QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT 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 Number) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
Large-accelerated filer |
☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Page |
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Item 1. |
3 | |||||
3 | ||||||
4 | ||||||
5 | ||||||
7 | ||||||
8 | ||||||
Item 2. |
22 | |||||
Item 3. |
35 | |||||
Item 4. |
36 | |||||
Item 1. |
38 | |||||
Item 1A. |
38 | |||||
Item 2. |
38 | |||||
Item 3. |
39 | |||||
Item 4. |
39 | |||||
Item 5. |
39 | |||||
Item 6. |
40 | |||||
41 |
• | The impact of the COVID-19 pandemic on the global economy, our customers, employees and business; |
• | We may experience fluctuations in our operating results, which could make our future operating results difficult to predict; |
• | If we fail to innovate and make the right investment decisions in our product offerings and platform, we may not attract and retain customers and our revenue and results of operations may decline; |
• | Our success and revenue growth depends on our ability to add and retain scaled customers, which we define as customers from which the Company has generated trailing-12-month |
• | If we do not manage our growth effectively, the quality of our platform and solutions may suffer and our business, results of operations and financial condition may be adversely affected; |
• | Our business and the effectiveness of our platform depends on our ability to collect and use data online. New consumer tools, regulatory restrictions and potential changes to web browsers and mobile operating systems all threaten our ability to collect such data, which could harm our operating results and financial condition and adversely affect the demand for our products and solutions; |
• | The standards that private entities and inbox service providers adopt in the future to regulate the use and delivery of email may interfere with the effectiveness of our platform and our ability to conduct business |
• | A significant inadvertent disclosure or breach of confidential and/or personal information we process, or a security breach of our or our customers’, suppliers’ or other partners’ computer systems could be detrimental to our business, reputation, financial performance and results of operations; |
• | Our infrastructure depends on third-party data centers, systems and technologies to operate our business, the disruption of which could adversely affect our business, results of operations and financial condition; |
• | Our failure to remediate the material weaknesses in our internal control over financial reporting could result in material misstatements in our financial statements or the inability to timely report our financial condition or results of operations; and |
• | other factors discussed in other sections of this Quarterly Report on Form 10-Q, including the sections titled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations.” |
Item 1. |
Financial Statements |
As of June 30, 2021 |
As of December 31, 2020 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
$ | ||||||
Accounts receivable, net of allowance of $ and December 31, 2020, respectively |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Website and software development costs, net |
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Intangible assets, net |
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Goodwill |
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Deferred tax assets, |
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Other non-current assets |
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Total non-current assets |
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Total assets |
$ |
$ | ||||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY / (DEFICIT) |
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Current liabilities: |
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Accounts payable |
$ |
$ | ||||||
Accrued expenses |
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Acquisition related liabilities |
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Deferred revenue |
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Other current liabilities |
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Total current liabilities |
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Non-current liabilities: |
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Long term borrowings |
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Acquisition related liabilities |
