QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |||
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(Address of principal executive offices) |
Title of each class |
Trading symbol |
Name of each exchange on which registered | ||
(Nasdaq Global Select Market) |
Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Smaller reporting company | ☒ | |||||
Emerging growth company |
Page No. | ||||
PART I. |
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Item 1. |
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3 | ||||
4 | ||||
5 | ||||
7 | ||||
8 | ||||
Item 2. |
25 | |||
Item 3. |
36 | |||
Item 4. |
37 | |||
PART II. |
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Item 1. |
39 | |||
Item 1A. |
39 | |||
Item 2. |
39 | |||
Item 3. |
39 | |||
Item 4. |
39 | |||
Item 5. |
39 | |||
Item 6. |
40 | |||
41 |
(IN THOUSANDS, EXCEPT SHARE AND UNIT DATA) |
June 30, 2021 |
December 31, 2020 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ | $ | ||||||
Restricted cash |
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Accounts receivable, net |
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Unbilled receivables |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Internal use software, net |
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Intangible assets, net |
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Goodwill |
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Other long-term assets |
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Total assets |
$ |
$ | ||||||
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LIABILITIES AND MEMBERS’/STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable and accrued expenses |
$ | $ | ||||||
Due to related party |
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Capital leases payable |
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Deferred revenue |
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Total current liabilities |
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Accrued rent |
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Net deferred tax liability |
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Long-term debt |
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Total liabilities |
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Commitments and Contingencies (Note 13) |
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Members’/Stockholders’ Equity |
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Units, $ |
— |
|||||||
Preferred Stock, $ |
||||||||
Common Stock, $ |
— | |||||||
Additional paid-in-capital(1) |
— | |||||||
Accumulated other comprehensive income |
||||||||
Accumulated deficit(1) |
— | ( |
) | |||||
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Total members’/stockholders’ equity |
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Total liabilities and members’/stockholders’ equity |
$ |
$ | ||||||
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(1) |
Balances prior to the Company’s conversion to a Delaware corporation have been reclassified to additional paid-in capital to give effect to the corporate conversion described in Note 1. |
Three Months Ended June 30, |
Six Months Ended June 30, |
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(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) |
2021 |
2020 |
2021 |
2020 |
||||||||||||
Revenue |
$ | $ | $ | $ | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) |
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Sales and marketing |
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Technology and development |
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General and administrative |
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Depreciation and amortization |
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Total operating expenses |
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Operating loss |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Interest expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
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Net loss before benefit from income taxes |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Benefit from income taxes |
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Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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|||||||||
