring plan that included a workforce reduction communicated in 2022. The 2022 restructuring plan was substantially completed in 2024. For further information refer to Footnote 15 , Organizational Restructuring .
Interest Expense, Net
Interest expense, net consists of interest income and interest expense. Interest income primarily consists of interest earned from our cash and cash equivalent balances. Interest expense relates to interest on our Prior Credit Agreement and our finance leases.
Interest expense, net, increased $0.4 million in 2024 to $1.9 million as compared to $1.4 million in 2023. The increase in interest expense for the year ended December 31, 2024 as compared to 2023 was primarily due to a higher interest rate on debt under our Prior Credit Agreement, as described in Footnote 5 , Debt.
Interest expense, net, increased $0.5 million in 2023 to $1.4 million as compared to $0.9 million in 2022. The increase in interest expense for the year ended December 31, 2023 as compared to 2022 was primarily due to a higher interest rate on debt under our Prior Credit Agreement, as described in Footnote 5 , Debt .
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:
Years Ended December 31,
(In thousands) 2024 2023 2022
Change in fair value of warrants liability $ 669 $ 49 $ 9,802
Other (18) (7) (17)
Total other income, net
$ 651 $ 42 $ 9,785
Total other income, net for the year ended December 31, 2024 was $0.7 million as compared to total other income, net of $42 thousand in 2023. The increase in other income, net was primarily driven by larger gains from the change in fair value of warrants liability recognized in 2024 compared to 2023, due to a decrease in the trading price of our Common Stock during the first quarter of 2024 and the Series A warrants
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expiring unexercised in the second quarter of 2024, as described in Footnote 4 , Convertible Redeemable Preferred Stock and Stockholders' Equity (Deficit).
Total other income, net for the year ended December 31, 2023 was negligible as compared to total other income, net of $9.8 million in 2022. The decrease in other income, net was primarily driven by larger gains from the change in fair value of warrants liability recognized in 2022 compared to 2023, due to a decrease in the trading price of our Common Stock in 2022 and an exercise price adjustment in 2023. For additional information about the change in fair value of warrants liability, refer to Footnote 4 , Convertible Redeemable Preferred Stock and Stockholders' Equity (Deficit).
Gain (Loss) From Foreign Currency Transactions
Our foreign currency transactions are recorded as a result of fluctuations in the exchange rate between the transactional currency and the functional currency of foreign subsidiary transactions. Our foreign currency exposures that relate to the translation to U.S. Dollars are in a net liability position, and our foreign currency exposures that relate to the translation from U.S. Dollars are in a net asset position.
For the year ended December 31, 2024, the gain from foreign currency transactions was $1.4 million. The gain was primarily driven by fluctuations in the U.S. Dollar against the Chilean Peso, Euro and Canadian Dollar and the Chilean Peso against the Euro.
For the year ended December 31, 2023, the loss from foreign currency transactions was $2.8 million. The loss was primarily driven by fluctuations in the Chilean Peso against the U.S. Dollar and Euro and the U.S. Dollar against the Euro and Argentine Peso.
For the year ended December 31, 2022, the gain from foreign currency transactions was $1.2 million. The gain was primarily driven by fluctuations in the Euro and Chilean Peso against the U.S. Dollar and the U.S. Dollar against the Canadian Dollar and Argentine Peso.
Income Tax Provision
A valuation allowance has been established against our net U.S. federal and state deferred tax assets, and certain foreign deferred tax assets, including net operating loss carryforwards. As a result, our income tax position is primarily related to foreign tax activity and U.S. deferred taxes for tax deductible goodwill and other indefinite-lived liabilities.
During the years ended December 31, 2024, 2023, and 2022, we recorded an income tax provision of $0.9 million, $1.5 million, and $1.7 million, resulting in an effective tax rate of 1.6%, 2.0%, and 2.7%, respectively. These effective tax rates differ from the U.S. federal statutory rate primarily due to the effects of certain permanent items, foreign tax rate differences, changes in the valuation allowance against our domestic deferred tax assets and income tax benefit related to the impairment of goodwill.