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Warrants and derivative liabilities |
— |
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Other non-current liabilities |
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Total non-current liabilities |
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Total liabilities |
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Commitments and contingencies (Note 8 ) |
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Mezzanine equity: |
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Redeemable convertible preferred stock $ shares issued and outstanding as of December 31, 2020 |
— |
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Stockholders’ equity / (deficit): |
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Series A c ommon stock $authorized, 2020 |
— |
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Treasury c ommon s tock, price of $ |
( |
( |
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Series B c ommon s tock $authorized, |
— |
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Class A common stock, par value $ outstanding as of June 30, 2021 |
— |
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Class B common stock, par value $ outstanding as of June 30, 2021 |
— |
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Additional paid-in capital |
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Accumulated deficit |
( |
( |
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Accumulated other comprehensive loss |
( |
( |
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Total stockholders’ equity / (deficit) |
( |
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Total liabilities and stockholders’ equity / (deficit) |
$ |
$ | ||||||
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Three months ended June 30, |
Six months ended June 30, |
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2021 |
2020 |
2021 |
2020 |
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Revenues |
$ |
$ | $ |
$ | ||||||||||||
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Operating expenses: |
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Cost of revenues (excluding depreciation and amortization) (1) |
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General and administrative expenses (1) |
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Selling and marketing expenses (1) |
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Research and development expenses (1) |
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Depreciation and amortization |
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Acquisition related expenses |
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Restructuring expenses |
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Total operating expenses |
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Loss from operations |
( |
( |
( |
( |
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Interest expense |
||||||||||||||||
Other (income s ) / expenses, net |
( |
( |
( |
|||||||||||||
Gain on extinguishment of debt |
( |
— |
( |
— |
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Change in fair value of warrants and derivative liabilities |
( |
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Total other (income s ) / expenses |
( |
( |
||||||||||||||
Loss before income taxes |
( |
( |
( |
( |
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Income tax provision / (benefit) |
( |
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Net loss |
$ |
( |
$ | ( |
$ |
( |
$ | ( |
||||||||
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|
|||||||||
Other comprehensive loss: |
||||||||||||||||
Foreign currency translation adjustment |
( |
( |
( |
( |
||||||||||||
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Total comprehensive loss |
( |
( |
( |
( |
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Net loss per share |
||||||||||||||||
Net loss |
( |
$ | ( |
$ |
( |
$ | ( |
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Cumulative redeemable convertible preferred stock dividends |
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Net loss available to common stockholders |
$ |
( |
$ | ( |
$ |
( |
$ | ( |
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| |
Basic loss per share |
$ |
( |
$ | ( |
$ |
( |
$ | ( |
||||||||
Diluted loss per share |
$ |
( |
$ | ( |
$ |
( |
$ | ( |
||||||||
Weighted average number of shares used to compute net loss per share |