Net loss per share – basic and diluted (1): |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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Basic and diluted weighted average shares outstanding |
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Other comprehensive income (loss): |
||||||||||||||||
Foreign currency translation adjustments |
( |
) | ( |
) | ||||||||||||
|
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|
|
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|
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|
|||||||||
Total comprehensive loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
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|
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|
|
(1) | Amounts for periods prior to the Company’s conversion to a Delaware corporation have been retrospectively adjusted to give effect to the corporate conversion described in Note 1. |
Member’s Interest |
Common Stock |
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(IN THOUSANDS, EXCEPT UNITS AND SHARES) |
Units (1) |
Amount |
Shares |
Amount |
Additional paid-in capital |
Accumulated other comprehensive income (loss) |
Accumulated deficit |
Total members’/ stockholders’ equity |
||||||||||||||||||||||||
Balance, April 1, 2021 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||
Option exercises |
— | — | — | — | ||||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Conversion to Delaware corporation (Note 1) |
( |
) |
( |
) | — | |||||||||||||||||||||||||||
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Balance, June 30, 2021 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
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Member’s Interest |
Common Stock |
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(IN THOUSANDS, EXCEPT UNITS AND SHARES) |
Units (1) |
Amount |
Shares |
Amount |
Additional paid-in capital |
Accumulated other comprehensive income (loss) |
Accumulated deficit |
Total members’/ stockholders’ equity |
||||||||||||||||||||||||
Balance, January 1, 2021 |
$ | $ | $ | $ | $ | ( |
) | $ | ||||||||||||||||||||||||
Repurchase of units |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||||||||||
Units vested |
— | |||||||||||||||||||||||||||||||
Option exercises |
— | |||||||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | ||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | ( |
) | — | ( |
) | ||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | ( |
) | ( |
) | ||||||||||||||||||||||
Conversion to Delaware corporation (Note 1) |
( |
) |
( |
) | — | |||||||||||||||||||||||||||
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Balance, June 30, 2021 |
$ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||
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(1) | Amounts for periods prior to the Company’s conversion to a Delaware corporation have been retrospectively adjusted to give effect to the corporate conversion described in Note 1. |
Member’s Interest |
||||||||||||||||||||||||
(IN THOUSANDS, EXCEPT UNITS AND SHARES) |
Units (1) |
Amount |
Additional paid-in capital |
Accumulated other comprehensive income (loss) |
Accumulated deficit |
Total members’/ stockholders’ equity |
||||||||||||||||||
Balance, April 1, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | ||||||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Balance, June 30, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
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Member’s Interest |
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(IN THOUSANDS, EXCEPT UNITS AND SHARES) |
Units (1) |
Amount |
Additional paid-in capital |
Accumulated other comprehensive income (loss) |
Accumulated deficit |
Total members’/ stockholders’ equity |
||||||||||||||||||
Balance, January 1, 2020 |
$ | $ | $ | $ | ( |
) | $ | |||||||||||||||||
Repurchase of units |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||||||||||
Units vested |
— | — | — | |||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | ( |
) | — | ( |
) | ||||||||||||||||
Net loss |
— | — | — | — | ( |
) | ( |
) | ||||||||||||||||
Balance, June 30, 2020 |
$ | $ | $ | ( |
) | $ | ( |
) | $ | |||||||||||||||
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(1) | Amounts for periods prior to the Company’s conversion to a Delaware corporation have been retrospectively adjusted to give effect to the corporate conversion described in Note 1. |
Six Months Ended June 30, |
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(IN THOUSANDS) |
2021 |
2020 |
