10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36331

Quotient Technology Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	77-0485123
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
400 Logue Avenue, Mountain View, California	94043
(Address of Principal Executive Offices)	(Zip Code)

(650) 605-4600

(Registrant’s Telephone Number, Including Area Code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes☒No☐

Indicate by checkmark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes☒No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes☐No☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.00001 par value	QUOT	New York Stock Exchange

As of May 3, 2019, the registrant had 93,656,678 shares of common stock outstanding.

QUOTIENT TECHNOLOGY INC.

INDEX

REPORT ON

FORM 10-Q

FOR THE QUARTER ENDED MARCH 31, 2019

PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited):	3
Condensed Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018	3
Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018	4
Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2019 and 2018	5
Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2019 and 2018	6
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018	7
Notes to Condensed Consolidated Financial Statements	8
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3 Quantitative and Qualitative Disclosures About Market Risk	35
Item 4 Controls and Procedures	35
PART II OTHER INFORMATION
Item 1—Legal Proceedings	36
Item 1A—Risk Factors	36
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3—Defaults Upon Senior Securities	65
Item 4—Mine Safety Disclosures	65
Item 5—Other Information	65
Item 6—Exhibits	66
SIGNATURES	67

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	March 31, 2019			December31, 2018
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	286,458		$	302,028
Short-term investments		—			20,738
Accounts receivable, net of allowance for doubtful accounts of $1,331 and $1,200 at    March 31, 2019 and December 31, 2018, respectively		108,323			112,108
Prepaid expenses and other current assets		10,931			10,044
Total current assets		405,712			444,918
Property and equipment, net		15,379			15,579
Intangible assets, net		76,085			81,724
Goodwill		118,821			118,821
Other assets		8,628			1,311
Total assets	$	624,625		$	662,353
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	17,478		$	17,060
Accrued compensation and benefits		8,099			13,107
Other current liabilities		42,797			53,255
Deferred revenues		9,807			8,686
Contingent consideration related to acquisitions		24,893			—
Total current liabilities		103,074			92,108
Other non-current liabilities		7,668			3,622
Contingent consideration related to acquisitions		7,133			28,963
Convertible senior notes, net		158,276			155,719
Deferred tax liabilities		1,854			1,854
Total liabilities		278,005			282,266
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized and no shares    issued or outstanding at March 31, 2019 and December 31, 2018		—			—
Common stock, $0.00001 par value—250,000,000 shares authorized; 93,536,042    and 94,995,211 shares issued and outstanding at March 31, 2019 and December    31, 2018, respectively		1			1
Additional paid-in capital		689,809			703,023
Accumulated other comprehensive loss		(814	)		(844	)
Accumulated deficit		(342,376	)		(322,093	)
Total stockholders’ equity		346,620			380,087
Total liabilities and stockholders’ equity	$	624,625		$	662,353

See Accompanying Notes to Condensed Consolidated Financial Statements

3

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Revenues	$	98,107		$	86,766
Costs and expenses:
Cost of revenues		56,823			40,453
Sales and marketing		25,523			23,830
Research and development		10,370			12,626
General and administrative		13,623			11,392
Change in fair value of escrowed shares and contingent    consideration, net		3,062			7,350
Total costs and expenses		109,401			95,651
Loss from operations		(11,294	)		(8,885	)
Interest expense		(3,439	)		(3,308	)
Other income (expense), net		1,531			938
Loss before income taxes		(13,202	)		(11,255	)
Provision for income taxes		26			102
Net loss	$	(13,228	)	$	(11,357	)
Net loss per share, basic and diluted	$	(0.14	)	$	(0.12	)
Weighted-average number of common shares used in    computing net loss per share, basic and diluted		94,263			92,711

See Accompanying Notes to Condensed Consolidated Financial Statements

4

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Net loss	$	(13,228	)	$	(11,357	)
Other comprehensive income (loss):
Foreign currency translation adjustments		30			(22	)
Comprehensive loss	$	(13,198	)	$	(11,379	)

See Accompanying Notes to Condensed Consolidated Financial Statements

5

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)

	Three Months Ended
	March 31, 2019			March 31, 2018
Total stockholders' equity, beginning balances	$	380,087		$	398,041
Common stock and additional paid-in capital:
Beginning balances	$	703,023		$	686,025
Stock-based compensation		8,102			7,857
Exercise of employee stock options		1,443			1,675
Payments for taxes related to net share settlement of equity awards		(4,651	)		(6,859	)
Retirement of treasury stock		(18,107	)		—
Change in fair value of escrowed shares related to a services and data    agreement		—			1,350
Ending balance	$	689,810		$	690,048
Treasury stock:
Beginning balances	$	—		$	—
Repurchase of common stock		(25,162	)		—
Retirement of treasury stock		25,162			—
Ending balance	$	—		$	—
Accumulated other comprehensive loss:
Beginning balances	$	(844	)	$	(700	)
Other comprehensive income (loss)		30			(22	)
Ending balance	$	(814	)	$	(722	)
Accumulated deficit:
Beginning balances	$	(322,093	)	$	(287,285	)
Cumulative-effect of accounting change		—			105
Retirement of treasury stock		(7,055	)		—
Net loss		(13,228	)		(11,357	)
Ending balance	$	(342,376	)	$	(298,537	)
Total stockholders' equity, ending balances	$	346,620		$	390,789

See Accompanying Notes to Condensed Consolidated Financial Statements

6

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net loss	$	(13,228	)	$	(11,357	)
Adjustments to reconcile net loss to net cash provided by (used in) operating    activities:
Depreciation and amortization		7,722			4,417
Stock-based compensation		8,048			7,796
Amortization of debt discount and issuance cost		2,558			2,425
Loss on disposal of property and equipment		3			2
Allowance for doubtful accounts		132			95
Deferred income taxes		25			102
Change in fair value of escrowed shares and contingent consideration, net		3,062			7,350
Changes in operating assets and liabilities:
Accounts receivable		3,652			(4,433	)
Prepaid expenses and other current assets		(791	)		(1,634	)
Accounts payable and other current liabilities		2,418			(5,783	)
Accrued compensation and benefits		(5,004	)		(5,901	)
Deferred revenues		1,121			668
Net cash provided by (used in) operating activities		9,718			(6,253	)
Cash flows from investing activities:
Purchases of property and equipment		(1,994	)		(1,713	)
Purchase of intangible assets		(14,611	)		—
Purchases of short-term investments		—			(25,721	)
Proceeds from maturities of short-term investment		20,738			34,750
Net cash provided by investing activities		4,133			7,316
Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans		1,443			1,675
Payments for taxes related to net share settlement of equity awards		(4,651	)		(6,857	)
Repurchases and retirement of common stock under share repurchase    program		(26,134	)		—
Principal payments on promissory note and capital lease obligations		(77	)		(82	)
Net cash used in financing activities		(29,419	)		(5,264	)
Effect of exchange rates on cash and cash equivalents		(2	)		13
Net decrease in cash and cash equivalents		(15,570	)		(4,188	)
Cash and cash equivalents at beginning of period		302,028			334,635
Cash and cash equivalents at end of period	$	286,458		$	330,447
Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	57		$	42
Cash paid for interest	$	6		$	8
Supplemental disclosures of noncash investing and financing activities:
Fixed asset purchases not yet paid	$	826		$	320
Repurchase of common stock not settled	$	586		$	—

See Accompanying Notes to Condensed Consolidated Financial Statements

7

QUOTIENT TECHNOLOGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business

Quotient Technology Inc. (together with its subsidiaries, the “Company”), is an industry leading digital marketing platform, providing technology and services that power integrated digital promotions and media programs for consumer packaged goods (“CPG”s) brands and retailers. These programs are delivered across the Company’s network, including its flagship consumer brand Coupons.com and retail partners. This network provides the Company with proprietary and licensed data, including online behaviors, purchase intent, and retailers’ in-store point-of-sale (“POS”) shopper data, to target shoppers with the most relevant digital coupons and ads. Customers and partners use the Company to influence shoppers via digital channels, integrate marketing and merchandising programs, and leverage shopper data and insights to drive measurable sales results.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2019 or for any other period.

There have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on its condensed consolidated financial statements and related notes except for the adoption of the requirements of Accounting Standards Update ("ASU") No. 2016-02, Leases, effective January 1, 2019 using the modified retrospective transition method.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Company’s condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, revenue recognition, collectability of accounts receivable, coupon code sales return reserve, valuation of assets acquired and liabilities assumed in a business combination, useful lives of intangible assets and property and equipment, estimates related to recovery of long-lived assets and goodwill, stock-based compensation, measurement of contingent consideration, restructuring accruals, classification of current and non-current deferred revenue, debt discounts, and income taxes, deferred income tax assets and associated valuation allowances. These estimates generally require judgments, may involve the analysis of historical and prediction of future trends, and are subject to change from period to period. Actual results may differ from the Company’s estimates, and such differences may be material to the accompanying condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Adopted

Leases

Topic 842: In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The guidance requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. Lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs.

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The Company adopted ASU 2016-02 in the first quarter of 2019 utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first quarter of 2019. The Company has elected certain practical expedients, which allows the Company not to reassess (i) whether any expired or existing contracts as of the adoption date are or contain a lease, (ii) lease classification for any expired or existing leases as of the adoption date and (iii) initial direct costs for any existing leases as of the adoption date.The Company has elected to account for lease and non-lease components as a single lease component. In addition, the Company has elected not to recognize right-of-use assets and liabilities for short-term leases with terms of twelve months or less.The adoption of ASU 2016-02 on January 1, 2019, resulted in the recognition of 1) right-of-use assets of $8.5 million, adjusted for deferred rent and lease incentives as of the adoption date, and 2) lease liabilities for operating leases of $11.5 million on its condensed consolidated balance sheet, with no material impact to its condensed consolidated statements of operations and cashflows. Refer to Note 13 for further information regarding the impact of adoption of the standard on the Company’s condensed consolidated financial statements.

Revenue from Contracts with Customers

Topic 606: In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”), which supersedes the revenue recognition requirements in ASC 605, ”Revenue Recognition” (“Topic 605”), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.

The Company adopted Topic 606 as of January 1, 2018, using the modified retrospective method.  

As a result of adopting the new standard, the Company recorded a net increase to retained earnings of $0.1 million as of January 1, 2018, with the impact primarily related to unbilled receivables for performance obligations that have been satisfied but no invoice has been issued. The impact to revenues as a result of applying Topic 606 for the year ended December 31, 2018 was an increase of $1.0 million.  

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

Topic 350: In August 2018, the FASB issued ASU No. 2018-15, Intangibles (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard also requires customers to amortize the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The Company early adopted this standard, as of October 1, 2018, on a prospective basis for applicable implementation costs. The adoption did not have a material impact on the Company's consolidated financial statements in the fourth quarter of 2018.

Revenue Recognition

The Company primarily generates revenue by providing digital promotions and media solutions to its customers and partners. Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, we satisfy a performance obligation

Promotion Revenue

The Company generates revenue from promotions, in which consumer packaged goods brands, or CPGs, pay the Company to deliver coupons to consumers through its network of publishers and retail partners. The Company generates revenues, as consumers select, activate, or redeem a coupon through its platform by either saving it to a retailer loyalty account for automatic digital redemption, or printing it for physical redemption at a retailer. The pricing for promotion

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arrangements generally includes both coupon setup fees and coupon transaction fees. Coupon setup fees are related to the creation of digital coupons and set up of the underlying campaign on Quotient’s proprietary platform for tracking of related activations or redemptions. The Company recognizes revenues related to coupon setup fees over time, proportionally, on a per transaction basis, using the number of authorized transactions per insertion order, commencing on the date of the first coupon transaction. Coupon transaction fees are generally determined on a per unit activation or per redemption basis, and are generally billed monthly. Insertion orders generally include a limit on the number of activations, or times consumers may select a coupon.

Promotion revenues also include the Company’s Specialty Retail business, in which specialty stores including clothing, electronics, home improvement and others, offer coupon codes that the Company distributes. Each time a consumer makes a purchase using a coupon code, a transaction occurs and a distribution fee is generally paid to the Company. The Company generally generates revenues when a consumer makes a purchase using a coupon code from its platform and completion of the order is reported to the Company. In the same period that the Company recognizes revenues for the delivery of coupon codes, it also estimates and records a reserve, based upon historical experience, to provide for end-user cancelations or product returns which may not be reported until a subsequent date. 

Media Revenue

The Company’s media services enable CPGs and retailers to distribute digital media to promote their brands and products on its websites, and mobile apps, and through a network of affiliate publishers and non-publisher third parties that display its media offerings on their websites or mobile apps. Revenue is generally recognized each time a digital media ad is displayed or each time a user clicks on the media ad displayed on the Company’s websites, mobile apps or on third-party websites. Media pricing is generally determined on a per campaign, impression or per click basis and are generally billed monthly. 

Gross Versus Net Revenue Reporting

In the normal course of business and through its distribution network, the Company delivers digital coupons and media on retailers’ websites through retailers’ loyalty programs, and on the websites of digital publishers. In these situations, the Company evaluates whether it is the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, the Company reports digital promotion and media advertising revenues for campaigns placed on third-party owned properties on a gross basis, that is, the amounts billed to its customers are recorded as revenues, and distribution fees paid to retailers or digital publishers are recorded as cost of revenues. The Company is the principal because it controls the digital coupon and media advertising inventory before it is transferred to its customers. The Company’s control is evidenced by its sole ability to monetize the digital coupon and media advertising inventory, being primarily responsible to its customers, having discretion in establishing pricing for the delivery of the digital coupons and media, or a combination of these.

Arrangements with Multiple Performance Obligations

The Company’s contracts with customers may include multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines its best estimate of its standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors, including the value of its contracts and characteristics of targeted customers.

Accounts Receivables, Net of Allowance for Doubtful Accounts

Trade and other receivables are included in accounts receivables and primarily comprised of trade receivables that are recorded at invoiced amounts and do not bear interest, net of an allowance for doubtful accounts. Other receivables included unbilled receivables related to digital promotions and media advertising contracts with customers. The Company generally does not require collateral and performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. The Company maintains an allowance for doubtful accounts based upon the expected collectability of its accounts receivable. The allowance is determined based upon specific account identification and historical experience of uncollectable accounts. The expectation of collectability is based on the Company’s review of credit profiles of customers, contractual terms and conditions, current economic trends, and historical payment experience.

Deferred Revenues

Deferred revenues consist of coupon setup fees, coupon transaction fees and digital media fees that are expected to be recognized upon coupon activations, or delivery of media impressions or clicks, which generally occur within the next

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twelve months. The Company records deferred revenues, including amounts which are refundable, when cash payments are received or become due in advance of the Company satisfying its performance obligations. The increase in the deferred revenue balance for the three months ended March 31, 2019 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations of $6.2 million, partially offset by $5.1 million of recognized revenue.

The Company’s payment terms vary by the type and size of its customers. For certain products or services and customer types, we require payment before the products or services are delivered to the customer.

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by type of services (in thousands, unaudited). The majority of the Company’s revenue is generated from sales in the United States.

	Three Months Ended March 31,
	2019		2018
Promotion	$	63,567	$	63,783
Media		34,540		22,983
Total Revenue	$	98,107	$	86,766

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue for an amount where it has the right to invoice for services performed.

Sales Commissions

The Company generally incurs and expenses sales commissions upon recognition of revenue for related goods and services, which typically occurs within one year or less. Sales commissions earned related to revenues for initial contracts are commensurate with sales commissions related to renewal contracts. These costs are recorded within sales and marketing expenses on the condensed consolidated statements of operations.

3. Fair Value Measurements

The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in thousands):

	March 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	143,259		—		—	$	143,259
U.S. Treasury Bills		40,855		—		—		40,855
Short-Term investments:
Certificate of deposit		—		—		—		—
Total	$	184,114	$	—	$	—	$	184,114
Liabilities:
Contingent consideration related to acquisitions		—		—		32,026		32,026
Total	$	—	$	—	$	32,026	$	32,026
	December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	142,507		—		—	$	142,507
U.S. Treasury Bills		19,689		—		—		19,689
Short-Term investments:
Certificate of deposit		—		20,738		—		20,738
Total	$	162,196	$	20,738	$	—	$	182,934
Liabilities:
Contingent consideration related to acquisitions		—		—		28,963		28,963
Total	$	—	$	—	$	28,963	$	28,963

The valuation technique used to measure the fair value of money market funds and U.S. Treasury Bills includes using quoted prices in active markets. The money market funds have a fixed net asset value (NAV) of $1. The valuation technique to measure the fair value of certificate of deposits included using quoted prices in active markets for similar assets.

The contingent consideration as of March 31, 2019 relates to the acquisition of MLW Squared Inc. (“Ahalogy”) and Elevaate Ltd. (“Elevaate”). The contingent consideration as of March 31, 2018 relates to the acquisition of Crisp Media, Inc. (“Crisp”). The fair values of contingent consideration are based on the expected achievement of certain revenue targets as defined under the acquisition agreements and were estimated using an option pricing method with significant inputs that are not observable in the market, thus classified as a Level 3 instrument. The inputs included the expected achievement of certain financial metrics over the contingent consideration period, volatility and discount rate. The fair-value of the contingent consideration is classified as a liability and is re-measured each reporting period. Refer to Note 6 for further details related to the acquisitions.

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The following table represents the change in the contingent consideration (in thousands):

	Three Months Ended March 31, 2019
	Elevaate		Ahalogy
	Level 3		Level 3
Balance at the beginning of period	$	6,121	$	22,842
Change in fair value during the period		1,012		2,051
Balance as of March 31, 2019	$	7,133	$	24,893

	Three Months Ended March 31, 2018
	Crisp
	Level 3
Balance at the beginning of period	$	18,500
Change in fair value during the period		6,000
Balance as of March 31, 2018	$	24,500

For the three months ended March 31, 2019 and 2018, the Company recorded a charge of $3.1 million and $6.0 million, respectively, for the re-measurement of the fair values of contingent consideration related to acquisitions, as a component of operating expenses in the accompanying condensed consolidated statements of operations.

Fair Value Measurements of Other Financial Instruments

As of March 31, 2019 and December 31, 2018, the fair value of the Company’s 1.75% convertible senior notes due 2022 was $188.3 million and $187.5 million, respectively. The fair value was determined based on a quoted price of the convertible senior notes in an over-the-counter market on the last trading day of the reporting period. Accordingly, these convertible senior notes are classified within Level 2 in the fair value hierarchy. Refer to Note 8 for additional information related to the Company’s convertible debt.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities are valued on the date of acquisition for businesses acquired on a nonrecurring basis.

As of March 31, 2019 and December 31, 2018, there were no assets and liabilities that are required to be measured at fair value on a nonrecurring basis.

4. Allowance for Doubtful Accounts  

The summary of activity in the allowance for doubtful accounts is as follows (in thousands):

	Three Months Ended March 31,
	2019			2018
Balance at the beginning of period	$	1,200		$	786
Bad debt expense		132			95
Write-offs		(1	)		(67	)
Balance at the end of period	$	1,331		$	814

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5. Balance Sheet Components

Property and Equipment, Net

Property and equipment consist of the following (in thousands):

	March 31, 2019			December 31, 2018
Software	$	40,381		$	37,987
Computer equipment		24,372			23,986
Leasehold improvements		8,195			8,147
Furniture and fixtures		2,078			2,057
Total		75,026			72,177
Accumulated depreciation and amortization		(60,860	)		(59,348	)
Projects in process		1,213			2,750
Total property and equipment, net	$	15,379		$	15,579

Depreciation and amortization expense related to property and equipment was $1.8 million and $1.6 million for the three months ended March 31, 2019 and 2018, respectively.

The Company capitalized internal use software development and enhancement costs of $1.0 million and $0.9 million during the three months ended March 31, 2019 and 2018, respectively. During the three months ended March 31, 2019 and 2018, the Company had $0.6 million and zero, respectively, in amortization expense related to internal use software, which is included in property and equipment depreciation and amortization expense and recorded as cost of revenues. The unamortized capitalized development costs were $5.7 million and $6.1 million as of March 31, 2019 and December 31, 2018, respectively.

Accrued Compensation and Benefits

Accrued compensation and benefits consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Commissions	$	2,760	$	4,104
Bonus		2,358		5,997
Payroll and related expenses		2,561		1,938
Vacation		420		359
Severance related to restructuring		—		709
Total accrued compensation and benefits	$	8,099	$	13,107

Other Current Liabilities  

Other current liabilities consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Distribution fees	$	16,354	$	15,389
Prefunded liability		5,255		5,131
Traffic acquisition cost		3,899		2,417
Operating lease liabilities		4,362		—
Marketing expenses		2,117		2,416
Interest payable		1,157		282
Facility exit costs related to restructuring		—		1,019
Liability related to purchased intangible asset		—		14,500
Other		9,653		12,101
Total other current liabilities	$	42,797	$	53,255

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6. Acquisitions

Acquisition of Elevaate

On October 26, 2018, the Company acquired all the outstanding shares of Elevaate, a sponsored search company for retail partners and CPG brands.

The total preliminary acquisition consideration of $13.3 million consisted of $7.2 million in cash and contingent consideration of up to $18.5 million payable in cash with an estimated fair value of $6.1 million as of the acquisition date. The contingent consideration payout is based on Elevaate achieving certain financial metrics between February 1, 2019 through January 31, 2021. The acquisition date fair value of the contingent consideration was determined by using an option pricing model. The fair value of the contingent consideration will be remeasured every reporting period. Refer to Note 3 for the fair value of contingent consideration at March 31, 2019.

Acquisition of SavingStar, Inc.

On August 27, 2018, the Company acquired all the outstanding shares of SavingStar, Inc. (“SavingStar”), a digital promotions companywith a CRM platform designed to help brands build and track loyalty programs with their consumers.

The total preliminary acquisition consideration at closing consisted of $7.5 million in cash. In addition, SavingStar may receive potential contingent consideration of up to $10.6 million payable in all cash, subject to achieving certain financial metrics between closing through February 29, 2020. At the date of acquisition and March 31, 2019, the contingent consideration’s fair value was determined to be zero using an option pricing model. The fair value of the contingent consideration is remeasured every reporting period.

Acquisition of Ahalogy

On June 1, 2018, the Company acquired all the outstanding shares of Ahalogy, an influencer marketing firm that delivers premium content across social media channels for CPG brands. The acquisition enhances the Company’s performance media solutions for CPGs and retailers, adding social media expertise and a roster of influencers.

The total preliminary acquisition consideration of $36.4 million consisted of $21.8 million in cash and contingent consideration of up to $30.0 million payable in all cash with an estimated fair value of $14.6 million as of the acquisition date. The contingent consideration payout is based on Ahalogy achieving certain financial metrics between closing through December 31, 2019. At the date of acquisition, the contingent consideration’s fair value was determined by using an option pricing model. The fair value of the contingent consideration is remeasured every reporting period. Refer to Note 3 for the fair value of contingent consideration at March 31, 2019.

The Elevaate, SavingStar and Ahalogy, transactions were each accounted for as a business combination. Accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date when control was obtained. The Company expensed all transaction costs in the period in which they were incurred. The Company acquired various intangible assets resulting from these acquisitions, such as, customer relationships, vendor relationships, developed technologies and trade names. The fair value of the customer relationships was determined by using a discounted cash flow model. The fair value of the vendor relationships was determined by using a cost approach. The fair value of developed technologies was determined by using the relief from royalty method or the with-and-without method. The fair value of trade names was determined by using the relief from royalty method. The excess of the consideration paid over the fair value of the net tangible assets and liabilities and identifiable intangible assets acquired is recorded as goodwill. The goodwill arising from the acquisitions are largely attributable to the synergies expected to be realized. None of the goodwill recorded from the acquisitions will be deductible for income tax purposes.

For each of these transactions,the fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to measure the fair value of identifiable intangible assets and obligations related to deferred revenue and contingent consideration. The estimated fair value of the identifiable assets acquired and liabilities assumed in the relevant acquisition is based on management’s best estimates. As the Company finalizes certain valuation assumptions, the provisional measurements of identifiable assets and liabilities, and the resulting goodwill related to these acquisitions are subject to change and the final purchase price accounting could be different from the amounts presented herein.

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The following table summarizes the preliminary acquisition consideration and the related fair values of the assets acquired and liabilities assumed (in thousands):

	Purchase Consideration		Net Tangible Assets Acquired/ (Liabilities Assumed)			Identifiable Intangible Assets		Goodwill		Goodwill Deductible for Taxes	(1) Acquisition Related Expenses
Elevaate	$	13,346	$	(60	)	$	3,781	$	9,625	NotDeductible	$	549
SavingStar	$	7,485	$	(1,126	)	$	2,577	$	6,034	Not Deductible	$	419
Ahalogy	$	36,432	$	2,196		$	11,580	$	22,656	Not Deductible	$	684
	$	57,263	$	1,010		$	17,938			Not Deductible	$	1,652

(1) Expensed as general and administrative

The following sets forth each component of identifiable intangible assets acquired in connection with the acquisitions (in thousands):

	Elevaate		Estimated Useful Life (in Years)		SavingStar		Estimated Useful Life (in Years)		Ahalogy		Estimated Useful Life (in Years)
Developed technologies	$	3,307		5.0	$	1,476		3.0	$	3,100		4.0
Customer relationships		379		5.0		1,040		3.0		6,210		6.0
Trade names		95		3.0		61		1.5		650		4.0
Vendor relationships		—		—		—		—		1,620		2.0
Total identifiable intangible    assets	$	3,781			$	2,577			$	11,580

7. Intangible Assets

The following table summarizes the gross carrying amount and accumulated amortization for the intangible assets (in thousands):  

	March 31, 2019
	Gross		Accumulated Amortization			Net		Weighted Average Amortization Period (Years)
Media service rights	$	34,684	$	(9,121	)	$	25,563		2.9
Promotion service rights		29,548		(7,987	)		21,561		4.8
Developed technologies		20,070		(9,440	)		10,630		3.0
Customer relationships		19,290		(9,974	)		9,316		4.4
Data access rights		10,801		(5,007	)		5,794		3.1
Domain names		5,948		(5,364	)		584		0.4
Trade names		2,573		(1,083	)		1,490		2.5
Vendor relationships		2,510		(1,564	)		946		1.2
Patents		975		(834	)		141		3.4
Registered users		420		(360	)		60		0.7
	$	126,819	$	(50,734	)	$	76,085		3.5

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	December 31, 2018
	Gross		Accumulated Amortization			Net		Weighted Average Amortization Period (Years)
Media service rights	$	34,476	$	(6,838	)	$	27,638		3.2
Promotion service rights		29,492		(7,248	)		22,244		5.1
Developed technologies		20,070		(8,353	)		11,717		3.2
Customer relationships		19,290		(9,145	)		10,145		4.5
Data access rights		10,801		(4,544	)		6,257		3.3
Domain names		5,948		(5,260	)		688		0.5
Trade names		2,573		(923	)		1,650		2.7
Vendor relationships		2,510		(1,364	)		1,146		1.4
Patents		975		(821	)		154		3.6
Registered users		420		(335	)		85		1.0
	$	126,555	$	(44,831	)	$	81,724		3.7

As of March 31, 2019 and December 31, 2018, the Company has a domain name with a gross value of $0.4 million with an indefinite useful life that is not subject to amortization.

Intangible assets subject to amortization are amortized over their useful lives as shown in the table above. Amortization expense related to intangible assets subject to amortization was $5.9 million and $2.8 million during the three months ended March 31, 2019 and 2018, respectively.Estimated future amortization expense related to intangible assets as of March 31, 2019 is as follows (in thousands):   

	Total
2019, remaining nine months	$	17,285
2020		21,121
2021		15,206
2022		9,304
2023		4,949
2024 and beyond		812
Total estimated amortization expense	$	68,677

8. Debt Obligations

2018 Convertible Senior Notes

In November 2017, the Company issued and sold $200.0 million aggregate principal amount of 1.75% convertible senior notes due 2022 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, (the “notes”). The notes are unsecured obligations of the Company and bear interest at a fixed rate of 1.75% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2018. The total net proceeds from the debt offering, after deducting transaction costs, were approximately $193.8 million.  

The conversion rate for the notes is initially 57.6037 shares of the Company’s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $17.36 per share of common stock, subject to adjustment upon the occurrence of specified events.

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Holders of the notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding September 1, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the notes on each such trading day; (3) if the Company calls any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after September 1, 2022, holders may convert all or any portion of their notes at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. The Company intends to settle the principal amount of the notes with cash.

The Company may not redeem the notes prior to December 5, 2020. It may redeem for cash all or any portion of the notes, at its option, on or after December 5, 2020 if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than three trading days preceding the date on which it provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the notes.

If the Company undergoes a fundamental change prior to the maturity date, holders may require the Company to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

In accounting for the issuance of the notes, the Company separated the notes into liability and equity components. The carrying amount of the liability component of $149.3 million was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component of $50.7 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the notes. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the notes at an effective interest rate of 5.8%.

The Company allocated the total debt issuance costs incurred of $6.2 million to the liability and equity components of the notes in proportion to the respective values. Issuance costs attributable to the liability component of $4.6 million are being amortized to interest expense using the effective interest method over the contractual terms of the notes. Issuance costs attributable to the equity component of $1.6 million were netted with the equity component in additional paid-in capital.

The net carrying amount of the liability component of the notes recorded in convertible senior notes, net on the condensed consolidated balance sheets was as follows (in thousands):

	March 31,			March 31,
	2019			2018
Principal	$	200,000		$	200,000
Unamortized debt discount		(38,322	)		(47,435	)
Unamortized debt issuance costs		(3,402	)		(4,319	)
Net carrying amount of the liability component	$	158,276		$	148,246

The net carrying amount of the equity component of the notes recorded in additional paid-in capital on the condensed consolidated balance sheets was $49.1 million, net of debt issuance costs of $1.6 million as of March 31, 2019 and December 31, 2018.

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The following table sets forth the interest expense related to the notes recognized in interest expense on the condensed consolidated statements of operations (in thousands):

	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Contractual interest expense	$	875	$	875
Amortization of debt discount		2,328		2,197
Amortization of debt issuance costs		230		229
Total interest expense related to the Notes	$	3,433	$	3,301

9. Stock-based Compensation

2013 Equity Incentive Plan

In October 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”), which became effective in March 2014 and serves as the successor to the Company’s 2006 Stock Plan (the “2006 Plan”). Pursuant to the 2013 Plan, 4,000,000 shares of common stock were initially reserved for grant, plus (1) any shares that were reserved and available for issuance under the 2006 Plan at the time the 2013 Plan became effective, (2) any shares that become available upon forfeiture or repurchase by the Company under the 2006 Plan and (3) any shares added to the 2013 Plan pursuant to the next paragraph.

Under the 2013 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units (“RSUs”), performance shares and units to employees, directors and consultants. The shares available will be increased at the beginning of each year by the lesser of (i) 4% of outstanding common stock on the last day of the immediately preceding year, or (ii) such number determined by the Board of Directors and subject to additional restrictions relating to the maximum number of shares issuable pursuant to incentive stock options. Under the 2013 Plan, both the ISOs and NSOs are granted at a price per share not less than 100% of the fair market value on the effective date of the grant. The Board of Directors determines the vesting period for each option award on the grant date, and the options generally expire 10 years from the grant date or such shorter term as may be determined by the Board of Directors.

Stock Options

The fair value of each option was estimated using the Black-Scholes model on the date of grant for the periods presented using the following assumptions:

	Three Months Ended March 31,
	2019	2018
Expected life (in years)	6.02	6.02
Risk-free interest rate	2.66%	2.66%
Volatility	50%	50%
Dividend yield	—	—

The weighted-average grant-date fair value of options was $5.01 and $6.59 per share during the three months ended March 31, 2019 and 2018, respectively.

Restricted Stock Units and Performance-Based Restricted Stock Units

The fair value of RSUs equals the market value of the Company’s common stock on the date of the grant. The RSUs are excluded from issued and outstanding shares until they are vested.