||||||||||||||||
Basic |
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Diluted |
(1) | The Company recorded the total stock-based compensation expense as follows: |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Cost of revenues (excluding depreciation and amortization) |
— | — | ||||||||||||||
General and administrative expenses |
||||||||||||||||
Selling and marketing expenses |
— | — | ||||||||||||||
Research and development expenses |
— | — | ||||||||||||||
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Tota |
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Series A |
Series B |
Class A |
Class B |
Accumulated Other Comprehensive Loss |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock |
Common Stock |
Common Stock |
Common Stock |
Common Stock |
Treasury Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2021 |
$ |
$ |
$ |
— | $ | — | — | $ | — | ( |
$ |
( |
$ |
$ |
( |
$ |
( |
$ |
( |
|||||||||||||||||||||||||||||||||||||||||||||
Shares issued in connection with acquisition |
— | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock grants |
— | — | — | — | — | — | — | — | — | — | ( |
— | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock forfeitures |
— |
— | ( |
( |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock cancelation |
— |
— |
( |
( |
— |
— |
— | — | — |
— |
— |
— |
— |
— |
— | |||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | — | — | — | ( |
— | ( |
||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2021 |
$ |
$ |
$ |
— |
$ |
— |
— |
$ |
— |
( |
$ |
( |
$ |
$ |
( |
$ |
( |
$ |
( |
|||||||||||||||||||||||||||||||||||||||||||||
Conversion of Series A and Series B common shares into Class A and Class B common shares, respectively |
— |
— |
( |
( |
( |
( |
— |
— |
— |
— |
— | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Conversion of redeemable convertible preferred stock to Class A Common Stock |
( |
( |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants exercised |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares issued in connection with the Initial Public Offering |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity issuance cost |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
— |
— |
( |
||||||||||||||||||||||||||||||||||||||||||||||||
Shares repurchased |
— |
— |
— |
— |
— |
— |
( |
( |
( |
( |
— |
— |
( |
— |
— |
( |
||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock grants |
— | — | — | — | — | — | — | — | ( |
— | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock forfeitures |
— | — | — | — | — | — | ( |
( |
— | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock units vesting |
— | — | — | — | — | — | — | — |
— |
— |
— |
— | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
( |
||||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | — | — | — | ( |
— | ( |
||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2021 |
— |
$ |
— |
— |
$ |
— |
$ |
— |
$ |
— |
$ |
$ |
( |
$ |
( |
$ |
$ |
( |
$ |
( ) |
$ |
|||||||||||||||||||||||||||||||||||||||||||
Series A |
Series B |
Class A |
Class B |
Accumulated Other Comprehensive Loss |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Redeemable Convertible Preferred Stock |
Common Stock |
Common Stock |
Common Stock |
Common Stock |
Treasury Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of January 1, 2020 |
$ | $ | — | $ | — | — | $ | — | ( |
$ | ( |
$ | $ | ( |
) | $ | ( |
$ |
( |
|||||||||||||||||||||||||||||||||||||||||||||
Shares issued in connection with an agreement |
— | — | — | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock grants |
— | — | — | — | — | — | — | — | — | — | ( |
— | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock forfeitures |
— | — | ( |
( |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
( |
||||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | — | — | — | ( |
— | ( |
||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2020 |
$ |
$ |
$ |
— |
$ |
— |
— |
$ |
— |
( |
$ |
( |
$ |
$ |
( |
$ |
( |
$ |
( |
|||||||||||||||||||||||||||||||||||||||||||||
Restricted stock grants |
— | — | — | — | — | — | — | — | — | — | ( |
— | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted stock forfeitures |
— | — | ( |
— | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— | — | — | — | — | — | — | — | — | — | — | — | — | — | ( |
( |
||||||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— | — | — | — | — | — | — | — | — | — | — | — | — | ( |
— | ( |
||||||||||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2020 |
$ |
— |