||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash provided by operating activities |
||||||||
Depreciation and amortization |
||||||||
Stock-based compensation |
||||||||
Deferred tax provision |
|
|
( |
) | |
|
— |
|
Amortization of debt issuance costs |
||||||||
Allowance for doubtful accounts |
||||||||
Non-cash interest expense |
||||||||
Changes in operating assets and liabilities: |
||||||||
Decrease in accounts receivable |
||||||||
Decrease in unbilled receivables |
||||||||
Increase in prepaid expenses and other current assets |
( |
) | ( |
) | ||||
Increase in taxes receivable |
( |
) | ||||||
Increase in other long-term assets |
( |
) | ( |
) | ||||
Increase in accounts payable and accrued expenses |
||||||||
Increase (decrease) in due to related party |
( |
) | ||||||
Increase in accrued rent |
||||||||
Decrease in deferred revenue |
( |
) | ( |
) | ||||
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|
|||||
Net cash provided by operating activities |
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|
|||||
Cash flows from investing activities: |
||||||||
Purchase of property and equipment |
( |
) | ( |
) | ||||
Acquisition and development of internal use software |
( |
) | ( |
) | ||||
|
|
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|
|||||
Net cash used in investing activities |
( |
) | ( |
) | ||||
|
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|
|||||
Cash flows from financing activities: |
||||||||
Principal payments on capital lease obligations |
( |
) | ( |
) | ||||
Cash paid for share repurchases |
( |
) | ( |
) | ||||
Initial public offering costs paid |
( |
) | ||||||
Exercise of stock options |
||||||||
|
|
|
|
|||||
Net cash used in financing activities |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Net increase in cash, cash equivalents and restricted cash |
||||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
( |
) | ||||||
Cash, cash equivalents and restricted cash at beginning of period |
||||||||
|
|
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|
|||||
Cash, cash equivalents, and restricted cash, at end of period |
$ | $ | ||||||
|
|
|
|
|||||
Supplemental Disclosures: |
||||||||
Cash paid during the period for: |
||||||||
Interest |
$ | $ | ||||||
Taxes |
$ | $ | ||||||
Non-cash investing and financing activities |
||||||||
Deferred offering costs accrued, not yet paid |
$ | $ | ||||||
Assets acquired under capital leases |
$ | $ | ||||||
Property and equipment acquired included in accounts payable |
$ | $ | ||||||
Conversion of members’ equity to additional paid-in capital |
$ | $ |
June 30, 2021 |
December 31. 2020 |
|||||||
Cash and cash equivalents |
$ | $ | ||||||
Short term restricted cash |
||||||||
Long term restricted cash (held in other long-term assets) |
||||||||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows |
$ | $ | ||||||
June 30, 2021 |
June 30, 2020 |
|||||||
Balance, beginning of period |
$ | |
|
|||||
Additional provision |
||||||||
Receivables written off |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Balance, end of period |
$ | |||||||
|
|
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|
June 30, 2021 |
June 30, 2020 (1) | |||
Estimated fair value |
$ |
$ | ||
Expected volatility (%) |
||||
Expected term (in years) |
||||
Risk-free interest rate (%) |
||||
Dividend yield |
(1) |
For issuances prior to the pricing of the IPO, the fair value of the Company’s option grants was estimated at the grant date using the Monte Carlo simulation model and relate to the Return-Target Options only as the Time-Based Options were not within the scope of ASC 718, Compensation - Stock Compensation |
Estimated useful life (in years) |
June 30, 2021 |
December 31, 2020 |
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Computer and office equipment |
$ | $ | ||||||||||
Computer software |
||||||||||||
Leasehold improvements |
||||||||||||
Furniture |
||||||||||||
Total property and equipment |
||||||||||||
Less: accumulated depreciation |
( |
) | ( |
) | ||||||||
Total property and equipment, net |
$ | $ | ||||||||||
June 30, 2021 |
December 31, 2020 |
|||||||
Computer and office equipment |
$ | $ | ||||||
Less: Accumulated depreciation |
( |
) | ( |
) | ||||
Total computer and office equipment under capital leases, net |
$ | $ | ||||||
Estimated useful life (in years) |
June 30, 2021 |
December 31, 2020 |
||||||||||
Internal use software |
$ | $ | ||||||||||
Less: Accumulated amortization |
( |
) | ( |