Included within tax expense for the year ended December 31, 2024 is an income tax adjustment of $17.2 million related to the impairment of goodwill. Also included in the total tax expense is an income tax benefit of $2.5 million for a decrease in the valuation allowance recorded against our deferred tax assets to offset the tax expense of our operating losses in the U.S. and certain foreign jurisdictions. Income tax expense of $0.9 million has also been included for permanent differences in the book and tax treatment of certain stock-based compensation, local statutory to U.S. GAAP adjustments, and other nondeductible expenses. These tax adjustments, along with state and local taxes, are the primary drivers of the annual effective income tax rate.
Included within tax expense for the year ended December 31, 2023 is an income tax adjustment of $20.9 million related to the impairment of goodwill. Also included in the total tax expense is an income tax expense of $15.1 million for an increase in the valuation allowance recorded against our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions. Income tax expense of $0.7 million has also been included for permanent differences in the book and tax treatment of certain stock-based compensation, executive compensation, and other nondeductible expenses. These tax adjustments, along with state and local taxes, are the primary drivers of the annual effective income tax rate.
Included within tax expense for the year ended December 31, 2022 is income tax benefit of $2.6 million for permanent differences in the book and tax treatment of nontaxable gain on fair market value adjustment of stock warrants, offset by certain nondeductible stock-based compensation and executive compensation. Also included in the total tax expense is an income tax adjustment of $12.7 million related to the impairment of goodwill. Income tax expense of $18.5 million has also been included for an increase in the valuation allowance recorded against our deferred tax assets to offset the tax benefit of our operating losses in the U.S. and certain foreign jurisdictions. These tax adjustments, along with state and local taxes and book losses in foreign jurisdictions where the income tax rate is substantially lower than the U.S. federal statutory rate, are the primary drivers of the annual effective income tax rate.
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Liquidity and Capital Resources
The following table summarizes our cash flows for each of the periods identified:
Years Ended December 31,
(In thousands) 2024 2023 2022
Net cash provided by operating activities $ 18,104 $ 28,926 $ 34,937
Net cash used in investing activities (24,062) (23,786) (17,822)
Net cash provided by (used in) financing activities 17,623 (3,394) (18,132)
Effect of exchange rate changes on cash, cash equivalents and restricted cash (1,133) 748 (820)
Net increase (decrease) in cash, cash equivalents and restricted cash 10,532 2,494 (1,837)
Overview
Our principal uses of cash consist of cash paid for data, payroll and other operating expenses, including expenses incurred in prior periods; payments related to investments in equipment, primarily to support our consumer panels and technical infrastructure required to deliver our products and services and support our customers; service of our debt and lease facilities; and deferred payment obligations with respect to our 2021 acquisition of Shareablee.
As of December 31, 2024, our principal sources of liquidity consisted of cash, cash equivalents and restricted cash totaling $33.5 million, including $3.5 million in restricted cash (primarily related to letters of credit); cash flows from our operations; and amounts available to us under our Credit Agreement, as described below. We had outstanding letters of credit of $3.2 million as of December 31, 2024.
On December 31, 2024, we entered into a senior secured financing agreement (the "Credit Agreement") with Blue Torch Finance LLC. The Credit Agreement has a term of four years and matures in December 2028. The Credit Agreement provides a borrowing capacity of $60.0 million consisting of a $45.0 million term loan that was fully funded at closing (the "Term Loan") and a $15.0 million revolving credit facility that was unfunded at closing (the "Revolving Facility"). Initial proceeds from the Term Loan were used to resolve our aged accounts payable, cash collateralize our outstanding letters of credit, pay transaction fees and expenses, and strengthen our cash position. As of December 31, 2024, we had no borrowings outstanding under the Revolving Facility, with remaining borrowing capacity of $15.0 million.
Also on December 31, 2024, we terminated our prior credit agreement with Bank of America, N.A. (the "Prior Credit Agreement"). As described above, we used a portion of proceeds from the new Credit Agreement to cash collateralize our outstanding letters of credit under the Prior Credit Agreement. We had no other borrowings outstanding under the Prior Credit Agreement on the termination date, and we did not incur any early termination penalties in connection with the termination.
On July 24, 2024, we issued 13.3 million additional shares of Preferred Stock to the existing holders of Preferred Stock in exchange for cancellation of our obligation to pay accrued dividends to such holders for dividend periods ended in 2023 and 2024. The additional shares of Preferred Stock have the same terms and conditions as the Preferred Stock previously issued by us, including that they accrue annual dividends at a rate of 7.5% per annum. Under the Credit Agreement, we are prohibited from paying cash dividends to the holders of Preferred Stock prior to April 1, 2026. On and after April 1, 2026, the Credit Agreement imposes certain limitations on cash dividends, including a heightened liquidity requirement.
Macroeconomic Factors
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 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.
Preferred Stock
On March 10, 2021, we issued 82,527,609 shares of Preferred Stock in exchange for gross cash proceeds of $204.0 million. Net proceeds from the issuance totaled $187.9 million after deducting issuance costs. Shares of Preferred Stock are convertible into Common Stock as described in Footnote 4 , 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 4 , 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.
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At an annual meeting held on June 15, 2023, our stockholders approved proposals permitting the payment of annual dividends on the Preferred Stock in the form of cash, shares of Common Stock, additional shares of Preferred Stock, or a combination thereof, subject to conditions set forth in the Certificate of Designations governing the Preferred Stock. On the same date, each holder of Preferred Stock waived its right to receive on June 30, 2023 the annual dividends otherwise payable by us on that date. Upon receipt of the waivers, our Board 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, 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 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. On the date of issuance, 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.
As of December 31, 2024, each share of Preferred Stock was convertible into 0.051892 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.
Secured Credit Agreement
On December 31, 2024, we entered into the Credit Agreement with Blue Torch Finance LLC. The Credit Agreement has a term of four years and matures in December 2028. The Credit Agreement provides a borrowing capacity of $60.0 million consisting of the $45.0 million Term Loan and the $15.0 million Revolving Facility. As of December 31, 2024, the interest rate for the Term Loan was 11.59% based on the Adjusted Term SOFR rate, as defined in the Credit Agreement. In addition, the Credit Agreement provides for an unused commitment fee equal to 1.0% per annum of the unused Revolving Facility.
Amounts outstanding under the Credit Agreement must be prepaid from time to time with the net cash proceeds of certain debt incurrences, equity issuances, asset sales and other dispositions, insurance and condemnation proceeds, tax refunds and other extraordinary receipts. Additionally, beginning with the fiscal year ending December 31, 2025, we may be required to prepay the loans annually with Excess Cash Flow (as defined in the Credit Agreement) at specified percentages. Certain payments may be subject to prepayment premiums.
The Credit Agreement contains financial covenants that require us to maintain a maximum Senior Leverage Ratio and minimum Liquidity (each term as defined in the Credit Agreement) during the term of the facility. Additionally, the Credit Agreement contains restrictive covenants that limit our ability to, among other things, incur additional indebtedness and liens, make investments and loans, enter into mergers and acquisitions, make or declare dividends and other payments, enter into certain contracts, sell assets and engage in transactions with affiliates. With respect to dividends, the Credit Agreement prohibits the payment of cash dividends to holders of the Preferred Stock prior to April 1, 2026 and imposes certain limitations on cash dividends, including a heightened Liquidity requirement, on and after that date.
As of December 31, 2024, we had $45.0 million outstanding under the Term Loan and no borrowings outstanding under the Revolving Facility, with a remaining borrowing capacity of $15.0 million.
For additional information on the Credit Agreement, refer to Footnote 5 , Debt .
Prior Credit Agreement
On May 5, 2021, we entered into the Prior Credit Agreement. The Prior Credit Agreement provided for 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 Prior Credit Agreement in an aggregate amount up to $5.0 million.
On May 3, 2024, we entered into an amendment to the Prior Credit Agreement that, among other things, (i) extended the maturity date of the facility from May 5, 2024 to November 5, 2024; (ii) reduced our borrowing capacity from $40.0 million to $25.0 million; (iii) increased the
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applicable rate payable on SOFR-based loans to 4.50%; (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 were paid in full prior to such date.
On November 1, 2024, we repaid the outstanding principal balance of $10.0 million under the Prior Credit Agreement. On November 5, 2024, we entered into an amendment to the Prior 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 Prior Credit Agreement to equal the outstanding letters of credit (totaling $3.2 million) and limited the purpose of, and use of proceeds under, the Prior Credit Agreement to the issuance of letters of credit. Additionally, the amendment terminated certain financial covenants while maintaining the same non-financial covenants, security interest and interest rate as in effect immediately prior to the amendment.
On December 31, 2024, we terminated the amended Prior Credit Agreement. As described above, we used a portion of proceeds from the Term Loan to cash collateralize our outstanding letters of credit under the Prior Credit Agreement. We had no other borrowings outstanding under the Prior Credit Agreement on the termination date, and we did not incur any early termination penalties in connection with the termination.
For additional information on the Prior Credit Agreement, refer to Footnote 5 , Debt .
Restricted Cash
Restricted cash represents collateralized letters of credit and security deposits for subleased office space. As of December 31, 2024 and 2023, we had $3.5 million and $0.2 million of restricted cash, respectively.
Operating Activities
Our primary source of cash provided by operating activities is revenues generated from sales of our products and services. Our primary uses of cash from operating activities include personnel costs and costs related to data and infrastructure used to develop and maintain our products and services.
Cash provided by operating activities is calculated by adjusting our net loss for changes in working capital, as well as by excluding non-cash items such as: depreciation, 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 provision and change in the fair value of warrants liability.
Net cash provided by operating activities in 2024 was $18.1 million compared to $28.9 million in 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 $23.8 million of cash used for the year ended December 31, 2024 as compared to $10.5 million for the year ended December 31, 2023. This was primarily due to lower revenue, higher vendor payments (including aged accounts payable resolved at year-end with proceeds from the Term Loan), and the timing of cash receipts from customers in 2024. Other contributors included lower adjustments for amortization of intangible assets and stock-based compensation expense in 2024 compared to 2023.
Net cash provided by operating activities in 2023 was $28.9 million compared to $34.9 million in 2022. The decrease in cash provided by operating activities was partially attributable to a net decrease in cash generated from operating assets and liabilities, with $10.5 million of cash used for the year ended December 31, 2023 as compared to $0.3 million of cash generated for the year ended December 31, 2022. The lower amount of cash generated from operating assets and liabilities in 2023 was primarily due to severance payments made in 2023, as well as the first payment of contingent consideration for our 2021 Shareablee acquisition. Other contributors to the decrease in cash provided by operating activities were lower revenue, lower adjustments for amortization and stock-based compensation expense and change in fair value of contingent consideration in 2023, offset by the change in fair value of our warrants liability and depreciation.
Investing Activities
Cash used in investing activities primarily consists of payments related to capitalized internal-use software costs, purchases of computer and network equipment to support our technical infrastructure, and furniture and equipment. The extent of these investments will be affected by our ability to expand relationships with existing customers, grow our customer base and introduce new digital formats, as well as constraints on cash expenditures due to our financial position and the current economic environment.
Net cash used in investing activities in 2024 was $24.1 million compared to $23.8 million in 2023.
Net cash used in investing activities in 2023 was $23.8 million compared to $17.8 million in 2022. The increase in cash used in investing activities was primarily due to an increase in cash paid for capitalized internally developed software as we increased our focus on product infrastructure and innovation in 2023.
Financing Activities
Net cash provided by financing activities in 2024 was $17.6 million compared to net cash used in financing activities of $3.4 million in 2023. The increase in cash provided by financing activities was primarily due to net proceeds of $40.4 million from the Credit Agreement in 2024. This was offset by the repayment of $16.0 million under the Prior Credit Agreement and the payment of the second installment of contingent consideration for our 2021 Shareablee acquisition initially recorded at fair value and paid in 2024.
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Net cash used in financing activities in 2023 was $3.4 million compared to $18.1 million in 2022. The decrease in cash used for financing activities was primarily due to the deferral of accrued dividends due to holders of the Preferred Stock in 2023, as described under "Preferred Stock" above. This was offset by a portion of the first payment of contingent consideration for our 2021 Shareablee acquisition initially recorded at fair value and paid in 2023.
Contractual Payment Obligations
We have certain long-term contractual arrangements that have fixed and determinable payment obligations including purchase obligations with MVPDs and connected TV data providers, operating and financing leases, and data storage and bandwidth arrangements.
We have data licensing agreements with a number of MVPDs and other providers for set-top box and connected TV data. These agreements have remaining terms of less than one year to seven years. As of December 31, 2024, the total fixed payment obligations related to set-top box and connected TV data agreements are $125.5 million and $25.4 million, respectively. In addition, we expect to make variable payments related to a set-top box data agreement totaling an estimated $108.8 million over the next seven years.
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 December 31, 2024, the total fixed payment obligation related to these agreements is $36.4 million.
We have an agreement for cloud-based data storage and bandwidth to help process and store our data. The remaining term for this agreement is less than one year. As of December 31, 2024, the total fixed payment obligation related to this agreement is $13.8 million.
Future Capital Requirements
Our ability to generate cash is subject to our performance, general economic conditions, industry trends and other factors, including the timing of cash collections from our customers, data costs and other trade payables, service of our debt and lease facilities, dividend payment obligations, and expenses from ongoing compliance efforts and legal matters. To the extent that our existing cash, cash equivalents and operating cash flow, together with savings from cost-reduction initiatives undertaken by our management and amounts available to us under the Revolving Facility, 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 prepay or refinance our Credit Agreement or 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. If we issue additional equity securities in order to raise additional funds, pay dividends or for other purposes, further dilution to existing stockholders may occur.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based on our Consolidated Financial Statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. ("GAAP"). The preparation of these financial statements requires us to make estimates, assumptions and judgments that affect the amounts reported in our Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
The accounting estimates and assumptions discussed in this section are those that we consider to be the most critical to an understanding of our financial condition and results of operations because they involve significant judgments and uncertainties. Actual results in these areas could differ from management's estimates. Refer to Footnote 2 , Summary of Significant Accounting Policies, for further information on our most significant accounting policies.
Revenue Recognition
We recognize revenue under the core principle of depicting the transfer of promised goods and services to our customers in an amount that reflects the consideration to which we expect to be entitled. Significant judgments used in the determination of the amount and timing of our revenue recognition include the identification of distinct performance obligations and the allocation of contract consideration among individual performance obligations based on their relative standalone selling price ("SSP").
Performance obligations are identified by evaluating whether the promised goods and services are capable of being distinct and distinct within the context of the contract. We have a limited number of monetary contracts with MVPDs that involve both the purchase and sale of services with a single counterparty. Each contract is assessed to determine if the goods and services exchanged between the two parties represent distinct performance obligations which can entail significant judgment. The conclusion regarding whether goods and services exchanged are distinct determines whether consideration received from the counterparty is recognized as revenues (up to the SSP of the distinct goods or services), or as a reduction to the purchase price of the goods or services recorded in our cost of revenues.
The transaction price is allocated to each performance obligation based on its relative SSP. In most sales contracts, we bundle multiple products and very few are sold on a standalone basis. As a result, our SSP is not directly observable and we have to develop internal estimates using information that is reasonably available to us. Our SSP is primarily developed using an adjusted market approach supported by rate cards and pricing calculators that are periodically reviewed and updated to reflect the best available information. Bundled arrangements may include a combination of distinct goods and services where some are satisfied over time and others are satisfied at a point in time. Changes to the SSP will impact the amount of consideration allocated to each performance obligation, which could have an impact on the timing and amount of
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revenues recognized in future periods as our performance obligations are satisfied. The determination of SSP also impacts the amount of revenues we can recognize in transactions where consideration is exchanged with counterparties as described above.
Goodwill
The valuation of goodwill involves the use of management's estimates and assumptions and can have a significant impact on future operating results. Goodwill is not amortized but is evaluated for impairment at least annually, as of October 1, by comparing the fair value of a reporting unit to its carrying value including goodwill recorded by the reporting unit.
We have one reporting unit. As such, we perform the impairment assessment for goodwill at the enterprise level. Goodwill is reviewed for possible impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below the carrying value. In assessing the possibility that our reporting unit's fair value has been reduced below its carrying value due to the occurrence of events or circumstances between annual impairment testing dates, we consider all available evidence including, but not limited to: (i) the results of our impairment testing from the most recent testing date (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts, if any, (iii) declines in market capitalization below book value (and the magnitude and duration of those declines), if any, and (iv) changes in general industry, market and macroeconomic conditions.
We determine the fair value of our reporting unit using a combination of the income and market approaches. The results from each of these approaches are weighted appropriately taking into account the relevance and availability of data at the time we perform the valuation.
Under the income approach, the fair value is determined using a discounted cash flow model based on projected financial performance and discount rates that take into account an appropriate risk-adjusted return. The discounted cash flow model requires the use of various assumptions in developing the present value of projected cash flows, the following of which are significant to our analysis:
Projected financial performance: expected future cash flows and growth rates are based upon assumptions of our future revenue growth and operating costs. Actual results of operations and cash flows will likely differ from those utilized in our discounted cash flow analysis, and it is possible that those differences could be material.
Long-term growth rate: the long-term growth rate represents the rate at which our single reporting unit's earnings are expected to grow or losses to decrease. Our assumed long-term growth rate was based on projected long-term inflation and gross domestic product growth estimates for the countries in which we operate and a long-term growth estimate for our business and the industry in which we operate. The long-term growth rate selected for the 2024, 2023 and 2022 annual impairment analyses was 3.0%.
Discount rate: our reporting unit's future cash flows are discounted at a rate that is consistent with our average weighted cost of capital that is likely to be utilized by market participants. The weighted-average cost of capital is our estimate of the overall returns required by both debt and equity investors, weighted by their respective contributions of capital. We use discount rates that are commensurate with the risks and uncertainty inherent in our business and in our internally-developed forecasts. The discount rates selected for the 2024, 2023 and 2022 annual impairment analyses were 24.5%, 22.0% and 27.0%, respectively. Our selected discount rate was higher in 2024 in comparison to 2023 primarily due to the increase in company-specific risk premium ("CSRP"). The increase in CSRP was related to an increase in operational risk in earnings before interest, taxes, depreciation, and amortization.
Under the market approach, the fair value is determined using certain financial metrics of publicly traded companies or historically completed transactions of comparable businesses. The selection of comparable businesses requires judgment and is based on the markets in which we operate giving consideration to, amongst other things, risk profiles, size and geography. The market approach may also be limited in instances where there is a lack of recently executed transactions of comparable businesses. We determine fair value primarily based on selected market multiples based on current and projected revenues compared to business enterprise value, with an estimated control premium as applicable.
During the third quarter of 2024, we concluded that it was more likely than not that the estimated fair value of our reporting unit was less than its carrying value. In our assessment, we considered changes in our stock price, market and equity capitalization, operating results and projections. We performed a quantitative goodwill impairment test in conjunction with the annual testing using a discounted cash flow model, supported by a market approach. Our reporting unit did not pass the goodwill impairment test, and as a result we recorded a $63.0 million non-cash impairment charge in the quarter ended September 30, 2024.
Goodwill allocated to our single reporting unit as of December 31, 2024 was $246.0 million. The projected long-term cash flows used in our fair value estimate are consistent with our most recent operating plan as of the evaluation date and are dependent on the successful execution of our business plan, overall industry growth rates and the competitive environment.
We monitor for events and circumstances that could negatively impact the key assumptions in determining the fair value of our goodwill, including long-term growth projections, profitability, discount rates, volatility in our market capitalization, and general industry, market and macroeconomic conditions. The judgments and estimates described above could change in future periods. If the reporting unit's future performance falls below our expectations, or if there are negative revisions to our fair value assumptions, including those that are significant and discussed above, we may need to record a material, non-cash goodwill impairment charge in a future period.
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