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A summary of the Company’s stock option and RSU award activity under the 2013 Plan is as follows:

				RSUs Outstanding					Options Outstanding
	Shares Available for Grant			Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Balance as of December 31, 2018		6,497,353			4,904,161		$	12.48		6,622,006		$	12.12		5.96	$	9,987
Increase in shares authorized		3,799,808		—			—		—			—		—		—
Options granted		(1,317,926	)	—			—			1,317,926		$	9.96	—		—
Options exercised	—			—			—			(302,948	)	$	4.76	—		$	1,949
Options canceled or expired		57,287		—			—			(57,287	)	$	11.20	—		—
RSUs granted		(2,427,631	)		2,427,631		$	9.99	—			—		—		—
RSUs vested	—				(1,207,853	)	$	12.26	—			—		—		—
RSUs canceled or expired		248,484			(248,484	)	$	12.16	—			—		—		—
RSUs vested and withheld for    taxes		(458,337	)	—			—		—			—		—		—
Balance as of March 31, 2019		6,399,038			5,875,455		$	11.52		7,579,697		$	12.05		6.69	$	5,973
Vested and exercisable as of    March 31, 2019										4,878,570		$	12.58		5.41	$	5,639

The aggregate intrinsic value disclosed in the table above is based on the difference between the exercise price of the options and the fair value of the Company’s common stock.

The aggregate total fair value of options vested was $1.3 million and $2.4 million during the three months ended March 31, 2019 and 2018, respectively.

Employee Stock Purchase Plan

The Company’s Board of Directors adopted the 2013 Employee Stock Purchase Plan (“ESPP”), which became effective in March 2014. Eligible employees can enroll and elect to contribute up to 15% of their base compensation through payroll withholdings in each offering period which is six months in duration, subject to certain limitations.The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date.

The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions:

	Three Months Ended March 31,
	2019	2018
Expected life (in years)	0.50	0.50
Risk-free interest rate	2.50%	1.42%
Volatility	35%	40%
Dividend yield	—	—

As of March 31, 2019, a total of 1,149,287 shares of common stock were issued under the ESPP since inception of the plan. As of March 31, 2019, a total of 2,050,713 shares are available for issuance under the ESPP.

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Stock-based Compensation Expense

The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs and ESPP included in the Company’s condensed consolidated statements of operations (in thousands):

	Three Months Ended March 31,
	2019		2018
Cost of revenues	$	602	$	540
Sales and marketing		1,738		1,600
Research and development		1,366		1,827
General and administrative		4,342		3,829
Total stock-based compensation expense	$	8,048	$	7,796

As of March 31, 2019, there was $76.6 million of unrecognized stock-based compensation expense, of which $14.9 million is related to stock options and ESPP shares and $61.7 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of March 31, 2019 will be amortized over a weighted-average period of 2.91 years. The total unrecognized stock-based compensation expense related to RSUs as of March 31, 2019 will be amortized over a weighted-average period of 2.93 years.

During the three months ended March 31, 2019 and 2018, the Company capitalized $0.1 million in each respective period of stock-based compensation expense in projects in process as part of property and equipment, net on the accompanying condensed consolidated balance sheets.

10. Common Stock Repurchase Programs

The Board of Directors has approved programs for the Company to repurchase shares of its common stock. In April 2018, the Board of Directors authorized a one-year share repurchase program (“2018 Program”) for the Company to repurchase up to $100.0 million of its common stock from May 2018 through May 2019. During the three months ended March 31, 2019, the Company repurchased and retired 2,511,633 shares of its common stock for an aggregate of $25.2 million. As of March 31, 2019, $59.0 million remained available for repurchases under the 2018 Program.

Additionally, in April 2019, the Company’s Board of Directors authorized a one-year share repurchase program (“2019 Program”) for the Company to repurchase up to $60.0 million of its common stock from May 2019 through May 2020. The 2019 Program will commence after the termination of the 2018 Program. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2019 Program at any time without prior notice.

11. Income Taxes

The Company recorded a provision for income taxes of $26 thousand and $0.1 million during the three months ended March 31, 2019 and 2018, respectively. The provision for income taxes for the three months ended March 31, 2019 and 2018 was primarily attributable to the Company’s foreign operations.

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12. Net Loss Per Share

The computation of the Company’s basic and diluted net loss per share is as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2019			2018
Net loss	$	(13,228	)	$	(11,357	)
Weighted-average number of common shares used in    computing net loss per share, basic and diluted		94,263			92,711
Net loss per share, basic and diluted	$	(0.14	)	$	(0.12	)

The outstanding common equivalent shares excluded from the computation of the diluted net loss per share for the periods presented because including them would have been antidilutive are as follows (in thousands):

	Three Months Ended March 31,
	2019		2018
Stock options and ESPP		7,705		8,071
Restricted stock units		5,875		5,715
Shares held in escrow		—		1,000
Shares related to convertible senior notes		11,521		11,521
		25,101		26,307

13. Leases

The Company has entered into operating leases primarily for office facilities. These leases have terms which typically range from 1 year to 5 years, and often include options to renew. These renewal terms can extend the lease term up to 6 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. Effective January 1, 2019, these operating leases are included as right-of-use assets in other assets on the condensed consolidated balance sheets, as a result of the adoption of the new leasing standard as discussed under Note 2 to the condensed consolidated financial statements, and represent the Company’s right to use the underlying asset for the lease term. The present value of the Company’s obligation to make lease payments are included in other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.

Based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized 1) right-of-use assets of $8.5 million, adjusted for deferred rent and lease incentives as of the adoption date, and 2) lease liabilities for operating leases of $11.5 million on January 1, 2019. Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term.

The Company has entered into short-term leases primarily for office facilities with an initial term of twelve months or less, and a professional sports team suite with a 20-year term, which it uses for sales and marketing purposes. The effective lease term for the professional sports team suite is based on the cumulative days available for use throughout the 20-year contractual term, which is less than twelve months and therefore is classified as a short-term lease. As of March 31, 2019, the Company’s lease commitment of $6.1 million, relating to the professional sports team suite, expires in 2034, and does not reflect short-term lease costs. These leases are not recorded on the Company's condensed consolidated balance sheet due to the accounting policy election as discussed under Note 2 to the condensed consolidated financial statements.

All operating lease expense is recognized on a straight-line basis over the lease term. During the three months ended March 31, 2019, the Company recognized $0.9 million in total lease costs, which is comprised of $0.8 million in operating lease costs for right-of-use assets and $0.1 million in short-term lease costs related to short-term operating leases.

Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The Company has certain contracts for office facilities which may

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contain lease and non-lease components which it has elected to be treated as a single lease component due to the accounting policy election as discussed under Note 2 to the condensed consolidated financial statements.

Supplemental cash flow information related to operating leases was as follows (in thousands):

	Three Months Ended March 31,
	2019
Cash paid for operating lease liabilities	$	1,348
Right-of-use assets obtained in exchange for lease obligations		12,955

Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate):

	Three Months Ended March 31,
	2019
Operating right-of-use assets reported as:
Other assets	$	7,400
Operating lease liabilities reported as:
Other current liabilities	$	4,362
Other non-current liabilities		7,412
Total operating lease liabilities	$	11,774
Weighted average remaining lease term (in years)		3.7
Weighted average discount rate		7.9	%

Maturities of operating lease liabilities were as follows (in thousands):

	Operating Leases
2019, remaining 9 months	$	4,170
2020		3,536
2021		1,884
2022		1,572
2023		1,551
2024 and thereafter		909
Total lease payments	$	13,622
Less: Imputed Interest		(1,848	)
Total	$	11,774

14. Commitments and Contingencies

Purchase Obligations

The Company has unconditional purchase commitments, primarily related to software license fees and marketing services, of $10.5 million as of March 31, 2019.

Promissory Note

In January 2017, the Company entered into a promissory note agreement with a lender to finance the purchase of computer equipment for $0.8 million to be paid in quarterly installments over three years. As of March 31, 2019, the Company had a remaining balance of $0.3 million under the agreement, which is included in other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.

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Indemnification

In the normal course of business, to facilitate transactions related to the Company’s operations, the Company indemnifies certain parties, including CPGs, advertising agencies, retailers and other third parties. The Company has agreed to hold certain parties harmless against losses arising from claims of intellectual property infringement or other liabilities relating to or arising from our products or services or other contractual infringement. The term of these indemnity provisions generally survive termination or expiration of the applicable agreement. To date, the Company has not recorded any liabilities related to these agreements.

Litigation

In the ordinary course of business, the Company may be involved in lawsuits, claims, investigations, and proceedings consisting of intellectual property, commercial, employment, and other matters. The Company records a provision for these claims when it is both probable that a liability has been incurred and the amount of the loss, or a range of the potential loss, can be reasonably estimated. These provisions are reviewed regularly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information or events pertaining to a particular case. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results, or financial condition.

The Company believes that liabilities associated with existing claims are remote, therefore the Company has not recorded any accrual for claims as of March 31, 2019 and December 31, 2018. The Company expenses legal fees in the period in which they are incurred.

15. Employee Benefit Plan

The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code. The 401(k) plan provides retirement benefits for eligible employees. Eligible employees may elect to contribute to the 401(k) plan. The Company provides a match of up to the lesser of 3% of each employee’s annual salary or $6,000, which vests immediately for employees with tenure of over a year. Previously, the Company’s 401(k) plan contributions vest over four years after continuous employment. The Company’s matching contribution expense was $0.7 million and $0.6 million during the three months ended March 31, 2019 and 2018, respectively.

16. Information About Geographic Areas

Revenues generated outside of the United States were insignificant for all periods presented. Additionally, as the Company’s assets are primarily located in the United States, information regarding geographical location is not presented, as such amounts are immaterial to these condensed consolidated financial statements taken as a whole.

17. Subsequent Events

In April 2019, the Company’s Board of Directors authorized the 2019 Program for the Company to repurchase up to $60.0 million of its common stock from May 2019 through May 2020. The 2019 Program will commence after the termination of the 2018 Program. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2019 Program at any time without prior notice.

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Item 2. 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 the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K filed on February 27, 2019 with the SEC. In addition to historical financial information, the following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934. The forward looking statements reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences are described in “Risk Factors” set forth in our Annual Report on Form 10-K and elsewhere in this Quarterly Report on Form 10-Q.

Overview

Quotient Technology Inc. is an industry leading digital marketing company, providing technology and services that power integrated digital promotions and media programs for consumer packaged goods (“CPG”s) brands and retailers. These programs are delivered across our network, including our flagship consumer brand Coupons.com and our retail partners’ properties. This network provides Quotient with proprietary and licensed data, including online behavior, purchase intent, and retailers’ in-store point-of-sale (“POS”) shopper data, to target shoppers with the most relevant digital coupons and ads. Customers and partners use Quotient to influence shoppers via digital channels, integrate marketing and merchandising programs, and leverage shopper data and insights to drive measurable sales results.

For our retail partners, we provide a digital platform, Retailer iQ, to directly engage with shoppers across their websites, mobile, e-commerce, and social channels. This platform is generally co-branded or white-labeled through retailers’ savings or loyalty programs and uses shopper data to deliver relevant digital promotions from brand marketers and retailers to shoppers.

Our network is made up of three constituencies: over 2,000 brands from approximately 700 CPGs; retail partners across multiple classes of trade such as grocery retailers, drug, dollar, club, and mass merchandise channels; and consumers visiting our web, mobile properties, social channels, as well as those of our CPGs, retailers, and publishing partners.

We primarily generate revenue by providing digital coupons and media solutions to our customers and partners.

We generate revenue from promotions, in which CPGs pay us to deliver coupons to consumers through our network of publishers and retail partners. Each time a consumer activates a digital coupon on our platform or in some cases redeems a digital coupon, we are generally paid a fee. Activation of a digital coupon can include: saving it to a retailer loyalty account or printing it for physical redemption at a retailer.

As our business evolves, we will continue to offer new integrated solutions and pricing with CPGs and retailers, which may impact how we monetize transactions. For example, we offer results-based pricing, a la carte, and/or integrated solutions.

Promotion revenues also include our Specialty Retail business, in which specialty stores including clothing, electronics, home improvement and many others offer coupon codes that we distribute. Each time a consumer makes a purchase using a coupon code, a transaction occurs and a distribution fee is generally paid to us.

We also generate revenues from digital media in which CPGs, retailers, and advertising agencies, use our platform to deliver digital advertising. Using our proprietary data and shopper data from our retail partners, we target audiences with digital ad campaigns. These ads are delivered to shoppers through our network, including our websites and mobile apps, as well as those of our publishers, retailers and other third parties. Campaigns are measured based on optimization and performance, attributing digital ad campaigns to in-store purchases in near real time. In 2018, we acquired Ahalogy, an influencer marketing platform, and Elevaate, a sponsored search technology platform for our retail partners and CPG customers. Our media solutions, including the solutions we acquired from Ahalogy and Elevaate, help serve our customers and partners’ needs as they shift more of their marketing dollars to digital.

We generally pay a distribution fee to retailers and publishers for activation or redemption of a digital promotion, for media campaigns, and for use of data for targeting or measurement. We also pay a fee to third-party publishers for traffic acquisition, which consists of delivering campaigns on certain networks or sites. These distribution and third-party service fees are included in our cost of revenues. See Management’s Discussion and Analysis of Financial Condition and Results of Operations – “Non-GAAP Financial Measure and Key Operating Metrics” for more information.

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Seasonality

Some of the Company’s products experience seasonal sales and buying patterns mirroring those in the CPG, retail, advertising, media and e-commerce markets, including back-to-school and holiday campaigns, where demand increases during the second half of the Company’s fiscal year. Seasonality may also be affected by CPG annual budget cycles, as some large CPGs have fiscal years ending in June. We believe that this seasonality pattern has affected, and will continue to affect, our business and the associated revenues during the first half and second half of our fiscal year. We recognized 54%, 54% and 52% of our annual revenue during the second half of 2018, 2017 and 2016, respectively.

First Quarter 2019 Overview

Quarterly revenues of $98.1 million in the first quarter of 2019 increased by $11.3 million, or 13%, as compared to the same period in 2018. The year over year increase in our quarterly revenues primarily related to an increase in media revenue, including incremental revenue related to the acquisition of Ahalogy that occurred in the second quarter of 2018.

Our net loss of $13.2 million in the first quarter of 2019 increased by $1.9 million, as compared to the net loss of $11.4 million in the same period in 2018. The increase in our net loss in the first quarter of 2019, as compared to the same period in 2018, was primarily the result of a decrease in margins primarily due to the shift in our product mix, as revenues from media, as a percentage of revenue, continue to increase as compared to promotion revenue (such media revenues have higher data and traffic acquisition costs related to offsite media on non-owned-and-operated properties), as well as an increase in distribution fees paid to our partners for promotions and media revenues delivered through their platform, and an increase in amortization expense related to acquired intangible assets including certain exclusivity rights acquired under strategic partnerships, partially offset by the benefit of not remeasuring the fair value of escrowed shares during the first quarter of 2019 since the contingencies have been met and the shares have been released. While we continue to make important investments in our technology and infrastructure, we remain focused on operational efficiencies and expense management.

Our operating expenses may increase in the future as we continue to (1) invest in (i) research and development to enhance our platform and investments in newer product offerings; (ii) sales and marketing to acquire new CPG and retailer customers and increase revenues from our existing customers; and; (iii) corporate infrastructure; (2) amortize expenses related to intangibles assets associated with acquisitions and other strategic acquisitions and partnerships; and (3) remeasure contingent consideration related to acquisitions.

Non-GAAP Financial Measure and Key Operating Metrics

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), a non-GAAP financial measure, is a key metric used by our management and our Board of Directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, to develop short and long-term operational plans, and to determine bonus payouts. In particular, we believe that the exclusion of certain income and expenses in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Additionally, Adjusted EBITDA is a key financial metric used by the compensation committee of our Board of Directors in connection with the determination of compensation for our executive officers. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and Board of Directors.

Adjusted EBITDA excludes non-cash charges, such as depreciation, amortization and stock-based compensation, because such non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations and can vary significantly between periods. Additionally, it excludes the effects of interest expense, income taxes, other (income) expense net, change in fair value of escrowed shares and contingent consideration, net, charges related to Enterprise Resource Planning (“ERP”) software implementation costs, certain acquisition related costs and restructuring charges. We exclude certain items because we believe that these costs (benefits) do not reflect expected future operating expenses. Additionally, certain items are inconsistent in amounts and frequency, making it difficult to contribute to a meaningful evaluation of our current or past operating performance.

We define a “transaction” as any action that generates revenue, directly or indirectly, including per item transaction fees, such as, coupon activation fees and coupon redemption fees, volume-based fixed fees and revenue sharing. Transactions continue to exclude retailer offers that generate no direct revenue. Transactions indirectly generate revenue when the action is not paid for on a per item basis, but is part of an agreement which generates revenue for offer services; for example, transactions after a fixed fee cap has been reached would be included in our definition. This definition of transaction does not impact the number of transactions reported in prior filings. The number of transactions on our platform has historically been an important indicator of our ability to grow our revenues, however, as our business continues to evolve with the shift to digital paperless and various pricing models, we believe transaction volume on our platform is no longer a predictive indicator of future operating performance.

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We plan to discontinue providing the number of transactions after the first quarter of 2019, as it no longer is indicative of the health of the business.

Net loss, Adjusted EBITDA and number of transactions for each of the periods presented were as follows (in thousands):

	Three Months Ended March 31,
	2019			2018
Net loss	$	(13,228	)	$	(11,357	)
Adjusted EBITDA		8,360			11,880
Transactions		944,849			1,027,297

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

• Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

• Adjusted EBITDA does not reflect interest and tax payments that may represent a reduction in cash available to us;

• Adjusted EBITDA also does not include the effects of stock-based compensation, amortization of acquired intangible assets, charges related to ERP software implementation costs, net change in fair value of escrowed shares and contingent consideration, interest expense, other (income) expense, net, provision for income taxes, certain acquisition related costs and restructuring charges; and

• other companies, including companies in our industry, may calculate Adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

A reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure, for each of the periods presented is as follows (in thousands):

	Three Months Ended March 31,
	2019			2018
Net loss	$	(13,228	)	$	(11,357	)
Adjustments:
Stock-based compensation		8,048			7,796
Depreciation, amortization and other(1)		8,544			5,619
Change in fair value of escrowed shares and contingent consideration, net		3,062			7,350
Interest expense		3,439			3,308
Other (income) expense, net		(1,531	)		(938	)
Provision for income taxes		26			102
Total adjustments	$	21,588		$	23,237
Adjusted EBITDA	$	8,360		$	11,880

(1) For the three months ended March 31, 2019, Other includes certain acquisition related costs of $0.8 million. For the three months ended March 31, 2018, Other includes ERP software implementation costs related to service agreements of $0.05 million and restructuring charges of $1.2 million. Acquisition related costs primarily include certain bonuses contingent upon the acquired company meeting certain financial metrics over the contingent consideration period, and diligence, accounting, and legal expenses incurred related to certain acquisitions. Restructuring charges relate to severance for impacted employees.

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This non-GAAP financial measure is not intended to be considered in isolation from, as substitute for, or as superior to, the corresponding financial measure prepared in accordance with GAAP. Because of these and other limitations, Adjusted EBITDA should be considered along with GAAP based financial performance measures, including various cash flow metrics, net loss, and our other GAAP financial results.

Factors Affecting Our Performance

Obtaining high quality coupons and increasing the number of CPG-authorized activations.   Our ability to grow revenue will depend upon our ability to shift more dollars to our platform from our CPG customers, continue to obtain high quality coupons and increase the number of CPG-authorized activations available through our platform. If we are unable to do any of these, growth in our revenue will be adversely affected.

Increasing revenue from CPGs on our platform.    Our ability to grow our revenue in the future depends upon our ability to continue to increase revenues from existing and new CPGs on our platform through national brand coupons, targeted media and measurement, trade promotions, and increasing the number of brands that are using our platform within each CPG.

Variability in promotional spend by CPGs.    Our revenues may fluctuate due to changes in promotional spending budgets of CPGs and retailers and the timing of their promotional spending. Decisions by major CPGs or retailers to delay or reduce their promotional and media spending, move campaigns, or divert spending away from digital promotions or media could slow our revenue growth or reduce our revenues.

Ability to scale Retail Performance Media and further integrate with Retailers.    Our ability to grow our revenues will depend upon our ability to continue to successfully implement and scale Retailer iQ and Retail Performance Media among retailers. If we are unable to continue to successfully maintain our Retailer iQ and Retail Performance Media partners, or if our retail partners do not provide sufficient support to our platforms, the growth in our revenues will be adversely affected. Our ability to grow our revenue in the future is also dependent upon our ability to further integrate digital promotions and media into retailers’ loyalty or POS systems and other channels so that CPGs and retailers can more effectively engage consumers and drive their own sales.

Growth of our consumer selection and digital offerings.    Our ability to grow our revenue in the future will depend on our ability to innovate and invest in promotion and media solutions, including Retailer iQ, Retailer Performance Media, sponsored search, mobile solutions for consumers, including digital print, mobile solutions and digital promotion offerings for specialty/franchise retail together with cash-back offers, leverage our reach to consumers and the strength of our platform to broaden the selection and consumers use of digital coupons as well as targeted printed offers at checkout, manage the transition from digital print coupons to digital paperless coupons as well as the transition from desktop to mobile platforms, and invest in solutions around our data and analytic capabilities, referred to as Quotient Analytics Cloud and Quotient Audience Cloud, for CPGs and retailers.

International Growth and Acquisitions.   Our ability to grow our revenues will also depend on our ability to grow our operations and offerings in existing international markets and expand our business through selective acquisitions, similar to our acquisitions of Ahalogy, Crisp, Elevaate, SavingStar, and Shopmium and their integration with the core business of the Company.

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Results of Operations

The following tables set forth our consolidated results of operations and our consolidated results of operations as a percentage of revenues for the periods presented:  

	Three Months Ended March 31,
(in thousands, except percentages)	2019					2018
Revenues	$	98,107		100.0	%	$	86,766		100.0	%
Costs and expenses:
Cost of revenues		56,823		57.9	%		40,453		46.6	%
Sales and marketing		25,523		26.0	%		23,830		27.5	%
Research and development		10,370		10.6	%		12,626		14.6	%
General and administrative		13,623		13.9	%		11,392		13.1	%
Change in fair value of escrowed shares and contingent    consideration, net		3,062		3.1	%		7,350		8.5	%
Total cost and expenses		109,401		111.5	%		95,651		110.2	%
Loss from operations		(11,294	)	(11.5	)%		(8,885	)	(10.2	)%
Interest expense		(3,439	)	(3.5	)%		(3,308	)	(3.8	)%
Other income (expense), net		1,531		1.6	%		938		1.1	%
Loss before income taxes		(13,202	)	(13.4	)%		(11,255	)	(12.9	)%
Provision for income taxes		26		—	%		102		0.1	%
Net loss	$	(13,228	)	(13.4	)%	$	(11,357	)	(13.0	)%

Disaggregated Revenue

The following table presents our revenues disaggregated by type of services. The majority of our revenue is generated from sales in the United States.

	Three Months Ended March 31,
(in thousands, except percentages)	2019		2018		$ Change			% Change
Promotion	$	63,567	$	63,783	$	(216	)		0	%
Media		34,540		22,983		11,557			50	%
Total Revenue	$	98,107	$	86,766	$	11,341			13	%

Comparison of the Three Months Ended March 31, 2019 and 2018

Revenues

	Three Months Ended March 31,
(in thousands, except percentages)	2019		2018		$ Change		% Change
Revenues	$	98,107	$	86,766	$	11,341		13	%

Revenues for the three months ended March 31, 2019 increased by $11.3 million, or 13%, as compared to the same period in 2018. The increase was primarily due to growth in media revenue, including incremental revenue related to our acquisition of Ahalogy in the second quarter of 2018. Revenues from digital promotion transactions and digital media campaigns were 65% and 35%, respectively, of total revenues for the three months ended March 31, 2019, as compared to 74% and 26%, respectively, of total revenues during the same period in 2018. Transactions during the three months ended March 31, 2019 were approximately 0.9 billion, as compared to 1.0 billion during the same period in 2018. 

We expect revenue growth in 2019 from increased media revenues as well as promotion revenues with anticipated marketing campaigns as well as adoption of our platform by consumers.

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Cost of Revenues and Gross Profit

	Three Months Ended March 31,
(in thousands, except percentages)	2019			2018			$ Change			% Change
Cost of revenues	$	56,823		$	40,453		$	16,370			40	%
Gross profit	$	41,284		$	46,313		$	(5,029	)		(11	)%
Gross margin		42	%		53	%

Cost of revenues for the three months ended March 31, 2019 increased by $16.4 million, or 40%, as compared to the same period in 2018. The increase was primarily due to an increase of $11.4 million in data and traffic acquisition costs for offsite media on non-owned-and-operated properties as well as an increase in distribution fees paid to our partners for promotions and media revenues delivered through their platform, an increase in amortization expense of $3.3 million related to acquired intangible assets as well as certain exclusivity rights acquired under strategic partnerships, an increase in overhead expenses related to facilities and infrastructure support of $1.2 million, and an increase in compensation costs, including stock-based compensation of $0.8 million, partially offset by a decrease in data center expenses of $0.2 million, and a decrease in restructuring charges of $0.1 million.

Gross margin for the three months ended March 31, 2019 decreased to 42%, as compared to 53% during the same periods in 2018, primarily due to the continued shift in our product mix as revenues from media, which have higher data and traffic acquisition costs related to offsite media, as a percentage of our total revenue, continue to increase compared to our promotion revenue. The decrease is also attributable to an increase in distribution fees paid to our partners for promotions and media revenues delivered through their platform and increase in amortization expense related to acquired intangible assets.

We expect the costs associated with distribution and third-party service fees to continue to increase in the future as we continue to expand and scale our distribution network and reach. We expect pressure on our gross margin as our growth strategy evolves and our product mix continues to change.

Sales and Marketing

	Three Months Ended March 31,
(in thousands, except percentages)	2019			2018			$ Change		% Change
Sales and marketing	$	25,523		$	23,830		$	1,693		7	%
Percent of revenues		26	%		27	%

Sales and marketing expenses consist primarily of compensation, including salaries and benefits, sales commissions and stock-based compensation provided to our sales and marketing personnel, as well as facility costs and other related overhead costs; marketing programs, amortization of acquired intangibles, and travel costs.

Sales and marketing expenses for the three months ended March 31, 2019 increased by $1.7 million, or 7%, as compared to the same period in 2018. The increase was primarily the result of an increase in compensation costs of $2.9 million from acquisitions and hiring additional employees to support our growth and business objectives, an increase in intangible asset amortization expense of $0.4 million related to our acquisitions, an increase in facilities expense of $0.3 million, partially offset by reduced spending in promotional and advertising costs of $1.3 millionresulting from our expense management efforts, and a decrease in restructuring charges of $0.6 million due to severance for impacted employees.

We expect to continue to invest in sales and marketing in order to support our growth and business objectives, while continuing to optimize our investment in promotional and advertising activities.

Research and Development

	Three Months Ended March 31,
(in thousands, except percentages)	2019			2018			$ Change			% Change
Research and development	$	10,370		$	12,626		$	(2,256	)		(18	)%
Percent of revenues		11	%		15	%

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Research and development expenses consist primarily of compensation, including salaries, bonuses, and benefits, and stock-based compensation provided to our engineering personnel, as well as facility costs and other related overhead costs; costs related to development of new products and the enhancement of existing products; and fees for design, testing, consulting, and other related services.

Research and development expenses for the three months ended March 31, 2019 decreased by $2.3 million, or 18%, as compared to the same period in 2018. The decrease was primarily due to a decrease in compensation costs of $1.4 million, a decrease in overhead expenses related to facilities and infrastructure support of $0.7 million, and a decrease in restructuring charges of $0.4 million primarily related to severance for the impacted employees, partially offset by an increase in capitalization of internal use software development costs of $0.2 million.

We believe that continued investment in technology is critical to attaining our strategic objectives. We intend to balance our investment in research and development with our continued operational and cost optimization efforts, as it provides us with the ability to invest in strategic areas, while managing growth in future periods. We expect to incur additional research and development expenses in future periods to expand our tools and products that will enable our business to scale and provide more offerings to our customers, and as we invest in a technology solution to comply with the upcoming California Consumer Privacy Act, which is effective January 1, 2020.

General and Administrative

	Three Months Ended March 31,
(in thousands, except percentages)	2019			2018			$ Change		% Change
General and administrative	$	13,623		$	11,392		$	2,231		20	%
Percent of revenues		14	%		13	%

General and administrative expenses consist primarily of compensation, including salaries, bonuses, and benefits, and stock-based compensation provided to our executives, finance, legal, human resource and administrative personnel, as well as facility costs and other related overhead costs; fees paid for professional services, including legal, tax, accounting services, and other related services.

General and administrative expenses for the three months ended March 31, 2019 increased by $2.2 million, or 20%, as compared to the same period in 2018. The increase was primarily due to an increase in compensation costs of $1.3 million from acquisitions and hiring additional employees to support our growth and business objectives, an increase in acquisition related charges of $0.8 million, and an increase in professional service fees of $0.2 million, partially offset by a decrease in restructuring charges of $0.1 million primarily related to severance for the impacted employees.

We expect to continue to incur additional general and administrative expenses in future periods as we continue to invest in corporate infrastructure and incur additional legal and compliance costs associated with the upcoming California Consumer Privacy Act, which is effective January 1, 2020.

Change in Fair Value of Escrowed Shares and Contingent Consideration

	Three Months Ended March 31,
(in thousands, except percentages)	2019			2018			$ Change			% Change
Change in fair value of escrowed shares and contingent    consideration, net	$	3,062		$	7,350		$	(4,288	)		(58	)%
Percent of revenues		3	%		8	%

During the three months ended March 31, 2019, we recorded a charge of $3.1 million in total related to the remeasurement of Ahalogy and Elevaate contingent consideration due to the increase in expected achievement of certain financial metrics over the contingent consideration period.

During the three months ended March 31, 2018, we recorded an expense of $7.4 million, consisting of $1.4 million due to the increase in fair value of certain escrowed shares resulting from the increase in the Company’s stock price and $6.0 million due to the change in fair value of Crisp contingent consideration.

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As of December 31, 2018, the contingencies for releasing the remaining installment of 1,000,000 shares held in escrow were met. Accordingly, the remeasurement period ended at that time. During the first quarter of 2019, the remaining shares were released from escrow.

Interest Expense and Other Income (Expense), Net

	Three Months Ended March 31,
(in thousands, except percentages)	2019			2018			$ Change			% Change
Interest expense	$	(3,439	)	$	(3,308	)		(131	)		4	%
Other income (expense), net		1,531			938			593			63	%
	$	(1,908	)	$	(2,370	)	$	462			(19	)%

Interest expense is primarily related to the convertible senior notes, promissory note and finance lease obligations. 

Other income (expense), net consists primarily of interest income on short-term certificate of deposits and U.S. Treasury Bills held as cash equivalents. The increase in other income (expense), net during the three months ended March 31, 2019, as compared to the same period in 2018, was due to interest income earned on short-term certificate of deposits and U.S. Treasury Bills held as cash equivalents, net of the effect of re-measuring balances in foreign currency due to exchange rate fluctuations.

Provision for Income Taxes

	Three Months Ended March 31,
(in thousands, except percentages)	2019		2018		$ Change			% Change
Provision for income taxes	$	26	$	102	$	(76	)		(75	)%

The provision for income taxes of $26 thousand and $0.1 million for the three months ended March 31, 2019 and 2018, respectively, was primarily attributable to our foreign operations.

Liquidity and Capital Resources

We have financed our operations and capital expenditures through the issuance of common stock and convertible senior notes, and cash flows obtained through the exercise of stock options and from operations. As of March 31, 2019, we had $286.5 million in cash and cash equivalents which were held for working capital purposes. Our cash equivalents are comprised primarily of money market funds and U.S. Treasury Bills.

In the near term, although we intend to continue to manage our operating expenses in line with our existing cash and available financial resources, we anticipate we will incur increased spending in future periods in order to execute our long-term business plan and to support our growth to fund our operating expenses. We have incurred and expect to continue to incur legal, accounting, regulatory compliance and other costs in future periods as we continue to invest in corporate infrastructure. In addition, we may use cash to fund acquisitions or invest in other businesses, repurchase the Company’s common stock under the publicly announced share repurchase program or incur capital expenditures including leasehold improvements or technologies.

Our Board of Directors has approved programs for us to repurchase shares of our common stock. In April 2018, our Board of Directors authorized a one-year share repurchase program (“2018 Program”) for us to repurchase up to $100.0 million of our common stock from May 2018 through May 2019. During the three months ended March 31, 2019, the Company had repurchased and retired 2,511,633 shares of our common stock for an aggregate of $25.2 million. As of March 31, 2019, $59.0 million remained available for repurchases under the 2018 Program.