) | ||||||||
Total internal use software, net |
$ | $ | ||||||||||
June 30, 2021 |
||||||||||||||||||||
Estimated useful life |
Gross book value |
Accumulated amortization |
Net book value |
Weighted average remaining useful life |
||||||||||||||||
Customer relationships |
$ | $ | ( |
) | $ | Ye ars |
||||||||||||||
Developed technology |
( |
) | Years |
|||||||||||||||||
Trademarks |
( |
) | Years |
|||||||||||||||||
Favorable leases |
( |
) | Y ears |
|||||||||||||||||
Total |
$ | $ | ( |
) | $ | |||||||||||||||
December 31, 2020 |
||||||||||||||||||||
Estimated useful life |
Gross book value |
Accumulated amortization |
Net book value |
Weighted average remaining useful life |
||||||||||||||||
Customer relationships |
$ | $ | ( |
) | $ | |||||||||||||||
Developed technology |
( |
) | ||||||||||||||||||
Trademarks |
( |
) | ||||||||||||||||||
Favorable leases |
( |
) | ||||||||||||||||||
Total |
$ | $ | ( |
) | $ | |||||||||||||||
Goodwill as of December 31, 2020 |
$ | |||
Impact of exchange rates |
( |
) | ||
Goodwill as of June 30, 2021 |
$ | |||
June 30, 2021 |
December 31, 2020 |
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Accounts payable |
$ |
$ |
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Accrued payroll |
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Accrued professional fees |
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Accrued interest |
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Accrued bonuses and commissions |
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Accrued revenue sharing |
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Taxes payable |
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Other accrued expenses |
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Total accounts payable and accrued expenses |
$ |
$ | ||||||
|
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|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Term Loan |
$ | $ | ||||||
PIK Interest |
||||||||
Less: Unamortized debt issuance costs |
( |
) | ( |
) | ||||
|
|
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|
|||||
Total carrying amount of Term Loan |
$ | $ | ||||||
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|
Year Ending |
||||
2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
|
|
|||
$ | ||||
|
|
Three Months Ended June 30, |
Six Months June Ended 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
North and South America (“Americas”) |
$ | $ | $ | $ | ||||||||||||
Europe, Middle East and Africa (“EMEA”) |
||||||||||||||||
Asia and Pacific Rim (“APAC”) |
||||||||||||||||
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|
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|
|
|
|||||||||
Total |
$ | $ | $ | $ | ||||||||||||
|
|
|
|
|
|
|
|
June 30, 2021 |
December 31, 2020 |
|||||||
Property and Equipment, net |
||||||||
Americas |
$ | $ | ||||||
EMEA |
||||||||
APAC |
||||||||
|
|
|
|
|||||
Total |
$ | $ | ||||||
|
|
|
|
Stock options |
Weighted average exercise price |
Weighted average remaining contractual life (years) |
Aggregate intrinsic value |
|||||||||||||
Outstanding at April 1, 2021 |
$ | — | ||||||||||||||
Granted |
— | |||||||||||||||
Canceled or forfeited |
( |
) | — | — | ||||||||||||
Exercised |
( |
) | — | — | ||||||||||||
Outstanding at June 30, 2021 |
$ | $ | ||||||||||||||
Vested and expected to vest at June 30, 2021 |
$ | |||||||||||||||
Exercisable as of June 30, 2021 |
$ | $ |
Stock options |
Weighted average exercise price |
Weighted average remaining contractual life (years) |
Aggregate intrinsic value |
|||||||||||||
Outstanding at April 1, 2021 |
$ | — | ||||||||||||||
Granted |
— | |||||||||||||||
Canceled or forfeited |
( |
) | — | — | ||||||||||||
Exercised |
— | — | ||||||||||||||
Outstanding at June 30, 2021 |
$ | $ | ||||||||||||||
Vested and expected to vest at June 30, 2021 |
$ | |||||||||||||||
Exercisable as of June 30, 2021 |
Stock options |
Weighted average exercise price |
Weighted average remaining contractual life (years) |
Aggregate intrinsic value |
|||||||||||||
Outstanding at January 1, 2021 |
$ | — | ||||||||||||||
Granted |
— | |||||||||||||||
Canceled or forfeited |
( |
) | — | — | ||||||||||||
Exercised |
( |
) | — | — | ||||||||||||
Outstanding at June 30, 2021 |
$ | $ | ||||||||||||||
Vested and expected to vest at June 30, 2021 |
$ | |||||||||||||||
Exercisable as of June 30, 2021 |
$ | $ |
Stock options |
Weighted average exercise price |