$ |
— |
— |
$ |
— |
( |
$ |
( |
$ |
$ |
( |
$ |
( |
$ |
( |
|||||||||||||||||||||||||||||||||||||||||||||||
Six months ended June 30, |
||||||||
2021 |
2020 |
|||||||
Cash flows from operating activities: |
||||||||
Net loss |
$ |
( |
$ |
( |
||||
Adjustments to reconcile net loss to net cash provided by operating activities: |
||||||||
Depreciation and amortizatio n |
||||||||
Stock-based compensation |
||||||||
Deferred income taxes |
( |
|||||||
Change in fair value of warrant and derivative liabilities |
||||||||
Gain on extinguishment of debt |
( |
— |
||||||
Others, net |
||||||||
Changes in non-cash working capital (net of acquisitions): |
||||||||
Account receivable |
||||||||
Prepaid expenses |
||||||||
Other current assets |
||||||||
Other non-current assets |
( |
|||||||
Deferred revenue |
( |
|||||||
Accounts payable |
( |
|||||||
Accrued expenses and other current liabilities |
( |
|||||||
Other non-current liabilities |
||||||||
Net cash provided by operating activities |
||||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
( |
( |
||||||
Website and software development costs |
( |
( |
||||||
Business and asset acquisitions, net of cash acquired |
( |
— |
||||||
Net cash used for investing activities |
( |
( |
||||||
|
|
|
|
|||||
Cash flows from financing activities: |
||||||||
Proceeds from initial public offering, net of issuance costs |
— |
|||||||
Cash paid for acquisition related liabilities |
( |
( |
||||||
Proceeds from term loan, net of issuance cost |
— |
|||||||
Proceeds from paycheck protection program loan |
— |
|||||||
Repurchase of restricted stock |
( |
— |
||||||
Exercise of warrants |
— |
|||||||
Repayments against the credit facilities |
( |
( |
||||||
|
|
|
|
|||||
Net cash provided by financing activities |
||||||||
|
|
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents |
( |
( |
||||||
|
|
|
|
|||||
Net increase in cash and cash equivalents and restricted cash |
||||||||
|
|
|
|
|||||
Cash and cash equivalents and restricted cash, beginning of period |
||||||||
|
|
|
|
|||||
Cash and cash equivalents and restricted cash, end of period |
$ |
$ | ||||||
|
|
|
|
|||||
Supplemental cash flow disclosures including non-cash activities: |
||||||||
Cash paid for interest |
$ |
|||||||
Cash paid for income taxes, net |
$ |
$ | ||||||
Contingent consideration liability established in connection with acquisitions |
$ |
$ | — |
|||||
Shares issued in connection with acquisitions and other agreements |
$ |
$ | ||||||
Dividends on redeemable convertible preferred stock settled in Company’s equity |
$ | $ | — | |||||
Non-cash settlement of warrants and derivative liabilities |
$ | $ | — | |||||
Capitalized stock-based compensation expense as website and software development costs |
$ | $ | — |
1. |
Organization and Background |
(a) |
Nature of Business |
(b) |
Initial Public Offering (“IPO”) |
(c) |
Reorganization Transactions |
• |
As per the amended and restated certificate of incorporation, the authorized capital stock consists of |
• | the conversion of outstanding shares, and unpaid dividends on such outstanding shares, of its Series A preferred stock, Series B-1 preferred stock, Series B-2 preferred stock, Series C preferred stock, Series E preferred stock, Series E-1 preferred stock, Series F preferred stock, Series F-1 preferred stock, Series F-2 preferred stock, Series F-3 preferred stock and Series F-4 preferred stock into its Class A common stock immediately prior to the completion of the IPO (the “Preferred Conversion”); |
• |
its Class A common stock issued in connection with the exercise of outstanding warrants (the “Warrant Exercise”); |
• |
the reclassification of its existing Series B common stock and |
• |
the exchange of Co-Founder and Chief Executive Officer and his affiliates for an equivalent number of shares of Class B common stock, which is effective upon the filing and effectiveness of our amended and restated certificate of incorporation pursuant to the terms of the exchange agreement entered into between its Co-Founder and Chief Executive Officer and his affiliates and us (the “Class B Exchange”); and |
• |
the repurchase of an aggregate of |
2. |
Basis of Presentation and Summary of Significant Accounting Policies |
(a) |
Principles of Consolidation |
(b) |
Revenue Recognition |
Six months ended |
||||||||
June 30, 2021 |
June 30, 2020 |
|||||||
Direct platform revenues |
$ | $ | ||||||
Integrated platform revenues |
||||||||
|
|
|
|
|||||
Total revenues |
$ |
$ |
||||||
|
|
|
|
(c) |