Additionally, in April 2019, our Board of Directors authorized the 2019 Program for the Company to repurchase up to $60.0 million of our common stock from May 2019 through May 2020. The 2019 Program will commence after the termination of the 2018 Program. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2019 Program at any time without prior notice.

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We believe our existing cash, cash equivalents and cash flow from operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months following the date that this quarterly report on Form 10-Q is filed and into the foreseeable future. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all.

Cash Flows

The following table summarizes our cash flows for the periods presented (in thousands):

	Three Months Ended March 31,
	2019			2018
Net cash provided by (used in) operating activities	$	9,718		$	(6,253	)
Net cash provided by investing activities		4,133			7,316
Net cash used in financing activities		(29,419	)		(5,264	)
Effects of exchange rates on cash		(2	)		13
Net decrease in cash and cash equivalents	$	(15,570	)	$	(4,188	)

Operating Activities

Cash from operating activities has typically been due to our net income or loss for the period adjusted for net non-cash income or expenses and changes in our operating assets and liabilities.

During the three months ended March 31, 2019, net cash provided by operating activities of $9.7 million reflects our net loss of $13.2 million, adjusted for net non-cash expenses of $21.5 million, and cash provided as a result of changes in working capital of $1.4 million. Non-cash expenses included stock-based compensation, depreciation and amortization, change in fair value of contingent consideration, amortization of debt discount and issuance costs, deferred income taxes, allowance for doubtful accounts, and loss on disposal of property and equipment. The sources of cash from working capital items included an increase in accounts payable and other current liabilities of $2.4 million due to timing of services and payments, a decrease in accounts receivable of $3.7 million due to collection efforts, and an increase in deferred revenues of $1.1 million, partially offset by an increase in prepaid expenses and other current assets of $0.8 million related to prepaid subscription and support fees and decrease in accrued compensation and benefits of $5.0 million related to the payout of the annual bonuses.

During the three months ended March 31, 2018, net cash used in operating activities of $6.3 million reflects our net loss of $11.4 million, adjusted for net non-cash expenses of $22.2 million, and cash provided as a result of changes in working capital of $17.1 million. Non-cash expenses included stock-based compensation, change in fair value of escrowed shares and contingent consideration, net, depreciation and amortization, amortization of debt discount and issuance costs, deferred income taxes, allowance for doubtful accounts, and loss on disposal of property and equipment. The uses of cash from working capital items included a decrease in accrued compensation and benefits of $5.9 million related to the payout of the annual bonuses, a decrease in accounts payable and other current liabilities of $5.8 million due to the timing of services and payments, an increase in accounts receivable of $4.4 million, and an increase in prepaid expenses and other current assets of $1.6 million, partially offset by an increase in deferred revenues of $0.6 million.

Investing Activities

Purchases of property and equipment may vary from period-to-period due to the timing of the expansion of our operations, the addition of headcount and the development activities related to our future offerings. We expect to continue to invest in property and equipment and in the further development and enhancement of our software platform for the foreseeable future. In addition, from time to time, we may consider potential acquisitions that would complement our existing service offerings, enhance our technical capabilities or expand our marketing and sales presence. Any future transaction of this nature could require potentially significant amounts of capital or could require us to issue our stock and dilute existing stockholders.

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During the threemonths ended March 31, 2019, net cash provided by investing activities of $4.1 million reflects proceeds from maturities of certificates of deposits of $20.7 million, partially offset by cash payments to acquire certain exclusive rights pursuant to strategic partnership agreements of $14.6 million that were acquired during 2018, and purchases of property and equipment of $2.0 million, which includes capitalized software development costs, and technology hardware and software to support our growth.

During the three months ended March 31, 2018, net cash provided by investing activities of $7.3 million primarily reflects the proceeds from maturities of certificates of deposits of $34.7 million, partially offset by purchases of certificates of deposits of $25.7 million, and purchases of property and equipment of $1.7 million.

Financing Activities

Our financing activities consisted primarily of repurchases of common stock, payments made for shares withheld to cover payroll withholding taxes and the issuance of shares of common stock upon the exercise of stock options.

During the three months ended March 31, 2019, net cash used in financing activities of $29.4 million reflects repurchases of common stock of $26.1 million, payments made for shares withheld to cover payroll withholding taxes of $4.6 million, and payments on promissory note and capital lease obligations of $0.1 million, partially offset by proceeds received from exercises of stock options under equity incentive plans and ESPP, net of $1.4 million.

During the three months ended March 31, 2018, net cash used in financing activities of $5.3 million primarily relates to payments made for shares withheld to cover payroll withholding taxes of $6.9 million and payments on promissory notes and capital lease obligations of $0.1 million, partially offset by proceeds received from exercises of stock options under equity incentive plans, net of $1.7 million.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of March 31, 2019.

Contractual Obligations and Commitments

Refer to Note 14 of our notes to condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for further information. There have been no significant changes outside the ordinary course of business during the three months ended March 31, 2019 to our commitments and contingencies disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 27, 2019 with the SEC.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

There were no significant changes in our critical accounting policies and estimates during the three months ended March 31, 2019, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 27, 2019 with the SEC, except for adopting ASU 2016-02 on January 1, 2019,utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first quarter of 2019, resulted in the recognition of 1) right-of-use assets of $8.5 million, adjusted for deferred rent and lease incentives as of the adoption date, and 2) lease liabilities for operating leases of $11.5 million. Refer to Note 2 for further details related to the adoption of Topic 842.

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Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in our condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, revenue recognition, collectability of accounts receivable, coupon code sales return reserve, valuation of assets acquired and liabilities assumed in a business combination, useful lives of intangible assets and property and equipment, estimates related to recovery of long-lived assets and goodwill, stock-based compensation, measurement of contingent consideration, restructuring accruals, classification of current and non-current deferred revenue, debt discounts, and income taxes deferred income tax assets and associated valuation allowances. These estimates generally require judgments, may involve the analysis of historical and prediction of future trends, and are subject to change from period to period. Actual results may differ from the Company’s estimates, and such differences may be material to the accompanying condensed consolidated financial statements.

Recently Issued and Adopted Accounting Pronouncements

Refer to Note 2 of the Notes to Condensed Consolidated Financial Statements contained in this Form 10-Q for further information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

During the three months ended March 31, 2019, there were no significant changes to our quantitative and qualitative disclosures about market risk. Please refer to Quantitative and Qualitative Disclosures About Market Risk included in our Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 27, 2019 with the SEC for a more complete discussion on the market risks we encounter.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our chief executive officer (“CEO”) and our chief financial officer (“CFO”), after evaluating the effectiveness of our “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of March 31, 2019, have concluded that our disclosure controls and procedures were effective at the reasonable assurance level and are effective to provide reasonable assurances that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, during the first quarter of 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our disclosure controls and procedures or our internal controls are not designed to prevent all errors and all frauds. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

For a discussion of legal proceedings, see Note 14, “Commitments and Contingencies,” of the Notes to Condensed Consolidated Financial Statements of this Form 10-Q.

Item 1A. Risk Factors.

Our operations and financial results are subject to various risks and uncertainties, including those described below, which could adversely affect our business, results of operations, cash flows, financial conditions, and the trading price of our common stock. The risks described below are not the only risk facing us. Risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially affect our business, financial condition, results of operations and prospects.

Risks Related to Our Business

We have incurred net losses since inception and we may not be able to generate sufficient revenues to achieve or subsequently maintain profitability.

We have incurred net losses of $28.3 million and $15.1 million in 2018 and 2017, respectively, and incurred net loss of $13.2 million for the three months ended March 31, 2019. We have an accumulated deficit of $342.4 million as of March 31, 2019. We anticipate that our costs and expenses will increase in the foreseeable future as we continue to invest in:

• sales and marketing;

• research and development, including new product development;

• our technology infrastructure;

• general administration, including legal and accounting expenses related to our growth and continued expenses;

• expanding into new markets; and

• strategic opportunities, including commercial relationships, retail partnerships and acquisitions.

For example, we have incurred and expect to continue to incur expenses developing, improving, integrating, investing, marketing and maintaining our Promotions, Media, Audience and Analytics Cloud platforms and solutions, which include Retailer iQ, Retail Performance Media, and Quotient Analytics, and we may not succeed in increasing our revenues sufficiently to offset these expenses. 

If we are unable to execute our growth strategy and gain efficiencies in our operating costs, our business could be adversely impacted. We cannot be certain that we will be able to attain or maintain profitability on a quarterly or annual basis. If we are unable to effectively manage these risks and difficulties as we encounter them, our business, financial condition and results of operations may suffer.

We may not achieve revenue growth.

We may not be able to achieve revenue growth, and we may not be able to generate sufficient revenues to achieve profitability. In addition, historically the growth rate of our business, and as a result, our revenue growth, has varied from quarter-to-quarter and year-to-year, and we expect that variability to continue. For example, some of our products experience seasonal sales and buying patterns mirroring those in the CPG, retail, and e-commerce markets, including back-to-school and holiday campaigns, where demand increases during the second half of our fiscal year. Our revenues may fluctuate due to changes in marketing budgets of CPGs and retailers and the timing of their marketing spend. Marketing spend by CPGs is considered the most flexible and easiest to cut at the end of a quarter or fiscal year if a CPG is facing budget pressures and as a result we are not always able to anticipate such fluctuations. Decisions by major CPGs or retailers to delay or reduce their digital promotion and media spending, or divert spending away from digital promotions, digital media campaigns, or other digital marketing from our platforms, or changes in our fee arrangements with CPGs, retailers and other commercial partners, could also slow our revenue growth or reduce our revenues.  

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As our business evolves, we will continue to offer new integrated solutions and pricing to CPGs and retailers, which may impact how we monetize transactions. For example, we offer results-based pricing, a la carte, and/or integrated solutions. If we shift a greater number of our arrangements with CPGs to these other models and we are not able to deliver on the results, our revenue growth and revenues could be harmed.

We believe that our continued revenue growth will depend on our ability to:

• increase our share of CPG marketing spend on promotions and media through our platforms and increase the number of brands that are using our platform within each CPG;

• adapt to changes in marketing budgets of CPGs and retailers and the timing of their marketing spend;

• successfully expand our media solutions into new areas such as Retail Performance Media, media agency, influencer marketing, and sponsored search;

• maintain and expand our data rights with our retailer network;

• respond to changes in the legislative or regulatory environment, including with respect to privacy and data protection, or enforcement by government regulators, including fines, orders, or consent decrees;

• successfully execute and grow Retail Performance Media programs;

• successfully expand our promotions solutions into new areas such as targeted printed offers at checkout and loyalty rewards programs;

• successfully execute our digital promotions and digital media solutions into retailers’ in-store and point of sale systems and consumer channels;

• deploy, execute, and continue to develop Quotient Analytics and our data, measurement, and analytics solutions in support of our digital promotions and media solutions;

• launch new products as planned;  

• demonstrate the value of our digital promotions and media solutions through trusted measurement metrics;

• expand the use by consumers of our digital promotions and media offerings and broaden the selection and use of digital coupons, coupon codes and cash-back offers;

• successfully enter into new markets;

• successfully integrate our newly acquired companies into our business;

• grow and maintain our retailer network through direct and indirect commercial partnerships;

• manage the shift from desktop to mobile devices;

• manage the transition from digital print coupons to digital paperless coupons;

• innovate our product offerings to retain and grow our consumer base;

• expand the number, variety, quality, and relevance of digital coupons available on our web, mobile and social channels, as well as those of our CPGs, retailers and network of publishers;

• increase the awareness of our brands, and earn and build our reputation;

• hire, integrate, train and retain talented personnel;

• effectively manage scaling and international expansion of our operations; and

• successfully compete with existing and new competitors.

However, we cannot assure you that we will successfully accomplish any of these actions. Failure to do so could harm our business and cause our operating results to suffer.

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If we fail to attract and retain CPGs, retailers and publishers and expand our relationships with them, our revenues and business will be harmed.

The success of our business depends in part on our ability to increase our share of CPG marketing spend on our promotions and media solutions and on our platforms; increase the number of brands that use our solutions and platforms within each CPG; increase adoption and scale of Retailer iQ; and our ability to demonstrate the value of our solutions through measurement and data analytics. It also depends on (i) our ability to obtain, maintain, and expand data rights agreements with our retail partners, (ii) our ability to further integrate our platforms and promotions and media solutions into retailers’ in-store and point of sale systems and consumer channels, which depends in part on retailers’ commitment in modifying point of sale systems and other solutions to integrate with our platforms, (iii) our ability to obtain the right to distribute Retailer iQ digital promotions more broadly through our websites and mobile apps and those of our publishers, and (iv) our retail partners’ commitment in promoting our digital marketing solutions to their customers. If we do not create more value than available alternatives, or if CPGs and retailers do not find that offering digital promotions and media on our platforms enables them to reach consumers and sufficiently increase sales with the scale and effectiveness that is compelling to them, CPGs and retailers may not increase their distribution of digital promotions and media on our platforms, or they may decrease them or stop offering them altogether, and new CPGs and retailers may decide not to use our platforms.

For example, if CPGs decide that our platforms do not provide the right solutions for them to connect with consumers, we may not be able to increase our prices or CPGs may pay us less. Likewise, if retailers decide that our Promotions, Media, Audience and Analytics Cloud platforms and solutions are less effective at increasing sales to and loyalty of existing and new consumers, retailers may demand a higher percentage of the total proceeds from each digital campaign or demand minimum guaranteed payments. Furthermore, if retailers do not find that Retailer iQ increases consumer engagement and loyalty, our overall success may be harmed. In addition, we expect to face increased competition, and competitors may accept lower payments from CPGs to attract and acquire new CPGs, or provide retailers and publishers a higher distribution fee than we currently offer to attract and acquire new retailers and publishers. We may also experience attrition in our CPGs, retailers and publishers in the ordinary course of business resulting from several factors, including losses to competitors, changes in CPG budgets, and decisions by CPGs, retailers and publishers to offer digital coupons and media through their own websites or other channels without using a third-party platform such as ours or through a competitive third-party network or platform, and failure to maintain distribution agreements with third-party digital promotions networks and platforms. If we are unable to retain and expand our relationships with existing CPGs, retailers and publishers or if we fail to attract new CPGs, retailers and publishers to the extent sufficient to grow our business, or if too many CPGs, retailers and publishers are unwilling to offer digital coupons and media with compelling terms through our platforms, we may not increase the number of high quality coupons and marketing campaigns on our platform and our revenues, gross margin and operating results will be adversely affected.

The loss or decrease in spending of any significant customer could materially and adversely affect our results of operations and financial condition.

Our business is exposed to risks related to customer concentration, particularly among CPGs and retailers. The loss or decrease in spending of any of our significant customers or deterioration in our relations with any of them could materially and adversely affect our results of operations and financial condition.

If we are unable to grow or successfully respond to changes in the digital promotions market, our business could be harmed.

As consumer demand for digital coupons has increased, promotion spending has shifted from traditional coupons through traditional offline or analog channels, such as newspapers and direct mail, to digital coupons. However, it is difficult to predict whether the pace of transition from traditional to digital coupons will continue at the same rate and whether the growth of the digital promotions market will continue. Some large retailers do not yet use digital paperless coupons. If a retailer decides not to accept digital paperless coupons or a CPG reduces its spend in digital promotions, our business could be harmed. In order to expand our business, we must appeal to and attract consumers who historically have used traditional promotions to purchase goods or may prefer alternatives to our offerings, such as those of our competitors. If the demand for digital coupons does not continue to grow as we expect, or if we fail to successfully address this demand, our business will be harmed. For example, the growth of our revenues will require increasing the number of brands that are using our digital promotions solutions within each CPG. If our projections regarding the adoption and usage of Retailer iQ by retailers, CPGs and consumers, do not occur or are slower than expected, our business, financial condition, results of operations and prospects will be harmed. A variety of factors could slow the success of Retailer iQ generally, including insufficient time, resources or funds committed by retailers to the promotion of Retailer iQ, a retailer’s decision to forego marketing Retailer iQ, our inability to obtain sufficient data rights to maximize the

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functionality of our platforms and our inability to monetize enhanced Retailer iQ functionality, and our inability to efficiently integrate Retailer iQ with a retailer’s system. Even if we are successful in driving the adoption and usage of Retailer iQ by retailers, CPGs and consumers, if Retailer iQ fee arrangements or transaction volumes, or the mix of offers, change or do not meet our projections, our revenues may be harmed. We expect that the market will evolve in ways which may be difficult to predict. It is also possible that digital coupon offerings generally could lose favor with CPGs, retailers or consumers. In the event of these or any other changes to the market, our continued success will depend on our ability to successfully adjust our strategy to meet the changing market dynamics. In addition, we will need to continue to grow demand for our digital promotions platform by CPGs, retailers and consumers, including through continued innovation and implementation of new initiatives associated with the digital coupons. For example, if consumer demand for our software-free print solution, cash-back receipt scanning solution, or our mobile application does not grow as we expect, our business may be harmed. If we are unable to grow or successfully respond to changes in the digital promotions market, our business could be harmed and our results of operations could be negatively impacted. For example, we are seeing a shift from digital paper coupons to digital paperless coupons. Our revenues may be harmed if we are unable to manage this transition and the growth of digital paperless coupons is slower than the decline in digital print coupons. Conversely, acceleration of this shift (from, for example, acceptance of digital paperless coupons by new retailers) could lead to unanticipated increases in revenue.

We depend in part on data-rights agreements with our retail partners to power a range of products and the termination of such agreements or the failure to obtain additional data rights can severely impact our revenue and growth.

Our Promotions, Media, Audience and Analytics Cloud platforms and solutions, which include Retailer iQ and Quotient Analytics, are powered in part by data we obtain from our retail partners.  Our access to this data is governed by data-rights agreements with some of our retail partners.  These data-rights agreements have complex rules and are required to be renewed periodically.  If we fail to secure additional data rights or renew expiring data-rights agreements, if we are found to be in violation of any of our obligations under these agreements, or if retailers lose their data rights, we could lose access to retailer data.  Without retailer data, our Promotions, Media, Audience and Analytics Cloud platforms and solutions, which includes Retailer iQ and Quotient Analytics and our targeted promotions and media offerings, would be less valuable to our CPG customers, publishers, ad tech and retail partners. In addition, changes to international, federal, state, local and municipal laws, regulations and industry standards that relate to privacy, electronic communications, data protection, intellectual property, e-commerce, competition, price discrimination, consumer protection, taxation, and the use of promotions may require us to amend, or alter our practices under, our data rights agreements.  If we and our retail partners cannot respond timely to such legal and regulatory changes, or if retailers decide to limit or prohibit use of their data to comply with such changes our revenue and growth would be impaired.  See the risk factor below titled “Our business is subject to complex and evolving laws, regulations and industry standards, and unfavorable interpretations of, or changes in, or failure by us to comply with these laws, regulations and industry standards could substantially harm our business and results of operations.” for additional information.

Our ability to generate revenue depends on our collection and use of significant amounts of data from various sources, which may be restricted by consumer choice, restrictions imposed by retailers, publishers and browsers or other software developers, changes in technology, and new developments in laws, regulations and industry standards.

Our ability to deliver our Promotions, Media, Audience and Analytics Cloud platforms and solutions depends on our ability to successfully leverage data, including data that we collect from consumers, data we receive from retail partners and third parties, and data from our own operating history.  Using cookies, loyalty card numbers both on-line and in-store, device identifiers, and other tracking technologies, we collect information about the interactions of consumers with our retail partners’ digital properties and in-store, our own and operated properties, and certain other publisher sites. Our ability to successfully leverage such data depends on our continued ability to access and use such data, which can be restricted by a number of factors, including consumer choice, the success of our retail partners in obtaining consumer consent, restrictions imposed by our retail partners, publishers and web browser developers or other software developers, changes in technology, including changes in web browser technology, and new developments in, or new interpretations of laws, regulations and industry standards.

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Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanism as a result of industry regulatory and/or legal developments, the adoption by consumers of browsers settings or “ad-blocking” software and the development and deployment of new technologies could materially impact our ability to collect data or reduce our ability to deliver relevant promotions or media, which could materially impair the results of our operations. See the risk factor below titled “Our business is subject to complex and evolving laws, regulations and industry standards, and unfavorable interpretations of, or changes in, or failure by us to comply with these laws, regulations and industry standards could substantially harm our business and results of operations.” for additional information.

Unfavorable publicity and negative public perception about data collection and use could adversely affect our business and operating results.

With the growth of online advertising and e-commerce, there is increasing awareness and concern among the general public, privacy advocates, mainstream media, governmental bodies and others regarding marketing, advertising, and privacy matters, particularly as they relate to individual privacy interests. Any unfavorable publicity or negative public perception about our use of data or other data focused industries could affect our business and results of operations, and may lead digital publishers like Facebook to change their business practice, or trigger additional regulatory scrutiny or lawmaking that affects us. For example, in recent years, consumer advocates, mainstream media and elected officals have increasingly and publicly criticized data and marketing companies for their collection, storage and use of personal data. The negative public attention could cause CPGs or our retail partners to discontinue using our targeted advertising solutions. This public scrutiny may also lead to general distrust of data and marketing companies, consumer reluctance to share and permit use of personal data and increased consumer opt-out rates, any of which could negatively influence, change or reduce our current and prospective customers’ demand for our products and services and adversely affect our business and operating results.

We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.

Historically, our revenue growth has varied from quarter-to-quarter and year-to-year, and we expect that variability to continue. In addition, our operating costs and expenses have fluctuated in the past, and we anticipate that our costs and expenses will increase over time as we continue to invest in growing our business. Our operating results could vary significantly from quarter-to-quarter and year-to-year as a result of these and other factors, many of which are outside of our control, and as a result we have a limited ability to forecast the amount of future revenues and expenses, which may adversely affect our ability to predict financial results accurately, and we expect our operating results to vary from quarter-to-quarter, which may cause results to fall below our estimates or the expectations of public market analysts and investors. Fluctuations in our quarterly operating results may lead analysts to change their long-term models for valuing our common stock, cause us to face short-term liquidity issues, impact our ability to retain or attract key personnel or cause other unanticipated issues, all of which could cause our stock price and the trading price of the convertible senior notes to decline. As a result of the potential variations in our quarterly revenues and operating results, we believe that quarter-to-quarter comparisons of our revenues and operating results may not be meaningful and the results of any one quarter or historical patterns should not be considered indicative of our future sales activity, expenditure levels or performance.

In addition to other factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results include:

• our ability to grow our revenues by increasing our share of CPG spending and the number of brands using our platform, including Retailer iQ, increasing media spending on our platform, further integrating with our retailers, adding new CPGs and retailers to our network and growing our current consumer base and expanding into new industry segments such as convenience, specialty/franchise retail, restaurants and entertainment;

• our ability to grow our revenues will depend on CPGs’ annual marketing budgets which are affected by economic headwinds facing the CPG industry;

• our ability to successfully respond to changes in the digital promotions and media market and continue to grow the market and demand for our platform;

• our ability to grow consumer selection and use of our digital promotion offerings and attract new consumers to our platform;

• the amount and timing of digital promotions and marketing campaigns by CPGs, which are affected by budget cycles, economic conditions, seasonality and other factors;

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• the impact of global business or macroeconomic conditions, including the resulting effects on the level of coupon and trade promotion spending by CPGs and spending by consumers;

• the impact of competitors or competitive products and services, and our ability to compete in the digital promotions market;

• our ability to obtain and increase the number of high quality coupons;

• our ability to grow and maintain our relationships with retailers, including our ability to negotiate favorable data rights agreements with retailers;

• changes in consumer behavior with respect to digital promotions and how consumers access digital coupons and our ability to develop applications that are widely accepted and generate revenues for CPGs, retailers and us;

• the costs of investing, maintaining and enhancing our technology infrastructure;

• increased legal and compliance costs associated with data protection laws and regulations in various jurisdictions, including the California Consumer Privacy Act, which is effective January 1, 2020;

• the costs of developing new products, solutions and enhancements to our platform;

• our ability to manage our growth, including scaling Retailer iQ, developing and growing our Media, Audience and Analytics Cloud platforms;

• the success of our sales and marketing efforts;

• the costs of acquiring new companies which we anticipate will help us grow our business;

• the costs of successfully integrating acquired companies and employees into our operations, including costs related to the integration of Ahalogy, Elevaate and SavingStar;

• changes in the legislative or regulatory environment, including with respect to privacy and data protection, or enforcement by government regulators, including fines, orders, or consent decrees;

• our ability to deal effectively with fraudulent transactions or customer disputes;

• the attraction and retention of qualified employees and key personnel, which can be affected by changes in U.S. immigration policies;

• the effectiveness of our internal controls;

• increased legal, accounting and compliance costs associated with complying with Section 404 of the Sarbanes-Oxley Act (“SOX”); and

• changes in accounting rules, tax laws or interpretations thereof.

The effects of these factors individually or in combination could cause our quarterly and annual operating results to fluctuate, and affect our ability to forecast those results and our ability to achieve those forecasts. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet or exceeding the expectations of our investors or financial analysts for any period. In addition, we may release guidance in our quarterly earnings conference calls, quarterly earnings releases, or otherwise, based on predictions of our management, which are necessarily uncertain in nature. The guidance provided depends on our prediction of CPG marketing budgets which can fluctuate greatly and are beyond our control.  Our guidance may vary materially from actual results. If our revenue or operating results, or the rate of growth of our revenue or operating results, fall below or above the expectations of our investors or financial analysts, or below or above any forecasts or guidance we may provide to the market, or if the forecasts we provide to the market are below or above the expectations of analysts or investors, the price of our common stock could decline or increase substantially. Such a stock price decline or increase could occur even when we have met our own or other publicly stated revenue or earnings forecasts. Our failure to meet our own or other publicly stated revenue or earnings forecasts, or even when we meet our own forecasts but fall short of analyst or investor expectations, could cause our stock price to decline and expose us to costly lawsuits, including securities class action suits. Such litigation against us could impose substantial costs and divert our management’s attention and resources. If we exceed our own or other publicly stated revenue or earnings forecasts, or even when we meet our own forecasts but exceed analyst or investor expectations, our stock price could increase.

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If the distribution fees that we pay as a percentage of our revenues increase, our gross profit and business will be harmed.

When we deliver promotions or media on a retailer’s receipt, website or mobile app or through its loyalty program, or the website or mobile app of a publisher, or through our Retailer iQ platform, and the consumer takes certain actions, we pay a distribution fee to the retailer or other publisher, which, in some cases may be prepaid or guaranteed prior to being incurred. Such fees have increased as a percentage of our revenues in recent periods. If such fees as a percentage of our revenues continue to increase, our cost of revenues as a percentage of revenues could increase and our operating results would be adversely affected. Additionally, if the adoption and usage of Retailer iQ does not meet projections, certain prepaid or guaranteed distribution fees with some of the retailers will not be recoverable and the distribution fee will increase as a percentage of revenue. During the third quarter of 2016, we recorded a one-time charge associated with certain distribution fees under an arrangement with a retail partner that were deemed unrecoverable. We considered various factors in our assessment including our historical experience with the transaction volumes through the retailer and comparative retailers, ongoing communications with the retailer to increase its marketing efforts to promote the digital platform, as well as the projected revenues, and associated revenue share payments. Accordingly, during the third quarter of 2016, we recognized a loss of $7.4 million related to such distribution fee arrangement. At March 31, 2019, and December 31, 2018, we had no prepaid non-refundable payments with our Retailer iQ partners.

Our gross margins are dependent on many factors, some of which are not directly controlled by us.

The factors potentially affecting our gross margins include:

• our product mix since we have significant variations in our gross margin among products. Any substantial change in product mix could change our gross margin;

• growth and expansion of our lower-margin media products, including programmatic ads delivered through third-party ad-tech partners and publishers;

• evolving fee arrangements with CPGs, because as we continue to scale customers on Retailer iQ we will continue to experiment with various fee arrangements which might have an impact on our gross margins;

• evolving fee arrangements with retailers, because as we expand our product offerings we have also expanded distribution fee arrangements with retailers which might have an impact on our gross margins;

• success of our pricing strategies, including our integrated solutions pricing strategy and results-based pricing strategy; and

• pricing and acceptance of higher-margin new products.

For instance, during the past 12 months we have seen pressure on our gross margin which we principally attribute to the factors described above and we expect this pressure to continue as our growth strategy evolve and our product mix continues to change.

If we fail to maintain and expand the use by consumers of digital coupons on our platform, our revenues and business will be harmed.

We must continue to maintain and expand the use by consumers of digital coupons in order to increase the attractiveness of our platforms to CPGs and retailers and to increase revenues and achieve profitability. If consumers do not perceive that we offer a broad selection of relevant and high quality digital coupons, or that the usage of digital coupons is easy and convenient through our platforms, we may not be able to attract or retain consumers on our platforms. If we are unable to maintain and expand the use by consumers of digital coupons on our platforms, including through our software-free print solution, our retail partners properties, our white label customer relationship management solutions, and Coupons.com and Shopmium mobile application, or if we do not do so to a greater extent than our competitors, CPGs may find that offering digital promotions on our platforms do not reach consumers with the scale and effectiveness that is compelling to them. Likewise, if retailers find that using our platforms, including Retailer iQ, does not increase sales of the promoted products and consumer loyalty to the retailer to the extent they expect, then the revenues we generate may not increase to the extent we expect or may decrease. Any of these could adversely affect our operating results.

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If we are not successful in responding to changes in consumer behavior and do not develop products and solutions that are widely accepted and generate revenues, our results of operations and business could be adversely affected.

The methods by which consumers access digital coupons are varied and evolving. Our platform has been designed to engage consumers at the critical moments when they are choosing the products they will buy and where they will shop. Consumers can select our digital coupons both online through web and mobile and in-store. In order for us to maintain and increase our revenues, we must be a leading provider of digital coupons in each of the forms by which consumers access them. As consumer behavior in accessing digital coupons changes and new distribution channels emerge, if we do not successfully respond and do not develop products or solutions that are widely accepted and generate revenues we may be unable to retain consumers or attract new consumers and as a result, CPGs and retailers, and our business may suffer. As another example, we are seeing a transition from digital print coupons to digital paperless coupons. If we do not manage this transition and digital print transactions decline faster than digital paperless transactions increase, our revenues may be harmed.

Consumers are increasingly using mobile devices to access our content, and if we are unsuccessful in expanding the capabilities of our digital coupon solutions for our mobile platforms to allow us to generate net revenues as effectively as our website platforms, our net revenues could decline.

Web usage and the consumption of digital content are increasingly shifting from desktop to mobile platforms such as smartphones. The growth of our business depends in part on our ability to drive engagement, activation and shopping behavior for our retailers and CPGs through these mobile channels. Our success on mobile platforms will be dependent on our interoperability with popular mobile operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade our functionality, ease of convenience or that give preferential treatment to competitive services could adversely affect usage of our services through mobile devices.

Further, to deliver high quality mobile offerings, it is important that our platform integrates with a range of other mobile technologies, systems, networks and standards that we do not control. We may not be successful in developing relationships with key participants in the mobile industry or in developing products that operate effectively with these technologies, systems, networks or standards. If we fail to achieve success with our mobile applications and mobile website, or if we otherwise fail to deliver effective solutions to CPGs and retailers for mobile platforms and other emerging platforms, our ability to monetize these growth opportunities will be constrained, and our business, financial condition and operating results would be adversely affected.

Our success on mobile platforms will also be dependent on our ability to develop features or products that will make our mobile platform attractive to, and drive engagement by, consumers.  If we fail to develop such features or products after investing in their development, our ability to monetize these growth opportunities will be constrained, and our business, financial condition and operating results may be adversely affected.

We depend in part on third-party advertising agencies as intermediaries, and if we fail to develop and maintain these relationships, our business may be harmed.