Weighted average remaining contractual life (years) |
Aggregate intrinsic value |
|||||||||||||
Outstanding at January 1, 2021 |
$ | — | ||||||||||||||
Granted |
— | |||||||||||||||
Canceled or forfeited |
( |
) | — | — | ||||||||||||
Exercised |
— | — | ||||||||||||||
Outstanding at June 30, 2021 |
$ | $ | ||||||||||||||
Vested and expected to vest at June 30, 2021 |
$ | |||||||||||||||
Exercisable as of June 30, 2021 |
Three and Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Sales and marketing |
$ | |||||||
Technology and development |
||||||||
General and administrative |
||||||||
Total |
$ | $ | ||||||
Total minimum lease payments |
$ | |||
Less: Amount representing interest |
( |
) | ||
|
|
|||
Total |
$ | |||
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Numerator: |
||||||||||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Denominator: |
||||||||||||||||
Weighted averages shares outstanding, basic and diluted |
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|
|||||||||
Net loss per share, basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
|
|
|
|
|
|
|
|
Three and Six Months Ended, June |
||||||||
2021 |
2020 |
|||||||
Options to purchase common stock/ member units |
Fair value hierarchy |
Book value |
Estimated fair value |
||||||||||
Term loan (a) |
||||||||||||
December 31, 2020 |
Level 2 | $ | $ | |||||||||
June 30, 2021 |
Level 2 | $ | $ |
(a) | The estimated fair value of our Term Loan is based upon market prices as of the valuation date. |
• |
the adverse effect on our business, operating results, financial condition, and prospects from the current COVID-19 pandemic and related economic downturns; |
• |
our dependence on the overall demand for advertising; |
• |
a failure to innovate or make the right investment decisions; |
• |
our failure to maintain or achieve industry accreditation standards; |
• |
our ability to compete successfully with our current or future competitors in an intensely competitive market; |
• |
our dependence on integrations with advertising platforms, digital service providers (“DSPs”), and proprietary platforms that we do not control; |
• |
our international expansion; |
• |
our ability to expand into new channels; |
• |
our ability to sustain our profitability and revenue growth rate decline; |
• |
risks that our customers do not pay or choose to dispute their invoices; |
• |
risks of material changes to revenue share agreements with certain DSPs; |
• |
our ability to effectively manage our growth; |
• |
the impact that any future acquisitions, strategic investments, or alliances may have on our business, financial condition, and results of operations; |
• |
our ability to successfully execute our international plans; |
• |
the risks associated with the seasonality of our market; |
• |
our ability to maintain high impression volumes; |
• |
the difficulty in evaluating our future prospects given our short operating history; |
• |
uncertainty in how the market for buying digital advertising verification solutions will evolve; |
• |
our ability to provide digital or cross-platform analytics;. |
• |
our ability to maintain our corporate culture; |
• |
risks posed by earthquakes, fires, floods, and other natural catastrophic events; |
• |
interruption by man-made problems such as terrorism, computer viruses, or social disruption; |
• |
the risk of failures in the systems and infrastructure supporting our solutions and operations; |
• |
our ability to avoid operational, technical, and performance issues with our platform; |
• |
risks associated with any unauthorized access to user, customer, or inventory and third-party provider data; |
• | our inability to use software licensed from third parties; |
• | our ability to provide the non-proprietary technology, software, products, and services that we use; |
• | the risk that we are sued by third parties for alleged infringement, misappropriation, or other violation of their proprietary rights; |
• | our ability to obtain, maintain, protect, or enforce intellectual property and proprietary rights that are important to our business;. |
• | our involvement in lawsuits to protect or enforce our intellectual property; |
• | risks that our employees, consultants, or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers; |
• | risks that our trademarks and trade names are not adequately protected; |
• | the impact of unforeseen changes to privacy and data protection laws and regulation on digital advertising; |
