(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||||||||
(Address of principal executive offices, including zip code) | |||||||||||
Registrant's telephone number, including area code: | |||||||||||
( |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Class | Outstanding as of May 3, 2023 | |||||||
Common Stock, $0.00001 par value |
Page No. | ||||||||
Part I. | ||||||||
Item 1. | ||||||||
Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Part II. | ||||||||
Item 1. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 6. | ||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net | |||||||||||
Prepaid expenses and other current assets | |||||||||||
TOTAL CURRENT ASSETS | |||||||||||
Property and equipment, net | |||||||||||
Right-of-use lease asset | |||||||||||
Internal use software development costs, net | |||||||||||
Intangible assets, net | |||||||||||
Goodwill | |||||||||||
Other assets, non-current | |||||||||||
TOTAL ASSETS | $ | $ | |||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | $ | |||||||||
Lease liabilities, current | |||||||||||
Debt, current | |||||||||||
Other current liabilities | |||||||||||
TOTAL CURRENT LIABILITIES | |||||||||||
Debt, non-current, net of debt issuance costs | |||||||||||
Lease liabilities, non-current | |||||||||||
Deferred tax liability, net | |||||||||||
Other liabilities, non-current | |||||||||||
TOTAL LIABILITIES | |||||||||||
Commitments and contingencies (Note 12) | |||||||||||
Preferred stock, $ | |||||||||||
Common stock, $ | |||||||||||
Additional paid-in capital | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
TOTAL STOCKHOLDERS' EQUITY | |||||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | $ |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
Revenue | $ | $ | |||||||||
Expenses: | |||||||||||
Cost of revenue | |||||||||||
Sales and marketing | |||||||||||
Technology and development | |||||||||||
General and administrative | |||||||||||
Merger, acquisition, and restructuring costs | |||||||||||
Total expenses | |||||||||||
Loss from operations | ( | ( | |||||||||
Other (income) expense: | |||||||||||
Interest expense, net | |||||||||||
Other income | ( | ( | |||||||||
Foreign exchange loss, net | |||||||||||
Gain on extinguishment of debt | ( | ||||||||||
Total other (income) expense, net | ( | ||||||||||
Loss before income taxes | ( | ( | |||||||||
Benefit for income taxes | ( | ( | |||||||||
Net loss | $ | ( | $ | ( | |||||||
Net loss per share: | |||||||||||
Basic and diluted | $ | ( | $ | ( | |||||||
Weighted average shares used to compute net loss per share: | |||||||||||
Basic and diluted | |||||||||||
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
Net loss | $ | ( | $ | ( | |||||||
Other comprehensive loss: | |||||||||||
Foreign currency translation adjustments | |||||||||||
Other comprehensive income | |||||||||||
Comprehensive loss | $ | ( | $ | ( |
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | $ | $ | ( | $ | ( | ( | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to RSU vesting | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement | ( | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Purchase of treasury stock | — | — | — | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Retirement of common stock | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Treasury Stock | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
Balance at December 31, 2022 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Exercise of common stock options | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock related to RSU vesting | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||
Shares withheld related to net share settlement | ( | — | ( | — | — | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Stock-based compensation | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||
Net loss | — | — | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||
Balance at March 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
OPERATING ACTIVITIES: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Stock-based compensation | |||||||||||
Impairment of intangible assets | |||||||||||
Gain on extinguishment of debt | ( | ||||||||||
Gain on disposal of property and equipment | ( | ( | |||||||||
Provision for doubtful accounts | ( | ||||||||||
Amortization of debt discount and issuance costs | |||||||||||
Non-cash lease expense | |||||||||||
Deferred income taxes | ( | ( | |||||||||
Unrealized foreign currency (gain) loss, net | ( | ||||||||||
Other items, net | |||||||||||
Changes in operating assets and liabilities, net of effect of business acquisitions: | |||||||||||
Accounts receivable | |||||||||||
Prepaid expenses and other assets | ( | ( | |||||||||
Accounts payable and accrued expenses | ( | ( | |||||||||
Other liabilities | ( | ||||||||||
Net cash (used in) provided by operating activities | ( | ||||||||||
INVESTING ACTIVITIES: | |||||||||||
Purchases of property and equipment | ( | ( | |||||||||
Capitalized internal use software development costs | ( | ( | |||||||||
Mergers and acquisitions, net of cash acquired | ( | ||||||||||
Net cash used in investing activities | ( | ( | |||||||||
FINANCING ACTIVITIES: | |||||||||||
Proceeds from exercise of stock options | |||||||||||
Repayment of debt | ( | ( | |||||||||
Repurchase of Convertible Senior Notes | ( | ||||||||||
Repayment of financing lease | ( | ( | |||||||||
Purchase of treasury stock | ( | ||||||||||
Taxes paid related to net share settlement | ( | ( | |||||||||
Payment of indemnification claims holdback | ( | ||||||||||
Net cash used in financing activities | ( | ( | |||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH | |||||||||||
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | ( | ( | |||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period | |||||||||||
CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period | $ | $ |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH TO CONSOLIDATED BALANCE SHEETS | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash included in prepaid expenses and other current assets | |||||||||||
Restricted cash included in other assets, non-current | |||||||||||
Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
SUPPLEMENTAL DISCLOSURES OF OTHER CASH FLOW INFORMATION: | |||||||||||
Cash paid for income taxes | $ | $ | |||||||||
Cash paid for interest | $ | $ | |||||||||
Capitalized assets financed by accounts payable and accrued expenses | $ | $ | |||||||||
Capitalized stock-based compensation | $ | $ | |||||||||
Operating lease right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | |||||||||
Purchase consideration - indemnification claims holdback | $ | $ | |||||||||
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands, except per share data) | |||||||||||
Basic and Diluted Loss Per Share: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Weighted-average common shares outstanding | |||||||||||
Weighted-average common shares outstanding used to compute net loss per share | |||||||||||
Basic and diluted loss per share | $ | ( | $ | ( | |||||||
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Options to purchase common stock | |||||||||||
Unvested restricted stock units | |||||||||||
Unvested performance stock units | |||||||||||
ESPP shares | |||||||||||
Convertible Senior Notes | |||||||||||
Total shares excluded from net loss per share |
Three Months Ended | |||||||||||||||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||||
Revenue: | |||||||||||||||||||||||
Net basis | $ | % | $ | % | |||||||||||||||||||
Gross basis | |||||||||||||||||||||||
Total | $ | % | $ | % |
Three Months Ended | |||||||||||||||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||||||||||||||
(in thousands, except percentages) | |||||||||||||||||||||||
Channel: | |||||||||||||||||||||||
CTV | $ | % | $ | % | |||||||||||||||||||
Mobile | |||||||||||||||||||||||
Desktop | |||||||||||||||||||||||
Total | $ | % | $ | % |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
United States | $ | $ | |||||||||
International | |||||||||||
Total | $ | $ |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Allowance for doubtful accounts, beginning balance | $ | $ | |||||||||
Write-offs | ( | ||||||||||
Increase (decrease) in provision for expected credit losses | ( | ||||||||||
Recoveries of previous write-offs | |||||||||||
Allowance for doubtful accounts, ending balance | $ | $ |
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Cash equivalents | $ | $ | $ | $ | |||||||||||||||||||
March 31, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Accounts payable—seller | $ | $ | |||||||||
Accounts payable—trade | |||||||||||
Accrued employee-related payables | |||||||||||
Accrued holdback - indemnification claims | |||||||||||
Total | $ | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Amortizable intangible assets: | |||||||||||
Developed technology | $ | $ | |||||||||
Customer relationships | |||||||||||
In-process research and development | |||||||||||
Non-compete agreements | |||||||||||
Trademarks | |||||||||||
Total identifiable intangible assets, gross | |||||||||||
Accumulated amortization—intangible assets: | |||||||||||
Developed technology | ( | ( | |||||||||
Customer relationships | ( | ( | |||||||||
In-process research and development | ( | ( | |||||||||
Non-compete agreements | ( | ( | |||||||||
Trademarks | ( | ( | |||||||||
Total accumulated amortization—intangible assets | ( | ( | |||||||||
Total identifiable intangible assets, net | $ | $ |
Fiscal Year | Amount | ||||
(in thousands) | |||||
Remaining 2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Total | $ |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Personnel related (severance and one-time termination benefit costs) | $ | $ | |||||||||
Loss contracts (facilities related) | |||||||||||
Exit costs | |||||||||||
Impairment of property and equipment, net | |||||||||||
Non-cash stock-based compensation (double-trigger acceleration and severance) | |||||||||||
Impairment costs of abandoned technology | |||||||||||
Professional services (investment banking advisory, legal and other professional services) | |||||||||||
Total merger, acquisition, and restructuring costs | $ | $ |
(in thousands) | |||||
Accrued restructuring costs at December 31, 2022 | $ | ||||
Personnel related and non-cash stock-based compensation | |||||
Loss contracts (facilities related) | |||||
Exit costs | |||||
Impairment of property and equipment, net | |||||
Cash paid for restructuring costs | ( | ||||
Non-cash loss contracts (facilities related) | ( | ||||
Non-cash impairments | ( | ||||
Non-cash stock-based compensation | ( | ||||
Accrued restructuring costs at March 31, 2023 | $ |
Shares Under Option | Weighted- Average Exercise Price | Weighted- Average Contractual Life | Aggregate Intrinsic Value | ||||||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||||
Outstanding at December 31, 2022 | $ | ||||||||||||||||||||||
Granted | $ | ||||||||||||||||||||||
Exercised | ( | $ | |||||||||||||||||||||
Expired | ( | $ | |||||||||||||||||||||
Outstanding at March 31, 2023 | $ | $ | |||||||||||||||||||||
Exercisable at March 31, 2023 | $ | $ |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
Expected term (in years) | |||||||||||
Risk-free interest rate | % | % | |||||||||
Expected volatility | % | % | |||||||||
Dividend yield | % | % |
Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
(in thousands) | |||||||||||
Restricted stock units outstanding at December 31, 2022 | $ | ||||||||||
Granted | $ | ||||||||||
Canceled | ( | $ | |||||||||
Vested and released | ( | $ | |||||||||
Restricted stock units outstanding at March 31, 2023 | * | $ | |||||||||
Restricted stock units outstanding and unvested | $ | ||||||||||
*At March 31, 2023, outstanding restricted stock units included |
Number of Shares | Weighted-Average Grant Date Fair Value | ||||||||||
(in thousands) | |||||||||||
Outstanding at December 31, 2022 | $ | ||||||||||
Granted | $ | ||||||||||
Outstanding at March 31, 2023 | $ |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
Expected term (in years) | |||||||||||
Risk-free interest rate | % | % | |||||||||
Expected volatility of Magnite | % | % | |||||||||
Expected volatility of selected peer companies | % | % | |||||||||
Expected correlation coefficients of Magnite | |||||||||||
Expected correlation coefficients of selected peer companies | |||||||||||
Dividend yield | % | % |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Cost of revenue | $ | $ | |||||||||
Sales and marketing | |||||||||||
Technology and development | |||||||||||
General and administrative | |||||||||||
Merger, acquisition, and restructuring costs | |||||||||||
Total stock-based compensation expense | $ | $ |
Fiscal Year | |||||
Remaining 2023 | $ | ||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total lease payments (undiscounted) | |||||
Less: imputed interest | ( | ||||
Lease liabilities—total (discounted) | $ |
Fiscal Year | |||||
Remaining 2023 | $ | ||||
2024 | |||||
2025 | |||||
Total | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Convertible Senior Notes | $ | $ | |||||||||
Less: Unamortized debt issuance cost | ( | ( | |||||||||
Net | |||||||||||
Term Loan B Facility | |||||||||||
Less: Unamortized discount and debt issuance cost | ( | ( | |||||||||
Net | |||||||||||
Less: Current portion | ( | ( | |||||||||
Total non-current debt | $ | $ |
Fiscal Year | |||||
Remaining 2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
2027 | |||||
Thereafter | |||||
Total | $ |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
Contractual interest expense | $ | $ | |||||||||
Amortization of debt issuance costs | |||||||||||
Total interest expense | $ | $ | |||||||||
Effective interest rate | % | % |
Fiscal Year | Debt Issuance Costs | ||||
Remaining 2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Total | $ |
March 31, 2023 | December 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Term Loan B Facility | $ | $ | |||||||||
Unamortized debt discounts | ( | ( | |||||||||
Unamortized debt issuance costs | ( | ( | |||||||||
Debt, net of debt issuance costs | $ | $ |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
Contractual interest expense | $ | $ | |||||||||
Amortization of debt discount | |||||||||||
Amortization of debt issuance costs | |||||||||||
Total interest expense | $ | $ | |||||||||
Effective interest rate | % | % |
Fiscal Year | Debt Discount | Debt Issuance Costs | |||||||||
Remaining 2023 | $ | $ | |||||||||
2024 | |||||||||||
2025 | |||||||||||
2026 | |||||||||||
2027 | |||||||||||
Thereafter | |||||||||||
Total | $ | $ | |||||||||
Three Months Ended | Change % | ||||||||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||||||||
(in thousands) | |||||||||||||||||
Revenue | $ | 130,150 | $ | 118,075 | 10 | % | |||||||||||
Expenses (1)(2): | |||||||||||||||||
Cost of revenue | 124,828 | 59,396 | 110 | % | |||||||||||||
Sales and marketing | 53,049 | 50,000 | 6 | % | |||||||||||||
Technology and development | 24,215 | 23,043 | 5 | % | |||||||||||||
General and administrative | 21,088 | 18,704 | 13 | % | |||||||||||||
Merger, acquisition, and restructuring costs | 7,465 | 6,756 | 10 | % | |||||||||||||
Total expenses | 230,645 | 157,899 | 46 | % | |||||||||||||
Loss from operations | (100,495) | (39,824) | (152) | % | |||||||||||||
Other (income) expense, net | (1,454) | 6,774 | NM | ||||||||||||||
Loss before income taxes | (99,041) | (46,598) | (113) | % | |||||||||||||
Benefit for income taxes | (309) | (2,005) | (85) | % | |||||||||||||
Net loss | $ | (98,732) | $ | (44,593) | (121) | % |
NM Not meaningful | |||||||||||
(1) Stock-based compensation expense included in our expenses was as follows: | |||||||||||
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Cost of revenue | $ | 468 | $ | 350 | |||||||
Sales and marketing | 7,405 | 5,341 | |||||||||
Technology and development | 5,446 | 4,717 | |||||||||
General and administrative | 5,825 | 4,237 | |||||||||
Merger, acquisition, and restructuring costs | 143 | 1,944 | |||||||||
Total stock-based compensation expense | $ | 19,287 | $ | 16,589 |
(2) Depreciation and amortization expense included in our expenses was as follows: | |||||||||||
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Cost of revenue | $ | 80,391 | $ | 26,322 | |||||||
Sales and marketing | 15,044 | 19,152 | |||||||||
Technology and development | 205 | 224 | |||||||||
General and administrative | 155 | 168 | |||||||||
Total depreciation and amortization expense | $ | 95,795 | $ | 45,866 |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
Revenue | 100 | % | 100 | % | |||||||
Cost of revenue | 96 | 50 | |||||||||
Sales and marketing | 41 | 42 | |||||||||
Technology and development | 19 | 20 | |||||||||
General and administrative | 16 | 16 | |||||||||
Merger, acquisition, and restructuring costs | 6 | 6 | |||||||||
Total expenses | 177 | 134 | |||||||||
Loss from operations | (77) | (34) | |||||||||
Other (income) expense, net | (1) | 6 | |||||||||
Loss before income taxes | (76) | (40) | |||||||||
Benefit for income taxes | — | (2) | |||||||||
Net loss | (76) | % | (38) | % | |||||||
Note: Percentages may not sum due to rounding. |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Interest expense, net | $ | 8,175 | $ | 7,111 | |||||||
Other income | (1,313) | (1,263) | |||||||||
Foreign exchange loss, net | 233 | 926 | |||||||||
Gain on debt extinguishment | (8,549) | — | |||||||||
Total other (income) expense, net | $ | (1,454) | $ | 6,774 |
Three Months Ended | |||||||||||||||||
March 31, 2023 | March 31, 2022 | Change Favorable/ (Unfavorable) | |||||||||||||||
(in thousands) | |||||||||||||||||
Financial Measures and non-GAAP Financial Measures: | |||||||||||||||||
Revenue | $ | 130,150 | $ | 118,075 | 10% | ||||||||||||
Revenue ex-TAC | 116,049 | 107,084 | 8% | ||||||||||||||
Gross profit | 5,322 | 58,679 | (91)% | ||||||||||||||
Net loss | (98,732) | (44,593) | (121)% | ||||||||||||||
Adjusted EBITDA | 23,338 | 28,841 | (19)% |
Three Months Ended | |||||||||||||||||
March 31, 2023 | March 31, 2022 | Change % | |||||||||||||||
(in thousands) | |||||||||||||||||
Revenue | $ | 130,150 | $ | 118,075 | 10 | % | |||||||||||
Less: Cost of revenue | 124,828 | 59,396 | 110 | % | |||||||||||||
Gross Profit | 5,322 | 58,679 | (91) | % | |||||||||||||
Add back: Cost of revenue, excluding TAC | 110,727 | 48,405 | 129 | % | |||||||||||||
Revenue ex-TAC | $ | 116,049 | $ | 107,084 | 8 | % |
Revenue ex-TAC | |||||||||||||||||
Three Months Ended | |||||||||||||||||
March 31, 2023 | March 31, 2022 | Change % | |||||||||||||||
(in thousands) | |||||||||||||||||
Channel: | |||||||||||||||||
CTV | $ | 46,412 | $ | 42,303 | 10 | % | |||||||||||
Mobile | 46,897 | 38,297 | 22 | % | |||||||||||||
Desktop | 22,740 | 26,484 | (14) | % | |||||||||||||
Total | $ | 116,049 | $ | 107,084 | 8 | % |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
Net loss | $ | (98,732) | $ | (44,593) | |||||||
Add back (deduct): | |||||||||||
Depreciation and amortization expense, excluding amortization of acquired intangible assets | 9,366 | 7,390 | |||||||||
Amortization of acquired intangibles | 86,429 | 38,476 | |||||||||
Stock-based compensation expense | 19,287 | 16,589 | |||||||||
Merger, acquisition, and restructuring costs, excluding stock-based compensation expense | 7,322 | 4,812 | |||||||||
Non-operational real estate and other expense, net | 116 | 135 | |||||||||
Interest expense, net | 8,175 | 7,111 | |||||||||
Foreign exchange loss, net | 233 | 926 | |||||||||
Gain on extinguishment of debt | (8,549) | — | |||||||||
Benefit for income taxes | (309) | (2,005) | |||||||||
Adjusted EBITDA | $ | 23,338 | $ | 28,841 |
Three Months Ended | |||||||||||
March 31, 2023 | March 31, 2022 | ||||||||||
(in thousands) | |||||||||||
Cash flows (used in) provided by operating activities | $ | (30,893) | $ | 21,632 | |||||||
Cash flows used in investing activities | (7,467) | (31,321) | |||||||||
Cash flows used in financing activities | (51,809) | (16,388) | |||||||||
Effects of exchange rate changes on cash, cash equivalents and restricted cash | 265 | 268 | |||||||||
Change in cash, cash equivalents and restricted cash | $ | (89,904) | $ | (25,809) |
Remaining 2023 | 2024 | 2025 | 2026 | 2027 | Thereafter | Total | |||||||||||||||||||||||||||||||||||
Lease liabilities associated with leases included Right of Use Asset as of March 31, 2023 | $ | 19,311 | $ | 22,299 | $ | 14,487 | $ | 12,020 | $ | 7,431 | $ | 21,011 | $ | 96,559 | |||||||||||||||||||||||||||
Obligations for leases not included in Lease liabilities as of March 31, 2023 | 174 | 231 | 231 | 231 | 231 | 1,176 | 2,274 | ||||||||||||||||||||||||||||||||||
Convertible Senior Notes | — | — | — | 349,750 | — | — | 349,750 | ||||||||||||||||||||||||||||||||||
Interest, Convertible Senior Notes | 437 | 874 | 874 | 434 | — | — | 2,619 | ||||||||||||||||||||||||||||||||||
Term Loan B (1) | 2,700 | 3,600 | 3,600 | 3,600 | 3,600 | 336,600 | 353,700 | ||||||||||||||||||||||||||||||||||
Interest, Term Loan B (2) | 27,529 | 35,222 | 34,764 | 34,402 | 34,040 | 11,203 | 177,160 | ||||||||||||||||||||||||||||||||||
Operating sublease income | (3,676) | (4,767) | (1,751) | (260) | — | — | (10,454) | ||||||||||||||||||||||||||||||||||
Other non-cancelable obligations | 3,058 | 6,953 | 2,091 | — | — | — | 12,102 | ||||||||||||||||||||||||||||||||||
Total | $ | 49,533 | $ | 64,412 | $ | 54,296 | $ | 400,177 | $ | 45,302 | $ | 369,990 | $ | 983,710 | |||||||||||||||||||||||||||
(1) Includes only scheduled amortization of payments and excludes currently unknown prepayment amounts that may be required, per terms of the Credit Agreement, after the end of each fiscal year. | |||||||||||||||||||||||||||||||||||||||||
(2) Interest payments are based on an assumed rate of 9.91%, which was the rate as of March 31, 2023 for the associated Term Loan B Facility. |
Period | Total Number of Shares Purchased | Average Price per Share | Total number of shares purchased as part of a Publicly Announced Program | Maximum Approximate Dollar Value that May Yet be Purchased Under the Program | ||||||||||||||||||||||
January 1 - January 31, 2023 | ||||||||||||||||||||||||||
Equity withholding(1) | 40 | $ | 10.05 | — | $ | — | ||||||||||||||||||||
Repurchase program(2) | — | $ | — | — | $ | 28,330 | ||||||||||||||||||||
February 1 - February 28, 2023 | ||||||||||||||||||||||||||
Equity withholding(1) | 649 | $ | 13.12 | — | $ | — | ||||||||||||||||||||
Repurchase program(2) | — | $ | — | — | $ | 75,000 | ||||||||||||||||||||
March 1 - March 31, 2023 | ||||||||||||||||||||||||||
Equity withholding(1) | 11 | $ | 10.84 | — | $ | — | ||||||||||||||||||||
Repurchase program(2) | — | $ | — | — | $ | 34,172 | ||||||||||||||||||||
700 | — |
Number | Description | |||||||
31.1* | ||||||||
31.2* | ||||||||
32*(1) | ||||||||
101.ins * | Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.sch * | XBRL Taxonomy Schema Linkbase Document | |||||||
101.cal * | XBRL Taxonomy Calculation Linkbase Document | |||||||
101.def * | XBRL Taxonomy Definition Linkbase Document | |||||||
101.lab * | XBRL Taxonomy Label Linkbase Document | |||||||
101.pre * | XBRL Taxonomy Presentation Linkbase Document | |||||||
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
MAGNITE, INC. (Registrant) | |||||
/s/ David Day | |||||
David Day | |||||
Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) | |||||
Date May 10, 2023 |
Signature: | /s/ Michael Barrett | |||||||
Date May 10, 2023 | Michael Barrett President and Chief Executive Officer (Principal Executive Officer) |
Signature: | /s/ David Day | |||||||
Date May 10, 2023 | David Day Chief Financial Officer (Principal Financial Officer) |
/s/ Michael Barrett | |||||
Michael Barrett President and Chief Executive Officer (Principal Executive Officer) |
/s/ David Day | |||||
David Day Chief Financial Officer (Principal Financial Officer) |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (usd per share) | $ 0.00001 | $ 0.00001 |
Preferred stock, shares authorized (in shares) | 10,000 | 10,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (usd per share) | $ 0.00001 | $ 0.00001 |
Common stock, shares authorized (in shares) | 500,000 | 500,000 |
Common stock, shares, issued (in shares) | 135,438 | 134,006 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2023 |
Mar. 31, 2022 |
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Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (98,732) | $ (44,593) |
Other comprehensive loss: | ||
Foreign currency translation adjustments | 367 | 110 |
Other comprehensive income | 367 | 110 |
Comprehensive loss | $ (98,365) | $ (44,483) |
Organization and Summary of Significant Accounting Policies |
3 Months Ended |
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Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies Company Overview Magnite, Inc. ("Magnite" or the "Company") was formed in Delaware and began operations on April 20, 2007. On April 1, 2020, Magnite completed a stock-for-stock merger with Telaria, Inc. ("Telaria" and such merger the "Telaria Merger"), a leading sell-side advertising platform and provider of connected television ("CTV") technology. On April 30, 2021, the Company completed its acquisition of SpotX, Inc. ("SpotX" and such acquisition the "SpotX Acquisition"), a leading CTV and video advertising platform. On July 1, 2021, the Company completed its acquisition of SpringServe, LLC ("SpringServe" and such acquisition the "SpringServe Acquisition"), a leading ad serving platform for CTV. Magnite has its principal offices in New York City, Los Angeles, Denver, London, and Sydney, and additional offices in Europe, Asia, North America, and South America. The Company provides a technology solution to automate the purchase and sale of digital advertising inventory for buyers and sellers globally, across all channels, formats and auction types. The Company’s platform features applications and services for sellers of digital advertising inventory, or publishers, that own or operate websites, applications, CTV channels, and other digital media properties, to manage and monetize their inventory; applications and services for buyers, including advertisers, agencies, agency trading desks, and demand side platforms, to buy digital advertising inventory; and a transparent, independent marketplace that brings buyers and sellers together and facilitates intelligent decision making and automated transaction execution at scale. The Company's clients include many of the world's leading sellers and buyers of digital advertising inventory. Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim period presented have been included. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for any future interim period, the year ending December 31, 2023, or for any future year. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in its 2022 Annual Report on Form 10-K. There have been no significant changes in the Company's accounting policies from those disclosed in its audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in its Annual Report on Form 10-K. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported and disclosed financial statements and accompanying footnotes. Due to the economic uncertainty of macroeconomic challenges, such as inflation, global conflict, capital market disruptions and instability of financial institutions, the occurrence of a recession, and other macroeconomic factors, it has become more difficult to apply certain assumptions and judgments into these estimates. The extent of the impact of these factors on the Company's operational and financial performance will depend on future developments, which are highly uncertain and cannot be predicted, including but not limited to the duration and how quickly and to what extent normal economic and operating conditions can resume. During the three months ended March 31, 2023, this uncertainty continued to result in a higher level of judgment related to its estimates and assumptions. As of the date of issuance of the condensed consolidated financial statements for the three months ended March 31, 2023, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments, or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ materially from these estimates. Recently Adopted Accounting Standards In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. Considerations to determine the amount of contract assets and contract liabilities to record at the acquisition date include the terms of the acquired contract, such as timing of payment, identification of each performance obligation in the contract and allocation of the contract transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception. ASU 2021-08 is effective for the Company beginning in the first quarter of 2023. The Company adopted this standard January 1, 2023 and will apply the guidance to future acquisitions, if any.
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Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss Per Share The following table presents the basic and diluted net loss per share:
The following weighted-average shares have been excluded from the calculation of diluted net loss per share attributable to common stockholders for each period presented because they are anti-dilutive:
For the three months ended March 31, 2023 and 2022, the Company excluded outstanding performance stock units from the calculation of diluted net loss per share because they were anti-dilutive. As of March 31, 2023, the performance stock units granted in 2020, 2021, 2022, and 2023 had expected achievement levels of 94%, 0%, 54% and 29%, respectively. As of March 31, 2022, the performance stock units granted in 2020, 2021, and 2022 had expected achievement levels of 121%, 0%, and 51% respectively. Refer to Note 9—"Stock-Based Compensation" for additional information related to performance stock units. For the three months ended March 31, 2023 and March 31, 2022, shares that would be issuable assuming conversion of all of the Convertible Senior Notes (as defined in Note 13) were excluded from the calculation of diluted loss per share because they were anti-dilutive. Diluted earnings per share for the Convertible Senior Notes is calculated under the if-converted method in accordance with ASC 260, Earnings Per Share. The Convertible Senior Notes have an initial conversion rate of 15.6539 shares of common stock per $1,000 principal amount of the Convertible Senior Notes, which will be subject to anti-dilution adjustments in certain circumstances. As of March 31, 2023 and 2022, the number of shares that would be issuable assuming conversion of all of the Convertible Senior Notes is approximately 5,474,952 and 6,261,560, respectively. Refer to Note 13—"Debt" for additional information related to accounting for Convertible Senior Notes issued and associated Capped Call Transactions
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Revenue |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | Revenue For the majority of transactions on the Company's platform, the Company reports revenue on a net basis as it does not act as the principal in the purchase and sale of digital advertising inventory because it does not have control of the digital advertising inventory and does not set prices agreed upon within the auction marketplace. For certain advertising campaigns that are transacted through insertion orders, the Company reports revenue on a gross basis, based primarily on its determination that the Company acts as the primary obligor in the delivery of advertising campaigns for buyers with respect to such transactions. The following table presents the Company's revenue recognized on a net basis and on a gross basis for the three months ended March 31, 2023 and 2022:
The following table presents the Company's revenue by channel for the three months ended March 31, 2023 and 2022:
The following table presents the Company's revenue disaggregated by geographic location, based on the location of the Company's sellers for the three months ended March 31, 2023 and 2022:
Payment terms are specified in agreements between the Company and the buyers and sellers on its platform. The Company generally bills buyers at the end of each month for the full purchase price of impressions filled in that month. The Company recognizes volume discounts as a reduction of revenue as they are incurred. Specific payment terms may vary by agreement, but are generally 75 days or less. The Company's accounts receivable are recorded at the amount of gross billings to buyers, net of allowances for the amounts the Company is responsible to collect. The Company's accounts payable related to amounts due to sellers are recorded at the net amount payable to sellers (see Note 5). Accordingly, both accounts receivable and accounts payable appear large in relation to revenue reported on a net basis. Accounts receivable are recorded at the invoiced amount, are unsecured, and do not bear interest. The allowance for doubtful accounts is reviewed quarterly, requires judgment, and is based on the best estimate of the amount of probable credit losses in existing accounts receivable. The Company reviews the status of the then-outstanding accounts receivable on a customer-by-customer basis, taking into consideration the aging schedule of receivables, its historical collection experience, current information regarding the client, subsequent collection history, and other relevant data, in establishing the allowance for doubtful accounts. Accounts receivable is presented net of an allowance for doubtful accounts of $1.7 million at March 31, 2023, and $1.1 million at December 31, 2022. Accounts receivable are written off against the allowance for doubtful accounts when the Company determines amounts are no longer collectible. The Company reviews the associated payable to sellers for recovery of buyer receivable allowance and write-offs; in some cases, the Company can reduce the payable to sellers. The reduction of seller payables related to recovery of uncollected buyer receivables is netted against allowance expense. The contra seller payables related to recoveries were $1.1 million and $0.6 million as of March 31, 2023 and December 31, 2022, respectively. The following is a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2023 and 2022:
During the three months ended March 31, 2023, the provision for expected credit losses associated with accounts receivable increased by $0.6 million, offset by increases of contra seller payables related to recoveries of uncollected buyer receivables of $0.5 million, which resulted in $0.1 million of bad debt expense. During the three months ended March 31, 2022, the provision for expected credit losses associated with accounts receivable decreased by $1.5 million, offset by decreases of contra seller payables related to recoveries of uncollected buyer receivables of an $0.9 million amount, which resulted in $0.6 million of bad debt expense.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements Recurring Fair Value Measurements Fair value represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Observable inputs are based on market data obtained from independent sources. The fair value hierarchy is based on the following three levels of inputs, of which the first two are considered observable and the last one is considered unobservable: •Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. •Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. •Level 3 – Unobservable inputs. The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at March 31, 2023:
The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at December 31, 2022:
At March 31, 2023 and December 31, 2022, cash equivalents of $22.6 million and $259.6 million, respectively, consisted of money market funds and commercial paper, with original maturities of three months or less. The carrying amounts of cash equivalents are classified as Level 1 or Level 2 depending on whether or not their fair values are based on quoted market prices for identical securities that are traded in an active market. At March 31, 2023 and December 31, 2022, the Company had Convertible Senior Notes and its Term Loan B Facility (as defined in Note 13) included in its balance sheets. The estimated fair value of the Company's Convertible Senior Notes was $282.4 million and $305.0 million as of March 31, 2023 and December 31, 2022, respectively. The estimated fair value of Convertible Senior Notes is based on market rates and the closing trading price of the Convertible Senior Notes as of March 31, 2023 and December 31, 2022 and is classified as Level 2 in the fair value hierarchy. At March 31, 2023 and December 31, 2022, the estimated fair value of the Company's Term Loan B Facility was $341.3 million and $333.3 million, respectively. The estimated fair value is based on borrowing rates currently available to the Company for financing with similar terms and is classified as Level 2 in the fair value hierarchy. There were no transfers between Level 1 and Level 2 fair value measurements during the three months ended March 31, 2023 and 2022.
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Other Balance Sheet Amounts |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Balance Sheet Amounts | Other Balance Sheet Amounts Accounts payable and accrued expenses included the following:
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Goodwill, Intangible Assets, Internal Use Software Development Costs, and Capitalized Costs Incurred in Cloud Computing Arrangements |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill, Intangible Assets, Internal Use Software Development Costs, and Capitalized Costs Incurred in Cloud Computing Arrangements | Goodwill, Intangible Assets, Internal Use Software Development Costs, and Capitalized Costs Incurred in Cloud Computing Arrangements The Company's goodwill balance as of March 31, 2023 and December 31, 2022 was $978.2 million. The Company’s intangible assets as of March 31, 2023 and December 31, 2022 included the following:
Amortization of intangible assets for the three months ended March 31, 2023 and 2022 was $86.4 million and $38.5 million, respectively. During the first quarter of 2022, the Company abandoned certain in-process research and development projects and technology intangible assets. The abandonment resulted in $3.3 million of impairment costs in the three months ended March 31, 2022, which was included within merger, acquisition, and restructuring costs in the condensed consolidated statement of operations. During the fourth quarter of 2022, the Company reassessed the remaining estimated useful lives of the developed technology and in-process research and development related to the SpotX acquisition based on the remaining expected benefit from those assets. The change in the remaining estimated useful lives for developed technology and in-process research and development resulted in increased amortization expense of $52.1 million for the three months ended March 31, 2023. The increased amortization expense increased the basic and diluted loss per share by $0.38, net of tax, for the three months ended March 31, 2023. The estimated remaining amortization expense associated with the Company's intangible assets was as follows as of March 31, 2023:
The Company capitalizes certain internal use software development costs associated with creating and enhancing internally developed software related to the Company’s technology infrastructure. During the fourth quarter of 2022, the Company reassessed the remaining estimated useful lives of capitalized software projects related to integration of its technology platforms. The change in the remaining estimated useful lives for the related projects resulted in increased amortization expense of $1.1 million for the three months ended March 31, 2023. The increased amortization expense increased the basic and diluted loss per share by $0.01, net of tax, for the three months ended March 31, 2023. The Company capitalizes costs related to arrangements for infrastructure as a service, platform as a service, and software as a service. As of March 31, 2023 and December 31, 2022, capitalized costs associated with these arrangements was included within prepaid expenses and other current assets in the amounts of $0.7 million and $0.7 million, respectively, and within other assets, non-current in the amounts of $0.4 million and $0.5 million, respectively. The amortization of these agreements was immaterial for the three months ended March 31, 2023 and 2022.
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Business Combinations |
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Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Business Combinations | Business Combinations 2022 Acquisition—CarbonThe Company completed the acquisition of the business of Carbon (AI) Limited ("Carbon" and such acquisition the "Carbon Acquisition"), a platform that enables publishers to measure, manage, and monetize audience segments, in February 2022 for a total purchase price of $23.1 million in cash. Approximately $2.3 million of the purchase price was held back to cover possible indemnification claims, which was subsequently paid out in February 2023. |
Merger, Acquisition, and Restructuring Costs |
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Merger, Acquisition, and Restructuring Costs | Merger, Acquisition, and Restructuring CostsMerger, acquisition, and restructuring costs consist primarily of professional services fees and employee termination costs, including stock-based compensation charges, associated with the Telaria Merger, the SpotX Acquisition, and restructuring activities. The following table summarizes merger, acquisition, and restructuring cost activity (in thousands):
During the three months ended March 31, 2023 and 2022, the Company incurred costs of $7.5 million and $6.8 million, respectively, related to restructuring activities as a result of the Company's consolidation of its legacy CTV and SpotX CTV platforms following the SpotX Acquisition. During the three months ended March 31, 2023, these activities included the Company's reduction of its global workforce primarily associated with the elimination of duplicative roles and other costs associated with the the consolidation of its platforms, including loss contracts office facilities the Company does not plan to continue to occupy and impairment charges related to certain assets it no longer plans to utilize. During the three months ended March 31, 2022 the Company incurred costs primarily related to restructuring activities following the SpotX Acquisition. Accrued restructuring costs related to mergers and acquisitions were $2.8 million and $1.2 million at March 31, 2023 and December 31, 2022, respectively, and were primarily related the Company's consolidation of its platforms as mentioned above and the Telaria Merger. Accrued restructuring costs associated with personnel costs are included within accounts payable and accrued expenses and accruals related to exit costs are included within other current liabilities and other liabilities, non-current on the Company's condensed consolidated balance sheets.
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Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Stock Options A summary of stock option activity for the three months ended March 31, 2023 is as follows:
The total intrinsic value of options exercised during the three months ended March 31, 2023 was $1.7 million. At March 31, 2023, the Company had unrecognized employee stock-based compensation expense relating to nonvested stock options of approximately $8.3 million, which is expected to be recognized over a weighted-average period of 2.4 years. Total grant date fair value of options vested during the three months ended March 31, 2023 was $2.2 million. The Company estimates the fair value of stock options that contain service and/or performance conditions using the Black-Scholes option pricing model. The grant date fair value of options granted during the three months ended March 31, 2023 was $7.27 per share. The weighted-average input assumptions used by the Company were as follows:
Restricted Stock Units A summary of restricted stock unit activity for the three months ended March 31, 2023 is as follows:
The weighted-average grant date fair value per share of restricted stock units granted during the three months ended March 31, 2023 was $10.72. The intrinsic value of restricted stock units that vested during the three months ended March 31, 2023 was $23.5 million. At March 31, 2023, the intrinsic value of unvested restricted stock units was $130.7 million. At March 31, 2023, the Company had unrecognized stock-based compensation expense relating to unvested restricted stock units of approximately $167.0 million, which is expected to be recognized over a weighted-average period of 3.1 years. Performance Stock Units The Company has granted performance stock units ("PSU") to select executive employees that vest based on share price metrics tied to total shareholder return relative to a peer group over a three-year period. The grant date fair value for such PSUs was estimated using a Monte-Carlo simulation model that incorporates option-pricing inputs covering the period from the grant date through the end of the performance period. Between 0% and 150% of the performance stock units will vest on the third anniversary of the respective grant date. The Company has additionally granted PSUs to the Company's CEO which are subject to both time-based and performance-based vesting conditions. The PSUs consist of three equal tranches (each, a "Performance Tranche"), based on achievement of a share price condition if the Company achieves share price targets of $60.00, $80.00, and $100.00, respectively, over 60 consecutive trading days during a performance period commencing on August 26, 2022 and ending on August 26, 2026. The grant date fair value for such PSUs was estimated using a Monte-Carlo simulation model that incorporates option-pricing inputs covering the period from the grant date through the end of the performance period. To the extent any of the performance-based requirements are met, the Company's CEO must also provide continued service to the Company through at least August 26, 2024 to receive any shares of common stock underlying the grant and through August 26, 2026 to receive all of the shares of common stock underlying the performance units that have satisfied the applicable performance-based requirement. Stock-based compensation expense for PSUs is based on a performance measurement of 100%. The compensation expense will not be reversed if the performance metrics are not met. A summary of performance stock units activity for the three months ended March 31, 2023 is as follows:
The grant date fair value for the PSUs was estimated using a Monte-Carlo simulation model. The weighted-average input assumptions used by the Company were as follows:
As of March 31, 2023, the Company had unrecognized stock-based compensation expense relating to outstanding PSUs of approximately $12.0 million, which will be recognized over a weighted-average period of 2.9 years. Stock-Based Compensation Expense Total stock-based compensation expense recorded in the condensed consolidated statements of operations was as follows:
An aggregate of 14,781,139 shares remained available for future grants at March 31, 2023 under the Company's 2014 Equity Incentive Plan. The 2014 Equity Incentive Plan has an evergreen provision pursuant to which the share reserve automatically increased on January 1, 2023 in an amount equal to 5% of the total number of shares of capital stock outstanding on December 31, 2022. This plan expires in November 2023. As of March 31, 2023, the Company has reserved 5,169,575 shares of its common stock for issuance under the Company's 2014 Employee Stock Purchase Plan ("ESPP"). The ESPP has an evergreen provision pursuant to which the share reserve automatically increased on January 1, 2023 in the amount equal to 1% of the total number of shares of capital stock outstanding on December 31, 2022. This plan expires in April 2024.
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Income Taxes |
3 Months Ended |
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Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes In determining quarterly provisions for income taxes, the Company uses the annual estimated effective tax rate applied to the actual year-to-date income. The Company's annual estimated effective tax rate differs from the statutory rate primarily as a result of state taxes, foreign taxes, deductible stock option expenses, nondeductible executive compensation, and changes in the Company's valuation allowance. The Company recorded an income tax benefit of $0.3 million and $2.0 million for the three months ended March 31, 2023 and 2022, respectively. The tax benefit for the three months ended March 31, 2023 and March 31, 2022 is primarily the result of recognizing the benefit of deferred tax assets ("DTAs") previously subject to the domestic valuation allowance and the foreign income tax provision. The Company continues to maintain a partial valuation allowance for the domestic DTAs. On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law. The IRA includes a new corporate alternative minimum tax (the “Corporate AMT”) of 15% on the adjusted financial statement income (the “AFSI”) of corporations with average AFSI exceeding $1.0 billion over a three-year period. The Corporate AMT is effective for tax years beginning after December 31, 2022 and is not expected to impact the Company. Additionally, the IRA imposes an excise tax of 1% on the fair market value of net stock repurchases made after December 31, 2022. The impact of this latter provision to the Company will be dependent upon the extent of share repurchases made in future periods. Due to uncertainty as to the realization of benefits from the Company's domestic and certain international DTAs, including net operating loss carryforwards and research and development tax credits, the Company has a partial valuation allowance reserved against such assets. The Company intends to continue to maintain a partial valuation allowance on the DTAs until there is sufficient evidence to support the reversal of all or some additional portion of these allowances. Due to the net operating loss carryforwards, all of the Company's United States federal and a majority of its state returns are open to examination by the Internal Revenue Service and state jurisdictions for all years since inception. For the Netherlands, Malaysia, India, Sweden, and the United Kingdom, all tax years remain open for examination by the local country tax authorities, for France only 2020 and forward are open, for Singapore only 2019 and forward are open for examination, for Australia, Brazil, Germany, and New Zealand 2018 and forward are open for examination, for Canada 2017 and forward are open for examination, and for Japan and Italy 2016 and forward remain open for examination. Pursuant to Section 382 of the Internal Revenue Code, the Company and Telaria, Inc. both underwent ownership changes for tax purposes (i.e. a more than 50% change in stock ownership in aggregated 5% shareholders) on April 1, 2020 due to the Telaria Merger. As a result, the use of our total domestic NOL carryforwards and tax credits generated prior to the ownership change will be subject to annual use limitations under Section 382 and Section 383 of the Code and comparable state income tax laws. The Company believes that the ownership change will not impact our ability to utilize substantially all of our NOLs and state research and development carryforward tax credits to the extent it will generate taxable income that can be offset by such losses. The Company reasonably expects its pre-2021 federal research and development carryforward tax credits will not be recovered prior to expiration. There was no material change to the Company's unrecognized tax benefits in the three months ended March 31, 2023 and the Company does not expect to have any material changes to unrecognized tax benefits through the end of the fiscal year.
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Lease Obligations |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Obligations | Lease Obligations For the three months ended March 31, 2023 and 2022, the Company recognized $6.5 million and $5.6 million, respectively, of operating lease expense associated with leases included in the lease liability and right of use ("ROU") asset on the condensed consolidated balance sheets. For lease expenses not included in the Company's ROU asset and lease liability balances, the Company recognized short term lease expense of $0.2 million and $0.3 million, respectively, and variable lease expense of $0.9 million and $0.5 million, respectively, during the three months ended March 31, 2023 and 2022. The Company also received rental income of $1.3 million and $1.3 million for real estate leases for which it subleases the property to third parties during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023 and December 31, 2022, a weighted average discount rate of 6.13% and 6.11%, respectively, has been applied to the remaining lease payments to calculate the lease liabilities included within the condensed consolidated balance sheet. The lease terms of the Company’s operating leases generally range from one year to ten years, and the weighted average remaining lease term of leases included in the lease liability is 5.5 years and 5.6 years as of March 31, 2023 and December 31, 2022, respectively. The maturity of the Company's lease liabilities associated with leases included in the lease liability and ROU asset were as follows as of March 31, 2023 (in thousands):
In addition to the lease liabilities included in these condensed consolidated financial statements, the Company entered into an agreement for office space that had not commenced as of March 31, 2023; therefore, the lease was not included in the lease liability and ROU asset balance as of March 31, 2023. The Company has future commitments totaling $2.3 million over a term of 10.0 years related to this agreement.
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Commitments and Contingencies |
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Commitments The Company has commitments under non-cancelable operating leases for facilities, certain equipment, and its managed data center facilities (Note 11). As of March 31, 2023 and December 31, 2022, the Company had $5.3 million and $5.3 million, respectively, of letters of credit associated with office leases available for borrowing, on which there were no outstanding borrowings as of either date. In the normal course of business, the Company enters into non-cancelable contractual obligations with various parties, primarily related to software services agreements and data center providers that are not included in the Company's lease liability obligations and ROU assets. As of March 31, 2023, the Company's outstanding non-cancelable contractual obligations with a remaining term of one year or longer consist of the following (in thousands):
Additionally, as of March 31, 2023, the Company has an agreement for cloud-managed services containing commitments that are variable in nature. Under this agreement, the Company has a non-cancelable minimum spend commitment from July 2023 to June 2025 based on actual spend, as defined in the agreement, with the third-party provider from July 2022 to June 2023. The estimated non-cancelable minimum annual obligation is approximately $42 million in each twelve-month period (i.e. July 2023 to June 2024 and July 2024 to June 2025), based on spend in the nine months ended March 31, 2023. Per the agreement, the commitment from July 2023 to June 2025 will generally increase as the amount of spend during the period from July 2022 to June 2023 increases. Because the Company expects to continue to spend under this agreement through June 2023, the Company also expects that the minimum future commitment will likely increase as a result of the higher level of spend. Guarantees and Indemnification The Company’s agreements with sellers, buyers, and other third parties typically obligate the Company to provide indemnity and defense for losses resulting from claims of intellectual property infringement, damages to property or persons, business losses, or other liabilities. Generally, these indemnity and defense obligations relate to the Company’s own business operations, obligations, and acts or omissions. However, under some circumstances, the Company agrees to indemnify and defend contract counterparties against losses resulting from their own business operations, obligations, and acts or omissions, or the business operations, obligations, and acts or omissions of third parties. For example, because the Company’s business interposes the Company between buyers and sellers in various ways, buyers often require the Company to indemnify them against acts and omissions of sellers, and sellers often require the Company to indemnify them against acts and omissions of buyers. In addition, the Company’s agreements with sellers, buyers, and other third parties typically include provisions limiting the Company’s liability to the counterparty, and the counterparty’s liability to the Company. These limits sometimes do not apply to certain liabilities, including indemnity obligations. These indemnity and limitation of liability provisions generally survive termination or expiration of the agreements in which they appear. The Company has also entered into indemnification agreements with its directors, executive officers, and certain other officers that will require the Company, among other things, to indemnify them against certain liabilities that may arise by reason of their status or service as directors, officers, or employees. No material demands have been made upon the Company to provide indemnification under such agreements and there are no claims that the Company is aware of that could have a material effect on the Company’s consolidated financial statements. Litigation The Company and its subsidiaries may from time to time be parties to legal or regulatory proceedings, lawsuits and other claims incident to their business activities and to the Company’s status as a public company. Such matters may include, among other things, assertions of contract breach or intellectual property infringement, claims for indemnity arising in the course of the Company’s business, regulatory investigations or enforcement proceedings, and claims by persons whose employment has been terminated. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. Consequently, management is unable to ascertain the ultimate aggregate amount of monetary liability, amounts which may be covered by insurance or recoverable from third parties, or the financial impact with respect to such matters as of March 31, 2023. However, based on management’s knowledge as of March 31, 2023, management believes that the final resolution of these matters known at such date, individually and in the aggregate, will not have a material adverse effect upon the Company’s consolidated financial position, results of operations or cash flows. Employment Contracts The Company has entered into severance agreements with certain employees and officers. The Company may be required to pay severance and accelerate the vesting of certain equity awards in the event of involuntary terminations.
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt | Debt Long term debt as of March 31, 2023 and December 31, 2022 consisted of the following:
Maturities of the principal amount of the Company's long-term debt as of March 31, 2023 are as follows (in thousands):
Amortization of the debt issuance cost and the discount associated with our indebtedness totaled $1.6 million for the three months ended March 31, 2023 and $1.6 million for the three months ended March 31, 2022. Amortization of debt issuance costs is computed using the effective interest method and is included in interest expense. In addition, amortization of deferred financing costs was $0.1 million for the three months ended March 31, 2023 and 2022. Deferred financing costs are included in prepaid expenses and other current assets and other assets, non-current assets. Convertible Senior Notes and Capped Call Transactions In March 2021, the Company issued $400.0 million aggregate principal amount of 0.25% convertible senior notes in a private placement, including $50.0 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment options of the initial purchasers (collectively, the "Convertible Senior Notes"). The Convertible Senior Notes will mature on March 15, 2026, unless earlier repurchased, redeemed or converted. The total net proceeds from the offering, after deducting debt issuance costs, paid by the Company, were approximately $388.6 million. The Company used approximately $39.0 million of the net proceeds from the offering to pay for the Capped Call Transactions (as described below). The Convertible Senior Notes are senior, unsecured obligations and are (i) equal in right of payment with the existing and future senior, unsecured indebtedness; (ii) senior in right of payment to any of the Company’s future indebtedness that is expressly subordinated to the Convertible Senior Notes; (iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness, including amounts outstanding under our Loan Agreement or our new Credit Agreement (see section below); and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent we are not a holder thereof) preferred equity, if any, of the Company’s subsidiaries that do not guarantee the Convertible Senior Notes. The Convertible Senior Notes accrue interest at 0.25% per annum payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2021. The Convertible Senior Notes will mature on March 15, 2026 unless they are redeemed, repurchased or converted prior to such date. The Convertible Senior Notes are convertible at the option of holders only during certain periods and upon satisfaction of certain conditions. Holders have the right to convert their notes (or any portion of a note in an authorized denomination), in the following circumstances: (i) during any calendar quarter commencing after the calendar quarter ending on June 30, 2021, if the last reported sale price per share of the Company’s common stock exceeds 130% of the conversion price for each of at least 20 trading days during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter; (ii) during the five consecutive business days immediately after any ten consecutive trading day period (such ten 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 per share of the Company’s common stock on such trading day and the conversion rate on such trading day; (iii) upon the occurrence of certain corporate events or distributions on the Company’s common stock; (iv) if the Company calls such Convertible Senior Notes for redemption; and (v) on or after September 15, 2025, until the close of business on the second scheduled trading day immediately before the maturity date, holders of the Convertible Senior Notes may, at their option, convert all or a portion of their Convertible Senior Notes regardless of the foregoing conditions at any time from, and including, September 15, 2025 until the close of business on the second scheduled trading day immediately before the maturity date. Upon conversion, the Convertible Senior Notes may be settled in shares of the Company’s common stock, cash or a combination of cash and shares of the Company’s common stock, at the Company’s election. All conversions with a conversion date that occurs on or after September 15, 2025 will be settled using the same settlement method, and the Company will send notice of such settlement method to noteholders no later than the open of business on September 15, 2025. The Company may not redeem the Convertible Senior Notes at their option at any time before March 20, 2024. Subject to the terms of the indenture agreement, the Company has the right, at its election, to redeem all, or any portion (subject to the partial redemption limitation) in an authorized denomination, of the Convertible Senior Notes, at any time, and from time to time, on a redemption date on or after March 20, 2024 and on or before the 40th scheduled trading day immediately before the maturity date, for cash, but only if the "last reported sale price," as defined under the Offering Memorandum, per share of common stock exceeds 130% of the “conversion price” on (i) each of at least 20 trading days, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related redemption notice; and (ii) the trading day immediately before the date we send such notice. In addition, calling any note for redemption will constitute a "make-whole fundamental change" (as defined below) with respect to that note, in which case the conversion rate applicable to the conversion of that note will be increased in certain circumstances if it is converted after it is called for redemption. If the Company elects to redeem less than all of the outstanding notes, then the redemption will not constitute a make-whole fundamental change with respect to the notes not called for redemption, and holders of the notes not called for redemption will not be entitled to an increased conversion rate for such notes as described above on account of the redemption, except to the limited extent described further below. No sinking fund is provided for the Convertible Senior Notes, which means that the Company is not required to redeem or retire the Convertible Senior Notes periodically. If a fundamental change occurs, then each noteholder will have the right to require the Company to repurchase its notes (or any portion thereof in an authorized denomination) for cash on a date (the "fundamental change repurchase date") of the Company’s choosing, which must be a business day that is no more than 45, nor less than 20, business days after the date the Company distributes the related fundamental change notice. If an event of default, other than a reporting default remedied by special interest as defined in the indenture agreement, occurs with respect to the Company or any guarantor, then the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding will immediately become due and payable without any further action or notice by any person. If an event of default (other than a reporting event of default described above with respect to the Company or any guarantor and not solely with respect to a significant subsidiary of the Company’s or a guarantor, other than the Company or such guarantor) occurs and is continuing, then, the trustee, by notice to the Company, or noteholders of at least 25% of the aggregate principal amount of notes then outstanding, by written notice to the Company and the trustee, may declare the principal amount of, and all accrued and unpaid interest on, all of the notes then outstanding to become due and payable immediately. The Convertible Senior Notes have an initial conversion rate of 15.6539 shares of common stock per $1,000 principal amount of the Convertible Senior Notes, which will be subject to customary anti-dilution adjustments in certain circumstances. In connection with the pricing of the Convertible Senior Notes, the Company entered into privately negotiated capped call transactions with various financial institutions (the "Capped Call Transactions"). The Capped Call Transactions were entered into with third party broker-dealers to limit the potential dilution that would occur if the Company has to settle the conversion value in excess of the principal in shares. This exposure will be covered (i.e., the Company will receive as many shares as are required to be issued between the conversion price of $63.8818 and the maximum price of $91.2600). Any shares required to be issued by the Company over this amount would have net earnings per share dilution impact. By entering into the Capped Call Transactions, the Company expects to reduce the potential dilution to its common stock (or, in the event the conversion is settled in cash, to reduce its cash payment obligation) in the event that at the time of conversion its stock price exceeds the conversion price under the Convertible Senior Notes. The Company paid $39.0 million for the Capped Call Transactions, which was recorded as additional paid-in capital, using a portion of the gross proceeds from the sale of the Convertible Senior Notes. The cost of the Capped Call Transactions is not expected to be tax deductible as the Company did not elect to integrate the capped call into the Convertible Senior Notes for tax purposes. The cost of the Capped Call Transaction was recorded as a reduction of the Company’s additional paid-in capital in the accompanying condensed consolidated financial statements. The Company incurred debt issuance costs of $11.4 million in March 2021. The Convertible Senior Notes are presented net of issuance costs on the Company's condensed consolidated balance sheets. The debt issuance costs are amortized on an effective interest basis over the term of the Convertible Senior Notes and are included in interest expense and amortization of debt discount in the accompanying condensed consolidated statements of operations. In March 2023, the Company repurchased a portion of its Convertible Senior Notes in the open market with cash on hand for $40.8 million. The Company recognized a gain on extinguishment of debt of $8.5 million related to the repurchase of $50.3 million of principal balance of Convertible Senior Notes and $0.9 million of unamortized debt issuance costs associated with the extinguished debt. The gain on extinguishment is included in other (income) expense in the Company's condensed consolidated statement of operations. The following table sets forth interest expense related to the Convertible Senior Notes for the three months ended March 31, 2023 and 2022 (in thousands, except interest rates):
Amortization expense for the Company's debt issuance costs related to the Convertible Senior Notes for the fiscal years 2023 through 2026 is as follows (in thousands):
Credit Agreement On April 30, 2021, the Company entered into a credit agreement (the "Credit Agreement") with Goldman Sachs Bank USA as administrative agent and collateral agent, and other lender parties thereto. The Credit Agreement provides for a $360.0 million seven-year senior secured term loan facility ("Term Loan B Facility") and a $52.5 million senior secured revolving credit facility (the "Revolving Credit Facility"). As part of the Term Loan B Facility, the Company received $325 million in proceeds, net of discounts and fees, which were used to finance the SpotX Acquisition and related transactions, and for general corporate purposes. Loans, if any, under the Revolving Credit Facility are expected to be used for general corporate purposes. The obligations under the Credit Agreement are secured by substantially all of the assets of the Company and those of its subsidiaries that are guarantors under the Credit Agreement. Amounts outstanding under the Credit Agreement accrue interest at a rate equal to either, (1) for the Term Loan B Facility, at the Company’s election, the Eurodollar Rate (as defined in the Credit Agreement) plus a margin of 5.00% per annum, or ABR (as defined in the Credit Agreement) plus a margin of 4.00%, and (2) for the Revolving Credit Facility, at the Company’s election, the Eurodollar Rate plus a margin of 4.25% to 4.75%, or ABR plus a margin of 3.25% to 3.75%, in each case, depending on the Company’s first lien net leverage ratio. As of March 31, 2023, the contractual interest rate related to the Term Loan B Facility was 9.91%. The covenants of the Credit Agreement include customary negative covenants that, among other things, restrict the Company’s ability to incur additional indebtedness, grant liens and make certain acquisitions, investments, asset dispositions and restricted payments. In addition, the Credit Agreement contains a financial covenant, tested on the last day of any fiscal quarter if utilization of the Revolving Credit Facility exceeds 35% of the total revolving commitments, that requires the Company to maintain a first lien net leverage ratio not greater than 3.25 to 1.00. As of March 31, 2023, the Company was in compliance with its debt covenants. The Credit Agreement includes customary events of default, and customary rights and remedies upon the occurrence of any event of default thereunder, including rights to accelerate the loans, terminate the commitments thereunder and realize upon the collateral securing the obligations under the Credit Agreement. The Credit Agreement calls for customary scheduled loan amortization payments of 0.25% of the initial principal balance payable quarterly (i.e. 1% in aggregate per year) as well as a provision that requires the Company to prepay the Term Loan B based on an annual calculation of cumulative free cash flow ("Excess Cash Flow") generated by the company as defined within the terms of the Agreement. The Company was not required to make any such mandatory prepayment required by the Excess Cash Flow provision for the period ended March 31, 2023. In addition, the Credit Agreement will mature in the event that any portion of the Convertible Senior Notes remains outstanding 91 days prior to the maturity date of the Convertible Senior Notes. On June 28, 2021, the Company entered into an Incremental Assumption Agreement (the "Incremental Agreement") to the Credit Agreement. Pursuant to the terms of the Incremental Agreement, the Company’s existing revolving credit facility under the Credit Agreement was increased by $12.5 million (the "Incremental Revolver"), and the letter of credit sublimit under the Credit Agreement was increased by $5.0 million. The Incremental Revolver bears the same interest rate as the existing revolving credit facility and has the same maturity date as the existing revolving credit facility. No other terms of the Credit Agreement were amended. As a result, amounts available under the Revolving Credit Facility were $65.0 million. At March 31, 2023, amounts available under the Revolving Credit Facility were $59.7 million, net of letters of credit outstanding in the amount of $5.3 million. The following table summarizes the amount outstanding under the Term Loan B Facility at March 31, 2023 and December 31, 2022:
The Company incurred debt issuance costs of $27.7 million in April 2021, of which $10.8 million were associated with debt discount netted against the proceeds and $16.9 million were associated with other deferred financing costs associated with the Term Loan B Facility. Debt outstanding under the Term Loan B Facility are presented net of issuance costs on the Company's condensed consolidated balance sheets. The debt issuance costs are amortized on an effective interest basis over the term of the Term Loan B Facility and are included in interest expense and amortization of debt discount in the accompanying condensed consolidated statements of operations. The following table sets forth interest expense related to the Term Loan B Facility for the three months ended March 31, 2023 and 2022 (in thousands, except interest rates):
Amortization expense for the Term Loan B Facility debt discount and debt issuance costs for fiscal years 2023 through 2028 is as follows (in thousands):
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Organization and Summary of Significant Accounting Policies (Policies) |
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Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Summary of Significant Accounting Policies | Basis of Presentation and Summary of Significant Accounting Policies The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, or GAAP, for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair statement of the results for the interim period presented have been included. Operating results for the three months ended March 31, 2023 are not necessarily indicative of the results that may be expected for any future interim period, the year ending December 31, 2023, or for any future year. The condensed consolidated balance sheet at December 31, 2022 has been derived from the audited financial statements at that date, but does not include all of the disclosures required by GAAP. The accompanying condensed consolidated financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in its 2022 Annual Report on Form 10-K. There have been no significant changes in the Company's accounting policies from those disclosed in its audited consolidated financial statements and notes thereto for the year ended December 31, 2022 included in its Annual Report on Form 10-K.
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Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported and disclosed financial statements and accompanying footnotes. Due to the economic uncertainty of macroeconomic challenges, such as inflation, global conflict, capital market disruptions and instability of financial institutions, the occurrence of a recession, and other macroeconomic factors, it has become more difficult to apply certain assumptions and judgments into these estimates. The extent of the impact of these factors on the Company's operational and financial performance will depend on future developments, which are highly uncertain and cannot be predicted, including but not limited to the duration and how quickly and to what extent normal economic and operating conditions can resume. During the three months ended March 31, 2023, this uncertainty continued to result in a higher level of judgment related to its estimates and assumptions. As of the date of issuance of the condensed consolidated financial statements for the three months ended March 31, 2023, the Company is not aware of any specific event or circumstance that would require the Company to update its estimates, judgments, or revise the carrying value of its assets or liabilities. These estimates may change, as new events occur and additional information is obtained, and are recognized in the consolidated financial statements as soon as they become known. Actual results could differ materially from these estimates.
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Recently Adopted Accounting Standards | Recently Adopted Accounting Standards In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) – Accounting for Contract Assets and Contract Liabilities from Contracts with Customers ("ASU 2021-08"). ASU 2021-08 requires the recognition and measurement of contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. Considerations to determine the amount of contract assets and contract liabilities to record at the acquisition date include the terms of the acquired contract, such as timing of payment, identification of each performance obligation in the contract and allocation of the contract transaction price to each identified performance obligation on a relative standalone selling price basis as of contract inception. ASU 2021-08 is effective for the Company beginning in the first quarter of 2023. The Company adopted this standard January 1, 2023 and will apply the guidance to future acquisitions, if any.
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Net Loss Per Share (Tables) |
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Schedule of Net Loss Per Share, Basic and Diluted | The following table presents the basic and diluted net loss per share:
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Schedule of Antidilutive Securities Excluded from Computation of Diluted Net Loss Per Share | The following weighted-average shares have been excluded from the calculation of diluted net loss per share attributable to common stockholders for each period presented because they are anti-dilutive:
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Revenue (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenue Recognized on a Net Basis and on a Gross Basis | The following table presents the Company's revenue recognized on a net basis and on a gross basis for the three months ended March 31, 2023 and 2022:
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Summary of Disaggregation of Revenue | The following table presents the Company's revenue by channel for the three months ended March 31, 2023 and 2022:
The following table presents the Company's revenue disaggregated by geographic location, based on the location of the Company's sellers for the three months ended March 31, 2023 and 2022:
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Accounts Receivable, Allowance for Credit Loss | The following is a summary of activity in the allowance for doubtful accounts for the three months ended March 31, 2023 and 2022:
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Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value, Assets Measured on Recurring Basis | The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at March 31, 2023:
The table below sets forth a summary of financial instruments that are measured at fair value on a recurring basis at December 31, 2022:
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Other Balance Sheet Amounts (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accounts Payable and Accrued Expenses | Accounts payable and accrued expenses included the following:
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Goodwill, Intangible Assets, Internal Use Software Development Costs, and Capitalized Costs Incurred in Cloud Computing Arrangements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | The Company’s intangible assets as of March 31, 2023 and December 31, 2022 included the following:
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Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The estimated remaining amortization expense associated with the Company's intangible assets was as follows as of March 31, 2023:
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Merger, Acquisition, and Restructuring Costs (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Merger, Acquisition, and Restructuring Costs | The following table summarizes merger, acquisition, and restructuring cost activity (in thousands):
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Stock-Based Compensation (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | A summary of stock option activity for the three months ended March 31, 2023 is as follows:
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Schedule of Nonvested Restricted Stock Units Activity | A summary of restricted stock unit activity for the three months ended March 31, 2023 is as follows:
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Schedule of Nonvested Performance-Based Units Activity | A summary of performance stock units activity for the three months ended March 31, 2023 is as follows:
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Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The weighted-average input assumptions used by the Company were as follows:
The grant date fair value for the PSUs was estimated using a Monte-Carlo simulation model. The weighted-average input assumptions used by the Company were as follows:
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Schedule of Stock Based Compensation Expense | Total stock-based compensation expense recorded in the condensed consolidated statements of operations was as follows:
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Lease Obligations (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Maturity of Lease Liabilities | The maturity of the Company's lease liabilities associated with leases included in the lease liability and ROU asset were as follows as of March 31, 2023 (in thousands):
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Commitment and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Contractual Obligation, Fiscal Year Maturity | As of March 31, 2023, the Company's outstanding non-cancelable contractual obligations with a remaining term of one year or longer consist of the following (in thousands):
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Debt (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Long-term Debt | Long term debt as of March 31, 2023 and December 31, 2022 consisted of the following:
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Schedule of Maturities of Long-term Debt | Maturities of the principal amount of the Company's long-term debt as of March 31, 2023 are as follows (in thousands):
Amortization expense for the Company's debt issuance costs related to the Convertible Senior Notes for the fiscal years 2023 through 2026 is as follows (in thousands):
Amortization expense for the Term Loan B Facility debt discount and debt issuance costs for fiscal years 2023 through 2028 is as follows (in thousands):
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Interest Income and Interest Expense Disclosure | The following table sets forth interest expense related to the Convertible Senior Notes for the three months ended March 31, 2023 and 2022 (in thousands, except interest rates):
The following table sets forth interest expense related to the Term Loan B Facility for the three months ended March 31, 2023 and 2022 (in thousands, except interest rates):
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Schedule of Debt | The following table summarizes the amount outstanding under the Term Loan B Facility at March 31, 2023 and December 31, 2022:
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Net Loss Per Share - Basic and Diluted Income (Loss) Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Earnings Per Share [Abstract] | ||
Net loss | $ (98,732) | $ (44,593) |
Weighted-average common shares outstanding, basic (in shares) | 134,667 | 132,236 |
Weighted average number of shares outstanding, diluted (in shares) | 134,667 | 132,236 |
Basic loss per share (in dollars per share) | $ (0.73) | $ (0.34) |
Diluted loss per share (in dollars per share) | $ (0.73) | $ (0.34) |
Revenue - Revenue Recognized on a Gross and Net Basis (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 130,150 | $ 118,075 |
Net basis | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 107,457 | 100,076 |
Gross basis | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 22,693 | $ 17,999 |
Revenue Benchmark | Concentration of Basis of Revenue Recognition | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 100.00% | 100.00% |
Revenue Benchmark | Concentration of Basis of Revenue Recognition | Net basis | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 83.00% | 85.00% |
Revenue Benchmark | Concentration of Basis of Revenue Recognition | Gross basis | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 17.00% | 15.00% |
Revenue - Revenue Disaggregated by Sales Distribution Channel (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 130,150 | $ 118,075 |
CTV | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 59,050 | 51,440 |
Mobile | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 48,184 | 39,029 |
Desktop | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 22,916 | $ 27,606 |
Product Concentration Risk | Revenue Benchmark | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 100.00% | 100.00% |
Product Concentration Risk | Revenue Benchmark | CTV | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 45.00% | 44.00% |
Product Concentration Risk | Revenue Benchmark | Mobile | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 37.00% | 33.00% |
Product Concentration Risk | Revenue Benchmark | Desktop | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk, percentage | 18.00% | 23.00% |
Revenue - Revenue Disaggregated by Geographic Location (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 130,150 | $ 118,075 |
United States | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | 97,156 | 90,408 |
International | ||
Disaggregation of Revenue [Line Items] | ||
Revenue | $ 32,994 | $ 27,667 |
Revenue - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
Dec. 31, 2021 |
|
Revenue from Contract with Customer [Abstract] | ||||
Payment terms in days (or less) | 75 days | |||
Accounts receivable, allowance for credit loss | $ 1,662 | $ 2,096 | $ 1,092 | $ 3,475 |
Contra seller payable | 1,100 | $ 600 | ||
Decrease in provision for expected credit losses | (586) | 1,466 | ||
Increase (decrease) in contra seller payable | 500 | (900) | ||
Provision for doubtful accounts | $ 67 | $ (571) |
Revenue - Schedule of Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Allowance for doubtful accounts, beginning balance | $ 1,092 | $ 3,475 |
Write-offs | (16) | 0 |
Increase (decrease) in provision for expected credit losses | 586 | (1,466) |
Recoveries of previous write-offs | 0 | 87 |
Allowance for doubtful accounts, ending balance | $ 1,662 | $ 2,096 |
Fair Value Measurements - Financial Instruments (Details) - Recurring - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 22,636 | $ 259,647 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 22,636 | 259,647 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | $ 0 | $ 0 |
Fair Value Measurements - Narrative (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Secured Debt | Term Loan B Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Term loan fair value | $ 341,300 | $ 333,300 |
Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 22,636 | 259,647 |
Recurring | Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash equivalents | 0 | 0 |
Convertible notes | $ 282,400 | $ 305,000 |
Other Balance Sheet Amounts - Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts payable—seller | $ 913,047 | $ 1,057,556 |
Accounts payable—trade | 21,725 | 19,387 |
Accrued employee-related payables | 15,633 | 15,065 |
Accrued holdback - indemnification claims | 0 | 2,313 |
Total | $ 950,405 | $ 1,094,321 |
Goodwill, Intangible Assets, Internal Use Software Development Costs, and Capitalized Costs Incurred in Cloud Computing Arrangements - Finite-Lived Intangible Assets, Future Amortization Expense (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Fiscal Year | ||
Remaining 2023 | $ 116,061 | |
2024 | 30,134 | |
2025 | 14,445 | |
2026 | 6,001 | |
2027 | 431 | |
Total | $ 167,072 | $ 253,501 |
Business Combinations - Narrative (Details) - Carbon (AI) Limited and Mode Technologies, Inc. - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Feb. 28, 2022 |
Feb. 28, 2023 |
|
Business Acquisition [Line Items] | ||
Purchase price | $ 23.1 | |
Business combination, contingent consideration, liability | $ 2.3 |
Merger, Acquisition, and Restructuring Costs - Merger and Restructuring Cost Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Restructuring Cost and Reserve [Line Items] | ||
Loss contracts (facilities related) | $ 2,190 | $ 0 |
Impairment of property and equipment, net | 506 | 0 |
Non-cash stock-based compensation (double-trigger acceleration and severance) | 143 | 1,944 |
Impairment costs of abandoned technology | 0 | 3,320 |
Professional services (investment banking advisory, legal and other professional services) | 0 | 775 |
Total merger, acquisition, and restructuring costs | 7,465 | 6,756 |
Personnel related (severance and one-time termination benefit costs) | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | 3,218 | 717 |
Exit costs | ||
Restructuring Cost and Reserve [Line Items] | ||
Restructuring charges | $ 1,408 | $ 0 |
Merger, Acquisition, and Restructuring Costs - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Business Acquisition [Line Items] | |||
Acquisition related costs | $ 7,465 | $ 6,756 | |
SpotX and Telaria | |||
Business Acquisition [Line Items] | |||
Accrued merger, acquisition, and restructuring costs | $ 2,805 | $ 1,222 |
Merger, Acquisition, and Restructuring Costs - Accrued Merger and Restructuring Cost Activity (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Restructuring Reserve [Roll Forward] | ||
Impairment of property and equipment, net | $ 506 | $ 0 |
Non-cash impairments | 0 | (3,320) |
Non-cash stock-based compensation | (143) | $ (1,944) |
SpotX and Telaria | ||
Restructuring Reserve [Roll Forward] | ||
Accrued restructuring costs at December 31, 2022 | 1,222 | |
Personnel related and non-cash stock-based compensation | 3,361 | |
Loss contracts (facilities related) | 2,190 | |
Exit costs | 1,408 | |
Impairment of property and equipment, net | 506 | |
Cash paid for restructuring costs | (3,043) | |
Non-cash loss contracts (facilities related) | (2,190) | |
Non-cash impairments | (506) | |
Non-cash stock-based compensation | (143) | |
Accrued restructuring costs at March 31, 2023 | $ 2,805 |
Stock-Based Compensation - Stock Options Outstanding (Details) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
$ / shares
shares
| |
Shares Under Option | |
Beginning balance (in shares) | shares | 4,672 |
Granted (in shares) | shares | 130 |
Exercised (in shares) | shares | (303) |
Expired (in shares) | shares | (24) |
Ending balance (in shares) | shares | 4,475 |
Exercisable (in shares) | shares | 3,551 |
Weighted- Average Exercise Price | |
Beginning balance (usd per share) | $ / shares | $ 8.71 |
Granted (usd per share) | $ / shares | 10.59 |
Exercised (usd per share) | $ / shares | 4.91 |
Expired (usd per share) | $ / shares | 35.81 |
Ending balance (usd per share) | $ / shares | 8.88 |
Exercisable (usd per share) | $ / shares | $ 7.39 |
Weighted- Average Contractual Life | |
Outstanding | 5 years 9 months 18 days |
Exercisable | 5 years 2 months 12 days |
Aggregate Intrinsic Value | |
Outstanding | $ | $ 13,756 |
Exercisable | $ | $ 12,905 |
Stock-Based Compensation - Stock Options Narrative (Details) - Stock Option $ / shares in Units, $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
$ / shares
| |
Number of Shares | |
Intrinsic values of options exercised | $ 1.7 |
Unrecognized employee stock-based compensation | $ 8.3 |
Unrecognized employee stock-based compensation, period for recognition | 2 years 4 months 24 days |
Fair value of options vested in period | $ 2.2 |
Grant date fair value of options granted (usd per share) | $ / shares | $ 7.27 |
Stock-Based Compensation - Valuation Assumptions (Details) - Stock Option |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 5 years | 5 years |
Risk-free interest rate | 3.99% | 1.63% |
Expected volatility | 84.00% | 79.00% |
Dividend yield | 0.00% | 0.00% |
Stock-Based Compensation - Restricted Stock Units Activity (Details) - Restricted Stock Units (RSUs) |
3 Months Ended |
---|---|
Mar. 31, 2023
$ / shares
shares
| |
Number of Shares | |
Beginning balance (in shares) | 14,138,000 |
Granted (in shares) | 6,793,000 |
Canceled and Forfeited (in shares) | (826,000) |
Vested and released (in shares) | (1,829,000) |
Ending balance (in shares) | 10,000,000 |
Restricted stock units outstanding and unvested (in shares) | 14,120,000 |
Weighted-Average Grant Date Fair Value | |
Beginning balance (in dollars per share) | $ / shares | $ 15.06 |
Granted (in dollars per share) | $ / shares | 10.72 |
Canceled (in dollars per share) | $ / shares | 13.66 |
Vested and released (in dollars per share) | $ / shares | 14.01 |
Ending balance (in dollars per share) | $ / shares | 13.19 |
Restricted stock units outstanding and unvested (in dollars per share) | $ / shares | $ 13.20 |
Vested but deferred (in shares) | 18,436 |
Stock-Based Compensation - Restricted Stock Units Narrative (Details) - Restricted Stock Units (RSUs) $ / shares in Units, $ in Millions |
3 Months Ended |
---|---|
Mar. 31, 2023
USD ($)
$ / shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Granted (in dollars per share) | $ / shares | $ 10.72 |
Fair value of restricted stock vested | $ 23.5 |
Intrinsic value of nonvested unit | 130.7 |
Unrecognized employee stock-based compensation | $ 167.0 |
Unrecognized employee stock-based compensation, period for recognition | 3 years 1 month 6 days |
Stock-Based Compensation - Performance Stock Units Activity (Details) - Unvested performance stock units shares in Thousands |
3 Months Ended |
---|---|
Mar. 31, 2023
$ / shares
shares
| |
Number of Shares | |
Beginning balance (in shares) | shares | 639 |
Granted (in shares) | shares | 474 |
Ending balance (in shares) | shares | 1,113 |
Weighted-Average Grant Date Fair Value | |
Beginning balance, nonvested (in dollars per share) | $ / shares | $ 19.02 |
Granted (in dollars per share) | $ / shares | 13.32 |
Ending balance, nonvested (in dollars per share) | $ / shares | $ 16.59 |
Stock-Based Compensation - Weighted Average Assumptions (Details) - Unvested performance stock units - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Expected term (in years) | 3 years | 3 years |
Risk-free interest rate | 4.19% | 1.39% |
Expected volatility of Magnite | 94.00% | 84.00% |
Expected volatility of selected peer companies | 64.00% | 63.00% |
Expected correlation coefficients of Magnite | 0.62% | 0.56% |
Expected correlation coefficients of selected peer companies | 0.54% | 0.52% |
Dividend yield | $ 0 | $ 0 |
Stock-Based Compensation - Stock Based Compensation Expense Narrative (Details) |
3 Months Ended |
---|---|
Mar. 31, 2023
shares
| |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares reserved (in shares) | 14,781,139 |
Annual percentage increase | 5.00% |
2014 Employee Stock Purchase Plan | Employee Stock | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Number of shares reserved (in shares) | 5,169,575 |
Annual percentage increase | 1.00% |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Income Tax Disclosure [Abstract] | ||
Benefit for income taxes | $ 309 | $ 2,005 |
Lease Obligations - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
Lessee, Lease, Description [Line Items] | |||
Lease expense | $ 6.5 | $ 5.6 | |
Short-term lease expense | 0.2 | 0.3 | |
Variable lease cost | 0.9 | 0.5 | |
Sublease income | $ 1.3 | $ 1.3 | |
Weighted average discount rate | 6.13% | 6.11% | |
Weighted average remaining lease term | 5 years 6 months | 5 years 7 months 6 days | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Term of lease contract | 1 year | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Term of lease contract | 10 years | ||
Company Office, San Francisco CA | |||
Lessee, Lease, Description [Line Items] | |||
Operating lease not yet commenced, amount | $ 2.3 | ||
Operating lease not yet commenced, term of contract | 10 years |
Lease Obligations - Schedule of Lease Liability Maturities (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Fiscal Year | |
Remaining 2023 | $ 19,311 |
2024 | 22,299 |
2025 | 14,487 |
2026 | 12,020 |
2027 | 7,431 |
Thereafter | 21,011 |
Total lease payments (undiscounted) | 96,559 |
Less: imputed interest | (14,091) |
Lease liabilities—total (discounted) | $ 82,468 |
Commitments and Contingencies (Details) - USD ($) $ in Millions |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Non Cancelable Inventory And Other Services Purchase Commitments Member | ||
Other Commitments [Line Items] | ||
Non-cancelable purchase commitments | $ 42.0 | |
Financial Standby Letter of Credit | ||
Other Commitments [Line Items] | ||
Letters of credit outstanding, amount | $ 5.3 | $ 5.3 |
Commitments and Contingencies - Contractual Obligations (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Remaining 2023 | $ 3,058 |
2024 | 6,953 |
2025 | 2,091 |
Total | $ 12,102 |
Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Total | $ 703,450 | |
Less: Current portion | (3,600) | $ (3,600) |
Total non-current debt | 674,036 | 722,757 |
Convertible Senior Notes | Convertible Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 349,750 | 400,000 |
Debt instrument, unamortized discount and debt issuance costs | (5,931) | (7,355) |
Total | 343,819 | 392,645 |
Term Loan B Facility | Secured Debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, gross | 353,700 | 354,600 |
Debt instrument, unamortized discount and debt issuance costs | (19,883) | (20,888) |
Total | 333,817 | 333,712 |
Total non-current debt | $ 333,817 | $ 333,712 |
Debt - Maturities of Principle Amount of Long-Term Debt (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Debt Disclosure [Abstract] | ||
Remaining 2023 | $ 2,700 | |
2024 | 3,600 | |
2025 | 3,600 | |
2026 | 353,350 | |
2027 | 3,600 | |
Thereafter | 336,600 | |
Total | 703,450 | |
Amortization of debt discount and issuance costs | 1,600 | $ 1,600 |
Amortization of deferred financing costs | $ 100 | $ 100 |
Debt - Interest Expense Related to the Convertible Senior Notes (Details) - Convertible Debt - Convertible Senior Notes - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 241 | $ 250 |
Amortization of debt issuance costs | 551 | 572 |
Total interest expense | $ 792 | $ 822 |
Effective interest rate | 0.82% | 0.82% |
Debt - Amortization Expense for Debt Issuance Costs (Details) - Convertible Debt - Convertible Senior Notes $ in Thousands |
Mar. 31, 2023
USD ($)
|
---|---|
Debt Issuance Costs | |
Remaining 2023 | $ 1,499 |
2024 | 2,001 |
2025 | 2,001 |
2026 | 430 |
Total | $ 5,931 |
Debt - Summary of Term Loan B Facility (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Instrument [Line Items] | ||
Debt, net of debt issuance costs | $ 674,036 | $ 722,757 |
Secured Debt | Term Loan B Facility | ||
Debt Instrument [Line Items] | ||
Term Loan B Facility | 353,700 | 354,600 |
Unamortized debt discounts | (7,765) | (8,158) |
Unamortized debt issuance costs | (12,118) | (12,730) |
Debt, net of debt issuance costs | $ 333,817 | $ 333,712 |
Debt - Interest Expense Related to the Term Loan B Facility (Details) - Secured Debt - Term Loan B Facility - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
Debt Instrument [Line Items] | ||
Contractual interest expense | $ 8,436 | $ 5,163 |
Amortization of debt discount | 393 | 397 |
Amortization of debt issuance costs | 612 | 619 |
Total interest expense | $ 9,441 | $ 6,179 |
Effective interest rate | 10.65% | 6.98% |
Debt - Amortization Expense for the Term Loan B Facility Debt Discount and Issuance Costs (Details) - Secured Debt - Term Loan B Facility - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
---|---|---|
Debt Discount | ||
Remaining 2023 | $ 1,171 | |
2024 | 1,548 | |
2025 | 1,532 | |
2026 | 1,516 | |
2027 | 1,500 | |
Thereafter | 498 | |
Total | 7,765 | $ 8,158 |
Debt Issuance Costs | ||
Remaining 2023 | 1,829 | |
2024 | 2,416 | |
2025 | 2,391 | |
2026 | 2,366 | |
2026 | 2,341 | |
Thereafter | 775 | |
Total | $ 12,118 | $ 12,730 |
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