A growing portion of our business is conducted indirectly with third-party advertising agencies acting on behalf of CPGs and retailers. Third-party advertising agencies are instrumental in assisting CPGs and retailers to plan and purchase media and promotions, and each third-party advertising agency generally allocates media and promotion spend from CPGs and retailers across numerous channels. We are still developing relationships with, and do not have exclusive relationships with, third-party advertising agencies and we depend in part on third-party agencies to work with us as they embark on marketing campaigns for CPGs and retailers. While in most cases we have developed relationships directly with CPGs and retailers, we nevertheless depend in part on third-party advertising agencies to present to their CPG and retailer clients the merits of our platform. Inaccurate descriptions of our platform by third-party advertising agencies, over whom we have no control, negative recommendations regarding use of our service offerings or failure to mention our platform at all could hurt our business. In addition, if a third-party advertising agency is disappointed with our platform on a particular campaign or generally, we risk losing the business of the CPG or retailer for whom the campaign was run, and of other CPGs and retailers represented by that agency. Since many third-party advertising agencies are affiliated with other third-party agencies in a larger corporate structure, if we fail to develop and maintain good relations with one third-party advertising agency in such an organization, we may lose business from the affiliated third-party advertising agencies as well.

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Our sales could be adversely impacted by industry changes relating to the use of third-party advertising agencies. For example, if CPGs or retailers seek to bring their campaigns in-house rather than using an agency, we would need to develop direct relationships with the CPGs or retailers, which we might not be able to do and which could increase our sales and marketing expenses. Moreover, to the extent that we do not have a direct relationship with CPGs or retailers, the value we provide to CPGs and retailers may be attributed to the third-party advertising agency rather than to us, further limiting our ability to develop long-term relationships directly with CPG and retailers. CPGs and retailers may move from one third-party advertising agency to another, and we may lose the underlying business. The presence of third-party advertising agencies as intermediaries between us and the CPGs and retailers thus creates a challenge to building our own brand awareness and affinity with the CPGs and retailers that are the ultimate source of our revenues. In addition, third-party advertising agencies conducting business with us may offer their own digital promotion solutions. As such, these third-party advertising agencies are, or may become, our competitors. If they further develop their own capabilities they may be more likely to offer their own solutions to advertisers, and our ability to compete effectively could be significantly compromised and our business, financial condition and operating results could be adversely affected.

Competition presents an ongoing threat to the success of our business.

We expect competition in digital promotions and media to continue to increase. The market for digital promotions and media is competitive, fragmented and rapidly changing. We compete against a variety of companies with respect to different aspects of our business, including:

• offline coupon and discount services, as well as newspapers, magazines and other traditional media companies that provide coupon promotions and discounts on products and services in free standing inserts or other forms, including Valassis Communications, Inc., News America Marketing Interactive, Inc. and Catalina Marketing Corporation;

• providers of digital coupons such as Valassis’ Redplum.com, Catalina Marketing Corporation’s Cellfire, News traditional America Marketing’s SmartSource., Inmar/You Technology, companies that offer coupon codes such as RetailMeNot, Inc., Groupon, Inc., Exponential Interactive, Inc.’s TechBargains.com, Savings.com, Inc., Honey Science Corporation and Ebates Performance Marketing, Inc., companies that offer cash back solutions such as iBotta, Inc., and News America Marketing’s Checkout 51, and companies providing other e-commerce based services that allow consumers to obtain direct or indirect discounts on purchases;

• Internet sites and blogs that are focused on specific communities or interests that offer coupons or discount arrangements related to such communities or interests;  

• companies offering online and marketing services to retailers and CPGs, such as MyWebGrocer, Inc. and Flipp Corp.; and

• companies offering CPG and retail digital media services, such as Triad Media Inc. and Criteo.

We believe the principal factors that generally determine a company’s competitive advantage in our market include the following:

• scale and effectiveness of reach in connecting CPGs and retailers to consumers in a digital manner, through web, mobile and other online properties;

• ability to attract consumers to use digital coupons delivered by it;

• platform security, scalability, reliability and availability;

• integration with retailer applications, point of sales systems, and consumer channels;

• access to retailer data;

• measurement that demonstrates the effectiveness of campaigns;

• quality of tools, reporting and analytics for planning, development and optimization of promotions;

• number of channels by which a company engages with consumers;

• integration of products and solutions;

• rapid deployment of products and services for customers;

• breadth, quality and relevance of the Company’s digital promotions including coupons;

• ability to deliver high quality and increasing number of digital coupons that are widely available and easy to use in consumers’ preferred form;

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• brand recognition and reputation;

• breadth and expertise of the Company’s sales organization; and

• skill and expertise of the Company’s operations organization.

We are subject to competition from large, well-established companies which have significantly greater financial, marketing and other resources than we do and have offerings that compete with our platform or may choose to offer digital promotions as an add-on to their core business on their own or in partnership with one of our competitors that would directly compete with ours. Many of our larger actual and potential competitors have the resources to significantly change the nature of the digital promotions industry to their advantage, which could materially disadvantage us. For example, Google and Facebook and online retailers such as Amazon have highly trafficked industry platforms which they have leveraged, or could leverage, to distribute digital coupons or other digital promotions and media that could negatively affect our business. In addition, these potential competitors may have greater access to first-party data, be able to respond more quickly than we can to new or emerging technologies and changes in consumer habits. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to attract more consumers and, as a result, more CPGs and retailers, or generate revenues more effectively than we do. Our competitors may offer digital coupons or targeted media campaigns that are similar to the digital coupons and targeted media campaigns we offer or that achieve greater market acceptance than those we offer. We are also subject to competition from smaller companies that launch similar or new products and services that we do not offer and that could gain market acceptance.

Our success depends on the effectiveness of our platform in connecting CPGs and retailers with consumers and with attracting consumer use of the digital coupons delivered through our platform. To the extent we fail to provide digital coupons for high quality, relevant products, or otherwise fail to successfully reach consumers on their mobile device or elsewhere, consumers may become dissatisfied with our platform and decide not to use our digital coupons and elect to use the digital coupons distributed by one of our competitors. As a result of these factors, our CPGs and retailers may not receive the benefits they expect, and CPGs may use the offerings of one of our competitors, and retailers may elect to handle coupons themselves or exclude us from integrating with their in-store and point of sale systems or consumer channels, and our operating results would be adversely affected. Similarly, if retailers elect to use a competitive distribution network or platform, and we do not have, or fail to maintain, an agreement to distribute content through that network or platform, CPGs may elect to provide digital coupons directly to that network or platform, instead of through our platform. If retailers and CPGs require our platform to integrate with competitive offerings instead of using our products, we could lose some of our competitive advantage and our business could be harmed.

We also face significant competition for trade promotion and marketing spending. We compete against online and mobile businesses, including those referenced above, and traditional advertising outlets, such as television, radio and print, for trade promotion and marketing spending. In order to grow our revenues and improve our operating results, we must increase our share of CPG spending on digital coupons and media relative to traditional sources and relative to our competitors, many of whom are larger companies that offer more traditional and widely accepted media products.

We also directly and indirectly compete with retailers for consumer traffic. Many retailers market and offer their own digital coupons directly to consumers using their own websites, email newsletters and alerts, mobile applications and social media channels. Additionally, some retailers also market and offer their own digital coupons directly to consumers using our platform for which we earn no revenue.  Our retailers could be more successful than we are at marketing their own digital coupons and could decide to terminate their relationship with us.

We may face competition from companies we do not yet know about. If existing or new companies develop, market or offer competitive digital coupon solutions, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and our operating results could be harmed. On March 13, 2019, Inmar announced that it completed the acquisition of Kroger’s subsidiary You Technology and entered into a long-term service agreement to provide digital coupon services to the Kroger family of stores.  This could adversely affect our current distribution of digital promotions through You Technology to Kroger shoppers and the Company could be harmed.

The success and scale of Retailer iQ depends, in part, on the level of commitment and support by retailers.  

If retailers do not commit sufficient time, resources and funds towards the marketing of digital promotions and programs on Retailer iQ, the growth and scale of Retailer iQ and its penetration into the consumer market will be adversely affected. The success of Retailer iQ requires integration with a retailer’s point of sales system, loyalty programs and consumer channels. This integration requires time and effort from both the retailer and ourselves, which also involves our working with third-party systems and solutions, some of whom may be our competitors. In addition, the success of Retailer iQ requires increased consumer adoption which requires significant support from retailers, this support includes marketing of Retailer iQ to consumers, providing technical support to consumers, and retailers satisfaction of increased and complex data privacy regulations to obtain consumer consent.  

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Acquisitions, joint ventures and strategic investments could result in operating difficulties, dilution and other harmful consequences.

We expect to evaluate and consider a wide array of potential strategic transactions, including acquisitions and dispositions of businesses, joint ventures, technologies, services, products and other assets and strategic investments. At any given time, we may be engaged in discussions or negotiations with respect to one or more of these types of transactions. Any of these transactions could be material to our financial condition and results of operations. The process of integrating any acquired business may create unforeseen operating difficulties and expenditures and is itself risky. The areas where we may face difficulties include:

• expected and unexpected costs incurred in identifying and pursuing strategic transactions and performing due diligence regarding potential strategic transactions that may or may not be successful;

• failure of an acquired company to achieve anticipated revenue, earnings, cash flows or other desired technological and business goals;

• effectiveness of our due diligence review and our ability to evaluate the results of such due diligence, which are dependent upon the accuracy and completeness of statements and disclosures made by the acquired company;

• diversion of management time, as well as a shift of focus from operating the businesses to issues related to integration and administration;

• the need to integrate the acquired company’s accounting, management, information, human resource and other administrative systems to permit effective management, and the lack of control if such integration is delayed or not implemented;

• retention of key employees from the acquired company and cultural challenges associated with integrating employees from the acquired company into our organization;

• the need to implement or improve controls, procedures and policies appropriate for a public company at companies that prior to acquisition had lacked such controls, procedures and policies;

• in some cases, the need to transition operations and customers onto our existing platforms;

• in certain instances, the ability to exert control of acquired businesses that include earnout provisions in the agreements relating to such acquisitions or the potential obligation to fund an earnout for, or other obligations related to, a product that has not met expectations;

• the need to integrate operations across different geographies, cultures and languages and to address the particular economic, currency, political and regulatory risks associated with specific countries;

• liability for activities of the acquired company before the acquisition, including violations of laws, rules and regulations, commercial disputes, tax liabilities and other known and unknown liabilities;

• write-offs or charges related to acquired assets or goodwill; and

• litigation or other claims in connection with the acquired company, including claims from terminated employees, users, former stockholders or other third parties and intellectual property infringement claims.

For example, we have acquired businesses whose technologies are new to us and with which we did not have significant experience. We have made and are making investments of resources to support such acquisitions, which will result in ongoing operating expenses and may divert resources and management attention from other areas of our business. We cannot assure you that these investments and the integration of these acquisitions will be successful. If we fail to successfully integrate the companies we acquire, we may not realize the benefits expected from the transaction and our business may be harmed.

Our failure to address these risks or other problems encountered in connection with our past or future acquisitions and investments could cause us to fail to realize the anticipated benefits of any or all of our acquisitions or joint ventures, or we may not realize them in the time frame expected or cause us to incur unanticipated liabilities, and harm our business. Future acquisitions or joint ventures may require us to issue dilutive additional equity securities, spend a substantial portion of our available cash, incur debt or contingent liabilities, amortize expenses related to intangible assets or incur incremental operating expenses or write-offs of goodwill or impaired acquired intangible assets, which could adversely affect our results of operations and harm our business.

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If we fail to effectively manage our growth, our business and financial performance may suffer.

We have significantly expanded our operations and anticipate expanding further to pursue our growth strategy. Through acquisitions we have added four additional offices within the last two years.  Such expansion increases the complexity of our business and places significant demands on our management, operations, technical performance, financial resources and internal control over financial reporting functions. Continued growth could strain our ability to deliver digital promotions and media on our platform, develop and improve our operational, financial, legal and management controls, and enhance our reporting systems and procedures. Failure to manage our expansion may limit our growth, damage our reputation and negatively affect our financial performance and harm our business.

To effectively manage this growth, we will need to continue to improve our operational, financial and management controls, and our reporting systems and procedures. If we do not effectively manage the growth of our business and operations the scalability of our business and our operating results could suffer.

Our current and planned personnel, systems, procedures and controls may not be adequate to support and effectively manage our future operations. We may not be able to hire, train, retain, motivate and manage required personnel. As we continue to grow, we must effectively integrate, develop and motivate a large number of new employees. We intend to continue to expand our research and development, sales and marketing, and general and administrative organizations, and over time, expand our international operations. To attract top talent, we have had to offer, and believe we will need to continue to offer, highly competitive compensation packages before we can validate the productivity of those employees. If we fail to effectively manage our hiring needs and successfully integrate our new hires, our efficiency and ability to meet our forecasts and our employee morale, productivity and retention could suffer, and our business and operating results could be adversely affected.

Providing our products and services to our CPGs, retailers and consumers is costly and we expect our expenses to continue to increase in the future as we grow our business with existing and new CPGs and retailers and develop new products and services that require enhancements to our technology infrastructure. In addition, our operating expenses, such as our sales, marketing and engineering expenses are expected to continue to grow to support our anticipated future growth. As a result of the requirements of being a public company we incur significant legal, accounting and other expenses. Our expenses may grow faster than our revenues, and our expenses may be greater than we anticipate. Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, operating results and financial condition would be harmed.

If we do not effectively grow and train our sales and operations teams, we may be unable to grow our business with CPGs and retailers and our business will be adversely affected.

We continue to be dependent on our sales team to obtain new CPGs and retailers and to drive sales from our existing CPGs and retailers. We also continue to be dependent on our operations team to execute and provide support to our new and existing CPGs and retailers. We believe that there is significant competition for sales and operations personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training, integrating and retaining sufficient numbers of sales and operations personnel to support our growth. New hires require significant training and it may take time before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. In addition, if we continue to grow rapidly, a large percentage of our sales and operations teams will be new to the Company and our solution. If (i) we are unable to hire and train sufficient numbers of effective sales and operations personnel, (ii) the sales personnel are not successful in obtaining new CPGs and retailers or increasing sales to our existing CPGs and retailers or (iii) the operations personnel are not successful in executing and supporting our new and existing CPGs and retailers, our business will be adversely affected.

Our sales cycle with CPGs and retailers is long and unpredictable and may require us to incur expenses before executing or renewing a customer agreement, which makes it difficult to project when, if at all, we will obtain new CPGs and retailers, or renew customer agreements with existing CPG customers and retail partners, and when we will generate additional revenues.

We market our services and products directly to CPGs and retailers. New CPG and retailer relationships typically take time to obtain and finalize. Existing CPG and retailer relationships may change and take time to re-establish due to market consolidation and personnel changes. A significant time period may pass between selection of our services and products by key decision-makers and the signing of a contract. The length of time between the initial sales call and the realization of a final contract is difficult to predict. As a result, it is difficult to predict when we will obtain new CPGs and retailers and when performance and delivery of services will be initiated with these potential CPGs and retailers. In

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addition, our customers typically have no obligation to renew their agreements with us after their initial term, and in order for us to maintain or improve our results of operations, it is important that our customers renew their agreements with us when the initial term expires. As part of our sales and renewal cycle, we may incur significant expenses before executing or renewing a definitive agreement with a prospective or existing CPG or retailer and before we are able to generate any revenues from such agreement or renewal. If conditions in the marketplace generally or with a specific prospective CPG or retailer change negatively, it is possible that no definitive agreement will be executed or renewed, and we will be unable to recover any expenses incurred before a definitive agreement is executed or renewed, which would in turn have an adverse effect on our business, financial condition and results of operations.

Our business depends on our ability to maintain and scale the network infrastructure necessary to operate our platforms, including our websites, mobile applications and Retailer iQ platform, and any significant disruption in service could result in a loss of CPGs, retailers and consumers.

We deliver digital coupons via our platforms, including over our websites and mobile applications, as well as through those of our CPGs and retailers and our publishers and other third parties. Our reputation and ability to acquire, retain and serve CPGs and retailers, as well as consumers who use digital coupons or view media on our platforms are dependent upon the reliable performance of our platforms. As the number of our CPG customers, retailers and consumers and the number of digital promotions and information shared through our platforms continue to grow, we will need an increasing amount of network capacity and computing power. Our technology infrastructure is hosted across two data centers in co-location facilities in California and Nevada. In addition, we use two other co-location facilities in California and Virginia to host our Retailer iQ platform. We have spent and expect to continue to spend substantial amounts in our data centers and equipment and related network infrastructure to handle the traffic on our platform. The operation of these systems is expensive and complex and could result in operational failures. In the event that the number of transactions or the amount of traffic on our platforms grows more quickly than anticipated, we may be required to incur significant additional costs. Interruptions in these systems or service disruptions, whether due to system failures, computer viruses, malware, ransomware, denial of service attacks, attempts to degrade or disrupt services, or physical or electronic break-ins, could affect the security or availability of our websites and platform, and prevent CPGs, retailers or consumers from accessing our platform. A substantial portion of our network infrastructure is hosted by third-party providers. Any disruption in these services or any failure of these providers to handle existing or increased traffic could significantly harm our business. Any financial or other difficulties these providers face may adversely affect our business, and we exercise little control over these providers, which increases our vulnerability to problems with the services they provide. If we do not maintain or expand our network infrastructure successfully or if we experience operational failures, we could lose current and potential CPGs, retailers and consumers, which could harm our operating results and financial condition.

If our websites or those of our publishers fail to rank prominently in unpaid search results from search engines like Google, Yahoo! and Bing, traffic to our websites could decline and our business would be adversely affected.

Our success depends in part on our ability to attract consumers through unpaid Internet search results on search engines like Google, Yahoo! and Bing. The number of consumers we attract to our websites from search engines is due in large part to how and where our websites rank in unpaid search results. These rankings can be affected by a number of factors, many of which are not in our direct control, and they may change frequently. For example, major search engines frequently modify their ranking algorithms, methodologies or design layouts. As a result, links to our websites may not be prominent enough to drive traffic to our websites or we may receive less favorable placement which could reduce traffic to our website, and we may not know how or otherwise be in a position to influence the results. In some instances, search engine companies may change these rankings in order to promote their own competing products or services or the products or services of one or more of our competitors. Our websites have experienced fluctuations in search result rankings in the past, and we anticipate fluctuations in the future. For example, the search result rankings of our websites have fallen relative to the same time last year. In addition, websites must comply with search engine guidelines and policies. These guidelines and policies are complex and may change at any time. If we fail to follow such guidelines and policies properly, search engines may rank our content lower in search results or could remove our content altogether from their index. Moreover, the use of voice recognition technology, such as Alexa, Google Assistant or Siri, may drive traffic away from search engines, which could reduce traffic to our website. Any reduction in the number of consumers directed to our websites could reduce the effectiveness of our coupon codes for specialty retailers and digital promotions for CPGs and retailers and could adversely impact our business and results of operations. It could also reduce our ability to sell media advertising on our sites, which would negatively impact revenues and harm our business.

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If we fail to continue to obtain and increase the number of high quality coupons through our platform, our revenue growth or our revenues may be harmed.

We generally generate revenues as consumers select, or activate, a digital coupon through our platform. Our business model depends upon the availability of high quality and increasing number of digital coupons. CPGs and retailers have a variety of channels through which to promote their products and services. If CPGs and retailers elect to distribute their digital coupons through other channels or not to promote digital coupons at all, or if our competitors are willing to accept lower prices than we are, our ability to obtain high quality digital coupons available on our platform may be impeded and our business, financial condition and operating results will be adversely affected. If we cannot maintain sufficient digital coupons inventory to offer through our platform, consumers may perceive our service as less relevant, consumer traffic to our websites and those of our publishers will decline and, as a result, CPGs and retailers may decrease their use of our platform to deliver digital coupons and our revenue growth or revenues may be harmed.

Our business relies in part on electronic messaging, including emails and SMS text messages, and any technical, legal or other restrictions on the sending of electronic messages or an inability to timely deliver such communications could harm our business.

Our business is in part dependent upon electronic messaging. We provide emails, mobile alerts and other messages to consumers informing them of the digital coupons on our websites, and we believe these communications help generate a significant portion of our revenues. We also use electronic messaging, in part, as part of the consumer sign-up and verification process. Because electronic messaging services are important to our business, if we are unable to successfully deliver electronic messages to consumers, if there are legal restrictions on delivering these messages to consumers, or if consumers do not or cannot open our messages, our revenues and profitability could be adversely affected. Changes in how webmail applications or other email management tools organize and prioritize email may result in our emails being delivered or routed to a less prominent location in a consumer’s inbox or viewed as “spam” by consumers and may reduce the likelihood of that consumer opening our emails. Actions taken by third parties that block, impose restrictions on or charge for the delivery of electronic messages could also harm our business. From time to time, Internet service providers or other third parties may block bulk email transmissions or otherwise experience technical difficulties that result in our inability to successfully deliver emails or other messages to consumers.

Changes in laws or regulations, or changes in interpretations of existing laws or regulations, including the Telephone Consumer Protection Act, or the TCPA in the United States and laws regarding commercial electronic messaging in other jurisdictions, that would limit our ability to send such communications or impose additional requirements upon us in connection with sending such communications could also adversely impact our business. For example, the Federal Communications Commission amended certain of its regulations under the TCPA in recent years in a manner that could increase our exposure to liability for certain types of telephonic communication with customers, including but not limited to text messages to mobile phones. Under the TCPA, plaintiffs may seek actual monetary loss or statutory damages of $500 per violation, whichever is greater, and courts may treble the damage award for willful or knowing violations. Given the enormous number of communications we send to consumers, a determination that there have been violations of the TCPA or other communications-based statutes could expose us to significant damage awards that could, individually or in the aggregate, materially harm our business. Moreover, even if we prevail, such litigation against us could impose substantial costs and divert our management’s attention and resources.

We also rely on social networking messaging services to send communications. Changes to these social networking services’ terms of use or terms of service that limit promotional communications, restrictions that would limit our ability or our customers’ ability to send communications through their services, disruptions or downtime experienced by these social networking services or reductions in the use of or engagement with social networking services by customers and potential customers could also harm our business.

We rely on a third-party service for the delivery of daily emails and other forms of electronic communication, and delay or errors in the delivery of such emails or other messaging we send may occur and be beyond our control, which could damage our reputation or harm our business, financial condition and operating results. If we were unable to use our current electronic messaging services, alternate services are available; however, we believe our sales could be impacted for some period as we transition to a new provider, and the new provider may be unable to provide equivalent or satisfactory electronic messaging service. Any disruption or restriction on the distribution of our electronic messages, termination or disruption of our relationship with our messaging service providers, including our third-party service that delivers our daily emails, or any increase in our costs associated with our email and other messaging activities could harm our business.

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We are dependent on technology systems and electronic communications networks that are supplied and managed by third parties, which could result in our inability to prevent or respond to disruptions in our services.

Our ability to provide services to consumers depends on our ability to communicate with CPGs, retailers and customers through the public Internet and electronic networks that are owned and operated by third parties. Our products and services also depend on the ability of our users to access the public Internet. In addition, in order to provide services promptly, our computer equipment and network servers must be functional 24 hours per day, which requires access to telecommunications facilities managed by third parties and the availability of electricity, which we do not control. A severe disruption of one or more of these networks, including as a result of utility or third-party system interruptions, could impair our ability to process information, which could impede our ability to provide digital promotions and media to consumers, harm our reputation, result in a loss of customers or CPGs and retailers and adversely affect our business and operating results.

If our security measures or information we collect and maintain are compromised or publicly exposed, CPGs, retailers and consumers may curtail or stop using our platforms.

We collect and maintain data about consumers, including personally identifiable information, as well as other confidential or proprietary information. Like all businesses that use computer systems and the Internet, our security measures, and those of our third-party service providers, may not detect or prevent all attempts to gain access to our systems, denial-of-service attacks, viruses, malicious software including malware and ransomware, break-ins, phishing attacks, social engineering, human error, security breaches or other attacks and similar disruptions that may jeopardize the security of information stored in or transmitted by our systems or solutions or that we or our third-party service providers otherwise maintain, including payment systems, any of which could lead to interruptions, delays, or website shutdowns, causing loss of critical data or the unauthorized disclosure or use of personally identifiable or other confidential information, or subject us to fines or higher transaction fees or limit or result in the termination of our access to certain payment methods. If we experience compromises to our security that result in performance or availability problems, the complete shutdown of one or more of our websites and mobile applications or the loss or unauthorized access to or disclosure of confidential information, personally identifiable information, or other personal data, CPGs, retailers, and consumers may lose trust and confidence in us and decrease their use of our platform or stop using our platform entirely. Further, such compromises to personal or sensitive information could lead to litigation or other adversarial actions by business partners or consumers.

Because the techniques used to obtain unauthorized access are often sophisticated and change frequently, neither we nor third-party service providers can guarantee that our systems will not be breached. In addition, consumer information including email addresses, phone numbers and data on consumer usage of our websites and mobile applications could be hacked, hijacked, altered or otherwise claimed or controlled by unauthorized persons. Security breaches can also occur as a result of nontechnical issues, including intentional or inadvertent actions by our employees or by persons with whom we have commercial relationships that lead to exposure of any types of sensitive information. Any or all of these issues, or the perception that any of them has occurred, even if inaccurate, could negatively impact our reputation and our ability to attract and retain CPGs and retailers as well as consumers or could reduce the frequency with which our platform is used, cause existing or potential CPG or retailer customers to cancel their contracts or subject us to third-party lawsuits, regulatory fines or other action or liability, and harm our business and results of operations.

Remediation of any potential cyber security breach may involve significant time, resources, and expenses, which may result in potential regulatory inquiries, litigation or other investigations, and can affect our financial and operational condition.  

Failure to deal effectively with fraudulent or other improper transactions could harm our business.

Digital coupons are issued in the form of redeemable coupons, coupon codes with unique identifiers or cash-back rebates. It is possible that third parties may create counterfeit digital coupons or coupon codes or exceed print or use limits in order to fraudulently or improperly claim discounts or credits for redemption. It is also possible that third parties may fraudulently or improperly claim cash-back rebates causing us to pay out cash that we are not able to get reimbursement from our retailer customers. It is possible that individuals will circumvent our anti-fraud systems using increasingly sophisticated methods or methods that our anti-fraud systems are not able to counteract. Further, we may not detect any of these unauthorized activities in a timely manner. Third parties who succeed in circumventing our anti-fraud systems may sell the fraudulent or fraudulently obtained digital coupons on social networks, which would damage our brand and relationships with CPGs and harm our business. Legal measures we take or attempt to take against these third parties may be costly and may not be ultimately successful. In addition, our service could be subject to employee fraud or other internal security breaches, and we may be required to reimburse CPGs and retailers for any funds stolen or revenues lost as a result of such breaches. Our CPGs and retailers could also request reimbursement, or stop using digital coupons, if they are affected by buyer fraud or other types of fraud. We may incur significant losses from fraud and counterfeit digital coupons. If our anti-fraud technical and legal measures do not succeed, our business may suffer.

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Factors adversely affecting performance marketing programs and our relationships with performance marketing networks and brand partners, or the termination of these relationships, may adversely affect our ability to attract and retain merchants and our coupon codes business.

A portion of our business is based upon consumers using coupon codes from specialty retailers in connection with the purchase of goods or services. The commissions we earn for coupon codes accessed through our platform are tracked by performance marketing networks. Third-party performance marketing networks provide publishers with affiliate tracking links that allow for revenues to be attributed to publishers. When a consumer executes a purchase on a publisher’s website as a result of a performance marketing program, most performance marketing conversion tracking tools credit the most recent link or ad clicked by the consumer prior to that purchase. This practice is generally known as “last-click attribution.” We generate revenues through transactions for which we receive last-click attribution. Risks that may adversely affect our performance marketing programs and our relationships with performance marketing networks include the following, some of which are outside our control:

• we may not be able to adapt to changes in the way in which CPGs and merchants attribute credit to us in their performance marketing programs, whether it be “first-click attribution” or “multichannel attribution,” which applies weighted values to each of a retailer’s advertisements and tracks how each of those advertisements contributes to a purchase, or otherwise;

• we may not receive revenue if consumers make purchases from their mobile devices as many retailers currently do not recognize affiliate tracking links on their mobile-optimized websites or applications, and tracking mechanisms on mobile websites or applications may not function to allow retailers to properly attribute sales to us;

• we may not generate revenue if consumers use mobile devices for shopping research but make purchases using coupon codes found on our sites in ways where we do not get credit;

• refund rates for products delivered on merchant sites may be greater than we estimate;

• performance marketing networks may not provide accurate and timely reporting on which we rely, we could fail to properly recognize and report revenues and misstate financial reports, projections and budgets and misdirect our advertising, marketing and other operating efforts for a portion of our business;

• we primarily rely on a small number of performance marketing networks in non-exclusive arrangements, the loss of which could adversely affect our coupon codes business;

• we primarily rely, in connection with our search engine marketing business, on a small number of brand partners that work with us in non-exclusive arrangements, the loss of which could adversely affect our coupon codes business;

• industry changes relating to the use of performance marketing networks could adversely impact our commission revenues;

• to the extent performance marketing networks serve as intermediaries between us and merchants, it may create challenges to building our own brand awareness and affinity with merchants, and the termination of our relationship with the performance marketing networks would terminate our ability to receive payments from merchants we service through that network; and

• performance marketing networks may compete with us.

While coupon codes from specialty retailers represent a declining portion of our business, any of these risks could adversely affect our revenues in this area.

Our business is subject to complex and evolving laws, regulations and industry standards, and unfavorable interpretations of, or changes in, or failure by us to comply with these laws, regulations and industry standards could substantially harm our business and results of operations.

We are subject to a variety of international, federal, state, local and municipal laws, regulations and industry standards that relate to privacy, electronic communications, data protection, intellectual property, e-commerce, competition, price discrimination, consumer protection, taxation, and the use of promotions. Many of these laws, regulations, and standards are still evolving and being tested in courts and industry standards are still developing. Our business, including our ability to operate and expand, could be adversely affected if legislation, regulations or industry standards are adopted, interpreted or implemented in a manner that is inconsistent with our current business practices and that require changes to these practices or the design of our platform. Existing and future laws, regulations and industry standards could restrict our operations, and our ability to retain or increase our CPGs and retailers and consumers’ use of digital promotions delivered on our platform may be adversely affected and we may not be able to maintain or grow our revenues as anticipated.

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If the use of third-party cookies is rejected by Internet users, restricted by third parties outside of our control, or otherwise subject to unfavorable regulation, our performance could decline and we could lose customers and revenue.

We use small text files (referred to as "cookies"), placed through an Internet browser on an Internet user's machine which corresponds to a data set that we keep on our servers, to gather important data to help deliver our solution. Certain of our cookies, including those that we predominantly use in delivering our solution, are known as "third-party" cookies because they are delivered by third parties rather than by us. Our cookies collect anonymous information, such as when an Internet user views an advertisement, clicks on an advertisement, or visits one of our advertisers' websites. In some countries, including countries in the European Economic Area, this information may be considered personal information under applicable data protection laws. On mobile devices, we may also obtain location based information about the user's device through our cookies. We use these cookies to achieve our customers' campaign goals, to ensure that the same Internet user does not unintentionally see the same media too frequently, to report aggregate information to our customers regarding the performance of their digital promotions and marketing campaigns, and to detect and prevent fraudulent activity throughout our network. We also use data from cookies to help us decide whether and how much to bid on an opportunity to place an advertisement in a certain Internet location and at a given time in front of a particular Internet user. A lack of data associated with or obtained from cookies may significantly detract from our ability to make decisions about which inventory to purchase for an advertiser's campaign and may undermine the effectiveness of our solution and harm our business.

Cookies may easily be deleted or blocked by Internet users. All of the most commonly used Internet browsers (including Chrome, Firefox, Internet Explorer, and Safari) allow Internet users to prevent cookies from being accepted by their browsers. Internet users can also delete cookies from their computers at any time. Some Internet users also download "ad blocking" software that prevents cookies from being stored on a user's computer. If more Internet users adopt these settings or delete their cookies more frequently than they currently do, our business could be harmed. In addition, the Safari and Firefox browsers blocks third-party cookies by default, and other browsers may do so in the future. Unless such default settings in browsers were altered by Internet users to permit the placement of third-party cookies, we would be able to set fewer of our cookies in users’ browsers, which could adversely affect our business. In addition, companies such as Google have publicly disclosed their intention to move away from cookies to another form of persistent unique identifier, or ID, to identify individual Internet users or Internet-connected devices in the bidding process on advertising exchanges. If companies do not use shared IDs across the entire ecosystem, this could have a negative impact on our ability to find the same anonymous user across different web properties, and reduce the effectiveness of our solution.