• | the risk that a perceived failure to comply with laws and industry self-regulation may damage our reputation; and |
• | other factors disclosed in the section entitled “Risk Factors” and elsewhere in our IPO prospectus and this Quarterly Report. |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Programmatic |
• | Social. |
• | Connected TV. |
• | Adjacent product expansion. |
June 30, |
||||||||
2021 |
2020 |
|||||||
Net Revenue retention of advertising customers (%) (as of the end of the period) |
142 | % | 123 | % | ||||
Total advertising customers (as of the end of the period) |
2,155 | 1,836 | ||||||
Total number of large advertising customers (as of the end of the period) |
187 | 154 |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
(in thousands except percentages) |
| |||||||||||||||
Revenue |
$ | 75,075 | $ | 48,320 | $ | 142,027 | $ | 102,362 | ||||||||
Operating expenses: |
||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) |
12,925 | 8,756 | 24,344 | 17,911 | ||||||||||||
Sales and marketing |
27,268 | 16,754 | 43,813 | 35,124 | ||||||||||||
Technology and development |
20,176 | 12,726 | 32,944 | 25,062 | ||||||||||||
General and administrative |
33,044 | 7,946 | 41,592 | 15,586 | ||||||||||||
Depreciation and amortization |
14,603 | 16,413 | 28,998 | 32,751 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
108,016 | 62,595 | 171,691 | 126,434 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
(32,941 | ) | (14,275 | ) | (29,664 | ) | (24,072 | ) | ||||||||
Interest expense, net |
(5,167 | ) | (7,695 | ) | (12,126 | ) | (15,953 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss before benefit from income taxes |
(38,108 | ) | (21,970 | ) | (41,790 | ) | (40,025 | ) | ||||||||
Benefit from income taxes |
3,045 | 5,519 | 3,958 | 9,130 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (35,063 | ) | $ | (16,451 | ) | $ | (37,832 | ) | $ | (30,895 | ) | ||||
|
|
|
|
|
|
|
|
|||||||||
Net loss margin |
(47 | )% | (34 | )% | (27 | )% | (30 | )% | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Revenue |
100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Operating expenses: |
||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) |
17 | 18 | 17 | 17 | ||||||||||||
Sales and marketing |
36 | 35 | 31 | 34 | ||||||||||||
Technology and development |
27 | 26 | 23 | 24 | ||||||||||||
General and administrative |
44 | 16 | 29 | 15 | ||||||||||||
Depreciation and amortization |
19 | 34 | 20 | 32 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
144 | 130 | 121 | 124 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
(44 | ) | (30 | ) | (21 | ) | (24 | ) | ||||||||
Interest expense, net |
(7 | ) | (16 | ) | (9 | ) | (16 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss before benefit from income taxes |
(51 | ) | (46 | ) | (29 | ) | (39 | ) | ||||||||
Benefit from income taxes |
4 | 12 | 3 | 9 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
(47 | )% | (34 | )% | (27 | )% | (30 | )% | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
||||||||||||||||
2021 |
2020 |
$ change |
% change |
|||||||||||||
(in thousands except percentages) |
| |||||||||||||||
Revenue |
$ | 75,075 | $ | 48,320 | $ | 26,755 | 55 | % | ||||||||
Operating expenses: |
||||||||||||||||
Cost of revenue (excluding depreciation and amortization shown below) |
12,925 | 8,756 | 4,169 | 48 | ||||||||||||
Sales and marketing |
27,268 | 16,754 | 10,514 | 63 | ||||||||||||
Technology and development |
20,176 | 12,726 | 7,450 | 59 | ||||||||||||
General and administrative |
33,044 | 7,946 | 25,098 | 316 | ||||||||||||
Depreciation and amortization |
14,603 | 16,413 | (1,810 | ) | (11 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
108,016 | 62,595 | 45,421 | 73 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
(32,941 | ) | (14,275 | ) | (18,666 | ) | 131 | |||||||||
Interest expense, net |
(5,167 | ) | (7,695 | ) | 2,528 | (32 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss before provision for income taxes |
(38,108 | ) | (21,970 | ) | (16,138 | ) | 73 | |||||||||
Benefit from income taxes |
3,045 | 5,519 | (2,474 | ) | (45 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (35,063 | ) | $ | (16,451 | ) | $ | (18,612 | ) | 113 | % | |||||
|
|
|
|
|
|
|
|
|||||||||
Net loss margin |
(47 | )% | (34 | )% | (13 | )% | 39 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
||||||||||||||||
2021 |
2020 |
$ change |
% change |
|||||||||||||
(in thousands) |
| |||||||||||||||
Advertiser direct revenue |