Stock-based compensation and other stock-based payments: |
(d) |
Segments |
Six months ended June 30 |
||||||||
2021 |
2020 |
|||||||
US |
$ | $ | ||||||
International |
||||||||
|
|
|
|
|||||
Total revenues |
$ |
$ |
||||||
|
|
|
|
As of |
||||||||
June 30, 2021 |
December 31, 2020 |
|||||||
US |
$ | $ | ||||||
International |
||||||||
|
|
|
|
|||||
Total long-lived assets |
$ |
$ |
||||||
|
|
|
|
(e) |
Concentration of Credit Risk |
3. |
Intangible Assets |
As of June 30, 2021 |
As of December 31, 2020 |
|||||||||||||||||||||||
Gross value |
Accumulated amortization |
Net value |
Gross value |
Accumulated amortization |
Net value |
|||||||||||||||||||
Publisher and data supply relationships |
$ | $ | $ | $ | — | $ | — | $ | — | |||||||||||||||
Tradenames |
||||||||||||||||||||||||
Completed technologies |
||||||||||||||||||||||||
Customer relationships |
||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total Intangible Assets |
$ |
$ |
$ |
$ |
$ |
$ |
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
As of June 30, 2021 |
||||
Year ended December 31, |
||||
Remaining six months of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
2026 and thereafter |
||||
|
|
|||
Total |
$ |
|||
|
|
4. |
Goodwill |
Balance as of January 1, 2021 |
$ | |||
Acquisition of Vital |
||||
Acquisition of Kinetic |
||||
Foreign currency translation |
||||
|
|
|||
Balance as of June 30, 2021 |
$ | |||
|
|
5. |
Acquisitions |
6. |
Acquisition Related Liabilities |
eBay CRM |
Sizmek |
PlaceIQ |
Ignition One |
Kinetic |
Vital |
Total |
||||||||||||||||||||||
Balance as of January 1, 2021 |
$ | $ |
$ | $ | $ | — | $ | — | $ | |||||||||||||||||||
Additions |
— | — | — | — | ||||||||||||||||||||||||
Payments made during the year |
— | — | ( |
— | — | — | ( |
|||||||||||||||||||||
Change in fair value of earn-out |
— | ( |
— | — | — | ( |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance as of June 30, 2021 |
$ | $ |
$ | — | $ | $ | $ |
$ |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7. |
Credit Facilities |
As of June 30, 2021 |
As of December 31, 2020 |
Credit facility |
$ | $ | ||||||
Loan under paycheck protection program |
— | |||||||
Revolving loan |
— | |||||||
|
|
|
|
|||||
Total borrowings |
||||||||
Less: |
||||||||
Unamortized discount on debt |
— | ( |
||||||
Unamortized deferred financing cost |
( |
( |
||||||
|
|
|
|
|||||
Long term borrowings |
$ |
$ |
||||||
|
|
|
|
8. |
Commitments and Contingencies |
(a) |
Purchase obligations |
(b) |
Lease commitments |
As of June 30, 2021 |
||||
Year Ended December 31, |
||||
Remaining six months of 2021 |
$ | |||
2022 |
||||
2023 |
||||
2024 |
||||
2025 |
||||
2026 and thereafter |
||||
|
|
|||
Total |
$ |
|||
|
|
9. |
Stock-Based Compensation |
• | For the first category of holders, terms of the modification provide the holders an option to tender up to buy-back program for a cash payout on the effective date of the IPO, with the remaining percentage of the awards subject to future vesting beginning at the end of the first quarter following the anniversary of the IPO and extending for a period of -year |
• | For the second category of holders, terms of the modification provide for vesting upon the effective date of the IPO as follows: (i) |
• | For the third category of holders, terms of the modification provide for vesting to begin at the end of the first quarter following the anniversary of the IPO, with such shares vesting in equal quarterly instalments at the end of each quarter until the -year anniversary of the date of the IPO. |
Shares |
Weighted Average Grant Date Fair Value |
|||||||
Nonvested as of January 1, 2021 |
$ | |||||||
Granted (1) |
||||||||
Vested |
( |
|||||||
Forfeited (2) |
( |
|||||||
Canceled (3) |
( |
|||||||
Modified |
( |
|||||||
Modified and reissued |
||||||||
|
|
|
|
|||||
Non-vested as of June 30, 2021 |
$ | |
||||||
|
|
|
|
(1) | During the six months ended June 30, 2021, the Company granted units to its employees and board members, of which |
(2) | During the six months ended June 30, 2021, the Company forfeited |
(3) | During the six months ended June 30, 2021, the Company also canceled N ote 10 to the condensed unaudited consolidated financial statements below ). |
|
10. |
Stockholders’ Equity / (Deficit) |
• |
Equal Status- Except as otherwise provided in the Certificate of Incorporation or required by applicable law, shares of Class A common stock and Class B common stock shall have the same rights, privileges and powers, rank equally (including as to dividends and distributions, and upon any liquidation, dissolution, distribution of assets or winding up of the Company), share ratably and be identical in all respects and as to all matters. |
• |
Voting- Except as otherwise required by applicable law, at all meetings of stockholders and on all matters submitted to a vote of stockholders of the Corporation generally, each holder of Class A common stock, as such, shall have the right to |
• |
Dividend Rights- Shares of Class A common stock and Class B common stock shall be treated equally, identically and ratably, on a per share basis, with respect to any dividends as may be declared and paid from time to time by the Board of Directors of the Company. |
• |
Liquidation, Dissolution or Winding Up- Subject to the preferential or other rights of any holders of Preferred Stock then outstanding, upon the dissolution, distribution of assets, liquidation or winding up of the Corporation, whether voluntary or involuntary, holders of Class A common stock and Class B common stock will be entitled to receive ratably all assets of the Company available for distribution to its stockholders unless disparate or different treatment of the shares of each such class with respect to distributions upon any such liquidation, dissolution, distribution of assets or winding up is approved by the affirmative vote of the holders of a majority of the outstanding shares of Class A common stock and Class B common stock, each voting separately as a class. |
11. |
Warrants and Derivative Liabilities |
As of June 30, 2021 |
As of December 31, 2020 |
|||||||
Stock price |
$ | — | $ | |||||
Exercise price |
$ | — | $ | |||||
Risk-free interest rate |
— | |||||||
Expected volatility |
— | |||||||
Time to maturity (in years) |
— |
12. |
Fair Value Disclosures |
As of June 30, 2021 |
||||||||||||||||
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
Assets |
||||||||||||||||
Cash and cash equivalents* |
$ | $ | — | $ | — | $ | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets measured at fair value |
$ |
$ |
— |
$ |
— |
$ |
||||||||||
Liabilities |
||||||||||||||||
Derivative liability |
$ | — | $ | — | $ |
— |
$ |
— |
||||||||
Warrant liability |
— | — | — |
— |
||||||||||||
Acquisition related liabilities |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities measured at fair value |
$ |
— |
$ |
— |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
As of December 31, 2020 |
||||||||||||||||
Assets |
Level 1 |
Level 2 |
Level 3 |
Total |
||||||||||||
Cash and cash equivalents* |
$ | $ | — | $ | — | $ | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total assets measured at fair value |
$ |
$ |
— | $ |
— | $ |
||||||||||
Liabilities |
||||||||||||||||
Derivative liability |
$ | — | $ | — | $ | $ | ||||||||||
Warrant liability |
— | — | ||||||||||||||
Acquisition related liabilities |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total liabilities measured at fair value |
$ |
— |
$ |
— |
$ |
$ |
||||||||||
|
|
|
|
|
|
|
|
* |
Includes cash invested by the Company in certain money market accounts with a financial institution . |
Warrant liability |
Acquisition related liabilities |
Derivative liability |
||||||||||
Balance as of January 1, 2021 |
$ | $ | $ | |||||||||
Additions, net of payments |
— | — | ||||||||||
Change in fair value |
( |
|||||||||||
Extinguishment of the warrant and derivative liabilities |
( |
— | ( |
|||||||||
|
|
|
|
|
|
|||||||
Balance as of June 30, 2021 |
$ |
$ |
$ |
|||||||||
|
|
|
|
|
|
13. |
Related Party Transactions |
1. | Caivis Acquisition Corp. II, Caivis Acquisition Corp. IV, Caivis Investment Company V, LLC and Caivis Investment Company VI, LLC, (collectively, the “Caivis Group”) are entities owned by many of the same stockholders of the Company. In addition, the Chief Executive Officer of the Company owns a controlling interest in Caivis Group. On April 9, 2012, the Company amended its agreement with Caivis Group, whereby Caivis Group will provide support for general administrative and corporate development activities, including sourcing and evaluating potential partners and acquisition targets to the Company for $ |
2. | Casting Made Simple Corp. (“CMS”) is an entity owned by Caivis group and the Chief Executive Officer’s spouse. On December 28, 2018, share and during thethree and condensed unaudited consolidated statements of operations and comprehensive loss, representing the profit shared by the Company with CMS. As of June 30, 2021 and December 31, 2020, the Company had outstanding payables of $ included in the “accounts payable and accrued expenses” in the condensed unaudited consolidated balances sheets. |
14. |
Income Taxes |
15. |
Net Loss Per Share Attributable to Common Stockholders |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Net loss |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
||||||||
Cumulative redeemable convertible preferred stock dividends |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Numerator for Basic and Dilutive loss per share - Loss available to common stockholders |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
||||||||
|
|
|
|
|
|
|
|
|||||||||
Denominator: |
||||||||||||||||
Class A common stock |
— |
— |
||||||||||||||
Class B common stock |
— |
— |
||||||||||||||
Series A common stock |
||||||||||||||||
Series B common stock |
||||||||||||||||
Warrants (convertible to Series A common stock) |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Denominator for Basic and Dilutive Loss per share-Weighted-average |
||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Basic Loss per Share |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
||||||||
Dilutive Loss per Share |
$ |
( |
$ |
( |
$ |
( |
$ |
( |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Options (convertible to Series A c ommon s tock) |
||||||||||||||||
Warrants (convertible to Series A c ommon s tock) |
— | — | ||||||||||||||
Redeemable convertible preferred stock |
— | — | ||||||||||||||
Restricted stock and restricted stock units |
|
|
|
|
|
|
|
|
|
|
|
|
16. |
Subsequent Event |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Net loss |
$ |
(94,922) |
$ |
(15,054) |
$ |
(119,296) |
$ |
(31,434) |
||||||||
Net income (loss) margin |
(88.9)% |
(19.5)% |
(57.3)% |
(19.9)% |
||||||||||||
Add back: |
||||||||||||||||
Interest expense |
1,402 |
4,382 |
4,363 |
8,725 |
||||||||||||
Depreciation and amortization |
11,235 |
10,497 |
21,352 |
20,038 |
||||||||||||
Stock-based compensation |
119,270 |
27 |
119,270 |
53 |
||||||||||||
IPO related expenses |
2,705 |
— |
2,705 |
— |
||||||||||||
Gain on extinguishment of debt |
(10,000) |
— |
(10,000) |
— |
||||||||||||
Income tax provision / (benefit) |
584 |
396 |
(993) |
1,018 |
||||||||||||
Acquisition related expenses |
329 |
1,156 |
1,036 |
3,091 |
||||||||||||
Restructuring expenses |
150 |
498 |
437 |
1,691 |
||||||||||||
Change in fair value of warrants and derivative liabilities |
(18,600) |
4,100 |
5,000 |
6,700 |
||||||||||||
Other incomes / (expense) |
(749) |
(471) |
535 |
(358) |
||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA |
$ |
11,404 |
$ |
5,531 |
$ |
24,409 |
$ |
9,524 |
||||||||
|
|
|
|
|
|
|
|
|||||||||
Adjusted EBITDA margin |
10.7% |
7.2% |
11.7% |
6.0% |
Three months ended June 30, |
Six months ended June 30, |
|||||||||||||||
2021 |
2020 |
2021 |
2020 |
|||||||||||||
Condensed Consolidated Statements of Operations Data: |
||||||||||||||||
Revenues |
$ |
106,896 |
$ | 77,130 | $ |
208,359 |
$ | 158,390 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
Cost of revenues (excluding depreciation and amortization) |
42,212 |
29,296 | 81,184 |
59,825 | ||||||||||||
General and administrative expenses |
65,907 |
17,327 | 85,039 |
36,120 | ||||||||||||
Selling and marketing expenses |
82,845 |
16,842 | 103,415 |
36,090 | ||||||||||||
Research and development expenses |
26,503 |
8,161 | 36,287 |
16,884 | ||||||||||||
Depreciation and amortization |
11,235 |
10,497 | 21,352 |
20,038 | ||||||||||||
Acquisition related expenses |
329 |
1,156 | 1,036 |
3,091 | ||||||||||||
Restructuring expenses |
150 |
498 | 437 |
1,691 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
$ |
229,181 |
$ | 83,777 | $ |
328,750 |
$ | 173,739 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
(122,285) |
(6,647) | (120,391) |
(15,349) | ||||||||||||
Interest expense |
1,402 |
4,382 | 4,363 |
8,725 | ||||||||||||
Other (incomes) / expenses, net |
(749) |
(471) | 535 |
(358) | ||||||||||||
Gain on extinguishment of debt |
(10,000) |
— | (10,000) |
— | ||||||||||||
Change in fair value of warrants and derivative liabilities |
(18,600) |
4,100 | 5,000 |
6,700 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other expenses / (other incomes) |
$ |
(27,947) |
$ | 8,011 | $ |
(102) |
$ | 15,067 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss before income taxes |
(94,338) |
(14,658) | (120,289) |
(30,416) | ||||||||||||
Income tax provision / (benefit) |
584 |
396 | (993) |
1,018 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss available to common stockholders |
$ |
(94,922) |
$ | (15,054) | $ |
(119,296) |
$ | (31,434) | ||||||||
|
|
|
|
|
|
|
|
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Revenues |
$ |
106,896 |
$ |
77,130 |
$ |
29,766 |
38.6% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Cost of revenues (excluding depreciation and amortization) |
$ |
42,212 |
$ |
29,296 |
$ |
12,916 |
44.1% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
General and administrative expenses |
$ |
65,907 |
$ |
17,327 |
$ |
48,580 |
280.4% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Selling and marketing expenses |
$ |
82,845 |
$ |
16,842 |
$ |
66,003 |
391.9% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Research and development expenses |
$ |
26,503 |
$ |
8,161 |
$ |
18,342 |
224.8% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Depreciation and amortization |
$ |
11,235 |
$ |
10,497 |
$ |
738 |
7.0% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Acquisition related expenses |
$ |
329 |
$ |
1,156 |
$ |
(827) |
(71.5)% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Restructuring expenses |
$ |
150 |
$ |
498 |
$ |
(348) |
(69.9)% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Interest expense |
$ |
1,402 |
$ |
4,382 |
$ |
(2,980) |
(68.0)% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Other incomes |
$ |
(749) |
$ |
(471) |
$ |
(278) |
58.7% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2021 |
Amount |
% |
|||||||||||||
Change in fair value of warrants and derivative liabilities |
$ |
(18,600) |
$ |
4,100 |
$ |
(22,700) |
(553.6)% |
Three months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Income tax provision |
$ |
584 |
$ |
396 |
$ |
188 |
47.5% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Revenues |
$ |
208,359 |
$ |
158,390 |
$ |
49,969 |
31.5% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Cost of revenues (excluding depreciation and amortization) |
$ |
81,184 |
$ |
59,825 |
$ |
21,359 |
35.7% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
General and administrative expenses |
$ |
85,039 |
$ |
36,120 |
$ |
48,919 |
135.4% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Selling and marketing expenses |
$ |
103,415 |
$ |
36,090 |
$ |
67,325 |
186.5% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Research and development expenses |
$ |
36,287 |
$ |
16,884 |
$ |
19,403 |
114.9% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Depreciation and amortization |
$ |
21,352 |
$ |
20,038 |
$ |
1,314 |
6.6% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Acquisition related expenses |
$ |
1,036 |
$ |
3,091 |
$ |
(2,055) |
(66.5)% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Restructuring expenses |
$ |
437 |
$ |
1,691 |
$ |
(1,254) |
(74.2)% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Interest expense |
$ |
4,363 |
8,725 |
$ |
(4,362) |
(50.0)% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Other expenses / (incomes) |
$ |
535 |
$ |
(358) |
$ |
893 |
249.4% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Change in fair value of warrants and derivative liabilities |
$ |
5,000 |
$ |
6,700 |
(1,700) |
(25.4)% |
Six months ended June 30, |
Change |
|||||||||||||||
2021 |
2020 |
Amount |
% |
|||||||||||||
Income tax (benefit) / provision |
$ |
(993) |
$ |
1,018 |
$ |
(2,011) |
(197.5)% |
Six months ended June 30, |
||||||||
2021 |
2020 |
|||||||
Net cash provided by / (used for): |
||||||||
Cash provided by operating activities |
$ | 13,203 | $ | 9,671 | ||||
Cash used in investing activities |
(16,069) | (12,762) | ||||||
Cash provided by financing activities |
65,776 | 6,004 | ||||||
Effect of exchange rate changes on cash and cash equivalents |
(67) | (49) | ||||||
|
|
|
|
|||||
Net increase in cash, cash equivalents and restricted cash |
$ |
62,843 |
$ |
2,864 |
||||
|
|
|
|
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 |
Item 6. |
Exhibits |
# | Indicates a management contract or compensatory plan. |
* | The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly Report on Form 10-Q are deemed furnished and not filed with the SEC and are not to be incorporated by reference into any filing of the Company under the Securities Act or the Exchange Act whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. |
Zeta Global Holdings Corp. | ||||||
Date: August 11, 2021 | By: | /s/ David A. Steinberg | ||||
David A. Steinberg | ||||||
President, Chief Executive Officer and Chairperson (principal executive officer) | ||||||
Date: August 11, 2021 | By: | /s/ Christopher Greiner | ||||
Christopher Greiner | ||||||
Chief Financial Officer (Principal financial officer) |