In addition, in the European Union, or EU, Directive 2009/136/EC, commonly referred to as the "Cookie Directive," directs EU member states to ensure that collecting information on an Internet user's computer, such as through a cookie, is allowed only if the Internet user has appropriately given his or her prior freely given, specific, informed and unambiguous consent. Similarly, this Directive which also contains specific rules for the sending of marketing communications, limits the use of marketing texts messages and e-mails. Additionally, an e-Privacy Regulation, which will replace the Cookie Directive with requirements that could be stricter in certain respects, apply directly to activities within the EU without the need to be transposed in each Member State’s Law, and could impose stricter requirements regarding the use of cookies and marketing e-mails and text messages and additional penalties for noncompliance, has been proposed, although at this time it is unclear whether it will be approved as it is currently drafted or when its requirements will be effective. We may experience challenges in obtaining appropriate consent to our use of cookies from consumers or to send marketing communications to consumers within the EU, which may affect our ability to run promotions and our operating results and business in European markets, and we may not be able to develop or implement additional tools that compensate for the lack of data associated with cookies. Moreover, even if we are able to do so, such additional tools may be subject to further regulation, time consuming to develop or costly to obtain, and less effective than our current use of cookies.  

Failure to comply with federal, state and international privacy, data protection, marketing and consumer protection laws, regulations and industry standards, or the expansion of current or the enactment or adoption of new privacy, data protection, marketing and consumer protection laws, regulations or industry standards, could adversely affect our business.

We and our service providers are subject to a variety of federal, state and international laws, regulations and industry standards regarding privacy, data protection, data security, marketing and consumer protection, which address the collection, storing, sharing, using, processing, disclosure and protection of data relating to individuals, as well as the tracking of consumer behavior and other consumer data. We are also subject to laws, regulations and industry standards relating to endorsements and influencer marketing. Many of these laws, regulations and industry standards are changing and may be subject to differing interpretations, costly to comply with or inconsistent among jurisdictions. For example, the Federal Trade Commission, or the FTC, expects companies like ours to comply with guidelines issued under the Federal Trade Commission Act that govern the collection, use, disclosure, and storage of consumer information, and establish principles relating to notice, consent, access and data integrity and security. The laws and regulations in many foreign countries relating to privacy, data protection, data security, marketing and consumer protection often are more restrictive

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than in the United States, and may in some cases be interpreted to have a greater scope. Additionally, the laws, regulations and industry standards, both foreign and domestic, relating to privacy, data protection, data security, marketing and consumer protection are dynamic and may be expanded or replaced by new laws, regulations or industry standards. For example, on June 28, 2018 California enacted the California Consumer Privacy Act of 2018 (the “CCPA”), the directives of which will become operative on January 1, 2020; the CCPA has already been amended once and grants consumers new rights with respect to their personal information. We believe our policies and practices comply in material respects with applicable privacy, data protection, data security, marketing and consumer protection guidelines, laws and regulations. However, if our belief is incorrect, or if these guidelines, laws or regulations or their interpretation change or new legislation or regulations are enacted, we may be compelled to provide additional disclosures to our consumers, obtain additional consents from our consumers before collecting, using, or disclosing their information or implement new safeguards to help our consumers manage our use of their information, among other changes.

Various industry standards on privacy and data security have been developed and are expected to continue to develop, which may be adopted by industry participants at any time. We are subject to the terms of our privacy policies and obligations to third parties relating to privacy, data protection and data security, including contractual obligations relating to privacy rights, data protection, data use and data security measures. We are also required, under certain regulatory regimes and industry standards, to contractually require our service providers to meet certain privacy and security requirements. Certain of our solutions, including Quotient Promotions, Media, Audience and Analytics Cloud platforms and solutions depend in part on our ability to use data that we obtain in connection with our offerings, and our ability to use this data may be subject to restrictions in our commercial agreements and subject to the privacy policies of the entities that provide us with this data. Our failure to adhere to these third-party restrictions on data use may result in claims, proceedings or actions against us by our business counterparties or other parties, or other liabilities, including loss of business, reputational damage, and remediation costs, which could adversely affect our business.

We strive to comply with applicable laws, policies, contractual and other legal obligations and certain applicable industry standards of conduct relating to privacy, data security, data protection, marketing and consumer protection. However, these obligations and standards of conduct often are complex, vague, and difficult to comply with fully, and it is possible that these obligations and standards of conduct may be interpreted and applied in new ways and/or in a manner that is inconsistent with each other or that new laws, regulations or other obligations may be enacted. It is possible that our practices may be argued or held to conflict with applicable laws, policies, contractual or other legal obligations, or applicable industry standards of conduct relating to privacy, data security, data protection, marketing or consumer protection. Any failure, or perceived failure, by us to comply with our posted privacy policies or with any data-related consent orders, FTC, other regulatory requirements or orders or other federal, state or, as we continue to expand internationally, international privacy, data security, data protection, marketing or consumer protection-related laws, regulations, contractual obligations or self-regulatory principles or other industry standards could result in claims, proceedings or actions against us by governmental entities or others or other liabilities or could result in a loss of consumers using our digital coupons or loss of CPGs and retailers. Any of these circumstances could adversely affect our business. Further, if third parties we work with violate applicable laws, our policies or other privacy-related obligations, such violations may also put our consumers’ information at risk and could in turn have an adverse effect on our business.

With respect to personal data transfers from the European Economic Area, or EEA, we have previously relied on compliance with the U.S.-EU and U.S.-Swiss Safe Harbor Frameworks as agreed to and set forth by the U.S. Department of Commerce, and the EU and Switzerland, which legitimized the transfer of personally identifiable information by U.S. companies doing business in Europe from the EEA and Switzerland to the U.S. In October 2015, a decision of the Court of Justice of the European Union, or CECJ, deemed the U.S.-EU Safe Harbor Framework an invalid method of compliance with restrictions set forth in the Data Protection Directive (and member states’ implementations thereof) regarding the transfer of data outside of the EEA. U.S. and EU authorities reached a political agreement in February 2016 regarding a new means for legitimizing personal data transfers from the EEA to the U.S., the EU-U.S. Privacy Shield. However, this framework is subject to an annual review that could result in changes to its framework and is being  challenged by national regulators and private parties. We have engaged in certain actions in an effort to legitimize our transfers of personal data from Europe to the U.S., and we anticipate engaging in additional activities in an effort to do so going forward. However, some of the transfer mechanisms on which we are relaying to legitimate the transfer of data outside of the EEA, such as standard Model Contractual Clauses (MCCs), have been subjected to regulatory and judicial scrutiny. Thus, while we have engaged in significant efforts to implement and maintain appropriate mechanisms to transfer data outside the EEA, if one or more of these mechanism is invalidated, we may become unsuccessful in establishing legitimate means of transferring all personal data from Europe to the U.S., we may experience reluctance or refusal by European consumers, retailers or CPGs to continue to use our solutions due to the potential risk exposure to such individuals and organizations  and we and our CPG and retail partners may be at risk of enforcement actions taken by an European data protection authority until we ensure that all applicable data transfers to us from the EEA and Switzerland are legitimized. In addition, the EU General Data Protection Regulation, or GDPR became effective in May 2018 and supersedes the 1995 EU Data Protection Directive, and includes more stringent operational requirements for processors and controllers of personal data, including payment card information, create additional rights for data subjects and impose significant penalties for non-compliance of up to the greater of €20 million or 4% of global annual revenues.

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Additionally, in June 2016, United Kingdom voters approved an exit from the EU, commonly referred to as “Brexit,” which could also lead to further legislative and regulatory changes. In March 2017, the United Kingdom began the process to leave the EU by April 2019.  While the Data Protection Act of 2018, that “implements” and complements the GDPR has achieved Royal Assent on May 23, 2018 and is now effective in the United Kingdom, it is still unclear whether transfer of data from the EEA to the United Kingdom will remain lawful under GDPR. We may incur liabilities, expenses, costs, and other operational losses under GDPR and applicable EU Member States and the United Kingdom privacy laws in connection with any measures we take to comply with them.

Additionally, California recently enacted legislation that has been dubbed the first “GDPR-like” law in the United States.  Known as the California Consumer Privacy Act, or CCPA, it creates new individual privacy rights for consumers (as that word is broadly defined in the law) and places increased privacy and security obligations on entities handling personal data of consumers or households.  When it goes into effect on January 1, 2020, the CCPA will require covered companies to provide new disclosures to California consumers, provide such consumers new ways to opt-out of certain sales of personal information, and allow for a new cause of action for data breaches. Legislators have stated that amendments will be proposed to the CCPA before it goes into effect, but it remains unclear what, if any, modifications will be made to this legislation or how it will be interpreted. As currently written, the CCPA will likely impact (possibly significantly) our US operations and exemplifies the vulnerability of our business to not only cyber threats but also the evolving regulatory environment related to personal data.

We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. For instance, with the increased focus on the use of data for advertising, the anticipation and expectation of future laws, regulations, standards and other obligations could impact us and our existing and potential business partners and delay certain business partnerships or deals until there is greater certainty. In addition, as we expand our data analytics and other data related product offerings there may be increased scrutiny on our use of data and we may be subject to new and unexpected regulations.Future laws, regulations, standards and other obligations could, for example, impair our ability to collect or use information that we utilize to provide targeted digital promotions and media to consumers, CPGs and retailers, thereby impairing our ability to maintain and grow our total customers and increase revenues. Future restrictions on the collection, use, sharing or disclosure of our users’ data or additional requirements for express or implied consent of users for the use and disclosure of such information could require us to modify our solutions, possibly in a material manner, and could limit our ability to develop or outright prohibit new solutions and features. Any such new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards may require us to incur additional costs and restrict our business operations.  If our measures fail to comply with current or future laws, regulations, policies, legal obligations or industry standards relating to privacy, data protection, data security, marketing or consumer protection, we may be subject to litigation, regulatory investigations, fines or other liabilities, as well as negative publicity and a potential loss of business. Moreover, if future laws, regulations, other legal obligations or industry standards, or any changed interpretations of the foregoing limit our users’, CPGs’ or retailers’ ability to use and share personally identifiable information or our ability to store, process and share personally identifiable information or other data, demand for our solutions could decrease, our costs could increase, our revenue growth could slow, and our business, financial condition and operating results could be harmed.

Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses.

Our agreements with CPGs, retailers and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement or other liabilities relating to or arising from our products, services or other contractual obligations. The term of these indemnity provisions generally survives termination or expiration of the applicable agreement. Large indemnity payments could harm our business.

We may not be able to adequately protect our intellectual property rights.

We regard our trademarks, service marks, copyrights, patents, trade dress, trade secrets, proprietary technology, and similar intellectual property as critical to our success.

We strive to protect our intellectual property rights in a number of jurisdictions, a process that is expensive and may not be successful or which we may not pursue in every location. We strive to protect our intellectual property rights by relying on federal, state and common law rights, contractual restrictions as well as rights provided under foreign laws. These laws are subject to change at any time and could further restrict our ability to protect our intellectual property rights.

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We also may not be able to acquire or maintain appropriate domain names in all countries in which we do business. Furthermore, regulations governing domain names may not protect our trademarks and similar proprietary rights. We may be unable to prevent third parties from acquiring domain names that are similar to, infringe upon, or diminish the value of our trademarks and other proprietary rights.

We typically enter into confidentiality and invention assignment agreements with our employees and contractors, and confidentiality agreements with parties with whom we conduct business in order to limit access to, and disclosure and use of, our proprietary information. Also, from time to time, we make our intellectual property rights available to others under license agreements. However, these contractual arrangements and the other steps we have taken to protect our intellectual property may not prevent the misappropriation or disclosure of our proprietary information, infringement of our intellectual property rights or deter independent development of similar technologies by others and may not provide an adequate remedy in the event of such misappropriation or infringement. Third parties that license our proprietary rights also may take actions that diminish the value of our proprietary rights or reputation.

Obtaining and maintaining effective intellectual property rights is expensive, including the costs of defending our rights. Even where we have such rights, they may be later found to be unenforceable or have a limited scope of enforceability. We may not be able to discover or determine the extent of any unauthorized use of our proprietary rights. Litigation may be necessary to enforce our intellectual property rights, protect our respective trade secrets or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business and operating results. If we fail to maintain, protect and enhance our intellectual property rights, our business and operating results may be harmed.

We may be accused of infringing intellectual property rights of third parties.

Other parties may claim that we infringe their proprietary rights. We are, have been subject to, and expect to continue to be subject to, claims and legal proceedings regarding alleged infringement by us of the intellectual property rights of third parties. Such claims, whether or not meritorious, may result in the expenditure of significant financial and managerial resources, injunctions against us, or the payment of damages, including to satisfy indemnification obligations. We may need to obtain licenses from third parties who allege that we have infringed their rights, but such licenses may not be available on terms acceptable to us or at all. In addition, we may not be able to obtain or utilize on terms that are favorable to us, or at all, licenses or other rights with respect to intellectual property we do not own. These risks have been amplified by the increase in third parties whose sole or primary business is to assert such claims.

We may be unable to continue to use the domain names that we use in our business, or prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks.

We may lose significant brand equity in our “Coupons.com” domain name, our “Quotient.com” domain name, and other valuable domain names. If we lose the ability to use a domain name, whether due to trademark claims, failure to renew an applicable registration, or any other cause, we may be forced to market our products under new domain names, which could cause us substantial harm, or to incur significant expense in order to purchase rights to the domain names in question. In addition, our competitors and others could attempt to capitalize on our brand recognition by using domain names similar to ours. We also may not be able to acquire or maintain appropriate domain names or trademarks in all countries in which we do business.  Domain names similar to ours have been registered in the United States and elsewhere. We may be unable to prevent third parties from acquiring and using domain names that infringe on, are similar to, or otherwise decrease the value of our brand or our trademarks or service marks. Protecting and enforcing our rights in our domain names may require litigation, which could result in substantial costs and diversion of management’s attention and harm our business.

Our business depends on strong brands, and if we are not able to maintain and enhance our brands, or if we receive unfavorable media coverage, our ability to retain and expand our number of CPGs, retailers and consumers will be impaired and our business and operating results will be harmed.

We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing our brands are critical to expanding our base of CPGs, retailers and consumers. Maintaining and enhancing our brands may require us to make substantial investments and these investments may not be successful. If we fail to promote and maintain our brands, or if we incur excessive expenses in this effort, our business would be harmed. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive. Maintaining and enhancing our brands will depend on our ability to continue to provide sufficient quantities of reliable, trustworthy and high quality digital coupons, which we may not do successfully.

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Unfavorable publicity or consumer perception of our websites, platforms, practices or service offerings, or the offerings of our CPGs and retailers, could adversely affect our reputation, resulting in difficulties in recruiting, decreased revenues and a negative impact on the number of CPGs and retailers we feature and our user base, the loyalty of our consumers and the number and variety of digital coupons we offer. As a result, our business could be harmed.  

Some of our solutions contain open source software, which may pose particular risks to our proprietary software and solutions.

We use open source software in our solutions and will use open source software in the future. From time to time, we may face claims from third parties claiming ownership of, or demanding release of, the open source software and/or derivative works that we developed using such software (which could include our proprietary source code), or otherwise seeking to enforce the terms of the applicable open source license. These claims could result in litigation and could require us to purchase a costly license or cease offering the implicated solutions unless and until we can re-engineer them to avoid infringement. This re-engineering process could require significant additional research and development resources. In addition to risks related to license requirements, use of certain open source software can lead to greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or controls on the origin of software. Any of these risks could be difficult to eliminate or manage, and, if not addressed, could have a negative effect on our business and operating results.

We may be required to record a significant charge to earnings if our goodwill or amortizable intangible assets become impaired.

We are required under GAAP to review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of assets may not be recoverable. The events and circumstances we consider include the business climate, legal factors, operating performance indicators and competition. In the future we may be required to record a significant charge to earnings in our condensed consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined. This could adversely impact our results of operations and harm our business.

If we fail to expand effectively in international markets, our revenues and our business may be harmed.

We currently generate almost all of our revenues from the United States. We also operate to a limited extent in the United Kingdom, France and other countries in Europe. Many CPGs and retailers on our platforms have global operations and we plan to grow our operations and offerings through expansion in existing international markets and by partnering with our CPGs and retailers to enter new geographies that are important to them. Further expansion into international markets will require management attention and resources and we have limited experience entering new geographic markets. Entering new foreign markets will require us to localize our services to conform to a wide variety of local cultures, business practices, laws and policies. The different commercial and Internet infrastructure in other countries may make it more difficult for us to replicate our business model. In some countries, we will compete with local companies that understand the local market better than we do, and we may not benefit from first-to-market advantages. We may not be successful in expanding into particular international markets or in generating revenues from foreign operations. As we expand internationally, we will be subject to risks of doing business internationally, including the following:

• competition with strong local competitors and preference for local providers, or foreign companies entering the same markets;

• the cost and resources required to localize our platform;

• burdens of complying with a wide variety of different laws and regulations, including intellectual property laws and regulation of digital coupons and media, Internet services, privacy and data protection, marketing and consumer protection laws, anti-competition regulations and different liability standards, which may limit or prevent us from offering of our solutions in some jurisdictions or limit our ability to enforce contractual obligations;

• differences in how trade promotion spending is allocated;

• differences in the way digital coupons and advertising are delivered and how consumers access and use digital coupons;

• technology compatibility;

• difficulties in recruiting and retaining qualified employees and managing foreign operations;

• different employee/employer relationships and the existence of workers’ councils and labor unions;

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• shorter payment cycles, different accounting practices and greater problems in collecting accounts receivable;

• higher product return rates;

• seasonal reductions in business activity;

• adverse tax effects and foreign exchange controls making it difficult to repatriate earnings and cash; and

• political and economic instability.

Changes in the U.S. taxation of international activities may increase our worldwide effective tax rate and harm our financial condition and results of operations. The taxing authorities of the jurisdictions in which we plan to operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences, which could increase our worldwide effective tax rate and harm our financial position and results of operations. Significant judgment will be required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there will be many transactions and calculations for which the ultimate tax determination is uncertain. As we expand our business to operate in numerous taxing jurisdictions, the application of tax laws may be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions. It is not uncommon for taxing authorities in different countries to have conflicting views. In addition, tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. In the United States, legislation commonly known as the Tax Cuts and Jobs Act (referred to herein as the “Tax Act”) was enacted on December 22, 2017, which included a number of changes, such as a reduction in the corporate tax rate, a one-time transition tax on the mandatory deemed repatriation of cumulative foreign earnings as of December 31, 2017 and provided for the transition of U.S. international taxation from a worldwide tax system to a territorial system. These changes, or future changes in tax laws applicable to us, could materially increase our future income tax expense.

Our planned corporate structure and intercompany arrangements will be implemented in a manner we believe is in compliance with current prevailing tax laws. However, the tax benefits which we intend to eventually derive could be undermined if we are unable to adapt the manner in which we operate our business and due to changing tax laws.

Our failure to manage these risks and challenges successfully could materially and adversely affect our business, financial condition and results of operations.

The loss of one or more key members of our management team, or our failure to attract, integrate and retain other highly qualified personnel in the future, could harm our business.

We currently depend on the continued services and performance of the key members of our management team, including Steven R. Boal, our Executive Chairman, and Mir Aamir, our President and Chief Executive Officer. Mr. Boal is one of our founders and his leadership has played an integral role in our growth. Mr. Aamir’s deep industry experience and long-standing relationships with both CPGs and retailers are key to our growth and developing our business strategy. Key institutional knowledge remains with a small group of long-term employees and directors whom we may not be able to retain. The loss of key personnel, including key members of management as well as our marketing, sales, product development and technology personnel, could disrupt our operations and have an adverse effect on our ability to grow our business.

As we become a more mature company, we may find our recruiting and retention efforts more challenging. We are seeking to continue to hire a significant number of personnel, including certain key management personnel. We may be limited in our ability to recruit global talent by U.S. immigration laws, including those related to H1-B visas. The demand for H1-B visas to fill highly-skilled IT and computer science jobs is greater than the number of H-1B visas available each year; for the U.S. government’s 2018 fiscal year, the U.S. issued 85,000 H-1B visas out of 199,000 requests.  In addition, the regulatory environment related to immigration under the current presidential administration may increase the likelihood that immigration laws may be modified to further limit the availability of H1-B visas. If a new or revised visa program is implemented, it may impact our ability to recruit, hire and retain qualified skilled personnel, which could adversely impact our business, operating results and financial condition. If we do not succeed in attracting, hiring and integrating qualified personnel, or retaining and motivating existing personnel, we may be unable to grow effectively.

Changes to financial accounting standards or the SEC’s rules and regulations may affect our results of operations and cause us to change our business practices.

We prepare our financial statements to conform to U.S. GAAP. These accounting principles are subject to interpretation by the FASB, American Institute of Certified Public Accountants (“AICPA”), the SEC and various bodies

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formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced. Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. For example, in February 2016, the FASB issued a new standard, Topic 842, which will require us to record most of our leases on our balance sheets beginning in our first quarter of fiscal year 2019.  

We are currently or could be exposed in the future to fluctuations in currency exchange rates and interest rates.

To date, we have generated almost all of our revenues from within the United States. As a result, we currently do not have significant revenues or expenses in our international operations and we do not hedge our foreign currency exchange risk. However, we plan to grow our operations and offerings through expansion in existing international markets and by partnering with our existing CPGs and retailers to enter new geographies that are important to them. For example, we opened a research and development facility in Bangalore, India and acquired Shopmium, which has research and development operations in Paris, France. As we expand our business outside the United States we will face exposure to adverse movements in currency exchange rates. We will be exposed to foreign exchange rate fluctuations from the conversion of collections and expenses not denominated in U.S. dollars. If the U.S. dollar weakens against foreign currencies, the conversion of these foreign currency denominated transactions will result in increased revenues, operating expenses and net income. Similarly, if the U.S. dollar strengthens against foreign currencies, the conversion of these foreign currency denominated transactions will result in decreased revenues, operating expenses and net income. As exchange rates vary, sales and other operating results, when translated, may differ materially from expectations. Our risks related to currency fluctuations will increase as our international operations become an increasing portion of our business. In addition, we face exposure to fluctuations in interest rates which may impact our investment income unfavorably.

Our use of and reliance on international research and development resources and operations may expose us to unanticipated costs or events.

We have research and development centers in India and France.  We expect to increase our headcount, development, and operations activity in India. There is no assurance that our reliance upon international research and development resources and operations will enable us to achieve our research and development and operational goals or greater resource efficiency. Further, our international research and development and operations efforts involve significant risks, including:

• difficulty hiring and retaining appropriate personnel due to intense competition for such resources and resulting wage inflation in the cities where our research and development activities and operations are located;

• different labor regulations, especially in the European Union, where labor laws are generally more advantageous to employees as compared to United States, including deemed hourly wage and overtime regulations in these locations;

• exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions;

• delays and inefficiencies caused by geographical separation of our international research and development activities and operations and other challenges inherent to efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs;

• the knowledge transfer related to our technology and resulting exposure to misappropriation of intellectual property or information that is proprietary to us, our customers and other third parties;

• heightened exposure to change in the economic, security and political conditions in the countries where our research and development activities and operations are located;

• fluctuations in currency exchange rates and regulatory compliance in the countries where our research and development activities and operations are located; and

• interruptions to our operations in the countries where our research and development activities and operations are located as a result of floods and other natural catastrophic events as well as other events beyond our control such as power disruptions or terrorism.

Difficulties resulting from the factors above could increase our research and development or operational expenses, delay the introduction of new products, or impact our product quality, the occurrence of any of which could adversely affect our business and operating results.

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Our business is subject to interruptions, delays or failures resulting from earthquakes, other natural catastrophic events or terrorism.

Our headquarters is located in Mountain View, California. Our current technology infrastructure is hosted across two data centers in co-location facilities in California and Nevada. In addition, we use two other co-location facilities in California and Virginia to host our Retailer iQ platform. Our services, operations and the data centers from which we provide our services are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events. A significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, financial condition and results of operations and our insurance coverage may be insufficient to compensate us for losses that may occur. Acts of terrorism could cause disruptions to the Internet, our business or the economy as a whole. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting areas where data centers upon which we rely are located, and our business interruption insurance may be insufficient to compensate us for losses that may occur. Such disruptions could negatively impact our ability to run our websites, which could harm our business.

Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.

We may in the future be required to raise additional capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity or equity-linked financing, such as our convertible senior notes, may dilute the interests of our stockholders, and debt financing, if available, may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business or respond to competitive pressures.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, and similar state law provisions, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset future taxable income. If our existing NOLs are subject to limitations arising from ownership changes, our ability to utilize NOLs could be limited by Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control, also could result in an ownership change under Section 382 of the Code. Additionally, our NOLs arising in tax years beginning prior to January 1, 2018 are subject to expiration and may expire prior to being utilized. Under the Tax Act any NOLs arising in tax years beginning after December 31, 2017 are not subject to expiration and may be carried forward indefinitely, but in any given year such NOLs may only be used to offset a maximum of 80% of taxable income for the year, determined without regard to the application of such NOLs. There is also a risk that our NOLs could otherwise be unavailable to offset future income tax liabilities due to changes in the law, including regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons. In addition, the Tax Act includes changes to the U.S. federal corporate income tax rate, and our net operating loss carryforwards and other deferred tax assets will be revalued at the newly enacted rate. We do not expect this to have a material impact on our financials because we currently maintain a full valuation allowance on our U.S. deferred tax assets. For these reasons, we may not be able to utilize all of our NOLs, even if we attain profitability.

State and foreign laws regulating money transmission could impact our cash-back applications.

Many states and certain foreign jurisdictions impose license and registration obligations on those companies engaged in the business of money transmission, with varying definitions of what constitutes money transmission. If our cash-back applications were to subject us to any applicable state or foreign laws, it could subject us to increased compliance costs and delay our ability to offer this product in certain jurisdictions pending receipt of any necessary licenses or registrations. If we need to make product and operational changes in light of these laws, the growth and adoption of these products may be adversely impacted, and our revenues may be harmed.

Risks Related to Our Convertible Senior Notes

We are leveraged financially, which could adversely affect our ability to adjust our business to respond to competitive pressures and to obtain sufficient funds to satisfy our future growth, business needs and development plans.

In November 2017, we issued $200 million aggregate principal amount of convertible senior notes (the “notes”).  Our leveraged capital structure could have negative consequences, including, but not limited to, the following:

• we may be more vulnerable to economic downturns, less able to withstand competitive pressures and less flexible in responding to changing business and economic conditions;

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• our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes may be limited;

• a substantial portion of our cash flow from operations in the future may be required for the payment of the principal amount of our existing indebtedness when it becomes due; and

• we may elect to make cash payments upon any conversion of the convertible notes, which would reduce our cash on hand

Our ability to meet our payment obligations under our notes depends on our ability to generate significant cash flow in the future. This, to some extent, is subject to general economic, financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control. There can be no assurance that our business will generate cash flow from operations, or that additional capital will be available to us, in an amount sufficient to enable us to meet our debt payment obligations and to fund other liquidity needs. If we are unable to generate sufficient cash flow to service our debt obligations, we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If we were unable to implement one or more of these alternatives, we may be unable to meet our debt payment obligations, which could have a material adverse effect on our business, results of operations, or financial condition.

The conditional conversion feature of the notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the notes is triggered, holders of the notes will be entitled to convert their notes at any time during specified periods at their option. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock or a combination of cash and shares of our common stock, at our election. If one or more holders elect to convert their notes, (unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share)), we intend to settle a portion or all of our conversion obligation in cash, which could adversely affect our liquidity. In addition, even if holders of notes do not elect to convert their notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the notes, could have a material effect on our reported financial results.

Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of the convertible debt instruments (such as the notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet at the issuance date and the value of the equity component would be treated as debt discount for purposes of accounting for the debt component of the notes. As a result, we will be required to record a greater amount of non-cash interest expense as a result of the amortization of the discounted carrying value of the notes to their face amount over the term of the notes. We will report larger net losses (or lower net income) in our financial results because ASC 470-20 will require interest to include both the amortization of the debt discount and the instrument’s nonconvertible coupon interest rate, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the notes.

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The Company uses the treasury stock method for calculating any potential dilutive effect of the conversion spread on diluted net income per share, if applicable. The effect of which is that the shares issuable upon conversion of such notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of such notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable or otherwise elect not to use the treasury stock method in accounting for the shares issuable upon conversion of the notes, then our diluted earnings per share could be adversely affected.

Conversion of our notes will dilute the ownership interest of existing stockholders and may depress the price of our common stock.

The conversion of some or all of our notes, if such conversion occurs, will dilute the ownership interests of then-existing stockholders to the extent we deliver shares upon conversion of any of the notes.  Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of our common stock.  In addition, the existence of the notes may encourage short selling by market participants because the conversion of the notes could be used to satisfy short positions, or anticipated conversion of the notes into shares of our common stock could depress the price of our common stock.

Risks Related to Ownership of our Common Stock

The market price of our common stock has been, and is likely to continue to be, subject to wide fluctuations and could subject us to litigation.

The price of our common stock may change in response to variations in our operating results and also may change in response to other factors, including factors specific to technology companies, many of which are beyond our control. As a result, our stock price may experience significant volatility. Among other factors that could affect our stock price are:

• the financial projections that we or analysts may choose to provide to the public, any changes in these projections or our failure for any reason to meet these projections;

• actual or anticipated changes or fluctuations in our results of operations;

• whether our results of operations meet the expectations of securities analysts or investors;

• addition or loss of significant customers or commercial business partners;

• price and volume fluctuations in the overall stock market from time to time;

• fluctuations in the trading volume of our shares or the size of our public float;

• success of competitive products or services;

• the public’s response to press releases or other public announcements by us or others, including our filings with the SEC;

• disputes or other developments related to proprietary rights, including patents, litigation matters or our ability to obtain intellectual property protection for our technologies;

• announcements relating to litigation;

• speculation about our business in the press or the investment community;

• reports, guidance and ratings issued by securities or industry analysts;

• future sales of our common stock by our significant stockholders, officers and directors;

• changes in our capital structure, such as future issuances of debt or equity securities;

• our entry into new markets;

• regulatory developments in the United States or foreign countries;

• strategic actions by us or our competitors, such as acquisitions or restructurings; and

• changes in accounting principles.

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If any of the foregoing occurs, it could cause our stock price or trading volume to decline. In addition, the stock market in general has experienced substantial price and volume volatility that is often seemingly unrelated to the operating results of any particular companies. Moreover, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the market price of our common stock could decline for reasons unrelated to our business, operating results or financial condition. The market price for our stock might also decline in reaction to events that affect other companies within, or outside, our industry, even if these events do not directly affect us. Some companies that have experienced volatility in the trading price of their stock have been subject of securities litigation. If we are the subject of such litigation, it could result in substantial costs and a diversion of management’s attention and resources.

Substantial future sales of shares by our stockholders could negatively affect our stock price.

Sales of a substantial number of shares of our common stock in the public market could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We have approximately 93,536,042 shares of common stock outstanding as of March 31, 2019, assuming no exercise of our outstanding options or vesting of our outstanding RSUs.

Our equity incentive plans allow us to issue, among other things, stock options, restricted stock and restricted stock units and we have filed a registration statement under the Securities Act to cover the issuance of shares upon the exercise or vesting of awards granted under those plan

The concentration of our common stock ownership with our executive officers, directors and owners of 5% or more of our outstanding common stock will limit our ability to influence corporate matters.

Our executive officers, directors and owners of 5% or more of our outstanding common stock together beneficially own approximately 46% of our outstanding common stock, based on the number of shares outstanding as of March 31, 2019. These stockholders therefore have significant influence over management and affairs and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the foreseeable future. This concentrated control limits your ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. This ownership could affect the value of your shares of common stock.

Our stock repurchase program could affect the price of our common stock and increase volatility and may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

Our Board of Directors has approved share repurchase programs for us to repurchase shares of our stock. In April 2018, our Board of Directors authorized a one-year share repurchase program (“2018 Program”) for us to repurchase up to $100.0 million of our common stock from May 2018 through May 2019. During the three months ended March 31, 2019, we repurchased and retired 2,511,633 shares of our common stock for an aggregate of $25.2 million. As of March 31, 2019, $59.0 million remained available for repurchases under the 2018 Program.In April 2019, our Board of Directors authorized a one-year share repurchase program (“2019 Program”) for us to repurchase up to $60.0 million of our common stock from May 2019 through May 2020. The 2019 Program will commence after the termination of the 2018 Program. Stock repurchases may be made from time to time at prevailing market prices, subject to certain restrictions on volume, pricing and timing. The repurchases may be made in the open market, through negotiated transactions, including accelerated share repurchase agreements, and through plans designed to comply with Rule 10b5-1 under the Securities Act.  The 2019 Program is discretionary, and we may suspend, modify or terminate the 2019 Program at any time without prior notice. Repurchases pursuant to our stock repurchase program could affect the price of our common stock and increase its volatility. The existence of our stock repurchase program could also cause the price of our common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock. Additionally, repurchases under our stock repurchase program will diminish our cash reserves, which could impact our ability to further develop our technology, access and/or retrofit additional facilities and service our indebtedness. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares. Any failure to repurchase shares after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price. Although our stock repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

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If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

We are subject to the reporting requirements of the Exchange Act, SOX, and the rules and regulations of the New York Stock Exchange, or the NYSE. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources.

SOX requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will be required to include in our periodic reports we will file with the SEC under Section 404 of SOX. In the event that we are not able to demonstrate compliance with Section 404 of SOX, that our internal control over financial reporting is perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and our stock price could decline.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and could result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, our common stock may not be able to remain listed on the NYSE.

Our independent registered public accounting firm is required to audit the effectiveness of our internal control over financial reporting as we lost our status as an “emerging growth company,” as defined in the JOBS Act, effective December 31, 2018. We are considered a large accelerated filer as the aggregate market value of our common equity held by our non-affiliates exceeded the $700 million threshold when measured as of the last business day of the end of our second quarter of 2018. If our independent registered public accounting firm concludes that our internal control over financial reporting is not effective, it may issue an adverse report.

Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results, and cause a decline in the price of our common stock.

Effective December 31, 2018, we are no longer an “emerging growth company,” and the reduced disclosure requirements applicable to “emerging growth companies” will no longer apply, which will increase our costs as a public company and demands on management.

Effective December 31, 2018 we are no longer an “emerging growth company” as defined in the JOBS Act.   As such, we will incur significant additional expenses that we did not previously incur in complying with the SOX and rules implemented by the SEC. The cost of compliance with Section 404 of SOX (“Section 404”) has required and will continue to require us to incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements.  Moreover, if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Furthermore, investor perceptions of our company may suffer if, in the future, material weaknesses are found, and this could cause a decline in the market price of our stock. Irrespective of compliance with Section 404, any failure of our

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internal control over financial reporting could have a material adverse effect on our stated operating results and harm our reputation. If we are unable to implement these changes effectively or efficiently, it could harm our operations, financial reporting or financial results and could result in an adverse opinion on internal control from our independent registered public accounting firm.

In addition, we have previously taken advantage of the JOBS Act reduced disclosure requirements applicable to "emerging growth companies" regarding executive compensation and exemptions from the requirements of holding advisory say-on-pay votes on executive compensation. We are no longer eligible for such reduced disclosure requirements and exemptions and as such, we will be required to hold a say-on-pay vote and a say-on-frequency vote at our 2019 annual meeting of stockholders. We expect that the increased disclosure requirements will require additional attention from management and will result in increased costs to us, which could include higher legal fees, accounting fees and fees associated with investor relations activities, among others.

If securities analysts do not publish research or if securities analysts or other third parties publish inaccurate or unfavorable research about us, the price of our common stock could decline.

The trading market for our common stock will rely in part on the research and reports that securities analysts and other third parties choose to publish about us. We do not control these analysts or other third parties. The price of our common stock could decline if one or more securities analysts downgrade our common stock or if one or more securities analysts or other third parties publish inaccurate or unfavorable research about us or cease publishing reports about us.

We do not intend to pay dividends for the foreseeable future.

We intend to retain all of our earnings for the foreseeable future to finance the operation and expansion of our business and do not anticipate paying cash dividends on our common stock. As a result, you can expect to receive a return on your investment in our common stock only if the market price of the stock increases.

Provisions in our charter documents and under Delaware law could discourage a takeover that stockholders may consider favorable.

Provisions in our certificate of incorporation and by-laws may have the effect of delaying or preventing a change of control or changes in our management. Amongst other things, these provisions:

• authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to defend against a takeover attempt;

• establish a classified Board of Directors, as a result of which the successors to the directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following their election;

• require that directors only be removed from office for cause and only upon a majority stockholder vote;

• provide that vacancies on the Board of Directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;

• prevent stockholders from calling special meetings; and

• prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the stockholders.

In addition, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder becomes an “interested” stockholder.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares PurchasedasPart of Publicly AnnouncedProgram(1)		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program (1)
January 1 - 31, 2019		888,839	$	10.29		888,839	$	75,000,000
February 1 - 28, 2019		937,326		9.77		937,326		65,800,000
March 1 - 31, 2019		685,468		9.93		685,468		59,000,000
Total		2,511,633	$	10.00		2,511,633	$	59,000,000

(1) In April 2018, the Company’s Board of Directors authorized the 2018 Program to repurchase up to $100.0 million of the Company’s common stock for a one-year duration from May 2018 through May 2019. During the three months ended March 31, 2019, the Company repurchased and retired 2,511,633 shares of its common stock for an aggregate of $25.2 million. As of March 31, 2019, $59.0 million remained available repurchases under the 2018 Program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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Item 6. Exhibits.

			Incorporated by Reference
Number	Exhibit Title	Form		File No.		Exhibit	Filing Date		Filed Herewith
3.1	Amended and Restated Certificate of Incorporation of the Registrant, as amended effective October 20, 2015.		10-K		001-36331	3.1		03/11/16
3.2	Amended and Restated Bylaws of the Registrant.		8-K		001-36331	3.2		10/06/15
4.1	Form of Registrant’s Common Stock Certificate.		S-1/A		333-193692	4.1		02/25/14
4.2	Eighth Amended and Restated Investors’ Rights Agreement among the Registrant and certain holders of its capital stock, dated June 1, 2011.		S-1		333-193692	4.2		01/31/14
31.1	Certification of Principal Executive pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.									X
31.2	Certificate of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.									X
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.									X
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.									X
101.INS	XBRL Instance Document.									X
101.SCH	XBRL Taxonomy Extension Schema Document.									X
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.									X
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.									X
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.									X
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.									X
*	The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Quotient under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.
†	Indicates a management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	QUOTIENT TECHNOLOGY INC.
Dated: May 10, 2019	By:	/s/ Mir Aamir
		Mir Aamir
		President and Chief Executive Officer
		(Principal Executive Officer)
Dated: May 10, 2019	By:	/s/ Ronald Fior
		Ronald Fior
		Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULES 13A-14(A) AND 15D-14(A),

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mir Aamir, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Quotient Technology Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Mir Aamir

Mir Aamir

President and Chief Executive Officer

(Principal Executive Officer)

Date: May 10, 2019

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULES 13A-14(A) AND 15D-14(A),

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald Fior, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Quotient Technology Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Ronald Fior

Ronald Fior

Chief Financial Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

Date: May 10, 2019

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Quotient Technology Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Mir Aamir, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Mir Aamir

Mir Aamir

President and Chief Executive Officer

(Principal Executive Officer)

Date: May 10, 2019

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Quotient Technology Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald Fior, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Ronald Fior

Ronald Fior

Chief Financial Officer and Treasurer

(Principal Financial Officer and Principal Accounting Officer)

Date: May 10, 2019

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 03, 2019
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Trading Symbol	QUOT
Entity Registrant Name	Quotient Technology Inc.
Entity Central Index Key	0001115128
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		93,656,678

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash and cash equivalents	$ 286,458	$ 302,028
Short-term investments		20,738
Accounts receivable, net of allowance for doubtful accounts of $1,331 and $1,200 at March 31, 2019 and December 31, 2018, respectively	108,323	112,108
Prepaid expenses and other current assets	10,931	10,044
Total current assets	405,712	444,918
Property and equipment, net	15,379	15,579
Intangible assets, net	76,085	81,724
Goodwill	118,821	118,821
Other assets	8,628	1,311
Total assets	624,625	662,353
Current liabilities:
Accounts payable	17,478	17,060
Accrued compensation and benefits	8,099	13,107
Other current liabilities	42,797	53,255
Deferred revenues	9,807	8,686
Contingent consideration related to acquisitions	24,893
Total current liabilities	103,074	92,108
Other non-current liabilities	7,668	3,622
Contingent consideration related to acquisitions	7,133	28,963
Convertible senior notes, net	158,276	155,719
Deferred tax liabilities	1,854	1,854
Total liabilities	278,005	282,266
Commitments and contingencies (Note 14)
Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized and no shares issued or outstanding at March 31, 2019 and December 31, 2018
Common stock, $0.00001 par value—250,000,000 shares authorized; 93,536,042 and 94,995,211 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively	1	1
Additional paid-in capital	689,809	703,023
Accumulated other comprehensive loss	(814)	(844)
Accumulated deficit	(342,376)	(322,093)
Total stockholders’ equity	346,620	380,087
Total liabilities and stockholders’ equity	$ 624,625	$ 662,353

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Statement Of Financial Position [Abstract]
Allowance for doubtful accounts	$ 1,331	$ 1,200
Preferred stock, par value	$ 0.00001	$ 0.00001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.00001	$ 0.00001
Common stock, shares authorized	250,000,000	250,000,000
Common stock, shares issued	93,536,042	94,995,211
Common stock, shares outstanding	93,536,042	94,995,211

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Revenues	$ 98,107	$ 86,766
Costs and expenses:
Cost of revenues	56,823	40,453
Sales and marketing	25,523	23,830
Research and development	10,370	12,626
General and administrative	13,623	11,392
Change in fair value of escrowed shares and contingent consideration, net	3,062	7,350
Total costs and expenses	109,401	95,651
Loss from operations	(11,294)	(8,885)
Interest expense	(3,439)	(3,308)
Other income (expense), net	1,531	938
Loss before income taxes	(13,202)	(11,255)
Provision for income taxes	26	102
Net loss	$ (13,228)	$ (11,357)
Net loss per share, basic and diluted	$ (0.14)	$ (0.12)
Weighted-average number of common shares used in computing net loss per share, basic and diluted	94,263	92,711

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement Of Income And Comprehensive Income [Abstract]
Net loss	$ (13,228)	$ (11,357)
Other comprehensive income (loss):
Foreign currency translation adjustments	30	(22)
Comprehensive loss	$ (13,198)	$ (11,379)

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands	Total	Common Stock and Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balances at Dec. 31, 2017	$ 398,041	$ 686,025		$ (700)	$ (287,285)
Other comprehensive income (loss)	(22)			(22)
Cumulative-effect of accounting change					105
Stock-based compensation		7,857
Exercise of employee stock options		1,675
Payments for taxes related to net share settlement of equity awards		(6,859)
Change in fair value of escrowed shares related to a services and data agreement		1,350
Net loss	(11,357)				(11,357)
Ending balance at Mar. 31, 2018	390,789	690,048		(722)	(298,537)
Beginning balances at Dec. 31, 2018	380,087	703,023		(844)	(322,093)
Other comprehensive income (loss)	30			30
Repurchase of common stock			$ (25,162)
Stock-based compensation		8,102
Exercise of employee stock options		1,443
Payments for taxes related to net share settlement of equity awards		(4,651)
Retirement of treasury stock		(18,107)	$ 25,162		(7,055)
Net loss	(13,228)				(13,228)
Ending balance at Mar. 31, 2019	$ 346,620	$ 689,810		$ (814)	$ (342,376)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net loss	$ (13,228)	$ (11,357)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	7,722	4,417
Stock-based compensation	8,048	7,796
Amortization of debt discount and issuance cost	2,558	2,425
Loss on disposal of property and equipment	3	2
Allowance for doubtful accounts	132	95
Deferred income taxes	25	102
Change in fair value of escrowed shares and contingent consideration, net	3,062	7,350
Changes in operating assets and liabilities:
Accounts receivable	3,652	(4,433)
Prepaid expenses and other current assets	(791)	(1,634)
Accounts payable and other current liabilities	2,418	(5,783)
Accrued compensation and benefits	(5,004)	(5,901)
Deferred revenues	1,121	668
Net cash provided by (used in) operating activities	9,718	(6,253)
Cash flows from investing activities:
Purchases of property and equipment	(1,994)	(1,713)
Purchase of intangible assets	(14,611)
Purchases of short-term investments		(25,721)
Proceeds from maturities of short-term investment	20,738	34,750
Net cash provided by investing activities	4,133	7,316
Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans	1,443	1,675
Payments for taxes related to net share settlement of equity awards	(4,651)	(6,857)
Repurchases and retirement of common stock under share repurchase program	(26,134)
Principal payments on promissory note and capital lease obligations	(77)	(82)
Net cash used in financing activities	(29,419)	(5,264)
Effect of exchange rates on cash and cash equivalents	(2)	13
Net decrease in cash and cash equivalents	(15,570)	(4,188)
Cash and cash equivalents at beginning of period	302,028	334,635
Cash and cash equivalents at end of period	286,458	330,447
Supplemental disclosures of cash flow information:
Cash paid for income taxes	57	42
Cash paid for interest	6	8
Supplemental disclosures of noncash investing and financing activities:
Fixed asset purchases not yet paid	826	$ 320
Repurchase of common stock not settled	$ 586

XML

Description of Business

3 Months Ended

Mar. 31, 2019

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of Business

1. Description of Business

Quotient Technology Inc. (together with its subsidiaries, the “Company”), is an industry leading digital marketing platform, providing technology and services that power integrated digital promotions and media programs for consumer packaged goods (“CPG”s) brands and retailers. These programs are delivered across the Company’s network, including its flagship consumer brand Coupons.com and retail partners. This network provides the Company with proprietary and licensed data, including online behaviors, purchase intent, and retailers’ in-store point-of-sale (“POS”) shopper data, to target shoppers with the most relevant digital coupons and ads. Customers and partners use the Company to influence shoppers via digital channels, integrate marketing and merchandising programs, and leverage shopper data and insights to drive measurable sales results.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2019 or for any other period.

There have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on its condensed consolidated financial statements and related notes except for the adoption of the requirements of Accounting Standards Update ("ASU") No. 2016-02, Leases, effective January 1, 2019 using the modified retrospective transition method.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Company’s condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, revenue recognition, collectability of accounts receivable, coupon code sales return reserve, valuation of assets acquired and liabilities assumed in a business combination, useful lives of intangible assets and property and equipment, estimates related to recovery of long-lived assets and goodwill, stock-based compensation, measurement of contingent consideration, restructuring accruals, classification of current and non-current deferred revenue, debt discounts, and income taxes, deferred income tax assets and associated valuation allowances. These estimates generally require judgments, may involve the analysis of historical and prediction of future trends, and are subject to change from period to period. Actual results may differ from the Company’s estimates, and such differences may be material to the accompanying condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Adopted

Leases

Topic 842: In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The guidance requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. Lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs.

The Company adopted ASU 2016-02 in the first quarter of 2019 utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first quarter of 2019. The Company has elected certain practical expedients, which allows the Company not to reassess (i) whether any expired or existing contracts as of the adoption date are or contain a lease, (ii) lease classification for any expired or existing leases as of the adoption date and (iii) initial direct costs for any existing leases as of the adoption date. The Company has elected to account for lease and non-lease components as a single lease component. In addition, the Company has elected not to recognize right-of-use assets and liabilities for short-term leases with terms of twelve months or less. The adoption of ASU 2016-02 on January 1, 2019, resulted in the recognition of 1) right-of-use assets of $8.5 million, adjusted for deferred rent and lease incentives as of the adoption date, and 2) lease liabilities for operating leases of $11.5 million on its condensed consolidated balance sheet, with no material impact to its condensed consolidated statements of operations and cash flows. Refer to Note 13 for further information regarding the impact of adoption of the standard on the Company’s condensed consolidated financial statements.

Revenue from Contracts with Customers

Topic 606: In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”), which supersedes the revenue recognition requirements in ASC 605, ”Revenue Recognition” (“Topic 605”), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.

The Company adopted Topic 606 as of January 1, 2018, using the modified retrospective method.  

As a result of adopting the new standard, the Company recorded a net increase to retained earnings of $0.1 million as of January 1, 2018, with the impact primarily related to unbilled receivables for performance obligations that have been satisfied but no invoice has been issued. The impact to revenues as a result of applying Topic 606 for the year ended December 31, 2018 was an increase of $1.0 million.  

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

Topic 350: In August 2018, the FASB issued ASU No. 2018-15, Intangibles (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard also requires customers to amortize the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The Company early adopted this standard, as of October 1, 2018, on a prospective basis for applicable implementation costs. The adoption did not have a material impact on the Company's consolidated financial statements in the fourth quarter of 2018.

Revenue Recognition

The Company primarily generates revenue by providing digital promotions and media solutions to its customers and partners. Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, we satisfy a performance obligation

Promotion Revenue

The Company generates revenue from promotions, in which consumer packaged goods brands, or CPGs, pay the Company to deliver coupons to consumers through its network of publishers and retail partners. The Company generates revenues, as consumers select, activate, or redeem a coupon through its platform by either saving it to a retailer loyalty account for automatic digital redemption, or printing it for physical redemption at a retailer. The pricing for promotion arrangements generally includes both coupon setup fees and coupon transaction fees. Coupon setup fees are related to the creation of digital coupons and set up of the underlying campaign on Quotient’s proprietary platform for tracking of related activations or redemptions. The Company recognizes revenues related to coupon setup fees over time, proportionally, on a per transaction basis, using the number of authorized transactions per insertion order, commencing on the date of the first coupon transaction. Coupon transaction fees are generally determined on a per unit activation or per redemption basis, and are generally billed monthly. Insertion orders generally include a limit on the number of activations, or times consumers may select a coupon.

Promotion revenues also include the Company’s Specialty Retail business, in which specialty stores including clothing, electronics, home improvement and others, offer coupon codes that the Company distributes. Each time a consumer makes a purchase using a coupon code, a transaction occurs and a distribution fee is generally paid to the Company. The Company generally generates revenues when a consumer makes a purchase using a coupon code from its platform and completion of the order is reported to the Company. In the same period that the Company recognizes revenues for the delivery of coupon codes, it also estimates and records a reserve, based upon historical experience, to provide for end-user cancelations or product returns which may not be reported until a subsequent date. 

Media Revenue

The Company’s media services enable CPGs and retailers to distribute digital media to promote their brands and products on its websites, and mobile apps, and through a network of affiliate publishers and non-publisher third parties that display its media offerings on their websites or mobile apps. Revenue is generally recognized each time a digital media ad is displayed or each time a user clicks on the media ad displayed on the Company’s websites, mobile apps or on third-party websites. Media pricing is generally determined on a per campaign, impression or per click basis and are generally billed monthly. 

Gross Versus Net Revenue Reporting

In the normal course of business and through its distribution network, the Company delivers digital coupons and media on retailers’ websites through retailers’ loyalty programs, and on the websites of digital publishers. In these situations, the Company evaluates whether it is the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, the Company reports digital promotion and media advertising revenues for campaigns placed on third-party owned properties on a gross basis, that is, the amounts billed to its customers are recorded as revenues, and distribution fees paid to retailers or digital publishers are recorded as cost of revenues. The Company is the principal because it controls the digital coupon and media advertising inventory before it is transferred to its customers. The Company’s control is evidenced by its sole ability to monetize the digital coupon and media advertising inventory, being primarily responsible to its customers, having discretion in establishing pricing for the delivery of the digital coupons and media, or a combination of these.

Arrangements with Multiple Performance Obligations

The Company’s contracts with customers may include multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines its best estimate of its standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors, including the value of its contracts and characteristics of targeted customers.

Accounts Receivables, Net of Allowance for Doubtful Accounts

Trade and other receivables are included in accounts receivables and primarily comprised of trade receivables that are recorded at invoiced amounts and do not bear interest, net of an allowance for doubtful accounts. Other receivables included unbilled receivables related to digital promotions and media advertising contracts with customers. The Company generally does not require collateral and performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. The Company maintains an allowance for doubtful accounts based upon the expected collectability of its accounts receivable. The allowance is determined based upon specific account identification and historical experience of uncollectable accounts. The expectation of collectability is based on the Company’s review of credit profiles of customers, contractual terms and conditions, current economic trends, and historical payment experience.

Deferred Revenues

Deferred revenues consist of coupon setup fees, coupon transaction fees and digital media fees that are expected to be recognized upon coupon activations, or delivery of media impressions or clicks, which generally occur within the next twelve months. The Company records deferred revenues, including amounts which are refundable, when cash payments are received or become due in advance of the Company satisfying its performance obligations. The increase in the deferred revenue balance for the three months ended March 31, 2019 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations of $6.2 million, partially offset by $5.1 million of recognized revenue.

The Company’s payment terms vary by the type and size of its customers. For certain products or services and customer types, we require payment before the products or services are delivered to the customer.

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by type of services (in thousands, unaudited). The majority of the Company’s revenue is generated from sales in the United States.

	Three Months Ended March 31,
	2019		2018
Promotion	$	63,567	$	63,783
Media		34,540		22,983
Total Revenue	$	98,107	$	86,766

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue for an amount where it has the right to invoice for services performed.

Sales Commissions

The Company generally incurs and expenses sales commissions upon recognition of revenue for related goods and services, which typically occurs within one year or less. Sales commissions earned related to revenues for initial contracts are commensurate with sales commissions related to renewal contracts. These costs are recorded within sales and marketing expenses on the condensed consolidated statements of operations.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

3. Fair Value Measurements

The fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

Level 1—Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in thousands):

	March 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	143,259		—		—	$	143,259
U.S. Treasury Bills		40,855		—		—		40,855
Short-Term investments:
Certificate of deposit		—		—		—		—
Total	$	184,114	$	—	$	—	$	184,114
Liabilities:
Contingent consideration related to acquisitions		—		—		32,026		32,026
Total	$	—	$	—	$	32,026	$	32,026
	December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	142,507		—		—	$	142,507
U.S. Treasury Bills		19,689		—		—		19,689
Short-Term investments:
Certificate of deposit		—		20,738		—		20,738
Total	$	162,196	$	20,738	$	—	$	182,934
Liabilities:
Contingent consideration related to acquisitions		—		—		28,963		28,963
Total	$	—	$	—	$	28,963	$	28,963

The valuation technique used to measure the fair value of money market funds and U.S. Treasury Bills includes using quoted prices in active markets. The money market funds have a fixed net asset value (NAV) of $1. The valuation technique to measure the fair value of certificate of deposits included using quoted prices in active markets for similar assets.

The contingent consideration as of March 31, 2019 relates to the acquisition of MLW Squared Inc. (“Ahalogy”) and Elevaate Ltd. (“Elevaate”). The contingent consideration as of March 31, 2018 relates to the acquisition of Crisp Media, Inc. (“Crisp”). The fair values of contingent consideration are based on the expected achievement of certain revenue targets as defined under the acquisition agreements and were estimated using an option pricing method with significant inputs that are not observable in the market, thus classified as a Level 3 instrument. The inputs included the expected achievement of certain financial metrics over the contingent consideration period, volatility and discount rate. The fair-value of the contingent consideration is classified as a liability and is re-measured each reporting period. Refer to Note 6 for further details related to the acquisitions.

The following table represents the change in the contingent consideration (in thousands):

	Three Months Ended March 31, 2019
	Elevaate		Ahalogy
	Level 3		Level 3
Balance at the beginning of period	$	6,121	$	22,842
Change in fair value during the period		1,012		2,051
Balance as of March 31, 2019	$	7,133	$	24,893

	Three Months Ended March 31, 2018
	Crisp
	Level 3
Balance at the beginning of period	$	18,500
Change in fair value during the period		6,000
Balance as of March 31, 2018	$	24,500

For the three months ended March 31, 2019 and 2018, the Company recorded a charge of $3.1 million and $6.0 million, respectively, for the re-measurement of the fair values of contingent consideration related to acquisitions, as a component of operating expenses in the accompanying condensed consolidated statements of operations.

Fair Value Measurements of Other Financial Instruments

As of March 31, 2019 and December 31, 2018, the fair value of the Company’s 1.75% convertible senior notes due 2022 was $188.3 million and $187.5 million, respectively. The fair value was determined based on a quoted price of the convertible senior notes in an over-the-counter market on the last trading day of the reporting period. Accordingly, these convertible senior notes are classified within Level 2 in the fair value hierarchy. Refer to Note 8 for additional information related to the Company’s convertible debt.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities are valued on the date of acquisition for businesses acquired on a nonrecurring basis.

As of March 31, 2019 and December 31, 2018, there were no assets and liabilities that are required to be measured at fair value on a nonrecurring basis.

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Allowance for Doubtful Accounts

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Allowance for Doubtful Accounts

4. Allowance for Doubtful Accounts  

The summary of activity in the allowance for doubtful accounts is as follows (in thousands):

	Three Months Ended March 31,
	2019			2018
Balance at the beginning of period	$	1,200		$	786
Bad debt expense		132			95
Write-offs		(1	)		(67	)
Balance at the end of period	$	1,331		$	814

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Balance Sheet Components

3 Months Ended

Mar. 31, 2019

Balance Sheet Related Disclosures [Abstract]

Balance Sheet Components

5. Balance Sheet Components

Property and Equipment, Net

Property and equipment consist of the following (in thousands):

	March 31, 2019			December 31, 2018
Software	$	40,381		$	37,987
Computer equipment		24,372			23,986
Leasehold improvements		8,195			8,147
Furniture and fixtures		2,078			2,057
Total		75,026			72,177
Accumulated depreciation and amortization		(60,860	)		(59,348	)
Projects in process		1,213			2,750
Total property and equipment, net	$	15,379		$	15,579

Depreciation and amortization expense related to property and equipment was $1.8 million and $1.6 million for the three months ended March 31, 2019 and 2018, respectively.

The Company capitalized internal use software development and enhancement costs of $1.0 million and $0.9 million during the three months ended March 31, 2019 and 2018, respectively. During the three months ended March 31, 2019 and 2018, the Company had $0.6 million and zero, respectively, in amortization expense related to internal use software, which is included in property and equipment depreciation and amortization expense and recorded as cost of revenues. The unamortized capitalized development costs were $5.7 million and $6.1 million as of March 31, 2019 and December 31, 2018, respectively.

Accrued Compensation and Benefits

Accrued compensation and benefits consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Commissions	$	2,760	$	4,104
Bonus		2,358		5,997
Payroll and related expenses		2,561		1,938
Vacation		420		359
Severance related to restructuring		—		709
Total accrued compensation and benefits	$	8,099	$	13,107

Other Current Liabilities  

Other current liabilities consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Distribution fees	$	16,354	$	15,389
Prefunded liability		5,255		5,131
Traffic acquisition cost		3,899		2,417
Operating lease liabilities		4,362		—
Marketing expenses		2,117		2,416
Interest payable		1,157		282
Facility exit costs related to restructuring		—		1,019
Liability related to purchased intangible asset		—		14,500
Other		9,653		12,101
Total other current liabilities	$	42,797	$	53,255

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Acquisitions

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Acquisitions

6. Acquisitions

Acquisition of Elevaate

On October 26, 2018, the Company acquired all the outstanding shares of Elevaate, a sponsored search company for retail partners and CPG brands.

The total preliminary acquisition consideration of $13.3 million consisted of $7.2 million in cash and contingent consideration of up to $18.5 million payable in cash with an estimated fair value of $6.1 million as of the acquisition date. The contingent consideration payout is based on Elevaate achieving certain financial metrics between February 1, 2019 through January 31, 2021. The acquisition date fair value of the contingent consideration was determined by using an option pricing model. The fair value of the contingent consideration will be remeasured every reporting period. Refer to Note 3 for the fair value of contingent consideration at March 31, 2019.

Acquisition of SavingStar, Inc.

On August 27, 2018, the Company acquired all the outstanding shares of SavingStar, Inc. (“SavingStar”), a digital promotions companywith a CRM platform designed to help brands build and track loyalty programs with their consumers.

The total preliminary acquisition consideration at closing consisted of $7.5 million in cash. In addition, SavingStar may receive potential contingent consideration of up to $10.6 million payable in all cash, subject to achieving certain financial metrics between closing through February 29, 2020. At the date of acquisition and March 31, 2019, the contingent consideration’s fair value was determined to be zero using an option pricing model. The fair value of the contingent consideration is remeasured every reporting period.

Acquisition of Ahalogy

On June 1, 2018, the Company acquired all the outstanding shares of Ahalogy, an influencer marketing firm that delivers premium content across social media channels for CPG brands. The acquisition enhances the Company’s performance media solutions for CPGs and retailers, adding social media expertise and a roster of influencers.

The total preliminary acquisition consideration of $36.4 million consisted of $21.8 million in cash and contingent consideration of up to $30.0 million payable in all cash with an estimated fair value of $14.6 million as of the acquisition date. The contingent consideration payout is based on Ahalogy achieving certain financial metrics between closing through December 31, 2019. At the date of acquisition, the contingent consideration’s fair value was determined by using an option pricing model. The fair value of the contingent consideration is remeasured every reporting period. Refer to Note 3 for the fair value of contingent consideration at March 31, 2019.

The Elevaate, SavingStar and Ahalogy, transactions were each accounted for as a business combination. Accordingly, assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date when control was obtained. The Company expensed all transaction costs in the period in which they were incurred. The Company acquired various intangible assets resulting from these acquisitions, such as, customer relationships, vendor relationships, developed technologies and trade names. The fair value of the customer relationships was determined by using a discounted cash flow model. The fair value of the vendor relationships was determined by using a cost approach. The fair value of developed technologies was determined by using the relief from royalty method or the with-and-without method. The fair value of trade names was determined by using the relief from royalty method. The excess of the consideration paid over the fair value of the net tangible assets and liabilities and identifiable intangible assets acquired is recorded as goodwill. The goodwill arising from the acquisitions are largely attributable to the synergies expected to be realized. None of the goodwill recorded from the acquisitions will be deductible for income tax purposes.

For each of these transactions,the fair value of the consideration transferred and the assets acquired and liabilities assumed was determined by the Company and in doing so management engaged a third-party valuation specialist to measure the fair value of identifiable intangible assets and obligations related to deferred revenue and contingent consideration. The estimated fair value of the identifiable assets acquired and liabilities assumed in the relevant acquisition is based on management’s best estimates. As the Company finalizes certain valuation assumptions, the provisional measurements of identifiable assets and liabilities, and the resulting goodwill related to these acquisitions are subject to change and the final purchase price accounting could be different from the amounts presented herein.

The following table summarizes the preliminary acquisition consideration and the related fair values of the assets acquired and liabilities assumed (in thousands):

	Purchase Consideration		Net Tangible Assets Acquired/ (Liabilities Assumed)			Identifiable Intangible Assets		Goodwill		Goodwill Deductible for Taxes	(1) Acquisition Related Expenses
Elevaate	$	13,346	$	(60	)	$	3,781	$	9,625	NotDeductible	$	549
SavingStar	$	7,485	$	(1,126	)	$	2,577	$	6,034	Not Deductible	$	419
Ahalogy	$	36,432	$	2,196		$	11,580	$	22,656	Not Deductible	$	684
	$	57,263	$	1,010		$	17,938			Not Deductible	$	1,652

(1) Expensed as general and administrative

The following sets forth each component of identifiable intangible assets acquired in connection with the acquisitions (in thousands):

	Elevaate		Estimated Useful Life (in Years)		SavingStar		Estimated Useful Life (in Years)		Ahalogy		Estimated Useful Life (in Years)
Developed technologies	$	3,307		5.0	$	1,476		3.0	$	3,100		4.0
Customer relationships		379		5.0		1,040		3.0		6,210		6.0
Trade names		95		3.0		61		1.5		650		4.0
Vendor relationships		—		—		—		—		1,620		2.0
Total identifiable intangible    assets	$	3,781			$	2,577			$	11,580

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Intangible Assets

3 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

7. Intangible Assets

The following table summarizes the gross carrying amount and accumulated amortization for the intangible assets (in thousands):  

	March 31, 2019
	Gross		Accumulated Amortization			Net		Weighted Average Amortization Period (Years)
Media service rights	$	34,684	$	(9,121	)	$	25,563		2.9
Promotion service rights		29,548		(7,987	)		21,561		4.8
Developed technologies		20,070		(9,440	)		10,630		3.0
Customer relationships		19,290		(9,974	)		9,316		4.4
Data access rights		10,801		(5,007	)		5,794		3.1
Domain names		5,948		(5,364	)		584		0.4
Trade names		2,573		(1,083	)		1,490		2.5
Vendor relationships		2,510		(1,564	)		946		1.2
Patents		975		(834	)		141		3.4
Registered users		420		(360	)		60		0.7
	$	126,819	$	(50,734	)	$	76,085		3.5

	December 31, 2018
	Gross		Accumulated Amortization			Net		Weighted Average Amortization Period (Years)
Media service rights	$	34,476	$	(6,838	)	$	27,638		3.2
Promotion service rights		29,492		(7,248	)		22,244		5.1
Developed technologies		20,070		(8,353	)		11,717		3.2
Customer relationships		19,290		(9,145	)		10,145		4.5
Data access rights		10,801		(4,544	)		6,257		3.3
Domain names		5,948		(5,260	)		688		0.5
Trade names		2,573		(923	)		1,650		2.7
Vendor relationships		2,510		(1,364	)		1,146		1.4
Patents		975		(821	)		154		3.6
Registered users		420		(335	)		85		1.0
	$	126,555	$	(44,831	)	$	81,724		3.7

As of March 31, 2019 and December 31, 2018, the Company has a domain name with a gross value of $0.4 million with an indefinite useful life that is not subject to amortization.

Intangible assets subject to amortization are amortized over their useful lives as shown in the table above. Amortization expense related to intangible assets subject to amortization was $5.9 million and $2.8 million during the three months ended March 31, 2019 and 2018, respectively.Estimated future amortization expense related to intangible assets as of March 31, 2019 is as follows (in thousands):   

	Total
2019, remaining nine months	$	17,285
2020		21,121
2021		15,206
2022		9,304
2023		4,949
2024 and beyond		812
Total estimated amortization expense	$	68,677

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Debt Obligations

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Debt Obligations

8. Debt Obligations

2018 Convertible Senior Notes

In November 2017, the Company issued and sold $200.0 million aggregate principal amount of 1.75% convertible senior notes due 2022 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, (the “notes”). The notes are unsecured obligations of the Company and bear interest at a fixed rate of 1.75% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2018. The total net proceeds from the debt offering, after deducting transaction costs, were approximately $193.8 million.  

The conversion rate for the notes is initially 57.6037 shares of the Company’s common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $17.36 per share of common stock, subject to adjustment upon the occurrence of specified events.

Holders of the notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding September 1, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the notes on each such trading day; (3) if the Company calls any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after September 1, 2022, holders may convert all or any portion of their notes at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. The Company intends to settle the principal amount of the notes with cash.

The Company may not redeem the notes prior to December 5, 2020. It may redeem for cash all or any portion of the notes, at its option, on or after December 5, 2020 if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than three trading days preceding the date on which it provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the notes.

If the Company undergoes a fundamental change prior to the maturity date, holders may require the Company to repurchase for cash all or any portion of their notes at a fundamental change repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

In accounting for the issuance of the notes, the Company separated the notes into liability and equity components. The carrying amount of the liability component of $149.3 million was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component of $50.7 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the notes. The excess of the principal amount of the liability component over its carrying amount (“debt discount”) is amortized to interest expense over the term of the notes at an effective interest rate of 5.8%.

The Company allocated the total debt issuance costs incurred of $6.2 million to the liability and equity components of the notes in proportion to the respective values. Issuance costs attributable to the liability component of $4.6 million are being amortized to interest expense using the effective interest method over the contractual terms of the notes. Issuance costs attributable to the equity component of $1.6 million were netted with the equity component in additional paid-in capital.

The net carrying amount of the liability component of the notes recorded in convertible senior notes, net on the condensed consolidated balance sheets was as follows (in thousands):

	March 31,			March 31,
	2019			2018
Principal	$	200,000		$	200,000
Unamortized debt discount		(38,322	)		(47,435	)
Unamortized debt issuance costs		(3,402	)		(4,319	)
Net carrying amount of the liability component	$	158,276		$	148,246

The net carrying amount of the equity component of the notes recorded in additional paid-in capital on the condensed consolidated balance sheets was $49.1 million, net of debt issuance costs of $1.6 million as of March 31, 2019 and December 31, 2018.

The following table sets forth the interest expense related to the notes recognized in interest expense on the condensed consolidated statements of operations (in thousands):

	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Contractual interest expense	$	875	$	875
Amortization of debt discount		2,328		2,197
Amortization of debt issuance costs		230		229
Total interest expense related to the Notes	$	3,433	$	3,301

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

9. Stock-based Compensation

2013 Equity Incentive Plan

In October 2013, the Company adopted the 2013 Equity Incentive Plan (the “2013 Plan”), which became effective in March 2014 and serves as the successor to the Company’s 2006 Stock Plan (the “2006 Plan”). Pursuant to the 2013 Plan, 4,000,000 shares of common stock were initially reserved for grant, plus (1) any shares that were reserved and available for issuance under the 2006 Plan at the time the 2013 Plan became effective, (2) any shares that become available upon forfeiture or repurchase by the Company under the 2006 Plan and (3) any shares added to the 2013 Plan pursuant to the next paragraph.

Under the 2013 Plan, the Company may grant stock options, stock appreciation rights, restricted stock and restricted stock units (“RSUs”), performance shares and units to employees, directors and consultants. The shares available will be increased at the beginning of each year by the lesser of (i) 4% of outstanding common stock on the last day of the immediately preceding year, or (ii) such number determined by the Board of Directors and subject to additional restrictions relating to the maximum number of shares issuable pursuant to incentive stock options. Under the 2013 Plan, both the ISOs and NSOs are granted at a price per share not less than 100% of the fair market value on the effective date of the grant. The Board of Directors determines the vesting period for each option award on the grant date, and the options generally expire 10 years from the grant date or such shorter term as may be determined by the Board of Directors.

Stock Options

The fair value of each option was estimated using the Black-Scholes model on the date of grant for the periods presented using the following assumptions:

	Three Months Ended March 31,
	2019	2018
Expected life (in years)	6.02	6.02
Risk-free interest rate	2.66%	2.66%
Volatility	50%	50%
Dividend yield	—	—

The weighted-average grant-date fair value of options was $5.01 and $6.59 per share during the three months ended March 31, 2019 and 2018, respectively.

Restricted Stock Units and Performance-Based Restricted Stock Units

The fair value of RSUs equals the market value of the Company’s common stock on the date of the grant. The RSUs are excluded from issued and outstanding shares until they are vested.

A summary of the Company’s stock option and RSU award activity under the 2013 Plan is as follows:

				RSUs Outstanding					Options Outstanding
	Shares Available for Grant			Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Balance as of December 31, 2018		6,497,353			4,904,161		$	12.48		6,622,006		$	12.12		5.96	$	9,987
Increase in shares authorized		3,799,808		—			—		—			—		—		—
Options granted		(1,317,926	)	—			—			1,317,926		$	9.96	—		—
Options exercised	—			—			—			(302,948	)	$	4.76	—		$	1,949
Options canceled or expired		57,287		—			—			(57,287	)	$	11.20	—		—
RSUs granted		(2,427,631	)		2,427,631		$	9.99	—			—		—		—
RSUs vested	—				(1,207,853	)	$	12.26	—			—		—		—
RSUs canceled or expired		248,484			(248,484	)	$	12.16	—			—		—		—
RSUs vested and withheld for    taxes		(458,337	)	—			—		—			—		—		—
Balance as of March 31, 2019		6,399,038			5,875,455		$	11.52		7,579,697		$	12.05		6.69	$	5,973
Vested and exercisable as of    March 31, 2019										4,878,570		$	12.58		5.41	$	5,639

The aggregate intrinsic value disclosed in the table above is based on the difference between the exercise price of the options and the fair value of the Company’s common stock.

The aggregate total fair value of options vested was $1.3 million and $2.4 million during the three months ended March 31, 2019 and 2018, respectively.

Employee Stock Purchase Plan

The Company’s Board of Directors adopted the 2013 Employee Stock Purchase Plan (“ESPP”), which became effective in March 2014. Eligible employees can enroll and elect to contribute up to 15% of their base compensation through payroll withholdings in each offering period which is six months in duration, subject to certain limitations.The purchase price of the stock is the lower of 85% of the fair market value on (a) the first day of the offering period or (b) the purchase date.

The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions:

	Three Months Ended March 31,
	2019	2018
Expected life (in years)	0.50	0.50
Risk-free interest rate	2.50%	1.42%
Volatility	35%	40%
Dividend yield	—	—

As of March 31, 2019, a total of 1,149,287 shares of common stock were issued under the ESPP since inception of the plan. As of March 31, 2019, a total of 2,050,713 shares are available for issuance under the ESPP.

Stock-based Compensation Expense

The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs and ESPP included in the Company’s condensed consolidated statements of operations (in thousands):

	Three Months Ended March 31,
	2019		2018
Cost of revenues	$	602	$	540
Sales and marketing		1,738		1,600
Research and development		1,366		1,827
General and administrative		4,342		3,829
Total stock-based compensation expense	$	8,048	$	7,796

As of March 31, 2019, there was $76.6 million of unrecognized stock-based compensation expense, of which $14.9 million is related to stock options and ESPP shares and $61.7 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of March 31, 2019 will be amortized over a weighted-average period of 2.91 years. The total unrecognized stock-based compensation expense related to RSUs as of March 31, 2019 will be amortized over a weighted-average period of 2.93 years.

During the three months ended March 31, 2019 and 2018, the Company capitalized $0.1 million in each respective period of stock-based compensation expense in projects in process as part of property and equipment, net on the accompanying condensed consolidated balance sheets.

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Common Stock Repurchase Programs

3 Months Ended

Mar. 31, 2019

Common Stock Repurchase Program [Abstract]

Common Stock Repurchase Programs

10. Common Stock Repurchase Programs

The Board of Directors has approved programs for the Company to repurchase shares of its common stock. In April 2018, the Board of Directors authorized a one-year share repurchase program (“2018 Program”) for the Company to repurchase up to $100.0 million of its common stock from May 2018 through May 2019. During the three months ended March 31, 2019, the Company repurchased and retired 2,511,633 shares of its common stock for an aggregate of $25.2 million. As of March 31, 2019, $59.0 million remained available for repurchases under the 2018 Program.

Additionally, in April 2019, the Company’s Board of Directors authorized a one-year share repurchase program (“2019 Program”) for the Company to repurchase up to $60.0 million of its common stock from May 2019 through May 2020. The 2019 Program will commence after the termination of the 2018 Program. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2019 Program at any time without prior notice.

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

11. Income Taxes

The Company recorded a provision for income taxes of $26 thousand and $0.1 million during the three months ended March 31, 2019 and 2018, respectively. The provision for income taxes for the three months ended March 31, 2019 and 2018 was primarily attributable to the Company’s foreign operations.

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Net Loss Per Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Net Loss Per Share

12. Net Loss Per Share

The computation of the Company’s basic and diluted net loss per share is as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2019			2018
Net loss	$	(13,228	)	$	(11,357	)
Weighted-average number of common shares used in    computing net loss per share, basic and diluted		94,263			92,711
Net loss per share, basic and diluted	$	(0.14	)	$	(0.12	)

The outstanding common equivalent shares excluded from the computation of the diluted net loss per share for the periods presented because including them would have been antidilutive are as follows (in thousands):

	Three Months Ended March 31,
	2019		2018
Stock options and ESPP		7,705		8,071
Restricted stock units		5,875		5,715
Shares held in escrow		—		1,000
Shares related to convertible senior notes		11,521		11,521
		25,101		26,307

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

13. Leases

The Company has entered into operating leases primarily for office facilities. These leases have terms which typically range from 1 year to 5 years, and often include options to renew. These renewal terms can extend the lease term up to 6 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. Effective January 1, 2019, these operating leases are included as right-of-use assets in other assets on the condensed consolidated balance sheets, as a result of the adoption of the new leasing standard as discussed under Note 2 to the condensed consolidated financial statements, and represent the Company’s right to use the underlying asset for the lease term. The present value of the Company’s obligation to make lease payments are included in other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.

Based on the present value of the lease payments for the remaining lease term of the Company's existing leases, the Company recognized 1) right-of-use assets of $8.5 million, adjusted for deferred rent and lease incentives as of the adoption date, and 2) lease liabilities for operating leases of $11.5 million on January 1, 2019. Operating lease right-of-use assets and liabilities commencing after January 1, 2019 are recognized at commencement date based on the present value of lease payments over the lease term.

The Company has entered into short-term leases primarily for office facilities with an initial term of twelve months or less, and a professional sports team suite with a 20-year term, which it uses for sales and marketing purposes. The effective lease term for the professional sports team suite is based on the cumulative days available for use throughout the 20-year contractual term, which is less than twelve months and therefore is classified as a short-term lease. As of March 31, 2019, the Company’s lease commitment of $6.1 million, relating to the professional sports team suite, expires in 2034, and does not reflect short-term lease costs. These leases are not recorded on the Company's condensed consolidated balance sheet due to the accounting policy election as discussed under Note 2 to the condensed consolidated financial statements.

All operating lease expense is recognized on a straight-line basis over the lease term. During the three months ended March 31, 2019, the Company recognized $0.9 million in total lease costs, which is comprised of $0.8 million in operating lease costs for right-of-use assets and $0.1 million in short-term lease costs related to short-term operating leases.

Because the rate implicit in each lease is not readily determinable, the Company uses its incremental borrowing rate to determine the present value of the lease payments. The Company has certain contracts for office facilities which may contain lease and non-lease components which it has elected to be treated as a single lease component due to the accounting policy election as discussed under Note 2 to the condensed consolidated financial statements.

Supplemental cash flow information related to operating leases was as follows (in thousands):

	Three Months Ended March 31,
	2019
Cash paid for operating lease liabilities	$	1,348
Right-of-use assets obtained in exchange for lease obligations		12,955

Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate):

	Three Months Ended March 31,
	2019
Operating right-of-use assets reported as:
Other assets	$	7,400
Operating lease liabilities reported as:
Other current liabilities	$	4,362
Other non-current liabilities		7,412
Total operating lease liabilities	$	11,774
Weighted average remaining lease term (in years)		3.7
Weighted average discount rate		7.9	%

Maturities of operating lease liabilities were as follows (in thousands):

	Operating Leases
2019, remaining 9 months	$	4,170
2020		3,536
2021		1,884
2022		1,572
2023		1,551
2024 and thereafter		909
Total lease payments	$	13,622
Less: Imputed Interest		(1,848	)
Total	$	11,774

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

14. Commitments and Contingencies

Purchase Obligations

The Company has unconditional purchase commitments, primarily related to software license fees and marketing services, of $10.5 million as of March 31, 2019.

Promissory Note

In January 2017, the Company entered into a promissory note agreement with a lender to finance the purchase of computer equipment for $0.8 million to be paid in quarterly installments over three years. As of March 31, 2019, the Company had a remaining balance of $0.3 million under the agreement, which is included in other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.

Indemnification

In the normal course of business, to facilitate transactions related to the Company’s operations, the Company indemnifies certain parties, including CPGs, advertising agencies, retailers and other third parties. The Company has agreed to hold certain parties harmless against losses arising from claims of intellectual property infringement or other liabilities relating to or arising from our products or services or other contractual infringement. The term of these indemnity provisions generally survive termination or expiration of the applicable agreement. To date, the Company has not recorded any liabilities related to these agreements.

Litigation

In the ordinary course of business, the Company may be involved in lawsuits, claims, investigations, and proceedings consisting of intellectual property, commercial, employment, and other matters. The Company records a provision for these claims when it is both probable that a liability has been incurred and the amount of the loss, or a range of the potential loss, can be reasonably estimated. These provisions are reviewed regularly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information or events pertaining to a particular case. In the event that one or more of these matters were to result in a claim against the Company, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on the Company’s future business, operating results, or financial condition.

The Company believes that liabilities associated with existing claims are remote, therefore the Company has not recorded any accrual for claims as of March 31, 2019 and December 31, 2018. The Company expenses legal fees in the period in which they are incurred.

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Employee Benefit Plan

3 Months Ended

Mar. 31, 2019

Defined Contribution Pension And Other Postretirement Plans Disclosure [Abstract]

Employee Benefit Plan

15. Employee Benefit Plan

The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code. The 401(k) plan provides retirement benefits for eligible employees. Eligible employees may elect to contribute to the 401(k) plan. The Company provides a match of up to the lesser of 3% of each employee’s annual salary or $6,000, which vests immediately for employees with tenure of over a year. Previously, the Company’s 401(k) plan contributions vest over four years after continuous employment. The Company’s matching contribution expense was $0.7 million and $0.6 million during the three months ended March 31, 2019 and 2018, respectively.

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Information About Geographic Areas

3 Months Ended

Mar. 31, 2019

Segments Geographical Areas [Abstract]

Information About Geographic Areas

16. Information About Geographic Areas

Revenues generated outside of the United States were insignificant for all periods presented. Additionally, as the Company’s assets are primarily located in the United States, information regarding geographical location is not presented, as such amounts are immaterial to these condensed consolidated financial statements taken as a whole.

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Subsequent Events

3 Months Ended

Mar. 31, 2019

Subsequent Events [Abstract]

Subsequent Events

17. Subsequent Events

In April 2019, the Company’s Board of Directors authorized the 2019 Program for the Company to repurchase up to $60.0 million of its common stock from May 2019 through May 2020. The 2019 Program will commence after the termination of the 2018 Program. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2019 Program at any time without prior notice.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation and Consolidation

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, 2019 or for any other period.

There have been no changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K that have had a material impact on its condensed consolidated financial statements and related notes except for the adoption of the requirements of Accounting Standards Update ("ASU") No. 2016-02, Leases, effective January 1, 2019 using the modified retrospective transition method.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the Company’s condensed consolidated financial statements and accompanying notes. Such management estimates include, but are not limited to, revenue recognition, collectability of accounts receivable, coupon code sales return reserve, valuation of assets acquired and liabilities assumed in a business combination, useful lives of intangible assets and property and equipment, estimates related to recovery of long-lived assets and goodwill, stock-based compensation, measurement of contingent consideration, restructuring accruals, classification of current and non-current deferred revenue, debt discounts, and income taxes, deferred income tax assets and associated valuation allowances. These estimates generally require judgments, may involve the analysis of historical and prediction of future trends, and are subject to change from period to period. Actual results may differ from the Company’s estimates, and such differences may be material to the accompanying condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

Accounting Pronouncements Adopted

Leases

Topic 842: In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842). The guidance requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner similar to today’s accounting. Lessees initially recognize a lease liability for the obligation to make lease payments and a right-of-use asset for the right to use the underlying asset for the lease term. The lease liability is measured at the present value of the lease payments over the lease term. The right-of-use asset is measured at the lease liability amount, adjusted for lease prepayments, lease incentives received and the lessee’s initial direct costs.

The Company adopted ASU 2016-02 in the first quarter of 2019 utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of the first quarter of 2019. The Company has elected certain practical expedients, which allows the Company not to reassess (i) whether any expired or existing contracts as of the adoption date are or contain a lease, (ii) lease classification for any expired or existing leases as of the adoption date and (iii) initial direct costs for any existing leases as of the adoption date. The Company has elected to account for lease and non-lease components as a single lease component. In addition, the Company has elected not to recognize right-of-use assets and liabilities for short-term leases with terms of twelve months or less. The adoption of ASU 2016-02 on January 1, 2019, resulted in the recognition of 1) right-of-use assets of $8.5 million, adjusted for deferred rent and lease incentives as of the adoption date, and 2) lease liabilities for operating leases of $11.5 million on its condensed consolidated balance sheet, with no material impact to its condensed consolidated statements of operations and cash flows. Refer to Note 13 for further information regarding the impact of adoption of the standard on the Company’s condensed consolidated financial statements.

Revenue from Contracts with Customers

Topic 606: In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers (“Topic 606”), which supersedes the revenue recognition requirements in ASC 605, ”Revenue Recognition” (“Topic 605”), and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services.

The Company adopted Topic 606 as of January 1, 2018, using the modified retrospective method.  

As a result of adopting the new standard, the Company recorded a net increase to retained earnings of $0.1 million as of January 1, 2018, with the impact primarily related to unbilled receivables for performance obligations that have been satisfied but no invoice has been issued. The impact to revenues as a result of applying Topic 606 for the year ended December 31, 2018 was an increase of $1.0 million.  

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

Topic 350: In August 2018, the FASB issued ASU No. 2018-15, Intangibles (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This standard also requires customers to amortize the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. The Company early adopted this standard, as of October 1, 2018, on a prospective basis for applicable implementation costs. The adoption did not have a material impact on the Company's consolidated financial statements in the fourth quarter of 2018.

Revenue Recognition

Revenue Recognition

The Company primarily generates revenue by providing digital promotions and media solutions to its customers and partners. Revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

We determine revenue recognition through the following steps:

• Identification of the contract, or contracts, with a customer

• Identification of the performance obligations in the contract

• Determination of the transaction price

• Allocation of the transaction price to the performance obligations in the contract

• Recognition of revenue when, or as, we satisfy a performance obligation

Promotion Revenue

Promotion Revenue

The Company generates revenue from promotions, in which consumer packaged goods brands, or CPGs, pay the Company to deliver coupons to consumers through its network of publishers and retail partners. The Company generates revenues, as consumers select, activate, or redeem a coupon through its platform by either saving it to a retailer loyalty account for automatic digital redemption, or printing it for physical redemption at a retailer. The pricing for promotion arrangements generally includes both coupon setup fees and coupon transaction fees. Coupon setup fees are related to the creation of digital coupons and set up of the underlying campaign on Quotient’s proprietary platform for tracking of related activations or redemptions. The Company recognizes revenues related to coupon setup fees over time, proportionally, on a per transaction basis, using the number of authorized transactions per insertion order, commencing on the date of the first coupon transaction. Coupon transaction fees are generally determined on a per unit activation or per redemption basis, and are generally billed monthly. Insertion orders generally include a limit on the number of activations, or times consumers may select a coupon.

Promotion revenues also include the Company’s Specialty Retail business, in which specialty stores including clothing, electronics, home improvement and others, offer coupon codes that the Company distributes. Each time a consumer makes a purchase using a coupon code, a transaction occurs and a distribution fee is generally paid to the Company. The Company generally generates revenues when a consumer makes a purchase using a coupon code from its platform and completion of the order is reported to the Company. In the same period that the Company recognizes revenues for the delivery of coupon codes, it also estimates and records a reserve, based upon historical experience, to provide for end-user cancelations or product returns which may not be reported until a subsequent date. 

Media Revenue

Media Revenue

The Company’s media services enable CPGs and retailers to distribute digital media to promote their brands and products on its websites, and mobile apps, and through a network of affiliate publishers and non-publisher third parties that display its media offerings on their websites or mobile apps. Revenue is generally recognized each time a digital media ad is displayed or each time a user clicks on the media ad displayed on the Company’s websites, mobile apps or on third-party websites. Media pricing is generally determined on a per campaign, impression or per click basis and are generally billed monthly. 

Gross versus Net Revenue Reporting

Gross Versus Net Revenue Reporting

In the normal course of business and through its distribution network, the Company delivers digital coupons and media on retailers’ websites through retailers’ loyalty programs, and on the websites of digital publishers. In these situations, the Company evaluates whether it is the principal (i.e., report revenues on a gross basis) or agent (i.e., report revenues on a net basis). Generally, the Company reports digital promotion and media advertising revenues for campaigns placed on third-party owned properties on a gross basis, that is, the amounts billed to its customers are recorded as revenues, and distribution fees paid to retailers or digital publishers are recorded as cost of revenues. The Company is the principal because it controls the digital coupon and media advertising inventory before it is transferred to its customers. The Company’s control is evidenced by its sole ability to monetize the digital coupon and media advertising inventory, being primarily responsible to its customers, having discretion in establishing pricing for the delivery of the digital coupons and media, or a combination of these.

Arrangements with Multiple Performance Obligations

Arrangements with Multiple Performance Obligations

The Company’s contracts with customers may include multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines its best estimate of its standalone selling prices based on its overall pricing objectives, taking into consideration market conditions and other factors, including the value of its contracts and characteristics of targeted customers.

Accounts Receivable, Net of Allowance for Doubtful Accounts

Accounts Receivables, Net of Allowance for Doubtful Accounts

Trade and other receivables are included in accounts receivables and primarily comprised of trade receivables that are recorded at invoiced amounts and do not bear interest, net of an allowance for doubtful accounts. Other receivables included unbilled receivables related to digital promotions and media advertising contracts with customers. The Company generally does not require collateral and performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. The Company maintains an allowance for doubtful accounts based upon the expected collectability of its accounts receivable. The allowance is determined based upon specific account identification and historical experience of uncollectable accounts. The expectation of collectability is based on the Company’s review of credit profiles of customers, contractual terms and conditions, current economic trends, and historical payment experience.

Deferred Revenues

Deferred Revenues

Deferred revenues consist of coupon setup fees, coupon transaction fees and digital media fees that are expected to be recognized upon coupon activations, or delivery of media impressions or clicks, which generally occur within the next twelve months. The Company records deferred revenues, including amounts which are refundable, when cash payments are received or become due in advance of the Company satisfying its performance obligations. The increase in the deferred revenue balance for the three months ended March 31, 2019 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations of $6.2 million, partially offset by $5.1 million of recognized revenue.

The Company’s payment terms vary by the type and size of its customers. For certain products or services and customer types, we require payment before the products or services are delivered to the customer.

Disaggregated Revenue

Disaggregated Revenue

The following table presents the Company’s revenues disaggregated by type of services (in thousands, unaudited). The majority of the Company’s revenue is generated from sales in the United States.

	Three Months Ended March 31,
	2019		2018
Promotion	$	63,567	$	63,783
Media		34,540		22,983
Total Revenue	$	98,107	$	86,766

Practical Expedients and Exemptions

Practical Expedients and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue for an amount where it has the right to invoice for services performed.

Sales Commissions

Sales Commissions

The Company generally incurs and expenses sales commissions upon recognition of revenue for related goods and services, which typically occurs within one year or less. Sales commissions earned related to revenues for initial contracts are commensurate with sales commissions related to renewal contracts. These costs are recorded within sales and marketing expenses on the condensed consolidated statements of operations.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Summary of Revenues Disaggregated by Type of Services

The following table presents the Company’s revenues disaggregated by type of services (in thousands, unaudited). The majority of the Company’s revenue is generated from sales in the United States.

	Three Months Ended March 31,
	2019		2018
Promotion	$	63,567	$	63,783
Media		34,540		22,983
Total Revenue	$	98,107	$	86,766

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The Company’s fair value hierarchy for its financial assets and liabilities that are measured at fair value on a recurring basis are as follows (in thousands):

	March 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	143,259		—		—	$	143,259
U.S. Treasury Bills		40,855		—		—		40,855
Short-Term investments:
Certificate of deposit		—		—		—		—
Total	$	184,114	$	—	$	—	$	184,114
Liabilities:
Contingent consideration related to acquisitions		—		—		32,026		32,026
Total	$	—	$	—	$	32,026	$	32,026
	December 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	142,507		—		—	$	142,507
U.S. Treasury Bills		19,689		—		—		19,689
Short-Term investments:
Certificate of deposit		—		20,738		—		20,738
Total	$	162,196	$	20,738	$	—	$	182,934
Liabilities:
Contingent consideration related to acquisitions		—		—		28,963		28,963
Total	$	—	$	—	$	28,963	$	28,963

Summary of Changes in Contingent Consideration

The following table represents the change in the contingent consideration (in thousands):

	Three Months Ended March 31, 2019
	Elevaate		Ahalogy
	Level 3		Level 3
Balance at the beginning of period	$	6,121	$	22,842
Change in fair value during the period		1,012		2,051
Balance as of March 31, 2019	$	7,133	$	24,893

	Three Months Ended March 31, 2018
	Crisp
	Level 3
Balance at the beginning of period	$	18,500
Change in fair value during the period		6,000
Balance as of March 31, 2018	$	24,500

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Allowance for Doubtful Accounts (Tables)

3 Months Ended

Mar. 31, 2019

Receivables [Abstract]

Summary of Activity in Allowance for Doubtful Accounts

The summary of activity in the allowance for doubtful accounts is as follows (in thousands):

	Three Months Ended March 31,
	2019			2018
Balance at the beginning of period	$	1,200		$	786
Bad debt expense		132			95
Write-offs		(1	)		(67	)
Balance at the end of period	$	1,331		$	814

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Balance Sheet Components (Tables)

3 Months Ended

Mar. 31, 2019

Balance Sheet Related Disclosures [Abstract]

Property and Equipment, Net

Property and equipment consist of the following (in thousands):

	March 31, 2019			December 31, 2018
Software	$	40,381		$	37,987
Computer equipment		24,372			23,986
Leasehold improvements		8,195			8,147
Furniture and fixtures		2,078			2,057
Total		75,026			72,177
Accumulated depreciation and amortization		(60,860	)		(59,348	)
Projects in process		1,213			2,750
Total property and equipment, net	$	15,379		$	15,579

Accrued Compensation and Benefits

Accrued compensation and benefits consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Commissions	$	2,760	$	4,104
Bonus		2,358		5,997
Payroll and related expenses		2,561		1,938
Vacation		420		359
Severance related to restructuring		—		709
Total accrued compensation and benefits	$	8,099	$	13,107

Other Current Liabilities

Other current liabilities consist of the following (in thousands):

	March 31, 2019		December 31, 2018
Distribution fees	$	16,354	$	15,389
Prefunded liability		5,255		5,131
Traffic acquisition cost		3,899		2,417
Operating lease liabilities		4,362		—
Marketing expenses		2,117		2,416
Interest payable		1,157		282
Facility exit costs related to restructuring		—		1,019
Liability related to purchased intangible asset		—		14,500
Other		9,653		12,101
Total other current liabilities	$	42,797	$	53,255

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Acquisitions (Tables)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Summary of Preliminary Acquisition Consideration and the Related Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary acquisition consideration and the related fair values of the assets acquired and liabilities assumed (in thousands):

	Purchase Consideration		Net Tangible Assets Acquired/ (Liabilities Assumed)			Identifiable Intangible Assets		Goodwill		Goodwill Deductible for Taxes	(1) Acquisition Related Expenses
Elevaate	$	13,346	$	(60	)	$	3,781	$	9,625	NotDeductible	$	549
SavingStar	$	7,485	$	(1,126	)	$	2,577	$	6,034	Not Deductible	$	419
Ahalogy	$	36,432	$	2,196		$	11,580	$	22,656	Not Deductible	$	684
	$	57,263	$	1,010		$	17,938			Not Deductible	$	1,652

(1) Expensed as general and administrative

Component of Identifiable Intangible Assets

The following sets forth each component of identifiable intangible assets acquired in connection with the acquisitions (in thousands):

	Elevaate		Estimated Useful Life (in Years)		SavingStar		Estimated Useful Life (in Years)		Ahalogy		Estimated Useful Life (in Years)
Developed technologies	$	3,307		5.0	$	1,476		3.0	$	3,100		4.0
Customer relationships		379		5.0		1,040		3.0		6,210		6.0
Trade names		95		3.0		61		1.5		650		4.0
Vendor relationships		—		—		—		—		1,620		2.0
Total identifiable intangible    assets	$	3,781			$	2,577			$	11,580

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Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill And Intangible Assets Disclosure [Abstract]

Summary of Gross Carrying Amount and Accumulated Amortization for Intangible Assets Intangible Assets

The following table summarizes the gross carrying amount and accumulated amortization for the intangible assets (in thousands):  

	March 31, 2019
	Gross		Accumulated Amortization			Net		Weighted Average Amortization Period (Years)
Media service rights	$	34,684	$	(9,121	)	$	25,563		2.9
Promotion service rights		29,548		(7,987	)		21,561		4.8
Developed technologies		20,070		(9,440	)		10,630		3.0
Customer relationships		19,290		(9,974	)		9,316		4.4
Data access rights		10,801		(5,007	)		5,794		3.1
Domain names		5,948		(5,364	)		584		0.4
Trade names		2,573		(1,083	)		1,490		2.5
Vendor relationships		2,510		(1,564	)		946		1.2
Patents		975		(834	)		141		3.4
Registered users		420		(360	)		60		0.7
	$	126,819	$	(50,734	)	$	76,085		3.5

	December 31, 2018
	Gross		Accumulated Amortization			Net		Weighted Average Amortization Period (Years)
Media service rights	$	34,476	$	(6,838	)	$	27,638		3.2
Promotion service rights		29,492		(7,248	)		22,244		5.1
Developed technologies		20,070		(8,353	)		11,717		3.2
Customer relationships		19,290		(9,145	)		10,145		4.5
Data access rights		10,801		(4,544	)		6,257		3.3
Domain names		5,948		(5,260	)		688		0.5
Trade names		2,573		(923	)		1,650		2.7
Vendor relationships		2,510		(1,364	)		1,146		1.4
Patents		975		(821	)		154		3.6
Registered users		420		(335	)		85		1.0
	$	126,555	$	(44,831	)	$	81,724		3.7

Estimated Amortization of Intangible Assets

Estimated future amortization expense related to intangible assets as of March 31, 2019 is as follows (in thousands):

	Total
2019, remaining nine months	$	17,285
2020		21,121
2021		15,206
2022		9,304
2023		4,949
2024 and beyond		812
Total estimated amortization expense	$	68,677

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Debt Obligations (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Net Carrying Amount of Liability Component

The net carrying amount of the liability component of the notes recorded in convertible senior notes, net on the condensed consolidated balance sheets was as follows (in thousands):

	March 31,			March 31,
	2019			2018
Principal	$	200,000		$	200,000
Unamortized debt discount		(38,322	)		(47,435	)
Unamortized debt issuance costs		(3,402	)		(4,319	)
Net carrying amount of the liability component	$	158,276		$	148,246

Schedule Of Interest Expense

The following table sets forth the interest expense related to the notes recognized in interest expense on the condensed consolidated statements of operations (in thousands):

	Three Months Ended March 31, 2019		Three Months Ended March 31, 2018
Contractual interest expense	$	875	$	875
Amortization of debt discount		2,328		2,197
Amortization of debt issuance costs		230		229
Total interest expense related to the Notes	$	3,433	$	3,301

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2019

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Assumptions Used to Estimate the Fair Value of Stock Options

The fair value of each option was estimated using the Black-Scholes model on the date of grant for the periods presented using the following assumptions:

	Three Months Ended March 31,
	2019	2018
Expected life (in years)	6.02	6.02
Risk-free interest rate	2.66%	2.66%
Volatility	50%	50%
Dividend yield	—	—

Summary of Stock Option and Restricted Stock Units Award Activity

A summary of the Company’s stock option and RSU award activity under the 2013 Plan is as follows:

				RSUs Outstanding					Options Outstanding
	Shares Available for Grant			Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Balance as of December 31, 2018		6,497,353			4,904,161		$	12.48		6,622,006		$	12.12		5.96	$	9,987
Increase in shares authorized		3,799,808		—			—		—			—		—		—
Options granted		(1,317,926	)	—			—			1,317,926		$	9.96	—		—
Options exercised	—			—			—			(302,948	)	$	4.76	—		$	1,949
Options canceled or expired		57,287		—			—			(57,287	)	$	11.20	—		—
RSUs granted		(2,427,631	)		2,427,631		$	9.99	—			—		—		—
RSUs vested	—				(1,207,853	)	$	12.26	—			—		—		—
RSUs canceled or expired		248,484			(248,484	)	$	12.16	—			—		—		—
RSUs vested and withheld for    taxes		(458,337	)	—			—		—			—		—		—
Balance as of March 31, 2019		6,399,038			5,875,455		$	11.52		7,579,697		$	12.05		6.69	$	5,973
Vested and exercisable as of    March 31, 2019										4,878,570		$	12.58		5.41	$	5,639

Summary of Assumptions Used to Estimate the Fair Value of Employee Stock Purchase Plan

The fair value of the option feature is estimated using the Black-Scholes model for the period presented based on the following assumptions:

	Three Months Ended March 31,
	2019	2018
Expected life (in years)	0.50	0.50
Risk-free interest rate	2.50%	1.42%
Volatility	35%	40%
Dividend yield	—	—

Schedule of Stock Based Compensation Expense

The following table sets forth the total stock-based compensation expense resulting from stock options, RSUs and ESPP included in the Company’s condensed consolidated statements of operations (in thousands):

	Three Months Ended March 31,
	2019		2018
Cost of revenues	$	602	$	540
Sales and marketing		1,738		1,600
Research and development		1,366		1,827
General and administrative		4,342		3,829
Total stock-based compensation expense	$	8,048	$	7,796

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Net Loss Per Share (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Net Loss Per Share

The computation of the Company’s basic and diluted net loss per share is as follows (in thousands, except per share data):

	Three Months Ended March 31,
	2019			2018
Net loss	$	(13,228	)	$	(11,357	)
Weighted-average number of common shares used in    computing net loss per share, basic and diluted		94,263			92,711
Net loss per share, basic and diluted	$	(0.14	)	$	(0.12	)

Schedule of Outstanding Common Equivalent Shares Excluded from Computation of Diluted Net Loss Per Share

The outstanding common equivalent shares excluded from the computation of the diluted net loss per share for the periods presented because including them would have been antidilutive are as follows (in thousands):

	Three Months Ended March 31,
	2019		2018
Stock options and ESPP		7,705		8,071
Restricted stock units		5,875		5,715
Shares held in escrow		—		1,000
Shares related to convertible senior notes		11,521		11,521
		25,101		26,307

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Schedule of Supplemental Cash Flow Information Related to Operating Leases

Supplemental cash flow information related to operating leases was as follows (in thousands):

	Three Months Ended March 31,
	2019
Cash paid for operating lease liabilities	$	1,348
Right-of-use assets obtained in exchange for lease obligations		12,955

Supplemental Balance Sheet Information Related to Operating Leases

Supplemental balance sheet information related to operating leases was as follows (in thousands, except lease term and discount rate):

	Three Months Ended March 31,
	2019
Operating right-of-use assets reported as:
Other assets	$	7,400
Operating lease liabilities reported as:
Other current liabilities	$	4,362
Other non-current liabilities		7,412
Total operating lease liabilities	$	11,774
Weighted average remaining lease term (in years)		3.7
Weighted average discount rate		7.9	%

Maturities of Operating Lease Liabilities

Maturities of operating lease liabilities were as follows (in thousands):

	Operating Leases
2019, remaining 9 months	$	4,170
2020		3,536
2021		1,884
2022		1,572
2023		1,551
2024 and thereafter		909
Total lease payments	$	13,622
Less: Imputed Interest		(1,848	)
Total	$	11,774

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Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Jan. 01, 2019	Jan. 01, 2018
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Operating lease, right-of-use asset	$ 7,400			$ 8,500
Operating lease, liability	11,774			$ 11,500
Deferred revenue due to performance obligations	1,121	$ 668
ASU 2016-02
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Operating lease, right-of-use asset	8,500
Operating lease, liability	11,500
ASU 2014-09
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Impact to revenues due to adoption of new standard			$ 1,000
Deferred revenue, revenue recognized	5,100
Deferred revenue due to performance obligations	$ 6,200
ASU 2014-09 | Retained Earnings
Basis Of Presentation And Summary Of Significant Accounting Policies [Line Items]
Cumulative effect adjustment to retained earnings					$ 100

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Summary of Significant Accounting Policies - Summary of Revenues Disaggregated by Type of Services (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation Of Revenue [Line Items]
Total Revenue	$ 98,107	$ 86,766
Promotion
Disaggregation Of Revenue [Line Items]
Total Revenue	63,567	63,783
Media
Disaggregation Of Revenue [Line Items]
Total Revenue	$ 34,540	$ 22,983

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Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Assets:
Assets fair value	$ 184,114	$ 182,934
Liabilities:
Liabilities fair value	32,026	28,963
Contingent Consideration
Liabilities:
Liabilities fair value	32,026	28,963
Cash Equivalents | Money Market Funds
Assets:
Assets fair value	143,259	142,507
Cash Equivalents | U.S. Treasury Bills
Assets:
Assets fair value	40,855	19,689
Short-Term Investments | Certificate of Deposit
Assets:
Assets fair value		20,738
Level 1
Assets:
Assets fair value	184,114	162,196
Level 1 | Cash Equivalents | Money Market Funds
Assets:
Assets fair value	143,259	142,507
Level 1 | Cash Equivalents | U.S. Treasury Bills
Assets:
Assets fair value	40,855	19,689
Level 2
Assets:
Assets fair value		20,738
Level 2 | Short-Term Investments | Certificate of Deposit
Assets:
Assets fair value		20,738
Level 3
Liabilities:
Liabilities fair value	32,026	28,963
Level 3 | Contingent Consideration
Liabilities:
Liabilities fair value	$ 32,026	$ 28,963

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Fair Value Measurements - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018	Nov. 30, 2017
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Charge related to changes in fair value of contingent consideration	$ 3,100,000	$ 6,000,000
Assets fair value	184,114,000		$ 182,934,000
Liabilities fair value	32,026,000		28,963,000
Fair Value, Measurements, Nonrecurring
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value	0		0
Liabilities fair value	0		0
Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Assets fair value			20,738,000
1.75% Convertible Senior Notes Due 2022
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Debt instrument fixed interest rate per annum				1.75%
1.75% Convertible Senior Notes Due 2022 | Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fair value of convertible senior notes	$ 188,300,000		$ 187,500,000
Debt instrument fixed interest rate per annum	1.75%		1.75%
Money Market Funds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Fixed net asset value	$ 1

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Fair Value Measurements - Summary of Changes in Contingent Consideration (Details) - Level 3 - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Elevaate
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance at the beginning of period	$ 6,121
Change in fair value during the period	1,012
Balance at the end of period	7,133
Ahalogy
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance at the beginning of period	22,842
Change in fair value during the period	2,051
Balance at the end of period	$ 24,893
Crisp Media, Inc
Fair Value Liabilities Measured On Recurring Basis Unobservable Input Reconciliation [Line Items]
Balance at the beginning of period		$ 18,500
Change in fair value during the period		6,000
Balance at the end of period		$ 24,500

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Allowance for Doubtful Accounts - Summary of Activity in Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Receivables [Abstract]
Balance at the beginning of period	$ 1,200	$ 786
Bad debt expense	132	95
Write-offs	(1)	(67)
Balance at the end of period	$ 1,331	$ 814

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Balance Sheet Components - Property and Equipment, Net (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Property Plant And Equipment [Line Items]
Property and equipment, Total	$ 75,026	$ 72,177
Accumulated depreciation and amortization	(60,860)	(59,348)
Projects in process	1,213	2,750
Total property and equipment, net	15,379	15,579
Software
Property Plant And Equipment [Line Items]
Property and equipment, Total	40,381	37,987
Computer Equipment
Property Plant And Equipment [Line Items]
Property and equipment, Total	24,372	23,986
Leasehold Improvements
Property Plant And Equipment [Line Items]
Property and equipment, Total	8,195	8,147
Furniture and Fixtures
Property Plant And Equipment [Line Items]
Property and equipment, Total	$ 2,078	$ 2,057

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Balance Sheet Components - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Property Plant And Equipment [Abstract]
Depreciation	$ 1.8	$ 1.6
Capitalized costs	1.0	0.9
Amortization expense	0.6	$ 0.0
Unamortized costs	$ 5.7		$ 6.1

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Balance Sheet Components - Accrued Compensation and Benefits (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Payables And Accruals [Abstract]
Commissions	$ 2,760	$ 4,104
Bonus	2,358	5,997
Payroll and related expenses	2,561	1,938
Vacation	420	359
Severance related to restructuring		709
Total accrued compensation and benefits	$ 8,099	$ 13,107

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Balance Sheet Components - Other Current Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Payables And Accruals [Abstract]
Distribution fees	$ 16,354	$ 15,389
Prefunded liability	5,255	5,131
Traffic acquisition cost	3,899	2,417
Operating lease liabilities	4,362
Marketing expenses	2,117	2,416
Interest payable	1,157	282
Facility exit costs related to restructuring		1,019
Liability related to purchased intangible asset		14,500
Other	9,653	12,101
Total other current liabilities	$ 42,797	$ 53,255

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Acquisitions - Additional Information (Details) - USD ($)	Oct. 26, 2018	Aug. 27, 2018	Jun. 01, 2018	Mar. 31, 2019	Dec. 31, 2018
Business Acquisition [Line Items]
Contingent consideration, fair value				$ 7,133,000	$ 28,963,000
Goodwill deductible for income tax purposes				0
Elevaate
Business Acquisition [Line Items]
Total preliminary acquisition consideration	$ 13,300,000
Cash payments for purchase of assets	7,200,000
Contingent consideration payable in cash	18,500,000
Contingent consideration, fair value	$ 6,100,000
Contingent consideration, milestones achievement period start date	Feb. 01, 2019
Contingent consideration, milestones achievement period end date	Jan. 31, 2021
SavingStar, Inc
Business Acquisition [Line Items]
Cash payments for purchase of assets		$ 7,500,000
Contingent consideration payable in cash		10,600,000
Contingent consideration, fair value		$ 0		$ 0
Contingent consideration, milestones achievement period end date		Feb. 29, 2020
Ahalogy
Business Acquisition [Line Items]
Total preliminary acquisition consideration			$ 36,400,000
Cash payments for purchase of assets			21,800,000
Contingent consideration payable in cash			30,000,000
Contingent consideration, fair value			$ 14,600,000
Contingent consideration, milestones achievement period end date			Dec. 31, 2019

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Acquisitions - Summary of Preliminary Acquisition Consideration and the Related Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands				22 Months Ended
	Oct. 26, 2018	Aug. 27, 2018	Jun. 01, 2018	Mar. 31, 2019
Business Acquisition [Line Items]
Purchase Consideration				$ 57,263
Net Tangible Assets Acquired/ (Liabilities Assumed)				1,010
Identifiable Intangible Assets				$ 17,938
Goodwill Deductible for Taxes				Not Deductible
Acquisition Related Expenses				$ 1,652
Elevaate
Business Acquisition [Line Items]
Purchase Consideration	$ 13,346
Net Tangible Assets Acquired/ (Liabilities Assumed)	(60)
Identifiable Intangible Assets	3,781
Goodwill	$ 9,625
Goodwill Deductible for Taxes	Not Deductible
Acquisition Related Expenses	$ 549
SavingStar, Inc
Business Acquisition [Line Items]
Purchase Consideration		$ 7,485
Net Tangible Assets Acquired/ (Liabilities Assumed)		(1,126)
Identifiable Intangible Assets		2,577
Goodwill		$ 6,034
Goodwill Deductible for Taxes		Not Deductible
Acquisition Related Expenses		$ 419
Ahalogy
Business Acquisition [Line Items]
Purchase Consideration			$ 36,432
Net Tangible Assets Acquired/ (Liabilities Assumed)			2,196
Identifiable Intangible Assets			11,580
Goodwill			$ 22,656
Goodwill Deductible for Taxes			Not Deductible
Acquisition Related Expenses			$ 684

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Acquisitions - Component of Identifiable Intangible Assets (Details) - USD ($) $ in Thousands	Oct. 26, 2018	Aug. 27, 2018	Jun. 01, 2018	Mar. 31, 2019
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets				$ 17,938
Elevaate
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets	$ 3,781
SavingStar, Inc
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets		$ 2,577
Ahalogy
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets			$ 11,580
Developed Technologies | Elevaate
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets	$ 3,307
Estimated Useful Life (in Years)	5 years
Developed Technologies | SavingStar, Inc
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets		$ 1,476
Estimated Useful Life (in Years)		3 years
Developed Technologies | Ahalogy
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets			$ 3,100
Estimated Useful Life (in Years)			4 years
Customer Relationships | Elevaate
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets	$ 379
Estimated Useful Life (in Years)	5 years
Customer Relationships | SavingStar, Inc
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets		$ 1,040
Estimated Useful Life (in Years)		3 years
Customer Relationships | Ahalogy
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets			$ 6,210
Estimated Useful Life (in Years)			6 years
Trade Names | Elevaate
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets	$ 95
Estimated Useful Life (in Years)	3 years
Trade Names | SavingStar, Inc
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets		$ 61
Estimated Useful Life (in Years)		1 year 6 months
Trade Names | Ahalogy
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets			$ 650
Estimated Useful Life (in Years)			4 years
Vendor Relationships | Ahalogy
Acquired Finite Lived Intangible Assets [Line Items]
Identifiable intangible assets			$ 1,620
Estimated Useful Life (in Years)			2 years

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Intangible Assets - Summary of Gross Carrying Amount and Accumulated Amortization for Intangible Assets Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Finite Lived Intangible Assets [Line Items]
Gross	$ 126,819	$ 126,555
Accumulated Amortization	(50,734)	(44,831)
Net	$ 76,085	$ 81,724
Weighted Average Amortization Period (Years)	3 years 6 months	3 years 8 months 12 days
Media Service Rights
Finite Lived Intangible Assets [Line Items]
Gross	$ 34,684	$ 34,476
Accumulated Amortization	(9,121)	(6,838)
Net	$ 25,563	$ 27,638
Weighted Average Amortization Period (Years)	2 years 10 months 24 days	3 years 2 months 12 days
Promotion Service Rights
Finite Lived Intangible Assets [Line Items]
Gross	$ 29,548	$ 29,492
Accumulated Amortization	(7,987)	(7,248)
Net	$ 21,561	$ 22,244
Weighted Average Amortization Period (Years)	4 years 9 months 18 days	5 years 1 month 6 days
Developed Technologies
Finite Lived Intangible Assets [Line Items]
Gross	$ 20,070	$ 20,070
Accumulated Amortization	(9,440)	(8,353)
Net	$ 10,630	$ 11,717
Weighted Average Amortization Period (Years)	3 years	3 years 2 months 12 days
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross	$ 19,290	$ 19,290
Accumulated Amortization	(9,974)	(9,145)
Net	$ 9,316	$ 10,145
Weighted Average Amortization Period (Years)	4 years 4 months 24 days	4 years 6 months
Data Access Rights
Finite Lived Intangible Assets [Line Items]
Gross	$ 10,801	$ 10,801
Accumulated Amortization	(5,007)	(4,544)
Net	$ 5,794	$ 6,257
Weighted Average Amortization Period (Years)	3 years 1 month 6 days	3 years 3 months 18 days
Domain Names
Finite Lived Intangible Assets [Line Items]
Gross	$ 5,948	$ 5,948
Accumulated Amortization	(5,364)	(5,260)
Net	$ 584	$ 688
Weighted Average Amortization Period (Years)	4 months 24 days	6 months
Trade Names
Finite Lived Intangible Assets [Line Items]
Gross	$ 2,573	$ 2,573
Accumulated Amortization	(1,083)	(923)
Net	$ 1,490	$ 1,650
Weighted Average Amortization Period (Years)	2 years 6 months	2 years 8 months 12 days
Vendor Relationships
Finite Lived Intangible Assets [Line Items]
Gross	$ 2,510	$ 2,510
Accumulated Amortization	(1,564)	(1,364)
Net	$ 946	$ 1,146
Weighted Average Amortization Period (Years)	1 year 2 months 12 days	1 year 4 months 24 days
Patents
Finite Lived Intangible Assets [Line Items]
Gross	$ 975	$ 975
Accumulated Amortization	(834)	(821)
Net	$ 141	$ 154
Weighted Average Amortization Period (Years)	3 years 4 months 24 days	3 years 7 months 6 days
Registered Users
Finite Lived Intangible Assets [Line Items]
Gross	$ 420	$ 420
Accumulated Amortization	(360)	(335)
Net	$ 60	$ 85
Weighted Average Amortization Period (Years)	8 months 12 days	1 year

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Intangible Assets - Additional Information (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Intangible Assets [Line Items]
Amortization expense of intangible assets	$ 5.9	$ 2.8
Domain Names
Intangible Assets [Line Items]
Indefinite lived intangible, gross value	$ 0.4		$ 0.4

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Intangible Assets - Estimated Amortization of Intangible Assets (Details) $ in Thousands	Mar. 31, 2019 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
2019, remaining nine months	$ 17,285
2020	21,121
2021	15,206
2022	9,304
2023	4,949
2024 and beyond	812
Total estimated amortization expense	$ 68,677

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Debt Obligations - Additional Information (Details) - 1.75% Convertible Senior Notes Due 2022	1 Months Ended	3 Months Ended
	Nov. 30, 2017 USD ($) d $ / shares shares	Mar. 31, 2019 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2018 USD ($)
Line Of Credit Facility [Line Items]
Debt instrument aggregate principal amount	$ 200,000,000
Debt instrument maturity year	2022
Debt instrument fixed interest rate per annum	1.75%
Debt instrument, frequency of payment		Payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2018.
Net proceeds from the debt offering, after deducting transaction costs	$ 193,800,000
Convertible notes, shares issued | shares	57.6037
Convertible notes, principal amount	$ 1,000
Convertible notes, initial conversion price | $ / shares	$ 17.36
Convertible notes, type of equity security issued		Common stock
Convertible notes, conversion description		Holders of the notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding September 1, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five-business day period after any five consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the notes on each such trading day; (3) if the Company calls any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after September 1, 2022, holders may convert all or any portion of their notes at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. The Company intends to settle the principal amount of the notes with cash.
Convertible notes, percentage of conversion price	130.00%
Convertible notes, redemption description		The Company may not redeem the notes prior to December 5, 2020. It may redeem for cash all or any portion of the notes, at its option, on or after December 5, 2020 if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than three trading days preceding the date on which it provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.
Convertible notes, redemption percentage	100.00%
Convertible notes, sinking fund	$ 0
Percentage of repurchase price is equal to principal amount of convertible notes	100.00%
Carrying amount of the liability component	$ 149,300,000
Carrying amount of the equity component	$ 50,700,000
Convertible notes, effective interest rate	5.80%
Debt issuance costs	$ 6,200,000
Amortization of interest expense	4,600,000	$ 230,000	$ 229,000
Adjustments to additional paid in capital, equity component of debt issuance costs	$ 1,600,000	1,600,000		$ 1,600,000
Additional Paid-In Capital
Line Of Credit Facility [Line Items]
Carrying amount of the equity component		$ 49,100,000		$ 49,100,000
90% Applicable Conversion Price
Line Of Credit Facility [Line Items]
Convertible notes, consecutive trading days | d	5
Minimum | 130% Applicable Conversion Price
Line Of Credit Facility [Line Items]
Convertible notes, consecutive trading days | d	20
Maximum
Line Of Credit Facility [Line Items]
Convertible notes, percentage of last reported sale price of common stock	98.00%
Maximum | 130% Applicable Conversion Price
Line Of Credit Facility [Line Items]
Convertible notes, consecutive trading days | d	30

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Debt Obligations -Schedule of Net Carrying Amount of Liability Component (Details) - 1.75% Convertible Senior Notes Due 2022 - USD ($) $ in Thousands	Mar. 31, 2019	Mar. 31, 2018
Line Of Credit Facility [Line Items]
Principal	$ 200,000	$ 200,000
Unamortized debt discount	(38,322)	(47,435)
Unamortized debt issuance costs	(3,402)	(4,319)
Net carrying amount of the liability component	$ 158,276	$ 148,246

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Debt Obligations - Interest Expense (Details) - 1.75% Convertible Senior Notes Due 2022 - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Nov. 30, 2017	Mar. 31, 2019	Mar. 31, 2018
Line Of Credit Facility [Line Items]
Contractual interest expense		$ 875	$ 875
Amortization of debt discount		2,328	2,197
Amortization of debt issuance costs	$ 4,600	230	229
Total interest expense related to the Notes		$ 3,433	$ 3,301

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Stock-Based Compensation - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Weighted average grant date fair value	$ 5.01	$ 6.59
Issuance of common stock, stock purchase plan, shares	1,149,287
Shares available for issuance	2,050,713
Stock-based compensation	$ 8,048	$ 7,796
Property and Equipment
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation	$ 100	100
2013 Equity Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Common stock reserved for future issuance	4,000,000
Percentage of outstanding stock	4.00%
Options expiration period	10 years
2013 Equity Incentive Plan | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted price per share percent	100.00%
Restricted Stock Units
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Fair value of options vested, total	$ 1,300	$ 2,400
Unrecognized stock based compensation	$ 61,700
Unrecognized stock based compensation, amortized weighted average period	2 years 11 months 4 days
2013 Employee Stock Purchase Plan ("ESPP")
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Maximum contribution of base compensation for employee stock purchase plan	15.00%
Offering period of employee stock purchase plan	6 months
Purchase price of common stock percentage of fair market value	85.00%
Stock Based Compensation Expense
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock based compensation	$ 76,600
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Unrecognized stock based compensation	$ 14,900
Unrecognized stock based compensation, amortized weighted average period	2 years 10 months 28 days

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Stock-Based Compensation - Summary of Assumptions Used to Estimate the Fair Value of Stock Options and Employee Stock Purchase Plan (Details)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Employee Stock Purchase Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (in years)	6 months	6 months
Risk-free interest rate	2.50%	1.42%
Volatility	35.00%	40.00%
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expected life (in years)	6 years 7 days	6 years 7 days
Risk-free interest rate	2.66%	2.66%
Volatility	50.00%	50.00%

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Stock-Based Compensation - Summary of Stock Option and Restricted Stock Units Award Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Shares Available for Grant
Beginning balance	6,497,353
Increase in shares authorized	3,799,808
Options granted	(1,317,926)
Options canceled or expired	57,287
RSUs granted	(2,427,631)
RSUs canceled or expired	248,484
RSUs vested and withheld for taxes	(458,337)
Ending balance	6,399,038	6,497,353
Number of Shares
Beginning balance	6,622,006
Options granted	1,317,926
Options exercised	(302,948)
Options canceled or expired	(57,287)
Ending balance	7,579,697	6,622,006
Vested and exercisable at the end of period	4,878,570
Weighted Average Exercise Price
Beginning balance	$ 12.12
Options granted	9.96
Options exercised	4.76
Options canceled or expired	11.20
Ending balance	12.05	$ 12.12
Vested and exercisable at the end of period	$ 12.58
Weighted Average Remaining Contractual Term (Years) / Aggregate Intrinsic Value
Weighted Average Remaining Contractual Term (Years)	6 years 8 months 8 days	5 years 11 months 15 days
Vested and exercisable at the end of period	5 years 4 months 28 days
Aggregate Intrinsic Value	$ 5,973	$ 9,987
Aggregate Intrinsic Value, Options exercised	1,949
Vested and exercisable at the end of period	$ 5,639
Restricted Stock Units, Number of Shares
RSUs granted	2,427,631
RSUs canceled or expired	(248,484)
Restricted Stock Units
Shares Available for Grant
RSUs granted	(2,427,631)
RSUs vested	1,207,853
RSUs canceled or expired	248,484
Restricted Stock Units, Number of Shares
Beginning balance	4,904,161
RSUs granted	2,427,631
RSUs vested	(1,207,853)
RSUs canceled or expired	(248,484)
Ending balance	5,875,455	4,904,161
Weighted Average Grant Date Fair Value
Beginning Balance	$ 12.48
RSUs granted	9.99
RSUs vested	12.26
RSUs canceled or expired	12.16
Ending balance	$ 11.52	$ 12.48

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Stock-Based Compensation - Schedule of Stock Based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	$ 8,048	$ 7,796
Cost of Revenues
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	602	540
Sales and Marketing
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	1,738	1,600
Research and Development
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	1,366	1,827
General and Administrative
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Stock-based compensation	$ 4,342	$ 3,829

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Common Stock Repurchase Programs - Additional Information (Details) - USD ($)	1 Months Ended		3 Months Ended
	Apr. 30, 2019	Apr. 30, 2018	Mar. 31, 2019
Share Repurchase Program ("2018 Program")
Common Stock Repurchases [Line Items]
Number of shares repurchased and retired			2,511,633
Remaining amount available for future share repurchases			$ 59,000,000
Aggregate cost of shares repurchased and retired			$ 25,200,000
Stock repurchase program duration		1 year
Share repurchase program, beginning date		2018-05
Share repurchase program, end date		2019-05
Subsequent Event | Share Repurchase Program ("2019 Program")
Common Stock Repurchases [Line Items]
Stock repurchase program duration	1 year
Share repurchase program, beginning date	2019-05
Share repurchase program, end date	2020-05
Maximum | Share Repurchase Program ("2018 Program")
Common Stock Repurchases [Line Items]
Repurchase of authorized common stock		$ 100,000,000
Maximum | Subsequent Event | Share Repurchase Program ("2019 Program")
Common Stock Repurchases [Line Items]
Repurchase of authorized common stock	$ 60,000,000

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Income Taxes - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Provision for (benefit from) income taxes	$ 26	$ 102

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Net Loss Per Share - Schedule of Computation of Basic and Diluted Net Loss Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Net loss	$ (13,228)	$ (11,357)
Weighted-average number of common shares used in computing net loss per share, basic and diluted	94,263	92,711
Net loss per share, basic and diluted	$ (0.14)	$ (0.12)

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Net Loss Per Share - Schedule of Outstanding Common Equivalent Shares Excluded from Computation of Diluted Net Loss Per Share (Details) - shares shares in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Outstanding common equivalent shares	25,101	26,307
Stock Options and ESPP
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Outstanding common equivalent shares	7,705	8,071
Restricted Stock Units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Outstanding common equivalent shares	5,875	5,715
Shares Held in Escrow
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Outstanding common equivalent shares		1,000
Shares Related to Convertible Senior Notes
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Outstanding common equivalent shares	11,521	11,521

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Leases - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Jan. 01, 2019
Lessee Lease Description [Line Items]
Lessee operating lease description	The Company has entered into operating leases primarily for office facilities. These leases have terms which typically range from 1 year to 5 years
Lessee operating lease option to extend	and often include options to renew.
Option to extend operating lease	true
Operating lease, right-of-use asset	$ 7,400	$ 8,500
Operating lease, liability	11,774	$ 11,500
Long term lease commitment, amount	13,622
Total lease costs	900
Operating lease costs for right-of-use assets	800
Short-term lease costs related to short-term operating leases	$ 100
Professional Sports Team Suite
Lessee Lease Description [Line Items]
Operating lease, term of contract	20 years
Long term lease commitment, amount	$ 6,100
Long term operating lease term	2034
Minimum
Lessee Lease Description [Line Items]
Operating lease, term of contract	1 year
Maximum
Lessee Lease Description [Line Items]
Operating lease, term of contract	5 years
Operating lease, renewal term	6 years

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Leases - Supplemental Cash Flow Information Related to Operating Leases (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Cash paid for operating lease liabilities	$ 1,348
Right-of-use assets obtained in exchange for lease obligations	$ 12,955

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Leases - Supplemental Balance Sheet Information Related to Operating Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019
Leases [Abstract]
Other assets	$ 7,400	$ 8,500
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List]	us-gaap:OtherAssetsMember
Other current liabilities	$ 4,362
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	us-gaap:OtherCurrentLiabilitiesMember
Other non-current liabilities	$ 7,412
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	us-gaap:OtherNoncurrentLiabilitiesMember
Total operating lease liabilities	$ 11,774	$ 11,500
Weighted average remaining lease term (in years)	3 years 8 months 12 days
Weighted average discount rate	7.90%

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Leases - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Jan. 01, 2019
Leases [Abstract]
2019, remaining 9 months	$ 4,170
2020	3,536
2021	1,884
2022	1,572
2023	1,551
2024 and thereafter	909
Total lease payments	13,622
Less: Imputed Interest	(1,848)
Operating lease, liability	$ 11,774	$ 11,500

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Commitments and Contingencies - Additional Information (Details) - USD ($)	1 Months Ended	3 Months Ended
	Jan. 31, 2017	Mar. 31, 2019
Computer Equipment | Promissory Note
Commitments And Contingencies [Line Items]
Debt instrument, used to finance	$ 800,000
Debt instrument, frequency of payment		quarterly
Debt instrument, maturity period	3 years
Debt instrument, remaining amount		$ 300,000
Open Purchase Commitments
Commitments And Contingencies [Line Items]
Software license fees and marketing services		$ 10,500,000

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Employee Benefit Plan - Additional Information (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Defined Contribution Pension And Other Postretirement Plans Disclosure [Abstract]
Rate at which the company matches employee contribution	3.00%
Maximum contribution amount	$ 6,000
Defined contribution vesting period	4 years
Matching contribution expense	$ 700,000	$ 600,000

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Subsequent Events - Additional Information (Details) - Share Repurchase Program ("2019 Program") - Subsequent Event	1 Months Ended
	Apr. 30, 2019 USD ($)
Subsequent Event [Line Items]
Share repurchase program, beginning date	2019-05
Share repurchase program, end date	2020-05
Maximum
Subsequent Event [Line Items]
Repurchase of authorized common stock	$ 60,000,000