$ | 35,281 | $ | 25,186 | $ | 10,095 | 40 | % | ||||||||
Programmatic revenue |
31,793 | 16,362 | 15,430 | 94 | ||||||||||||
Supply side revenue |
8,001 | 6,772 | 1,229 | 18 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue |
$ | 75,075 | $ | 48,320 | $ | 26,755 | 55 | % | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||||||||||
2021 |
2020 |
$ change |
% change |
|||||||||||||
(in thousands) |
| |||||||||||||||
Revenue |
$ | 142,027 | $ | 102,362 | $ | 39,665 | 39 | % | ||||||||
Operating expenses: |
||||||||||||||||
Cost of revenues (excluding depreciation and amortization shown below) |
24,344 | 17,911 | 6,433 | 36 | ||||||||||||
Sales and marketing |
43,813 | 35,124 | 8,689 | 25 | ||||||||||||
Technology and development |
32,944 | 25,062 | 7,882 | 31 | ||||||||||||
General and administrative |
41,592 | 15,586 | 26,006 | 167 | ||||||||||||
Depreciation and amortization |
28,998 | 32,751 | (3,753 | ) | (11 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
171,691 | 126,434 | 45,257 | 36 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating loss |
(29,664 | ) | (24,072 | ) | (5,592 | ) | 23 | |||||||||
Interest expense, net |
(12,126 | ) | (15,953 | ) | 3,827 | (24 | ) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss before benefit from income taxes |
(41,790 | ) | (40,025 | ) | (1,765 | ) | 4 | |||||||||
Benefit from income taxes |
3,958 | 9,130 | (5,172 | ) | (57 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (37,832 | ) | $ | (30,895 | ) | $ | (6,937 | ) | 22 | % | |||||
|
|
|
|
|
|
|
|
|||||||||
Net loss margin |
(27 | )% | (30 | )% | 3 | % | (10 | )% | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||||||||||
2021 |
2020 |
$ change |
% change |
|||||||||||||
(in thousands) |
| |||||||||||||||
Advertiser direct revenue |
$ | 67,880 | $ | 53,484 | $ | 14,396 | 27 | % | ||||||||
Programmatic revenue |
58,367 | 34,909 | 23,458 | 67 | ||||||||||||
Supply side revenue |
15,780 | 13,969 | 1,811 | 13 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total revenue |
$ | 142,027 | $ | 102,362 | $ | 39,665 | 39 | % | ||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Net loss |
$ | (35,063 | ) | $ | (16,451 | ) | $ | (37,832 | ) | $ | (30,895 | ) | ||||
Depreciation and amortization |
14,603 | 16,413 | 28,998 | 32,751 | ||||||||||||
Stock-based compensation |
41,531 | — | 41,531 | — | ||||||||||||
Interest expense, net |
5,167 | 7,695 | 12,126 | 15,953 | ||||||||||||
Benefit from income taxes |
(3,045 | ) | (5,519 | ) | (3,958 | ) | (9,130 | ) | ||||||||
Acquisition, restructuring and integration costs |
2,408 | 1,699 | 2,578 | 1,851 | ||||||||||||
IPO readiness costs |
93 | — | 1,038 | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ | 25,694 | $ | 3,837 | $ | 44,481 | $ | 10,530 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Revenue |
$ | 75,075 | $ | 48,320 | $ | 142,027 | $ | 102,362 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss margin |
(47 | )% | (34 | )% | (27 | )% | (30 | )% | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA margin |
34 | % | 8 | % | 32 | % | 10 | % | ||||||||
|
|
|
|
|
|
|
|
Six Months Ended June 30, |
||||||||
2021 |
2020 |
|||||||
Net cash provided by operating activities |
$ | 33,056 | $ | 13,238 | ||||
Net cash used in investing activities |
(8,096 | ) | (6,715 | ) | ||||
Net cash used in financing activities |
(3,115 | ) | (1,072 | ) | ||||
|
|
|
|
|||||
Net increase in cash and cash equivalents, and restricted cash |
$ | 21,845 | $ | 5,451 | ||||
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents, and restricted cash |
(553 | ) | 76 | |||||
|
|
|
|
|||||
Cash, cash equivalents, and restricted cash, at beginning of year |
54,721 | 30,370 | ||||||
|
|
|
|
|||||
Cash, cash equivalents and restricted cash, at end of year |
$ | 76,013 | $ | 35,897 | ||||
|
|
|
|
Item 3. |
Quantitative and Qualitative Disclosures about Market Risk |
Item 4. |
Controls and Procedures |
ITEM 1. |
LEGAL PROCEEDINGS |
ITEM 1A. |
RISK FACTORS |
ITEM 2. |
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3. |
DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. |
MINE SAFETY DISCLOSURES |
ITEM 5. |
OTHER INFORMATION |
* | The certifications furnished in Exhibit 32.1 and Exhibit 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. |
Integral Ad Science Holding Corp. (Registrant) | ||||||
Date: August 12, 2021 | By: | /s/ Joseph Pergola | ||||
Joseph Pergola | ||||||
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |