UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended September 30, ~~2020~~2021


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

For the transition period from to

Commission File Number: 001-36331


Quotient Technology Inc.
(Exact Name of Registrant as Specified in Its Charter)


Delaware						77-0485123
(State or Other Jurisdiction of Incorporation or Organization)						(I.R.S. Employer Identification No.)
~~400 Logue~~1260 East Stringham Avenue, ~~Mountain View, CA~~6th Floor, Salt Lake City, UT						~~94043~~84106
(Address of Principal Executive Offices)						(Zip Code)


	(650)	605-4600
(Registrant’s Telephone Number, Including Area Code)

	400 Logue Avenue
	Mountain View,	CA 94043
(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Common stock, $0.00001 par value

QUOT

New York Stock Exchange

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

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

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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

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

As of November 2, ~~2020,~~2021, the registrant had ~~91,005,558~~94,421,658 shares of common stock outstanding.

QUOTIENT TECHNOLOGY INC.

INDEX

REPORT ON

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, ~~2020~~2021


PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited):						4
Condensed Consolidated Balance Sheets as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020						4
Condensed Consolidated Statements of Operations for the t ~~hree~~Three and n ~~ine~~Nine months ended September 30, ~~2020~~2021 and ~~2019~~2020						5
Condensed Consolidated Statements of Comprehensive Loss for the t ~~hree~~Three and n ~~ine~~Nine months ended September 30, ~~2020~~2021 and ~~2019~~2020						6
Condensed Consolidated Statements of Stockholders’ Equity for the t ~~hree~~Three and n ~~ine~~Nine months ended September 30, ~~2020~~2021 and ~~2019~~2020						7
Condensed Consolidated Statements of Cash Flows for the n ~~ine~~Nine months ended September 30, ~~2020~~2021 and ~~2019~~2020						8
Notes to Condensed Consolidated Financial Statements						9
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations						2931
Item 3 Quantitative and Qualitative Disclosures About Market Risk						4245
Item 4 Controls and Procedures						4245
PART II OTHER INFORMATION
Item 1—Legal Proceedings						4447
Item 1A—Risk Factors						4449
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds						7888
Item 3—Defaults Upon Senior Securities						7888
Item 4—Mine Safety Disclosures						7888
Item 5—Other Information						7888
Item 6—Exhibits						7989
SIGNATURES						8090

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
		(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	209,854	$	224,764	Cash and cash equivalents	$	244,945	$	222,752
Accounts receivable, net of allowance for credit losses of $2,264 and $2,021 at September 30, 2020 and December 31, 2019, respectively		122,148		125,304
Accounts receivable, net of allowance for credit losses of $2,041 and $2,070 at September 30, 2021 and December 31, 2020, respectively						Accounts receivable, net of allowance for credit losses of $2,041 and $2,070 at September 30, 2021 and December 31, 2020, respectively	156,404		137,649
Prepaid expenses and other current assets	Prepaid expenses and other current assets	21,266		22,026		Prepaid expenses and other current assets	14,437		18,547
Total current assets	Total current assets	353,268		372,094		Total current assets	415,786		378,948
Property and equipment, net	Property and equipment, net	15,628		13,704		Property and equipment, net	21,819		17,268
Operating lease right-of-use assets	Operating lease right-of-use assets	17,181		7,211		Operating lease right-of-use assets	20,755		16,222
Intangible assets, net	Intangible assets, net	52,677		69,752		Intangible assets, net	15,978		44,898
Goodwill	Goodwill	128,427		128,427		Goodwill	128,427		128,427
Other assets	Other assets	1,246		750		Other assets	1,774		1,029
Total assets	Total assets	$	568,427	$	591,938	Total assets	$	604,539	$	586,792
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	10,765	$	19,116	Accounts payable	$	14,997	$	15,959
Accrued compensation and benefits	Accrued compensation and benefits	10,474		15,232		Accrued compensation and benefits	19,604		14,368
Other current liabilities	Other current liabilities	63,634		50,032		Other current liabilities	80,978		70,620
Deferred revenues	Deferred revenues	11,353		10,903		Deferred revenues	21,154		12,027
Contingent consideration related to acquisitions	Contingent consideration related to acquisitions	0		27,000		Contingent consideration related to acquisitions	21,655		8,524
Total current liabilities	Total current liabilities	96,226		122,283		Total current liabilities	158,388		121,498
Operating lease liabilities						Operating lease liabilities	22,182		15,956
Other non-current liabilities	Other non-current liabilities	17,926		7,119		Other non-current liabilities	746		2,358
Contingent consideration related to acquisitions	Contingent consideration related to acquisitions	15,008		9,220		Contingent consideration related to acquisitions	—		20,930
Convertible senior notes, net	Convertible senior notes, net	174,360		166,157		Convertible senior notes, net	185,823		177,168
Deferred tax liabilities	Deferred tax liabilities	1,937		1,937		Deferred tax liabilities	1,853		1,853
Total liabilities	Total liabilities	305,457		306,716		Total liabilities	368,992		339,763
Commitments and contingencies (Note 14)	Commitments and contingencies (Note 14)					Commitments and contingencies (Note 14)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.00001 par value—10,000,000 shares authorized and 0 shares issued or outstanding at September 30, 2020 and December 31, 2019		0		0
Common stock, $0.00001 par value—250,000,000 shares authorized; 90,799,437 and 89,371,199 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively		1		1
Preferred stock, $0.00001 par value—10,000,000 shares authorized and no shares issued or outstanding at September 30, 2021 and December 31, 2020						Preferred stock, $0.00001 par value—10,000,000 shares authorized and no shares issued or outstanding at September 30, 2021 and December 31, 2020	—		—
Common stock, $0.00001 par value—250,000,000 shares authorized; 94,268,564 and 91,743,302 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively						Common stock, $0.00001 par value—250,000,000 shares authorized; 94,268,564 and 91,743,302 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	1		1
Additional paid-in capital	Additional paid-in capital	689,013		671,060		Additional paid-in capital	725,401		698,333
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,045)		(916)		Accumulated other comprehensive loss	(1,093)		(1,001)
Accumulated deficit	Accumulated deficit	(424,999)		(384,923)		Accumulated deficit	(488,762)		(450,304)
Total stockholders’ equity	Total stockholders’ equity	262,970		285,222		Total stockholders’ equity	235,547		247,029
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	568,427	$	591,938	Total liabilities and stockholders’ equity	$	604,539	$	586,792

See Accompanying Notes to Condensed Consolidated Financial Statements

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Revenues	Revenues	$	121,116	$	114,830	$	303,358	$	317,628	Revenues	$	135,884	$	121,116	$	375,080	$	303,358
Costs and expenses:
Cost of revenues	Cost of revenues	73,603		70,458		185,445		191,387		Cost of revenues	86,535		73,603		240,680		185,445
Gross Margin										Gross Margin	49,349		47,513		134,400		117,913
Operating expenses:										Operating expenses:
Sales and marketing	Sales and marketing	24,555		24,310		73,403		73,703		Sales and marketing	29,401		24,555		85,233		73,403
Research and development	Research and development	9,744		9,236		28,958		28,305		Research and development	11,074		9,744		34,541		28,958
General and administrative	General and administrative	12,099		17,643		39,457		44,101		General and administrative	12,244		12,099		40,086		39,457
Change in fair value of contingent consideration	Change in fair value of contingent consideration	1,562		999		5,788		1,052		Change in fair value of contingent consideration	245		1,562		772		5,788
Total costs and expenses		121,563		122,646		333,051		338,548
Total operating expenses										Total operating expenses	52,964		47,960		160,632		147,606
Loss from operations	Loss from operations	(447)		(7,816)		(29,693)		(20,920)		Loss from operations	(3,615)		(447)		(26,232)		(29,693)
Interest expense	Interest expense	(3,646)		(3,507)		(10,830)		(10,416)		Interest expense	(3,809)		(3,646)		(11,306)		(10,830)
Other income (expense), net	Other income (expense), net	(59)		1,175		708		4,214		Other income (expense), net	(96)		(59)		(130)		708
Loss before income taxes	Loss before income taxes	(4,152)		(10,148)		(39,815)		(27,122)		Loss before income taxes	(7,520)		(4,152)		(37,668)		(39,815)
Provision for income taxes	Provision for income taxes	66		215		261		375		Provision for income taxes	323		66		790		261
Net loss	Net loss	$	(4,218)	$	(10,363)	$	(40,076)	$	(27,497)	Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)
Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.05)	$	(0.12)	$	(0.44)	$	(0.30)	Net loss per share, basic and diluted	$	(0.08)	$	(0.05)	$	(0.41)	$	(0.44)
Weighted-average number of common shares used in computing net loss per share, basic and diluted	Weighted-average number of common shares used in computing net loss per share, basic and diluted	90,585		88,789		90,113		91,850		Weighted-average number of common shares used in computing net loss per share, basic and diluted	94,133		90,585		93,408		90,113

See Accompanying Notes to Condensed Consolidated Financial Statements

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net loss	Net loss	$	(4,218)	$	(10,363)	$	(40,076)	$	(27,497)	Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustments	Foreign currency translation adjustments	115		(87)		(129)		(42)		Foreign currency translation adjustments	12		115		(92)		(129)
Comprehensive loss	Comprehensive loss	$	(4,103)	$	(10,450)	$	(40,205)	$	(27,539)	Comprehensive loss	$	(7,831)	$	(4,103)	$	(38,550)	$	(40,205)

See Accompanying Notes to Condensed Consolidated Financial Statements

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(In thousands)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Total stockholders' equity, beginning balances	Total stockholders' equity, beginning balances	$	262,345	$	304,982	$	285,222	$	380,087	Total stockholders' equity, beginning balances	$	239,772	$	262,345	$	247,029	$	285,222

Common stock and additional paid-in capital:	Common stock and additional paid-in capital:									Common stock and additional paid-in capital:
Beginning balances	Beginning balances	$	684,286	$	665,666	$	671,061	$	703,023	Beginning balances	$	721,796	$	684,286	$	698,333	$	671,061
Stock-based compensation	Stock-based compensation	6,584		7,768		21,374		24,097		Stock-based compensation	4,783		6,584		17,338		21,374
Exercise of employee stock options	Exercise of employee stock options	45		50		529		1,686		Exercise of employee stock options	—		45		13,199		529
Issuance of common stock for services provided	Issuance of common stock for services provided	228		—		456		—		Issuance of common stock for services provided	—		228		223		456
Issuance of common stock, purchase plan	Issuance of common stock, purchase plan	—		—		1,050		1,427		Issuance of common stock, purchase plan	—		—		1,595		1,050
Payments for taxes related to net share settlement of equity awards	Payments for taxes related to net share settlement of equity awards	(2,129)		(1,720)		(5,456)		(8,181)		Payments for taxes related to net share settlement of equity awards	(1,177)		(2,129)		(5,286)		(5,456)
Retirement of treasury stock		—		(9,478)		—		(59,766)
Ending balance		$	689,014	$	662,286	$	689,014	$	662,286

Treasury stock:
Beginning balances		$	0	$	0	$	0	$	0
Repurchase of common stock		—		(14,593)		—		(85,539)
Retirement of treasury stock		—		14,593		—		85,539
Ending balance	Ending balance	$	0	$	0	$	0	$	0	Ending balance	$	725,402	$	689,014	$	725,402	$	689,014

Accumulated other comprehensive loss:	Accumulated other comprehensive loss:									Accumulated other comprehensive loss:
Beginning balances	Beginning balances	$	(1,160)	$	(799)	$	(916)	$	(844)	Beginning balances	$	(1,105)	$	(1,160)	$	(1,001)	$	(916)
Other comprehensive income (loss)	Other comprehensive income (loss)	115		(87)		(129)		(42)		Other comprehensive income (loss)	12		115		(92)		(129)
Ending balance	Ending balance	$	(1,045)	$	(886)	$	(1,045)	$	(886)	Ending balance	$	(1,093)	$	(1,045)	$	(1,093)	$	(1,045)

Accumulated deficit:	Accumulated deficit:									Accumulated deficit:
Beginning balances	Beginning balances	$	(420,781)	$	(359,885)	$	(384,923)	$	(322,093)	Beginning balances	$	(480,919)	$	(420,781)	$	(450,304)	$	(384,923)
Retirement of treasury stock		—		(5,115)		—		(25,773)
Net loss	Net loss	(4,218)		(10,363)		(40,076)		(27,497)		Net loss	(7,843)		(4,218)		(38,458)		(40,076)
Ending balance	Ending balance	$	(424,999)	$	(375,363)	$	(424,999)	$	(375,363)	Ending balance	$	(488,762)	$	(424,999)	$	(488,762)	$	(424,999)

Total stockholders' equity, ending balances	Total stockholders' equity, ending balances	$	262,970	$	286,037	$	262,970	$	286,037	Total stockholders' equity, ending balances	$	235,547	$	262,970	$	235,547	$	262,970

See Accompanying Notes to Condensed Consolidated Financial Statements

QUOTIENT TECHNOLOGY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net loss	Net loss	$	(40,076)	$	(27,497)	Net loss	$	(38,458)	$	(40,076)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Adjustments to reconcile net loss to net cash provided by operating activities:						Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	26,522		23,260		Depreciation and amortization	24,425		26,522
Stock-based compensation	Stock-based compensation	21,021		23,692		Stock-based compensation	17,074		21,021
Amortization of debt discount and issuance cost	Amortization of debt discount and issuance cost	8,203		7,776		Amortization of debt discount and issuance cost	8,655		8,203
Impairment of intangible assets						Impairment of intangible assets	9,086		—
Allowance for credit losses	Allowance for credit losses	542		583		Allowance for credit losses	115		542
Deferred income taxes	Deferred income taxes	261		375		Deferred income taxes	790		261
Change in fair value of contingent consideration	Change in fair value of contingent consideration	5,788		1,052		Change in fair value of contingent consideration	772		5,788
Impairment of capitalized software development costs		0		3,579
Other non-cash expenses	Other non-cash expenses	2,546		1,872		Other non-cash expenses	3,236		2,546
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Accounts receivable	Accounts receivable	2,615		(5,332)		Accounts receivable	(18,871)		2,615
Prepaid expenses and other current assets	Prepaid expenses and other current assets	158		(11,084)		Prepaid expenses and other current assets	3,264		158
Accounts payable and other current liabilities	Accounts payable and other current liabilities	4,893		9,053		Accounts payable and other current liabilities	7,952		4,893
Payments for contingent consideration and bonuses	Payments for contingent consideration and bonuses	(15,418)		0		Payments for contingent consideration and bonuses	(2,901)		(15,418)
Accrued compensation and benefits	Accrued compensation and benefits	(4,334)		(1,743)		Accrued compensation and benefits	5,445		(4,334)
Deferred revenues	Deferred revenues	450		4,405		Deferred revenues	9,127		450
Net cash provided by operating activities	Net cash provided by operating activities	13,171		29,991		Net cash provided by operating activities	29,711		13,171

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property and equipment	Purchases of property and equipment	(6,648)		(7,412)		Purchases of property and equipment	(10,773)		(6,648)
Purchase of intangible assets	Purchase of intangible assets	(3,000)		(14,811)		Purchase of intangible assets	—		(3,000)
Proceeds from maturities of short-term investment		0		20,738
Net cash used in investing activities	Net cash used in investing activities	(9,648)		(1,485)		Net cash used in investing activities	(10,773)		(9,648)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans	Proceeds from issuances of common stock under stock plans	1,579		3,113		Proceeds from issuances of common stock under stock plans	14,794		1,579
Payments for taxes related to net share settlement of equity awards	Payments for taxes related to net share settlement of equity awards	(5,456)		(8,181)		Payments for taxes related to net share settlement of equity awards	(5,286)		(5,456)
Repurchases and retirement of common stock under share repurchase program		0		(87,097)
Principal payments on promissory note and capital lease obligations	Principal payments on promissory note and capital lease obligations	(100)		(236)		Principal payments on promissory note and capital lease obligations	(169)		(100)
Payments for contingent consideration	Payments for contingent consideration	(14,582)		0		Payments for contingent consideration	(6,121)		(14,582)
Net cash used in financing activities		(18,559)		(92,401)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	3,218		(18,559)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	126		1		Effect of exchange rates on cash and cash equivalents	37		126
Net decrease in cash and cash equivalents		(14,910)		(63,894)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	22,193		(14,910)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	224,764		302,028		Cash and cash equivalents at beginning of period	222,752		224,764
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	209,854	$	238,134	Cash and cash equivalents at end of period	$	244,945	$	209,854

Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid for income taxes	Cash paid for income taxes	$	149	$	240	Cash paid for income taxes	$	202	$	149
Cash paid for interest	Cash paid for interest	$	1,753	$	1,764	Cash paid for interest	$	1,774	$	1,753

Supplemental disclosures of noncash investing and financing activities:	Supplemental disclosures of noncash investing and financing activities:					Supplemental disclosures of noncash investing and financing activities:
Fixed asset purchases not yet paid	Fixed asset purchases not yet paid	$	924	$	599	Fixed asset purchases not yet paid	$	1,057	$	924
Intangible asset acquisitions not yet paid	Intangible asset acquisitions not yet paid	$	2,250	$	0	Intangible asset acquisitions not yet paid	$	—	$	2,250

See Accompanying Notes to Condensed Consolidated Financial Statements

QUOTIENT TECHNOLOGY INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business

Quotient Technology Inc. (together with its subsidiaries, the “Company” or "Quotient"), ~~provides~~is an industry leading digital ~~marketing~~media and promotions technology company for advertisers, retailers and consumers. The Company's omnichannel platform ~~providing technology~~is powered by exclusive consumer spending data, location intelligence and ~~services that power integrated~~purchase intent data to reach millions of shoppers daily and deliver measurable, incremental sales. Additionally, the Company has a broad network of digital ~~promotions~~properties to drive measurable sales results and ~~media programs for~~customer loyalty. The Company's network includes the digital properties of retail partners and advertiser customers ~~such~~(also known as consumer packaged goods ~~(“CPG”s) brands and retailers. These programs are delivered across the Company’s network, including~~"(CPGs") manufacturers or brands), social media platforms, third-party properties, its ~~flagship~~ consumer brand Coupons.com properties and ~~retail partners.~~digital out-of-home ("DOOH") properties. This network provides the Company with proprietary and licensed data, including ~~online behaviors,~~retailers’ in-store point-of-sale ("POS") shopper data, purchase intent and ~~retailers’ in-store point-of-sale (“POS”) shopper data,~~online behavior, and location intelligence to ~~target shoppers with the most relevant digital coupons~~deliver more valuable outcomes for advertisers, retailers, and ~~ads. The Company also delivers digital promotions and media programs to third party publishing properties outside of its network.~~consumers. Customers and partners use ~~the Company~~Quotient to ~~influence shoppers~~leverage consumer data and insights via digital channels, and integrate marketing and merchandising programs ~~and leverage shopper data and insights~~ to drive measurable sales results.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

The Company’s condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated. The accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial position, results of operations, comprehensive loss, and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year ending December 31, ~~2020~~2021 or for any other period. Certain prior period amounts on the condensed consolidated balance sheets have been reclassified to conform to the current period’s presentation.

There have been no significant changes to the Company’s significant accounting policies described in the Annual Report on Form 10-K for the year ended December 31, 2020 that have had a material impact on its condensed consolidated financial statements and related notes.

Use of Estimates

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

are underway. The Company expects uncertainties around its key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. The Company’s estimates may change as new events occur and

additional information emerges, and such changes are recognized or disclosed in its condensed consolidated financial statements.

Recently Issued Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

In August 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity. The guidance simplifies an issuer's accounting for convertible debt instruments and its application of the derivatives scope exception for contracts in its own entity. The guidance eliminates two of the three models in ASC 470-20 that require separate accounting for embedded conversion features. The standard is effective for the Company beginning January 1, ~~2021,~~2022, and interim periods within that reporting ~~period.~~period, and early adoption is permitted. The Company is currently evaluating the impact of adopting this new accounting guidance on the condensed consolidated financial statements.

~~Accounting Pronouncements Adopted~~

~~Credit Losses~~

In June 2016, the FASB issued Accounting Standards Update No. 2016-13 (ASU 2016-13) "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with an expected loss model which requires the use of a broader range of information to estimate credit losses.

~~The Company adopted ASU 2016-13 on January 1, 2020 and the impact of the adoption was not material to the Company’s condensed consolidated financial statements and related disclosures.~~

Revenue Recognition

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

We determine revenue recognition through the following steps:

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

•Identification of the performance obligations in the contract

•Determination of the transaction price

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

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

The Company provides digital promotions, including digital coupons, and/or media programs to its customers which ~~consists~~consist of ~~CPG customers,~~advertisers, retail partners and advertising agencies whereby it uses its proprietary technology platforms to create, target, deliver and ~~deliver~~analyze these programs. The Company typically generates revenue from its customers through the use of these programs on a cost-per-click, cost-per-impression, or cost-per-acquisition basis. Programs usually include a limit on the number of clicks and/or impressions and are billed monthly.

The pricing of digital promotions programs typically includes both promotion setup fees and promotion campaign fees. Promotion setup fees are related to the creation of digital promotions and set up of the underlying campaign on Quotient’s proprietary platforms for tracking of the related clicks. The Company recognizes revenues related to promotion setup fees over time, proportionally, on a ~~per click~~per-click basis, using the number of authorized clicks, per insertion order, commencing on the date of the first click. A click refers to the consumers action of activating a digital promotion through the Company’s proprietary technology platform by either saving it to a retailer’s loyalty account for automatic digital redemption, or printing it for physical redemption at a retailer. Promotion campaign fees

are usually determined on a ~~per click~~per-click basis. The Company typically recognizes revenues for digital promotion campaign fees as clicks occur.

The Company’s media programs enable ~~CPGs~~advertisers and retailers to distribute digital media to promote their brands and products on its retailers’ websites and mobile ~~apps,~~applications, and through a network of affiliate publishers and non-publisher third parties that display its media offerings on their websites or mobile ~~apps.~~applications. Pricing for media campaigns is usually determined on a cost-per-impression, cost-per-click or cost-per-acquisition basis. The Company recognizes revenue each time a digital media ad is displayed or each time a user clicks on the media ad displayed on the Company’s websites, mobile ~~apps~~applications or on third-party websites.

Digital promotion programs also include the Company’s Specialty Retail business, in which specialty stores including clothing, electronics, home improvement and many others offer coupon codes that we distribute. Each time a consumer makes a purchase using a coupon code delivered through our platform, we earn a ~~fee is typically paid to the Company.~~distribution fee. The Company usually generates revenues when a consumer makes a purchase using a coupon code from its platform and completion of the order is reported to the Company. In the same period that the Company recognizes revenues for the delivery of coupon codes, it also estimates and records a reserve, based upon historical experience, to provide for end-user cancellations or product returns which may not be reported until a subsequent date.

Gross Versus Net Revenue Reporting

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

In other cases, the Company reports certain digital media advertising revenues on a net basis, that is, the costs for digital advertising inventory and third-party data paid to suppliers are deducted from gross revenues to arrive at net revenues. The Company’s performance obligation in these arrangements is to provide the use of its platforms that enables customers to bid on digital advertising inventory, which is determined based on real-time bidding, use of data and other add-on features in designing and executing their campaigns. The Company charges its customers a platform fee based on a percentage of the digital advertising inventory and data costs purchased through the use of its platforms. The platform fee is not contingent on the results of a digital media advertising campaign. The Company has determined that it’s an agent in these arrangements because it does not have control of the digital advertising inventory before it is transferred to the customer and does not set prices agreed upon within the auction marketplace.

Arrangements with Multiple Performance Obligations

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

Accounts Receivables, Net of Allowance for Credit Losses

Trade and other receivables are included in accounts receivables and primarily comprised of trade receivables that are recorded at invoiced amounts, net of an allowance for credit losses and do not bear interest. Other receivables ~~included~~include unbilled receivables related to digital promotions and media advertising contracts with customers. The Company generally does not require collateral and performs ongoing credit evaluations of its customers and maintains allowances for potential credit losses. The Company maintains an allowance for credit losses based upon the expected collectability of its accounts receivable. The Company assesses collectability by reviewing accounts receivable on a collective basis where similar characteristics exist and on an individual basis

when we identify specific customers with known disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company reviewed credit profiles of its customers, contractual terms and conditions, current economic trends, reasonable and supportable forecasts of future economic conditions, and historical payment experience.

For the three and nine months ended September 30, ~~2020,~~2021, the Company’s assessment considered business and market disruptions caused by COVID-19 and estimates of expected emerging credit and collectability trends. The continued volatility in market conditions and evolving shifts in credit trends are difficult to predict, causing variability and volatility that may have a material impact on our allowance for credit losses in future periods.

Deferred Revenues

Deferred revenues ~~consist of~~primarily relate to cash received or billings to customers associated with promotion setup fees, promotion campaign fees and digital media fees that are expected to be recognized upon click, or delivery of media impressions, which generally occur within the next twelve months. The Company records deferred revenues, including amounts which are refundable, when cash payments are received or become due in advance of the Company satisfying its performance obligations. The increase in the deferred revenue balance for the nine months ended September 30, ~~2020~~2021 is primarily driven by cash payments received or due in advance of satisfying the Company’s performance obligations of ~~$20.5~~$33.2 million, partially offset by ~~$20.1~~$24.0 million of recognized revenue.

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

Disaggregated Revenue

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Promotion	Promotion	$	62,376	$	62,034	$	168,714	$	183,152	Promotion	$	65,538	$	62,376	$	194,729	$	168,714
Media	Media	58,740		52,796		134,644		134,476		Media	70,346		58,740		180,351		134,644
Total Revenue	Total Revenue	$	121,116	$	114,830	$	303,358	$	317,628	Total Revenue	$	135,884	$	121,116	$	375,080	$	303,358

Practical Expedients and Exemptions

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

Sales Commissions

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

3. Fair Value Measurements

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

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

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

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

Assets and Liabilities Measured at Fair Value on a Recurring Basis

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


		September 30, 2020									September 30, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	104,944	0		0		$	104,944	Money market funds	$	104,996	—		—		$	104,996
Total	Total	$	104,944	$	0	$	0	$	104,944	Total	$	104,996	$	—	$	—	$	104,996
Liabilities:	Liabilities:									Liabilities:
Contingent consideration related to acquisitions	Contingent consideration related to acquisitions	0		0		15,008		15,008		Contingent consideration related to acquisitions	—		—		21,655		21,655
Total	Total	$	0	$	0	$	15,008	$	15,008	Total	$	—	$	—	$	21,655	$	21,655


		December 31, 2019									December 31, 2020
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:
Cash equivalents:	Cash equivalents:									Cash equivalents:
Money market funds	Money market funds	$	124,303	0		0		$	124,303	Money market funds	$	104,964	—		—		$	104,964
U.S. Treasury Bills		15,120		0		0		15,120
Total	Total	$	139,423	$	0	$	0	$	139,423	Total	$	104,964	$	—	$	—	$	104,964
Liabilities:	Liabilities:									Liabilities:
Contingent consideration related to acquisitions	Contingent consideration related to acquisitions	0		0		36,220		36,220		Contingent consideration related to acquisitions	—		—		29,454		29,454
Total	Total	$	0	$	0	$	36,220	$	36,220	Total	$	—	$	—	$	29,454	$	29,454

The valuation technique used to measure the fair value of money market funds ~~and U.S. Treasury Bills~~ includes using quoted prices in active markets. The money market funds have a fixed net asset value (NAV) of $1.0.

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

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


		Three Months Ended September 30, 2020				Nine Months Ended September 30, 2020							Three Months Ended September 30, 2021				Nine Months Ended September 30, 2021
		Ubimo		Elevaate		Ubimo		Elevaate		Ahalogy			Ubimo		Elevaate		Ubimo		Elevaate
		Level 3		Level 3		Level 3		Level 3		Level 3			Level 3		Level 3		Level 3		Level 3
Balance at the beginning of period	Balance at the beginning of period	$	10,239	$	3,207	$	5,686	$	3,534	$	27,000	Balance at the beginning of period	$	21,410	$	—	$	20,930	$	8,524
Change in fair value during the period	Change in fair value during the period	4,769		(3,207)		9,322		(3,534)		0		Change in fair value during the period	245		—		725		47
Payments made during the period	Payments made during the period	0		0		0		0		(27,000)		Payments made during the period	—		—		—		(8,571)
Total	Total	$	15,008	$	0	$	15,008	$	0	$	0	Total	$	21,655	$	—	$	21,655	$	—


		Three Months Ended September 30, 2019				Nine Months Ended September 30, 2019					Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
		Elevaate		Ahalogy		Elevaate		Ahalogy			Ubimo		Elevaate		Ahalogy		Ubimo		Elevaate		Ahalogy
		Level 3		Level 3		Level 3		Level 3			Level 3		Level 3		Level 3		Level 3		Level 3		Level 3
Balance at the beginning of period	Balance at the beginning of period	$	3,015	$	26,001	$	6,121	$	22,842	Balance at the beginning of period	$	10,239	$	3,207	$	—	$	5,686	$	3,534	$	27,000
Change in fair value during the period	Change in fair value during the period	0		999		(3,106)		4,158		Change in fair value during the period	4,769		(3,207)		—		9,322		(3,534)		—
Payments made during the period										Payments made during the period	$	—	$	—	$	—	—		—		(27,000)
Total	Total	$	3,015	$	27,000	$	3,015	$	27,000	Total	$	15,008	$	—	$	—	$	15,008	$	—	$	—

The Company recorded a charge of $0.2 million and $0.8 million during the three and nine months ended September 30, 2021, respectively, and $1.6 million and $5.8 million during the three and nine months ended September 30, 2020, ~~respectively, and $1.0 million and $1.1 million during the three and nine months ended September 30, 2019,~~ respectively, for the re-measurement of the fair values of contingent consideration related to acquisitions, as a component of operating expenses in the accompanying condensed consolidated statements of operations.

During the nine months ended September 30, 2021, the Company paid $8.6 million related to Elevaate's achievement of certain financial metrics subject to contingent consideration during the measurement period ending January 31, 2021. Out of the total consideration paid, $6.1 million was originally measured and recorded on the acquisition date and $2.5 million was recorded subsequent to the acquisition date through changes in fair value of contingent consideration within the condensed consolidated statements of operations. In May 2021, the Company received a letter from certain former shareholders of Elevaate claiming that the Company owes additional contingent consideration. The Company believes that the claim is without merit.

During the nine months ended September 30, 2020, the Company paid $27.0 million related to Ahalogy’s achievement of financial metrics subject to contingent consideration during the measurement period ending December 31, 2019, and as a result, 0no liability ~~exists~~existed as of September 30, 2020. Out of the total consideration paid, $14.6 million was originally measured and recorded on the acquisition date and $12.4 million was recorded subsequent to the acquisition date through changes in fair value of contingent consideration within the condensed consolidated statements of operations.

Fair Value Measurements of Other Financial Instruments

As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the fair value of the Company’s 1.75% convertible senior notes due 2022 was ~~$190.4~~$184.1 million and ~~$195.4~~$196.5 million, respectively. The fair value was determined based on a quoted price of the convertible senior notes in an over-the-counter market on the last trading day of the reporting period. Accordingly, these convertible senior notes are classified within Level 2 in the fair value hierarchy. Refer to Note 8 for additional information related to the Company’s convertible debt.

4. Allowance for Credit Losses

The summary of activity in the allowance for credit losses is as follows (in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Balance at the beginning of period	Balance at the beginning of period	$	2,079	$	1,381	$	2,021	$	1,200	Balance at the beginning of period	$	1,962	$	2,079	$	2,070	$	2,021
Provision for expected credit losses	Provision for expected credit losses	279		217		542		583		Provision for expected credit losses	649		279		1,234		542
Write-offs charged against the allowance		(94)		(221)		(299)		(406)
Write-offs charged against the allowance, net of recoveries										Write-offs charged against the allowance, net of recoveries	(570)		(94)		(1,263)		(299)
Balance at the end of period	Balance at the end of period	$	2,264	$	1,377	$	2,264	$	1,377	Balance at the end of period	$	2,041	$	2,264	$	2,041	$	2,264

5. Balance Sheet Components

Property and Equipment, Net

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


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
Software	Software	$	44,122	$	41,876	Software	$	51,296	$	47,357
Computer equipment	Computer equipment	23,365		25,773		Computer equipment	23,478		23,912
Leasehold improvements	Leasehold improvements	5,867		5,883		Leasehold improvements	8,055		6,197
Furniture and fixtures	Furniture and fixtures	2,476		2,449		Furniture and fixtures	2,612		2,533
Total	Total	75,830		75,981		Total	85,441		79,999
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(64,754)		(63,543)		Accumulated depreciation and amortization	(69,048)		(65,959)
Projects in process	Projects in process	4,552		1,266		Projects in process	5,426		3,228
Total property and equipment, net	Total property and equipment, net	$	15,628	$	13,704	Total property and equipment, net	$	21,819	$	17,268

Depreciation and amortization expense related to property and equipment was $2.1 million and $5.6 million for the three and nine months ended September 30, 2021, respectively, and $1.8 million and $5.2 million for the three and nine months ended September 30, 2020, ~~respectively, and $1.9 million and $5.6 million for the three and nine months ended September 30, 2019,~~ respectively.

The Company capitalized internal use software development and enhancement costs, which is included in projects in process within "property and equipment, net" on the condensed consolidated balance sheets, of $2.2 million and $6.6 million during the three and nine months ended September 30, 2021, respectively and $1.7 million and $5.3 million during the three and nine months ended September 30, 2020, ~~respectively, and $1.9 million and $4.9 million during the three and nine months ended September 30, 2019,~~ respectively. During the three and nine months ended September 30, ~~2020,~~2021, the Company had ~~$0.8~~$1.1 million and ~~$2.3~~$2.9 million, respectively, in amortization expense related to internal use software, which is included in property and equipment depreciation and amortization expense, and recorded as cost of revenues, as compared to ~~$0.7~~$0.8 million and ~~$1.9~~$2.3 million during the three and nine months ended September 30, ~~2019,~~2020, respectively. Once the software is placed into service, the asset is included in software within "property and equipment, net". The unamortized capitalized development costs were ~~$8.8~~$10.8 million and ~~$5.8~~$8.6 million as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

Accrued Compensation and Benefits

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


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
Bonus						Bonus	$	7,371	$	3,150
Payroll and related expenses						Payroll and related expenses	6,073		3,116
Commissions	Commissions	$	3,908	$	5,996	Commissions	4,976		7,247
Payroll and related expenses		3,622		2,533
Bonus		2,092		5,997
Vacation	Vacation	852		706		Vacation	1,184		855
Total accrued compensation and benefits	Total accrued compensation and benefits	$	10,474	$	15,232	Total accrued compensation and benefits	$	19,604	$	14,368

Other Current Liabilities

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


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
Distribution fees	Distribution fees	$	30,692	$	20,360	Distribution fees	$	46,511	$	36,245
Traffic acquisition cost	Traffic acquisition cost	7,602		5,278		Traffic acquisition cost	10,257		9,756
Operating lease liabilities						Operating lease liabilities	3,959		3,650
Prefunded liability	Prefunded liability	5,425		5,429		Prefunded liability	3,185		3,067
Operating lease liabilities		3,727		3,168
Liability related to purchased intangible asset		2,250		1,000
Rebate liability						Rebate liability	3,065		2,696
Interest payable	Interest payable	1,157		282		Interest payable	1,157		282
Marketing expenses	Marketing expenses	946		2,164		Marketing expenses	643		2,251
Other	Other	11,835		12,351		Other	12,201		12,673
Total other current liabilities	Total other current liabilities	$	63,634	$	50,032	Total other current liabilities	$	80,978	$	70,620

6. Acquisitions

Acquisition of Ubimo

On November 19, 2019, the Company acquired all outstanding shares of Ubimo, a leading data and media activation company.

The total ~~preliminary~~ acquisition consideration of $20.7 million consisted of $15.0 million in cash and contingent consideration of up to $24.8 million payable in cash with an estimated fair value of $5.7 million as of the acquisition date. The contingent consideration payout is based on Ubimo achieving certain financial metrics between the date of the acquisition through December 31, 2021. The acquisition date fair value was determined using an option pricing model. The fair value of the contingent consideration will be re-measured through earnings every reporting period. Refer to Note 3 for the fair value of contingent consideration at September 30, ~~2020.~~2021.

Acquisition of Elevaate

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

The total ~~preliminary~~ acquisition consideration of $13.3 million consisted of $7.2 million in cash and contingent consideration of up to $18.5 million payable in cash with an estimated fair value of $6.1 million as of the acquisition date. The contingent consideration payout iswas based on Elevaate achieving certain financial metrics between February 1, 2019 through January 31, 2021. The acquisition date fair value of the contingent consideration was determined by using an option pricing model. The fair value of the contingent consideration ~~will be~~was re-measured every reporting period. As of January 31, 2021, the date that the contingent consideration period ended, Elevaate achieved certain financial metrics. The Company paid out $9.0 million during the nine months ended September 30, 2021, of which $8.6 million related to contingent consideration and $0.4 million related to certain bonuses. Of the total $9.0 million that was paid, $6.1 million was classified within financing activity and the remaining $2.9 million

was classified within operating activity on the Company's condensed consolidated statements of cash flows. Refer to Note 3 for the fair value of contingent consideration at September 30, ~~2020.~~

2021.

Acquisition of SavingStar, Inc.

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

The total ~~preliminary~~ acquisition consideration at closing consisted of $7.5 million in cash. In addition, SavingStar ~~may receive~~could have earned potential contingent consideration of up to $10.6 million payable in all cash, subject to achieving certain financial metrics between closing through February 29, 2020. At the date of acquisition, the contingent consideration’s fair value was determined to be 0zero using an option pricing model. As of February 29, 2020, the date that the contingent consideration period ended, SavingStar did not achieve certain financial metrics for payout and the fair value was concluded to be 0.zero. Accordingly, the Company determined that no payout was required when the contingent consideration period ended.

Acquisition of Ahalogy

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

The total ~~preliminary~~ acquisition consideration of $36.4 million consisted of $21.8 million in cash and contingent consideration of up to $30.0 million payable in all cash with an estimated fair value of $14.6 million as of the acquisition date. The contingent consideration payout iswas based on Ahalogy achieving certain financial metrics between closing through December 31, 2019. The acquisition date fair value of the contingent consideration was determined by using an option pricing model. The fair value of the contingent consideration iswas re-measured every reporting period. As of December 31, 2019, the date that the contingent consideration period ended, Ahalogy earned the full payout of the contingent consideration by achieving certain financial metrics. The Company paid out $30.0 million during the ~~nine months~~year ended ~~September 30,~~December 31, 2020, of which $27.0 million related to contingent consideration and $3.0 million related to certain bonuses; and as a result, 0no liability ~~exists~~existed as of ~~September 30,~~December 31, 2020. Of the total $30.0 million that was paid, $14.6 million iswas classified within financing activity and the remaining $15.4 million iswas classified within operating activity on the Company’s ~~condensed~~ consolidated statements of cash flows. ~~Refer to Note 3 for the fair value of contingent consideration at September 30, 2020.~~

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

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

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


	Purchase Consideration		Net Tangible Assets Acquired/ (Liabilities Assumed)		Identifiable Intangible Assets		Goodwill		Goodwill Deductible for Taxes	(1) Acquisition Related Expenses
Ubimo	$	20,740	$	384	$	10,750	$	9,606	Not Deductible	$	579
Elevaate	13,346		(60)		3,781		9,625		Not Deductible	549
SavingStar	7,485		(1,126)		2,577		6,034		Not Deductible	556
Ahalogy	36,432		2,196		11,580		22,656		Not Deductible	684
	$	78,003	$	1,394	$	28,688	$	47,921		$	2,368

(1)Expensed as general and administrative

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


	Ubimo		Estimated Useful Life (in Years)	Elevaate		Estimated Useful Life (in Years)	SavingStar		Estimated Useful Life (in Years)	Ahalogy		Estimated Useful Life (in Years)
Developed technologies	$	7,100	4.0	$	3,307	5.0	$	1,476	3.0	$	3,100	4.0
Customer relationships	3,400		2.0	379		5.0	1,040		3.0	6,210		6.0
Trade names	250		4.0	95		3.0	61		1.5	650		4.0
Vendor relationships	—		—	—		—	—		—	1,620		2.0
Total identifiable intangible assets	$	10,750		$	3,781		$	2,577		$	11,580

7. Goodwill and Intangible Assets

The Company tests goodwill for impairment annually during the fourth quarter of each year at the reporting unit level and on an interim basis if events or substantive changes in circumstances indicate that the carrying amount of a reporting unit may exceed its fair value (i.e., that a triggering event has occurred). Additionally, the Company evaluates finite-lived intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset groupings may not be recoverable.

In connection with renewal discussions between the parties, the Company received a letter in October 2021 from Albertsons Companies Inc. (“Albertsons”) notifying us of their intent to early terminate our agreement related to the delivery of promotions and media campaigns, effective December 31, 2021. The Company informed Albertsons that we disputed their right to terminate the agreement prior to March 31, 2022. The parties are in discussions regarding an orderly wind down of the partnership, including with respect to the specific termination date. However, there can be no assurance that we are able to negotiate a specific termination date and/or an orderly wind down of the Albertsons partnership on terms favorable or acceptable to us, or at all.Due to circumstances surrounding the forthcoming termination of its partnership with Albertsons, the Company determined a triggering event had occurred during the three months ended September 30, 2021 that required an interim impairment assessment for its goodwill reporting unit and intangible assets and other long-lived assets.

Goodwill:

In the third quarter of 2021, the Company, which operates in a single reporting unit, performed a qualitative interim assessment. In performing its qualitative impairment assessment, the Company considered (i) the results of its impairment testing from the most recent testing date, which was in the fourth quarter of 2020 (in particular, the

magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts, (iii) trends in market multiples and (iv) declines in market capitalization. The interim test resulted in the Company’s determination that the fair values of its reporting unit exceeded its carrying value and, therefore its goodwill was not impaired.

While the goodwill of the Company's reporting unit was not impaired as of the end of the third quarter of 2021, there can be no assurances that goodwill will not be impaired in future periods. The Company will continue to monitor the operating results, cash forecasts and challenges from declines in current business and market conditions, as well as impacts of COVID-19 for its reporting unit.

Intangible Assets:

As a result of performing its interim intangibles impairment assessment due to the triggering event noted above, during the three months ended September 30, 2021, the Company recorded an intangible asset impairment charge of $6.5 million, related to promotion service rights, media service rights, and data access rights.

During the three and nine months ended September 30, 2021, the Company recorded an impairment charge of $6.5 million and $9.1 million, respectively, within cost of revenues, on the condensed consolidated statements of operations, related to the impairment of certain intangible assets associated with the circumstances surrounding the forthcoming termination of the Company's partnership with Albertsons. Refer to "Purchase Obligations" in Note 14, "Commitments and Contingencies".

The Company will continue to monitor the operating results, cash flow forecasts and challenges from declines in current market conditions, as well as circumstances relating to the forthcoming termination of the Company's partnership with Albertsons and the impacts of COVID-19 for these intangible assets.

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


		September 30, 2020								September 30, 2021
		Gross		Accumulated Amortization		Net		Weighted Average Amortization Period (Years)		Gross		Accumulated Amortization		Net		Weighted Average Amortization Period (Years)
Media service rights	Media service rights	$	35,934	$	(23,135)	$	12,799	1.7	Media service rights	$	35,582	$	(31,169)	$	4,413	1.0
Developed technologies									Developed technologies	27,170		(21,434)		5,736		2.0
Promotion service rights	Promotion service rights	33,548		(15,072)		18,476		2.7	Promotion service rights	24,426		(23,043)		1,383		0.9
Developed technologies		27,170		(17,344)		9,826		2.7
Customer relationships	Customer relationships	22,690		(15,211)		7,479		2.8	Customer relationships	22,690		(18,673)		4,017		2.5
Data access rights	Data access rights	10,801		(7,825)		2,976		1.6	Data access rights	10,206		(10,206)		—		0.0
Domain names	Domain names	5,948		(5,590)		358		0.1	Domain names	5,948		(5,596)		352		0.0
Trade names	Trade names	2,823		(2,135)		688		0.6	Trade names	2,823		(2,785)		38		0.3
Vendor relationships		2,510		(2,510)		0		0.0
Patents	Patents	975		(900)		75		2.1	Patents	975		(936)		39		1.1
Registered users		420		(420)		0		0.0
		$	142,819	$	(90,142)	$	52,677	2.5		$	129,820	$	(113,842)	$	15,978	1.7

1819


		December 31, 2019								December 31, 2020
		Gross		Accumulated Amortization		Net		Weighted Average Amortization Period (Years)		Gross		Accumulated Amortization		Net		Weighted Average Amortization Period (Years)
Media service rights	Media service rights	$	34,684	$	(16,098)	$	18,586	2.2	Media service rights	$	35,934	$	(25,688)	$	10,246	1.4
Promotion service rights	Promotion service rights	30,548		(10,682)		19,866		3.6	Promotion service rights	33,566		(17,234)		16,332		1.9
Developed technologies	Developed technologies	27,170		(12,790)		14,380		3.2	Developed technologies	27,170		(18,511)		8,659		2.5
Customer relationships	Customer relationships	22,690		(12,267)		10,423		3.3	Customer relationships	22,690		(16,105)		6,585		2.7
Data access rights	Data access rights	10,801		(6,415)		4,386		2.3	Data access rights	10,801		(8,420)		2,381		1.0
Domain names	Domain names	5,948		(5,540)		408		0.8	Domain names	5,948		(5,596)		352		0.0
Trade names	Trade names	2,823		(1,560)		1,263		2.2	Trade names	2,823		(2,546)		277		0.6
Vendor relationships		2,510		(2,172)		338		0.4
Patents	Patents	975		(873)		102		2.8	Patents	975		(909)		66		1.8
Registered users		420		(420)		0		0.0
		$	138,569	$	(68,817)	$	69,752	3.0		$	139,907	$	(95,009)	$	44,898	2.0

As of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company has a domain name with a gross value of $0.4 million with an indefinite useful life that is not subject to amortization.

Intangible assets subject to amortization are amortized over their useful lives as shown in the table above. Amortization expense related to intangible assets subject to amortization was $5.2 million and $18.8 million during the three and nine months ended September 30, 2021, respectively, and $6.9 million and $21.3 million during the three and nine months ended September 30, 2020, ~~respectively, and $5.8 million and $17.7 million during the three and nine months ended September 30, 2019,~~ respectively. Estimated future amortization expense related to intangible assets as of September 30, ~~2020~~2021 is as follows (in thousands):


		Total			Total
2020, remaining three months		$	7,233
2021		22,959
2021, remaining three months				2021, remaining three months	$	2,975
2022	2022	14,739		2022	8,508
2023	2023	6,585		2023	3,583
2024	2024	809		2024	559
2025 and beyond		0
2025				2025	—
2026 and beyond				2026 and beyond	—
Total estimated amortization expense	Total estimated amortization expense	$	52,325	Total estimated amortization expense	$	15,625

As of September 30, 2020, the Company performed an analysis of the impact of recent events, including business and market disruption caused by COVID-19, on the fair values of its intangible assets, and determined that an impairment does not exist. However, there can be no assurances that intangible assets will not be impaired in future periods and the Company will continue to monitor the operating results, cash flow forecasts and challenges from declines in current market conditions, as well as impacts of COVID-19 for these intangible assets.

8. Debt Obligations

2017 Convertible Senior Notes

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

The total net proceeds from the debt offering, after deducting transaction costs, were approximately $193.8 million.

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

Holders of the notes may convert their notes at their option at any time prior to the close of business on the business day immediately preceding September 1, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on March 31, 2018 (and only during such calendar

quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the 5-business day period after any 5 consecutive trading day period (the “measurement period”) in which the trading price per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate for the notes on each such trading day; (3) if the Company calls any or all of the notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date; or (4) upon the occurrence of specified corporate events. On or after September 1, 2022, holders may convert all or any portion of their notes at any time prior to the close of business on the scheduled trading day immediately preceding the maturity date regardless of the foregoing conditions. Upon conversion, the Company will pay or deliver, as the case may be cash, shares of its common stock or a combination of cash and shares of its common stock, at its election. The Company intends to settle the principal amount of the notes with cash.

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

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

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

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

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


		September 30, 2020		December 31, 2019			September 30, 2021		December 31, 2020
Principal	Principal	$	200,000	$	200,000	Principal	$	200,000	$	200,000
Unamortized debt discount	Unamortized debt discount	(23,623)		(31,132)		Unamortized debt discount	(13,088)		(21,046)
Unamortized debt issuance costs	Unamortized debt issuance costs	(2,017)		(2,711)		Unamortized debt issuance costs	(1,089)		(1,786)
Net carrying amount of the liability component	Net carrying amount of the liability component	$	174,360	$	166,157	Net carrying amount of the liability component	$	185,823	$	177,168

The net carrying amount of the equity component of the notes recorded in additional paid-in capital on the condensed consolidated balance sheets was $49.1 million, net of debt issuance costs of $1.6 million as of September 30, ~~2020~~2021 and December 31, ~~2019.~~2020.

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

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Contractual interest expense $ 875 $ 875 $ 2,625 $ 2,625
Amortization of debt discount 2,540 2,396 7,510 7,086
Amortization of debt issuance costs 231 230 693 690
Total interest expense related to the Notes $ 3,646 $ 3,501 $ 10,828 $ 10,401


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Contractual interest expense	$	875	$	875	$	2,625	$	2,625
Amortization of debt discount	2,691		2,540		7,958		7,510
Amortization of debt issuance costs	233		231		697		693
Total interest expense related to the Notes	$	3,799	$	3,646	$	11,280	$	10,828

2122

9. Stock-based Compensation

2013 Equity Incentive Plan

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

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

Stock Options

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


		Three Months Ended September 30,		Nine Months Ended September 30,			Nine Months Ended September 30,
		2020	2019	2020	2019		2021	2020
Expected life (in years)	Expected life (in years)	—	6.08	6.02	6.02 - 6.08	Expected life (in years)	—	6.02
Risk-free interest rate	Risk-free interest rate	0	1.42%	0.96%	1.42% - 2.66%	Risk-free interest rate	—	0.96%
Volatility	Volatility	0	50%	50%	50%	Volatility	—	50%
Dividend yield	Dividend yield	0	0	0	0	Dividend yield	—	—

There were 0no option grants during the three and nine months ended September 30, 2021 and during the three months ended September 30, 2020. The weighted-average grant date fair value of options was $4.26 during the nine months ended September 30, 2020. ~~The weighted-average grant date fair value of options was $3.56 and $4.34 per share during the three and nine months ended September 30, 2019, respectively.~~

2223

Restricted Stock Units and Performance-Based Restricted Stock Units

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

On March 1, 2021, the Company granted a total of 938,831 performance-based restricted stock units (“PSU Awards”), under the 2013 Equity Incentive Plan, to certain executive leaders with a grant date fair value of $13.28. On August 1, 2021, the Company granted an additional 170,000 PSU Award to an executive in conjunction with a promotion with a grant date fair value of $10.00. The PSU Award represents the right to receive shares of the Company’s common stock upon meeting certain vesting conditions. All PSU Awards will vest in three years from the original grant date, subject to the achievement of certain operating performance goals, stock performance goals and continued employment. The fair value of the PSU Award was measured using a Monte Carlo simulation. As of September 30, 2021, the Company performed an assessment and determined that the likelihood of achievement of certain operating performance goals was not deemed probable. As such, during the three and nine months ended September 30, 2021, no compensation expense was recognized in the Company's consolidated financial statements related to the PSU Awards, and any previously recognized compensation expense was reversed.

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


			RSUs Outstanding			Options Outstanding								RSUs Outstanding			Options Outstanding
		Shares Available for Grant	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)			Shares Available for Grant	Number of Shares	Weighted Average Grant Date Fair Value		Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2019		6,036,180	5,022,675	$	10.66	8,600,441	$	11.40	5.16	$	8,811
Balance at December 31, 2020												Balance at December 31, 2020	8,467,143	4,708,854	$	9.09	8,160,221	$	11.21	5.03	$	7,100
Increase in shares authorized	Increase in shares authorized	3,574,847	—	—		—	—		—	—		Increase in shares authorized	3,669,732	—	—		—	—		—	—
Options granted	Options granted	(1,150,178)	—	—		1,150,178	$	8.95	—	—		Options granted	—	—	—		—	—		—	—
Options exercised	Options exercised	—	—	—		(74,307)	$	7.11	—	$	220	Options exercised	—	—	—		(1,245,453)	$	10.60	—	$	3,777
Options canceled or expired	Options canceled or expired	723,824	—	—		(723,824)	$	11.76	—	—		Options canceled or expired	—	—	—		—	—		—	—
RSUs granted	RSUs granted	(3,304,032)	3,304,032	$	8.33	—	—		—	—		RSUs granted	(3,935,802)	3,935,802	$	12.03	—	—		—	—
RSUs vested	RSUs vested	—	(1,767,543)	$	10.57	—	—		—	—		RSUs vested	—	(1,497,223)	$	9.71	—	—		—	—
RSUs canceled or expired	RSUs canceled or expired	789,849	(789,849)	$	10.91	—	—		—	—		RSUs canceled or expired	872,612	(872,612)	$	9.88	(5,600)	$	10.53	—	—
RSUs vested and withheld for taxes	RSUs vested and withheld for taxes	631,186	—	—		—	—		—	—		RSUs vested and withheld for taxes	472,103	—	—		—	—		—	—
Balance as of September 30, 2020		7,301,676	5,769,315	$	9.32	8,952,488	$	11.09	5.15	$	1,559
Vested and exercisable as of September 30, 2020						5,871,020	$	12.13	3.74	$	1,526
Balance as of September 30, 2021												Balance as of September 30, 2021	9,545,788	6,274,821	$	10.68	6,909,168	$	11.32	5.14	$	642
Vested and exercisable as of September 30, 2021												Vested and exercisable as of September 30, 2021					5,350,062	$	12.13	4.29	$	642

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

The aggregate total fair value of options vested was $1.3 million and $3.9 million during the three and nine months ended September 30, 2021 and $2.5 million and $5.4 million during the three and nine months ended September 30, 2020, ~~respectively and $1.7 million and $4.7 million during the three and nine months ended September 30, 2019,~~ respectively.

Employee Stock Purchase Plan

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

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


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2020	2019	2020	2019		2021	2020	2021	2020
Expected life (in years)	Expected life (in years)	0.50	0.50	0.50	0.50	Expected life (in years)	0.5	0.5	0.5	0.5
Risk-free interest rate	Risk-free interest rate	0.15%	2.43%	0.15% - 1.59%	2.43% - 2.50%	Risk-free interest rate	0.03%	0.15%	0.03% - 0.12%	0.15% - 1.59%
Volatility	Volatility	60%	35%	55% - 60%	35%	Volatility	75%	60%	60% - 75%	55% - 60%
Dividend yield	Dividend yield	0	0	0	0	Dividend yield	—	—	—	—

As of September 30, ~~2020,~~2021, a total of ~~1,667,810~~2,179,103 shares of common stock were issued under the ESPP since inception of the plan. As of September 30, ~~2020,~~2021, a total of ~~1,932,190~~1,820,897 shares are available for issuance under the ESPP.

Stock-based Compensation Expense

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Cost of revenues	Cost of revenues	$	442	$	508	$	1,264	$	1,672	Cost of revenues	$	525	$	442	$	1,349	$	1,264
Sales and marketing	Sales and marketing	1,187		1,433		3,912		4,996		Sales and marketing	1,411		1,187		3,847		3,912
Research and development	Research and development	1,003		1,140		2,723		3,579		Research and development	1,076		1,003		3,025		2,723
General and administrative	General and administrative	3,857		4,527		13,122		13,445		General and administrative	1,678		3,857		8,853		13,122
Total stock-based compensation expense	Total stock-based compensation expense	$	6,489	$	7,608	$	21,021	$	23,692	Total stock-based compensation expense	$	4,690	$	6,489	$	17,074	$	21,021

As of September 30, ~~2020,~~2021, there was ~~$61.2~~$56.6 million of unrecognized stock-based compensation expense, of which ~~$13.0~~$6.4 million is related to stock options and ESPP shares, and ~~$48.2~~$50.2 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP as of September 30, ~~2020~~2021 will be amortized over a weighted-average period of ~~2.69~~1.98 years. The total unrecognized stock-based compensation expense related to RSUs as of September 30, ~~2020~~2021 will be amortized over a weighted-average period of ~~2.83~~3.00 years.

During the three and nine months ended September 30, ~~2020,~~2021, the Company capitalized $0.1 million and $0.3 million, respectively, and ~~$0.2~~$0.1 million and ~~$0.4~~$0.3 million during the three and nine months ended September 30, ~~2019,~~2020, respectively, of stock-based compensation expense in projects in process as part of property and equipment, net on the accompanying condensed consolidated balance sheets.

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10. Common Stock Repurchase Programs

The Board of Directors ~~previously~~has approved programs for the Company to repurchase shares of its common stock. In ~~August 2019,~~February 2021, the Company’s Board of Directors authorized a one year share repurchase program (the ~~“August 2019~~“2021 Program”) for the Company to repurchase up to $50.0 million of its common stock from ~~August 2019~~February 2021 through ~~August 2020.~~February 2022. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2021 Program at any time without prior notice. During the three and nine months ended September 30, ~~2020,~~2021, the Company did 0tnot repurchase any shares of its common ~~stock, and~~stock. As of September 30, 2021, $50.0 million remains available for future share repurchases under the ~~program expired in August 2020.~~2021 Program.

11. Income Taxes

The Company recorded a provision for income taxes of $0.3 million and $0.8 million during the three and nine months ended September 30, 2021, respectively, and a provision for income taxes of $0.1 million and $0.3 million during the three and nine months ended September 30, 2020, ~~respectively, and a~~respectively. The provision for income taxes ~~of $0.2 million and $0.4 million during~~for the three and nine months ended September 30, ~~2019, respectively.~~2021 was primarily attributable to the Company’s foreign operations, amortization of tax deductible goodwill from previous acquisitions, and state taxes. The ~~benefit from and~~ provision for income taxes for the three and nine months ended September 30, 2020, respectively, was primarily attributable to the Company’s foreign operations, federal and state taxes, and amortization of tax deductible goodwill from prior year acquisitions. The provision for income taxes for the three and nine months ended September 30, 2019 was primarily attributable to the Company’s foreign operations and amortization of tax deductible goodwill from prior year acquisitions.

12. Net Loss Per Share

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net loss	Net loss	$	(4,218)	$	(10,363)	$	(40,076)	$	(27,497)	Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)

Weighted-average number of common shares used in computing net loss per share, basic and diluted	Weighted-average number of common shares used in computing net loss per share, basic and diluted	90,585		88,789		90,113		91,850		Weighted-average number of common shares used in computing net loss per share, basic and diluted	94,133		90,585		93,408		90,113

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.05)	$	(0.12)	$	(0.44)	$	(0.30)	Net loss per share, basic and diluted	$	(0.08)	$	(0.05)	$	(0.41)	$	(0.44)

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


		Three and Nine			Three and Nine
		Months Ended September 30,			Months Ended September 30,
		2020	2019		2021	2020
Stock options and ESPP	Stock options and ESPP	9,226	8,770	Stock options and ESPP	7,052	9,226
Restricted stock units	Restricted stock units	5,769	5,233	Restricted stock units	6,275	5,769
Shares related to convertible senior notes	Shares related to convertible senior notes	11,521	11,521	Shares related to convertible senior notes	11,521	11,521
		26,516	25,524		24,848	26,516

13. Leases

The Company has entered into operating leases primarily for office facilities. These leases have terms which typically range from 1 year to 10 years, and often include options to renew. These renewal terms can extend the lease term up to 6 years, and are included in the lease term when it is reasonably certain that the Company will exercise the option. These operating leases are included as operating lease right-of-use assets on the condensed consolidated balance sheets, and represent the Company’s right to use the underlying asset for the lease term. The present value of the Company’s obligation to make lease payments are included in other current liabilities and other non-current liabilities on the condensed consolidated balance sheets.

The Company has entered into short-term leases primarily for office facilities with an initial term of twelve months or less, and a professional sports team suite with a 20-year term, which it uses for sales and marketing purposes. The effective lease term for the professional sports team suite is based on the cumulative days available for use throughout the 20-year contractual term, which is less than twelve months and therefore is classified as a short-term lease. As of September 30, ~~2020,~~2021, the Company’s lease commitment of ~~$5.1~~$5.4 million, relating to the professional sports team suite, expires in 2034, and does not reflect short-term lease costs. These leases are not recorded on the Company's condensed consolidated balance sheet due to the accounting policy election as discussed under Note 2 to the condensed consolidated financial statements.

All operating lease expense is recognized on a straight-line basis over the lease term. During the three and nine months ended September 30, 2021, the Company recognized $1.7 million and $4.7 million, respectively, in total lease costs, which is comprised of $1.5 million and $4.1 million, respectively, in operating lease costs for right-of-use assets and $0.2 million and $0.6 million, respectively, in short-term lease costs related to short-term operating leases. During the three and nine months ended September 30, 2020, the Company recognized $1.5 million and $3.8 million, respectively, in total lease costs, which is comprised of $1.3 million and $3.0 million, respectively, in operating lease costs for right-of-use assets and $0.3 million and $0.8 million respectively, in short-term lease costs related to short-term operating leases. During the three and nine months ended September 30, 2019, the Company recognized $0.9 million and $2.7 million, respectively, in total lease costs, which is comprised of $0.8 million and $2.4 million, respectively in operating lease costs for right-of-use assets and $0.1 million and $0.3 million, respectively, in short-term lease costs related to short-term operating leases.

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

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Cash paid for operating lease liabilities	Cash paid for operating lease liabilities	$	975	$	1,500	$	2,885	$	4,317	Cash paid for operating lease liabilities	$	1,332	$	975	$	3,475	$	2,885
Right-of-use assets obtained in exchange for lease obligations	Right-of-use assets obtained in exchange for lease obligations	1,523		0		12,297		12,955		Right-of-use assets obtained in exchange for lease obligations	3,610		1,523		7,552		12,297

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


		September 30, 2020			December 31, 2019				September 30, 2021			December 31, 2020
Operating right-of-use assets reported as:	Operating right-of-use assets reported as:							Operating right-of-use assets reported as:
Operating lease right-of-use assets	Operating lease right-of-use assets	$	17,181		$	7,211		Operating lease right-of-use assets	$	20,755		$	16,222

Operating lease liabilities reported as:	Operating lease liabilities reported as:							Operating lease liabilities reported as:
Other current liabilities	Other current liabilities	$	3,727		$	3,168		Other current liabilities	$	3,959		$	3,650
Other non-current liabilities		16,572			6,692
Operating lease liabilities								Operating lease liabilities	22,182			15,956
Total operating lease liabilities	Total operating lease liabilities	$	20,299		$	9,860		Total operating lease liabilities	$	26,141		$	19,606

Weighted average remaining lease term (in years)	Weighted average remaining lease term (in years)	7.2			3.9			Weighted average remaining lease term (in years)	6.7			7.2
Weighted average discount rate	Weighted average discount rate	5.8		%	7.9		%	Weighted average discount rate	5.2		%	5.8		%

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


		Operating Leases			Operating Leases
2020, remaining three months		$	1,011
2021		4,726
2021, remaining three months				2021, remaining three months	$	1,108
2022	2022	3,561		2022	5,194
2023	2023	3,469		2023	5,480
2024	2024	2,857		2024	4,923
2025 and thereafter		9,988
2025				2025	3,761
2026 and thereafter				2026 and thereafter	11,272
Total lease payments	Total lease payments	$	25,612	Total lease payments	$	31,738

Less: Imputed Interest	Less: Imputed Interest	(5,313)		Less: Imputed Interest	(5,597)
Total	Total	$	20,299	Total	$	26,141

14. Commitments and Contingencies

Purchase Obligations

The Company has unconditional purchase commitments, primarily related to distribution fees, software license fees and marketing services, of ~~$36.4~~$9.5 million as of September 30, ~~2020.~~2021.

Some of ~~the Company’s~~our agreements with retailers include certain ~~prepaid or~~ guaranteed distribution ~~fees.~~fees which, in some cases, may apply to multiple annual periods. If the ~~Company does~~adoption and usage of our platforms do not meet ~~contractual~~projections or minimums, these ~~prepaid or~~ guaranteed distribution fees may not be recoverable and any shortfall may be payable by us at the end of the applicable period. ~~Implementation of~~We considered various factors in our assessment including our historical experience with the transaction volumes through the retailer and comparative retailers, ongoing communications with the retailer to increase its marketing efforts to promote the digital platform, as well as the projected revenues, and associated revenue share payments. For example, in 2020 the Company's efforts to implement, with Albertsons, one of the Company’s solutions ~~with a retailer experienced slower than expected adoption due to a variety~~resulted in multiple disputes being raised by each of ~~factors, including impacts related to~~ the ~~spread~~parties against the other, one of ~~COVID-19 and the retailer's failure to perform certain obligations under the agreement. In light of these factors,~~which disputes resulted in the Company ~~was~~ not being able to meet the contractual minimum ~~under such arrangement~~ at the end of the applicable period ~~which~~under the agreement. In order to resolve certain of the disputes regarding the parties' respective obligations, the Company recognized a loss of $8.8 million during the year ended December 31, 2020. This loss was ~~originally scheduled~~included in cost of revenues on our consolidated statements of operations.

During the second quarter of 2021, the Company notified Albertsons that due to ~~end~~the Albertsons' failure to meet certain obligations under the agreement, the Company is not obligated to meet the contractual minimums for the period that ended in October ~~2020.~~ 2021. In connection with renewal discussions between the parties, the Company received a letter in October 2021 from Albertsons notifying us of their intent to early terminate our agreement related to the delivery of promotions and media campaigns, effective December 31, 2021. The Company informed Albertsons that we disputed their right to terminate the agreement prior to March 31, 2022. The parties are in discussions regarding an orderly wind down of the partnership, including with respect to the specific termination date. However, there can be no assurance that we are able to negotiate a specific termination date and/or an orderly wind down of the Albertsons partnership on terms favorable or acceptable to us, or at all.If the contractual minimum ~~and~~ applicable to the period ~~remain~~that ended in October 2021 remains enforceable, ~~in light of these factors,~~ the Company may recognize a loss that, depending on a variety of factors, ~~could~~is estimated to be as high as the high single digit millions. Accordingly, the Company has accrued $2.0 million related to such guaranteed distribution fee arrangement in other current liabilities on the condensed consolidated balance sheets as of September 30, 2020.$8.5 million.

Indemnification

In the normal course of business, to facilitate transactions related to the Company’s operations, the Company indemnifies certain parties, including CPGs, advertising agencies, retailers and other third parties. The Company has agreed to hold certain parties harmless against losses arising from claims of intellectual property infringement or other liabilities relating to or arising from our products or services, or other contractual infringement. The term of these indemnity provisions generally survive termination or expiration of the applicable agreement. To date, the Company has not recorded any ~~liabilities~~reserves related to these agreements. We also have entered into indemnification agreements with our officers and directors, and our Amended and Restated Bylaws also contain provisions relating to circumstances under which the Company may indemnify certain other parties.

The Company’s founder and CEO (“CEO”) is subject to a claim from a third party, alleging that he owes certain amounts to the third party in connection with fundraising activities for Quotient that occurred between 1998 and 2006. The Company agreed to advance certain defense costs, subject to an undertaking to repay such amounts if, and to the extent that, it is ultimately determined that he is not entitled to indemnification. The matter is ongoing. If this matter is resolved in favor of the third party and the Company is required to indemnify the CEO for a loss, the Company may be required to make an indemnity payment. While the Company maintains directors’ and officers’ liability insurance, such insurance may not be applicable, adequate or cover all liabilities that may be incurred.

Litigation

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

The Company believes that liabilities associated with existing claims are ~~remote,~~remote; therefore, the Company has not recorded any accrual for existing claims as of September 30, ~~2020~~2021 and December 31, ~~2019.~~2020. The Company expenses legal fees in the period in which they are incurred.

15. Employee Benefit Plan

The Company maintains a defined-contribution plan under Section 401(k) of the Internal Revenue Code. The 401(k) plan provides retirement benefits for eligible employees. Eligible employees may elect to contribute to the 401(k) plan. The Company provides a match of up to the lesser of 3% of each employee’s annual salary or $6,000, which vests immediately for employees with tenure of over a ~~year.~~year of continuous employment. The Company’s matching contribution expense was $0.6 million and $2.0 million during the three and nine months ended September 30, 2021, respectively, and $0.5 million and $1.7 million during the three and nine months ended September 30, 2020, ~~respectively and $0.5 million and $1.3 million during the three and nine months ended September 30, 2019,~~ respectively.

16. Information About Geographic Areas

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

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K filed on ~~March 2, 2020~~February 23, 2021 with the SEC. In addition to historical financial information, the following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934. The ~~forward looking~~forward-looking statements reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties, including statements related to the potential impact of the COVID-19 pandemic on our business and operations. Our actual results and the timing of events could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to these differences are described in “Risk Factors” set forth in our Annual Report on Form 10-K and elsewhere in this Quarterly Report on Form 10-Q.

Overview

Quotient Technology Inc. is an industry leading digital ~~marketing~~media and promotions technology company ~~providing technology~~for advertisers, retailers and ~~services that power integrated digital promotions~~consumers. Our omnichannel platform is powered by exclusive consumer spending data, location intelligence and ~~media programs for CPGs brands~~purchase intent data to reach millions of shoppers daily and ~~retail partners. These programs are delivered across our~~deliver measurable, incremental sales. Additionally, we have a broad network of digital properties to drive measurable sales ~~results~~ and customer loyalty. Our network includes the digital properties of our retail partners and ~~CPG~~advertiser customers (also known as consumer packaged goods ("CPGs") manufacturers or brands), social media platforms, third-party properties, our ~~flagship~~ consumer brand Coupons.com properties and digital out-of-home ~~display screens.~~("DOOH") properties. This network provides Quotient with proprietary and licensed data, including retailers’ in-store ~~POS~~point-of-sale (“POS”) shopper data, purchase intent and online behavior ~~data,~~and location intelligence to ~~target shoppers with the most relevant digital coupons~~deliver more valuable outcomes for advertisers, retailers, and ~~ads.~~consumers. Customers and partners use Quotient to leverage ~~shopper~~consumer data and insights, consumers via digital channels, integrate marketing and merchandising programs, and ~~deliver marketing campaign programs across properties in our network.~~to drive measurable sales results.

For our retail partners, we provide ~~a digital platform,~~Quotient Retailer Promotions Platform, formerly known as Quotient Retailer iQ, ~~which is~~and Quotient Retailer Performance Media Platform, to directly engage with shoppers across their websites, mobile, eCommerce, and social channels. These platforms are generally co-branded or white-labeled through retailers’ savings or loyalty ~~programs. Retailer iQ provides~~programs and use shopper data to deliver ~~personalized~~relevant digital media and ~~targeted digital marketing programs~~promotions solutions from brand marketers and retailers ~~directly~~ to ~~shoppers via websites, mobile, social and eCommerce channels. Additionally, we provide Retail Media Performance ("RPM") which lets~~consumers. By partnering with Quotient, retailers ~~take control of~~can leverage their proprietary sales data and digital properties to build ~~powerful~~ new alternative revenue streams ~~from targeted media sales. We bring together advertising technology, data analytics, software expertise~~ and ~~seasoned sales teams~~offer effective marketing opportunities for their brand partners to ~~bring retailers' advertising products to our expansive network~~engage consumers, all while measuring the impact of ~~CPGs.~~every partnership.

We provide value to three constituencies: over 2,000 brands from approximately ~~700 CPGs;~~800 CPGs or advertisers; retail partners across multiple classes of trade such as grocery retailers, drug, mass merchant, dollar, club, and ~~mass~~convenience merchandise channels; and consumers visiting ~~the digital~~our websites, mobile properties and ~~platforms~~social channels within our network.

Through these three groups, we have created a network effect, which we believe gives us a competitive advantage over both offline and online competitors. As our ~~shopper~~consumer audience increases, our platforms become more valuable to ~~CPGs~~advertisers and their brands, and retailers, which, in turn, rely more heavily on our platforms for their digital ~~promotions~~media and ~~media.~~promotions. In addition, the breadth of ~~coupon~~media and ~~advertising~~promotion content offered from leading brands enables us to attract and retain more retailers and shoppers. As our network expands, we generate more ~~shopper~~consumer data and insights, which ~~improve~~improves our ability to deliver more relevant, targeted and personalized ~~promotions~~media and ~~media,~~promotions, and strengthens our measurement and data insights solutions.

We primarily generate revenue by ~~providing digital promotions and/or media programs to our CPG customers, retail partners and advertising agencies whereby we use~~using our technology platforms to create, target, deliver, analyze and measure ~~these programs.~~digital media and/or promotional programs for our advertiser customers, retail partners and advertising agencies. Using shopper data from our retail partners and our proprietary data and audience segments, we deliver targeted and/or personalized digital ~~promotions~~media and ~~media~~promotions to shoppers through our network, including our websites and mobile ~~apps,~~applications, as well as those of our publishers, retail partners and other third-party properties. ~~Our solutions help serve~~As our customers and ~~partners’ needs as they~~partners shift more of their marketing ~~dollars~~spend to digital channels, ~~to be optimized for performance. Performance~~our solutions help them optimize the performance of such digital channels. Our solutions' performance is measured by ~~attributing~~attribution of digital ad campaigns to retail purchases in near real time, demonstrating return on spend for our customers and partners.

~~Promotions~~

Our promotional products include digital paperless coupons, digital print coupons, ~~targeted~~ in-lane ~~coupons at checkout at retail partners’ stores,~~on receipt promotions, digital rebates and loyalty offers. ~~Media~~Our media solutions ~~we offer~~ include display, ~~targeted media,~~ social, ~~influencer,~~DOOH, Retailer.com display and sponsored ~~product~~ search, shoppable brand pages, and audiences. A growing ~~portion~~number of campaigns that our customers purchase are purchased as an integrated campaign which combines a mix of digital media ~~advertising~~ and/or promotions solutions in a

single campaign. In the fourth quarter of 2019 we purchased Ubimo, a data and media activation platform to strengthen our media solution and accelerate the development of a self-service media platform. Through Ubimo, we also offer digital-out-of-home ("DOOH") media solutions. CPGs and partners pay us for media and promotion programs. The revenue we earn from these programs is generally based on cost-per-click, cost-per-impression, or cost-per-acquisition. ~~Customers~~During the second half of 2021, we have continued to migrate customers to a duration-based model for digital national promotions — a model we sometimes refer to as "rates and ~~partners may also pay us~~dates". This model allows customers to book time on our network for a ~~fee for technology or services.~~specific duration to align with their merchandising schedules. Revenue earned from this duration-based model is recognized ratably over the contract term.

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

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

Seasonality

Some of ~~the Company’s~~our products experience seasonal sales and buying patterns mirroring those in ~~the~~ CPG, retail, advertising, ~~media~~ and eCommerce markets, including back-to-school and holiday campaigns, where demand increases during the second half of ~~the Company’s~~our fiscal year. Seasonality may also be affected by advertiser or CPG annual budget cycles, as some large CPGs have fiscal years ending in June. We believe that this seasonality pattern has affected, and will continue to affect, our business and the associated revenues during the first half and second half of our fiscal year. We recognized 59%, 54% and 54% of our annual revenue during the second half of 2020, 2019 and 2018, ~~and 2017, for each respective period.~~respectively. We believe the first half of our 2020 results were negatively impacted by the COVID-19 pandemic, resulting in a higher percentage of revenues in our second half of the year than we have experienced in the past.

Impact of COVID-19

We are cognizant ~~of the rapid expansion~~ of the COVID-19 pandemic and the resulting global implications. In an effort to protect the health and safety of our employees, our workforce has had, and continues in most instances, to spend a significant amount of time working remotely, and travel has been severely curtailed. ~~In an effort~~Many government measures initially imposed to contain COVID-19 or slow its spread, ~~governments around the world have also enacted various measures, some of which have been subsequently rescinded or modified,~~ including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing, ~~when engaging~~have been lifted in ~~essential activities.~~certain global locations and have been lifted widely in the U.S., although as a result of new variants to the virus it is possible that such measures may be reinstated in the future. We anticipate that these actions and the global health crisis caused by the COVID-19 pandemic will continue to negatively impact business activity across the ~~globe.~~globe, even though mass vaccination efforts have been undertaken throughout the United States and, to varying extents, in other countries. While we observed ~~a significant increase in~~ revenue growth during the ~~third quarter compared to the~~ first ~~two quarters,~~nine months of 2021, we cannot estimate the impact COVID-19 will have in the future as government entities and businesses make decisions about whether and when to open businesses or whether to return to restrictive measures after re-openings have occurred, and we also cannot estimate what impact these decisions will have on consumer activity across the ~~globe.~~

globe, especially as it remains uncertain how strong or lasting the impact of the vaccinations will be.

We will continue to actively monitor the pandemic situation and may take further actions that alter our business operations as may be required by federal, state, local or foreign authorities, or that we determine are in the best interests of our employees, customers, partners and stockholders. If ~~CPGs,~~brands or retailers ~~and brands continue to~~ pause, delay, or cancel campaigns due to the continuing uncertainty, supply-chain disruption, inflationary input-cost factors affecting advertiser and retailers, and consumer purchasing behavior changes caused by COVID-19, ~~such as we experienced during the first half of the year,~~ there may be an adverse impact on our promotion and media revenues and associated growth. The full extent of the impact of the COVID-19 pandemic on our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict. See Part II, Item 1A, Risk Factors, for an additional discussion of risks related to COVID-19.

Third Quarter ~~2020~~2021 Overview

Quarterly revenues of ~~$121.1~~$135.9 million in the third quarter of ~~2020~~2021 increased by ~~$6.3~~$14.8 million, or 5%12%, as compared to the same period in ~~2019.~~2020. The year over year increase in our quarterly revenues was due to growth in 2021 primarily ~~due a growth~~attributable to retailer programs driving more advertising spend on our platform in media revenue, as ~~a result of an~~well as growth in promotion revenue as brands increase inspend on our ~~media product offerings.~~

For certain media arrangements, we perform media services under the specific direction of our customers and therefore we do not control the media inventory before it is transferred to the customer. Accordingly, we are not the principal in those arrangements and recognize revenue net of certain costs resulting in reduced revenue growth. In addition, we may see decreased media revenues from promotions if CPGs, retailers and brands delay, pause or cancel campaigns due to COVID-19 as happened during the first half of the year.platform.

Our net loss of ~~$4.2~~$7.8 million in the third quarter of ~~2020 decreased~~2021 increased by ~~$6.2~~$3.6 million, as compared to the net loss of ~~$10.4~~$4.2 million in the same period in ~~2019.~~2020. The year over year ~~decrease~~increase in our quarterly net loss was primarily due to impairment charges related to certain intangible assets due to circumstances surrounding the termination of our partnership with Albertsons and higher operating expenses incurred to support our business objectives, offset in part by an increase in revenues, as discussed previously, and due to the benefit of the non-recurring restructuring costs recorded in the third quarter of 2019 related to the impairment of capitalized software development costs based on a decision to discontinue a product that was no longer part of our go forward strategy and severance for certain executive management changes, andalong with a decrease in variable compensation including bonuses, partially offset by a loss contingency related to a contract dispute resulting from a retailer's failure to perform certain obligations related to a guaranteed distribution fee arrangement, and a decreasethe changes in ~~interest income as a result~~fair value of ~~the decrease in interest rates and lower cash and cash equivalent balances.~~contingent consideration. While we continue to make important investments in our technology and infrastructure, we remain focused on operational efficiencies and expense management.

In connection with renewal discussions between the parties, we received a letter in October 2021 from Albertsons Companies Inc. (“Albertsons”) notifying us of their intent to early terminate our agreement related to the delivery of promotions and media campaigns, effective December 31, 2021. We informed Albertsons that we disputed their right to terminate the agreement prior to March 31, 2022. The parties are in discussions regarding an orderly wind down of the partnership, including with respect to the specific termination date. However, there can be no assurance that we are able to negotiate a specific termination date and/or an orderly wind down of the Albertsons partnership on terms favorable or acceptable to us, or at all.

As a result, during the third quarter of 2021 we incurred a non-cash impairment charge to write off the remaining intangible assets associated with the Albertsons agreement of approximately $6.5 million.

We expect our revenues and results of operations in future periods to be negatively impacted by the forthcoming wind-down and termination of our partnership with Albertsons. Revenues from Albertsons are below the average variable gross margin rates. In addition, we intend to take actions to reduce expenses and better align costs with forecasted revenue.

We expect our operating expenses to ~~increase~~decline in ~~the future~~absolute dollars as we ~~continue~~remove costs from the business but increase as a percentage of revenue due to ~~(1) invest~~the advertisers' control over campaign execution for certain product offerings resulting in ~~(i) research and development~~recognizing revenue net of certain costs as compared to ~~enhance our platform and investments in newer product offerings; (ii) sales and marketing~~recognizing revenue on a gross basis. As revenues begin to ~~acquire new CPG and retailer customers and~~grow again, we expect to increase ~~revenues from our existing customers; and; (iii) corporate infrastructure; (2) amortize expenses related~~spending to ~~intangibles assets associated with acquisitions and other strategic acquisitions and partnerships; and (3) re-measure contingent consideration related to acquisitions.~~support that growth.

Non-GAAP Financial Measure and Key Operating Metrics

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

Adjusted EBITDA excludes non-cash charges, such as depreciation, amortization and stock-based compensation, because such non-cash expenses in any specific period may not directly correlate to the underlying performance of our business operations and can vary significantly between periods. Additionally, it excludes the effects of interest expense, income taxes, other (income) expense net, change in fair value of contingent consideration, impairment of certain intangible assets, certain acquisition related costs, and restructuring ~~charges and loss contingency related to a contract dispute resulting from a retailer's failure to perform certain obligations related to a guaranteed distribution fee arrangement.~~charges. We exclude certain items because we believe that these costs (benefits) do not reflect expected future operating expenses. Additionally, certain items are inconsistent in amounts and frequency, making it difficult to contribute to a meaningful evaluation of our current or past operating performance.

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

Three Months Ended September 30, Nine Months Ended September 30,
2020 2019 2020 2019
Net loss $ (4,218) $ (10,363) $ (40,076) $ (27,497)
Adjusted EBITDA 18,676 13,577 28,127 33,663


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)
Adjusted EBITDA	17,327		18,676		28,492		28,127

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

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

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

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

•Adjusted EBITDA also does not include the effects of stock-based compensation, amortization of acquired intangible assets, change in fair value of contingent consideration, interest expense, other (income) expense, net, provision for income taxes, impairment of certain intangible assets, certain acquisition related costs, and restructuring ~~charges and loss contingency related to a contract dispute resulting from a retailer's failure to perform certain obligations related to a guaranteed distribution fee arrangement;~~charges; and

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

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net loss	Net loss	$	(4,218)	$	(10,363)	$	(40,076)	$	(27,497)	Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)
Adjustments:	Adjustments:									Adjustments:
Stock-based compensation	Stock-based compensation	6,489		7,608		21,021		23,692		Stock-based compensation	4,690		6,489		17,074		21,021
Depreciation, amortization and other(1)		11,072		12,786		31,011		29,839
Depreciation and amortization										Depreciation and amortization	7,287		10,685		24,425		30,020
Acquisition related costs and other (1)										Acquisition related costs and other (1)	8,720		387		12,453		991
Change in fair value of contingent consideration	Change in fair value of contingent consideration	1,562		999		5,788		1,052		Change in fair value of contingent consideration	245		1,562		772		5,788
Interest expense	Interest expense	3,646		3,507		10,830		10,416		Interest expense	3,809		3,646		11,306		10,830
Other (income) expense, net	Other (income) expense, net	59		(1,175)		(708)		(4,214)		Other (income) expense, net	96		59		130		(708)
Provision for income taxes	Provision for income taxes	66		215		261		375		Provision for income taxes	323		66		790		261
Total adjustments	Total adjustments	$	22,894	$	23,940	$	68,203	$	61,160	Total adjustments	$	25,170	$	22,894	$	66,950	$	68,203

Adjusted EBITDA	Adjusted EBITDA	$	18,676	$	13,577	$	28,127	$	33,663	Adjusted EBITDA	$	17,327	$	18,676	$	28,492	$	28,127

(1)For the three and nine months ended September 30, ~~2020, other includes:~~2021, "other" includes a charge of $6.5 million and $9.1 million, respectively, related to the impairment of certain intangible assets due to the circumstances surrounding the forthcoming termination of our partnership with Albertsons, and restructuring charges of ~~zero~~$1.8 million and ~~$1.5~~$2.0 million, respectively, certain acquisition related costs of $0.4 million and $1.0 million, respectively, and a $2.0 million loss contingency related to a contract dispute resulting from a retailer's failure to perform certain obligations related to a guaranteed distribution fee arrangement for ~~both respective~~such periods. For the three and nine months ended September 30, ~~2019, other includes:~~2020, "other" includes restructuring charges of ~~$4.2~~zero and $1.5 million, respectively, and a $2.0 million loss contingency for ~~each~~both respective ~~period, and certain acquisition~~periods, related ~~costs of $0.9 million and $2.3 million, respectively.~~to a contract dispute with Albertsons associated with a guaranteed distribution fee arrangement. Restructuring charges relate to ~~impairment charges for capitalized software development costs,~~ severance for certain ~~executive management changes and~~ impacted employees. Acquisition related costs primarily include certain bonuses contingent upon the acquired company meeting certain financial metrics over the contingent consideration period, together with diligence, accounting, and legal expenses incurred related to certain acquisitions.

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

Factors Affecting Our Performance

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

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

Variability in promotional and media spend by ~~CPGs~~advertisers or brands. . Our revenues may fluctuate due to changes in promotional ~~and~~or media spending budgets of ~~CPGs and retailers~~advertisers and the timing of their promotional and media spending. Decisions by major ~~CPGs or retailers~~advertisers to delay or reduce their promotional and media spending, move campaigns, or divert spending away from digital promotions or media could slow our revenue growth or reduce our revenues. During the last few weeks of the first quarter of 2020 and throughout the second quarter of 2020, CPGs, retailers and brands mostly paused or delayed, and in some cases cancelled, campaigns due to COVID-19. It is unclear when CPGs retailers and brands may resume these campaigns.

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

Growth of our consumer selection and digital offerings. Our ability to grow our revenue in the future will depend on our ability to innovate and invest in promotion and media solutions, including Quotient Retailer ~~iQ, Retailer~~Promotion Platform, Quotient Retail Performance Media Platform, sponsored ~~product~~ search, mobile solutions for consumers, ~~including digital print, mobile solutions and digital promotion offerings for specialty/franchise retail together,~~; leverage our reach to consumers and the strength of our ~~platform~~platforms to broaden the selection and consumers use of digital coupons and rebates as well as in-lane targeted ~~promotions,~~promotions; manage the transition from digital print coupons to digital paperless coupons as well as the transition from desktop to mobile ~~platforms,~~platforms; and invest in solutions around our data and analytic capabilities, referred to as Quotient Analytics and ~~Quotient Audience,~~Audiences, for ~~CPGs~~advertisers and retailers.

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

3335

Results of Operations

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


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020				2019				2020				2019				(in thousands, except percentages)	2021				2020				2021				2020
Revenues	Revenues	$	121,116	100.0	%	$	114,830	100.0	%	$	303,358	100.0	%	$	317,628	100.0	%	Revenues	$	135,884	100.0	%	$	121,116	100.0	%	$	375,080	100.0	%	$	303,358	100.0	%
Costs and expenses:
Cost of revenues	Cost of revenues	73,603		60.8	%	70,458		61.4	%	185,445		61.1	%	191,387		60.3	%	Cost of revenues	86,535		63.7	%	73,603		60.8	%	240,680		64.2	%	185,445		61.1	%
Gross Margin																		Gross Margin	49,349		36.3	%	47,513		39.2	%	134,400		35.8	%	117,913		38.9	%
Operating expenses:																		Operating expenses:
Sales and marketing	Sales and marketing	24,555		20.3	%	24,310		21.2	%	73,403		24.2	%	73,703		23.2	%	Sales and marketing	29,401		21.6	%	24,555		20.3	%	85,233		22.7	%	73,403		24.2	%
Research and development	Research and development	9,744		8.0	%	9,236		8.0	%	28,958		9.5	%	28,305		8.9	%	Research and development	11,074		8.1	%	9,744		8.0	%	34,541		9.2	%	28,958		9.5	%
General and administrative	General and administrative	12,099		10.0	%	17,643		15.4	%	39,457		13.0	%	44,101		13.9	%	General and administrative	12,244		9.0	%	12,099		10.0	%	40,086		10.7	%	39,457		13.0	%
Change in fair value of contingent consideration	Change in fair value of contingent consideration	1,562		1.3	%	999		0.9	%	5,788		1.9	%	1,052		0.3	%	Change in fair value of contingent consideration	245		0.2	%	1,562		1.3	%	772		0.2	%	5,788		1.9	%
Total cost and expenses		121,563		100.4	%	122,646		106.8	%	333,051		109.8	%	338,548		106.6	%
Total operating expenses																		Total operating expenses	52,964		38.9	%	47,960		39.6	%	160,632		42.8	%	147,606		48.7	%
Loss from operations	Loss from operations	(447)		(0.4)	%	(7,816)		(6.8)	%	(29,693)		(9.8)	%	(20,920)		(6.6)	%	Loss from operations	(3,615)		(2.7)	%	(447)		(0.4)	%	(26,232)		(7.0)	%	(29,693)		(9.8)	%
Interest expense	Interest expense	(3,646)		(3.0)	%	(3,507)		(3.1)	%	(10,830)		(3.6)	%	(10,416)		(3.3)	%	Interest expense	(3,809)		(2.8)	%	(3,646)		(3.0)	%	(11,306)		(3.0)	%	(10,830)		(3.6)	%
Other income (expense), net	Other income (expense), net	(59)		—	%	1,175		1.0	%	708		0.2	%	4,214		1.3	%	Other income (expense), net	(96)		(0.1)	%	(59)		—	%	(130)		—	%	708		0.2	%
Loss before income taxes	Loss before income taxes	(4,152)		(3.4)	%	(10,148)		(8.9)	%	(39,815)		(13.1)	%	(27,122)		(8.6)	%	Loss before income taxes	(7,520)		(5.6)	%	(4,152)		(3.4)	%	(37,668)		(10.0)	%	(39,815)		(13.1)	%
Provision for income taxes	Provision for income taxes	66		—	%	215		0.2	%	261		0.1	%	375		0.1	%	Provision for income taxes	323		0.2	%	66		—	%	790		0.2	%	261		0.1	%
Net loss	Net loss	$	(4,218)	(3.4)	%	$	(10,363)	(9.1)	%	$	(40,076)	(13.2)	%	$	(27,497)	(8.7)	%	Net loss	$	(7,843)	(5.8)	%	$	(4,218)	(3.4)	%	$	(38,458)	(10.2)	%	$	(40,076)	(13.2)	%

Disaggregated Revenue

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


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020		2019		$ Change		% Change		2020		2019		$ Change		% Change		(in thousands, except percentages)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
Promotion	Promotion	$	62,376	$	62,034	$	342	1	%	$	168,714	$	183,152	$	(14,438)	(8)	%	Promotion	$	65,538	$	62,376	$	3,162	5	%	$	194,729	$	168,714	$	26,015	15	%
Media	Media	58,740		52,796		5,944		11	%	134,644		134,476		168		—	%	Media	70,346		58,740		11,606		20	%	180,351		134,644		45,707		34	%
Total Revenue	Total Revenue	$	121,116	$	114,830	$	6,286	5	%	$	303,358	$	317,628	$	(14,270)	(4)	%	Total Revenue	$	135,884	$	121,116	$	14,768	12	%	$	375,080	$	303,358	$	71,722	24	%

Comparison of the Three and Nine months ended September 30, ~~2020~~2021 and ~~2019~~2020

Revenues


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020		2019		$ Change		% Change		2020		2019		$ Change		% Change		(in thousands, except percentages)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
Revenues	Revenues	$	121,116	$	114,830	$	6,286	5	%	$	303,358	$	317,628	$	(14,270)	(4)	%	Revenues	$	135,884	$	121,116	$	14,768	12	%	$	375,080	$	303,358	$	71,722	24	%

Revenues for the three months ended September 30, ~~2020~~2021 increased by ~~$6.3~~$14.8 million, or 5%12%, as compared to the same period in ~~2019.~~2020. The increase was primarily due to the growth in 2021 of retailer programs driving more advertising spend on our platform in media revenue and an increase in promotion revenue as brands ramp spend on our platform, partially offset by a decrease in media revenue as a result of performing certain media services under specific direction of our customers resulting in recognizing revenues net of certain costs. The higher growth in media revenues in 2021 have been primarily due to retailer programs that drive more brand spending through Quotient's Retailer Performance Media ("RPM") platform. These retailer programs incentivize advertisers to invest in marketing programs that target the retailer's shoppers to increase sales and also generate more distribution fees payments to our retailer partners. Revenues from digital promotion and media campaigns were 48% and 52%, respectively, of total revenues for the three months ended September 30, 2021, as compared to 52% and 48%, respectively, of total revenues during the same period in 2020.

Revenues for the nine months ended September 30, 2021 increased by $71.7 million, or 24%, as compared to the same period in 2020. The increase was primarily due the growth in 2021 of retailer programs driving more advertising spend on our platform in media revenue, and an increase in promotion revenue as brands ramp spend on our platform.The higher growth in media ~~product offerings.~~revenues in 2021 have been primarily due to retailer programs that drive more brand spending through Quotient's RPM platform.These retailer programs incentivize advertisers to invest in marketing programs that target the retailer’s shoppers to increase sales and generate more distribution fees payments to our retailer partners. Revenues from digital promotion and media campaigns were 52% and 48%, respectively, of total revenues for the ~~three~~nine months ended September 30, ~~2020,~~2021, as compared to ~~54%~~56% and ~~46%~~44%, respectively, of total revenues during the same period in ~~2019.~~2020.

~~Revenues for~~We expect our revenues in future periods to be negatively impacted by the ~~nine months ended September 30, 2020 decreased by $14.3 million, or 4%, as compared~~forthcoming wind-down and termination of our partnership with Albertsons related to the ~~same period in 2019. The decrease was primarily due to a decrease in revenues from digital promotion due to COVID-19, as well as a decrease in media revenues as a result~~delivery of performing certain media services under the specific direction of our customers resulting in recognizing revenues net of certain costs, partially offset by the growth in media revenue as a result of an increase in our media product offerings. During the last few weeks of the first quarter and during the second quarter of 2020, CPGs, retailers and brands mostly paused or delayed and in some cases cancelled campaigns due to the uncertainty, supply-chain or out-of-stock issues and consumer purchasing behavior changes caused by COVID-19, which had an adverse impact on our promotionpromotions and media revenues and associated. Revenues from digital promotion and media campaigns were 56% and 44%, respectively, of total revenues for the nine months ended September 30, 2020, as compared to 58% and 42%, respectively, of total revenues during the same period in 2019.campaigns.

For certain media arrangements, we perform media services under the specific direction of our customers and therefore we do not control the media inventory before it is transferred to the customer. Accordingly, we are not the principal in those arrangements and recognize revenue net of certain costs resulting in reduced revenue growth. In addition, we may continue to see decreased media revenues from promotions if CPGs, retailers and brands continue to delay, pause or cancel campaigns due to COVID-19.

Cost of Revenues and Gross Profit


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,										Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020			2019			$ Change		% Change		2020			2019			$ Change		% Change		(in thousands, except percentages)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change
Cost of revenues	Cost of revenues	$	73,603		$	70,458		$	3,145	4	%	$	185,445		$	191,387		$	(5,942)	(3)	%	Cost of revenues	$	86,535		$	73,603		$	12,932	18	%	$	240,680		$	185,445		$	55,235	30	%
Gross profit	Gross profit	$	47,513		$	44,372		$	3,141	7	%	$	117,913		$	126,241		$	(8,328)	(7)	%	Gross profit	$	49,349		$	47,513		$	1,836	4	%	$	134,400		$	117,913		$	16,487	14	%
Gross margin	Gross margin	39		%	39		%					39		%	40		%					Gross margin	36		%	39		%					36		%	39		%

Cost of revenues consist primarily of distribution fees paid to our retailer partners for the use of their shopper data and for the cost of publishing media and promotions campaigns on their website properties, digital media costs for the purchase of offsite media on non-owned-and-operated properties, third party data acquisition costs, impairment of intangible assets, intangible asset amortization expense related to acquired intangible assets, software licensing fees associated with the operation of our technology platform used to deliver campaigns, and finally compensation costs including salary, benefits and stock-based compensation for personnel, all of which costs are incurred to create, target, deliver and analyze these campaigns.

Cost of revenues for the three months ended September 30, ~~2020~~2021 increased by ~~$3.1~~$12.9 million, or 4%18%, as compared to the same period in ~~2019.~~2020. The increase was primarily due an increase of $8.5 million in distribution fees paid to our retailer partners for media and promotion campaigns delivered through our platform, a charge of $6.5 million related to the impairment of certain intangible assets due to circumstances surrounding the forthcoming termination of our partnership with Albertsons, an increase in compensation costs of $1.2 million, and an increase in overhead expenses of $0.3 million related to facilities and infrastructure support, the collective impact of which was partially offset by the benefit of the non-recurring loss contingency charge in the third quarter of 2020 of $2.0 million related to a contract dispute ~~resulting from a retailer's failure to perform certain obligations related to~~with Albertsons associated with a guaranteed distribution fee arrangement, and a shift in product mix to media revenues. Media revenues have higher data and traffic acquisition costs related to offsite media on non-owned-and-operated properties resulting in an increase of $0.9 million in data and traffic acquisition costs for offsite media on non-owned-and-operated properties as well as a decrease in ~~distribution fees paid to our partners for promotions and media revenues delivered through their platforms. In addition,~~ amortization expense ~~increased $0.8~~of $1.6 million related to acquired intangible assets as well as certain exclusivity rights acquired under strategic partnerships, compensation costs, including stock-based compensation increased $0.5 million and data center expenses increased $0.3 million, partially offset by a decrease in overhead expenses of $1.4 million related to facilities and infrastructure support.assets.

Cost of revenues for the nine months ended September 30, ~~2020 decreased~~2021 increased by ~~$5.9~~$55.2 million, or 3%30%, as compared to the same period in ~~2019.~~2020. This increase was primarily due a net increase of $47.8 million in distribution fees paid to our retailer partners for media and promotion campaigns delivered through our platform, offset by a decrease in ~~revenues, resulting in a decrease of $12.2 million in~~ data and ~~traffic~~media acquisition costs for offsite media on non-owned-and-operated ~~properties as well as~~properties; a charge of $9.1 million related to the impairment of certain intangible assets due to circumstances surrounding the forthcoming termination of our partnership with Albertsons; an increase in compensation costs of $2.8 million, partially offset by a decrease in amortization expense of $2.4 million related to acquired intangible assets; the benefit of the non-recurring loss contingency charge in the third quarter of 2020 of $2.0 million related to a contract dispute with Albertsons associated with a guaranteed distribution ~~fees paid to our partners for promotions and media revenues delivered through their platforms~~fee arrangement; and a decrease in overhead expenses of ~~$0.7~~$0.1 million related to facilities and infrastructure support. This was partially offset by an increase in amortization expense of $2.8 million related to acquired intangible assets as well as certain exclusivity rights acquired under strategic partnerships, a loss contingency of $2.0

million related to a contract dispute resulting from a retailer's failure to perform certain obligations related to a guaranteed distribution fee arrangement, an increase in data center expenses of $1.2 million, and an increase in compensation costs, including stock-based compensation of $1.0 million.

Gross margin for the three ~~months ended September 30, 2020 remained flat at 39%, compared to the same period in 2019,~~ and ~~decreased for the~~ nine months ended September 30, ~~2020~~2021 decreased to ~~39%,~~36% during each respective period, as compared to ~~40%~~39% during each respective period during the same ~~period~~periods in ~~2019. Gross margin decreased~~2020. The decrease is primarily due a charge related to the impairment of certain intangible assets as well as the shift in our product mix towards more media revenues, which have higher cost of sales due to media acquisition costs and distribution fees and which increased as a percentage of our total revenue as compared to our promotion revenue.

We expect the cost of revenues to decline, in absolute dollars, during the ~~nine months ended September 30, 2020, compared~~fourth quarter of fiscal 2021 due to the same period of 2019, primarily due to an increase in amortization expense related to acquired intangible assets and a loss contingency of $2.0 million related to a contract dispute resulting from a retailer's failure to performadvertisers' control over campaign execution for certain ~~obligations related to a guaranteed distribution fee arrangement, partially offset by the benefit of the change of performing certain media services under the specific direction of our customers~~product offerings resulting in recognizing revenue net of certain ~~costs. During the third quarter of 2020 we exited the portion of media business that had gone through~~costs as compared to recognizing revenue on a ~~delivery change resulting in recognizing revenues net of certain costs from gross.~~

We expect the costs associated with distribution and third-party service fees to continue to increase in absolute dollars in the future as we continue to expand and scale our distribution network and reach.gross basis.

Sales and Marketing


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,										Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020			2019			$ Change		% Change		2020			2019			$ Change		% Change		(in thousands, except percentages)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change
Sales and marketing	Sales and marketing	$	24,555		$	24,310		$	245	1	%	$	73,403		$	73,703		$	(300)	—	%	Sales and marketing	$	29,401		$	24,555		$	4,846	20	%	$	85,233		$	73,403		$	11,830	16	%
Percent of revenues	Percent of revenues	20		%	21		%					24		%	23		%					Percent of revenues	22		%	20		%					23		%	24		%

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

Sales and marketing expenses for the three months ended September 30, ~~2020~~2021 increased by ~~$0.2~~$4.8 million, or 20%, as compared to the same period in ~~2019.~~2020. The increase was primarily the result of an increase in compensation costs of ~~$1.3~~$3.5 million related to hiring additional employees to support our growth and business objectives, an increase in restructuring charges of $0.9 million related to severance for senior leadership and non-leadership employees, and

an increase in intangible asset amortization expense of ~~$0.5~~$0.6 million, ~~related to our acquisitions,~~the collective impact of which was partially offset by ~~a decrease~~reduced spending in ~~promotional~~travel, entertainment and ~~advertising~~other costs of ~~$1.6 million resulting from our expense management efforts.~~$0.2 million.

Sales and marketing expenses for the nine months ended September 30, ~~2020 decreased~~2021 increased by ~~$0.3~~$11.8 million, or 16%, as compared to the same period in ~~2019.~~2020. The ~~decrease~~increase was primarily the result of ~~a decrease in promotional and advertising costs of $2.4 million resulting from our expense management efforts and a decrease~~an increase in compensation costs of ~~$0.2~~$12.7 million ~~partially offset by~~related to hiring additional employees to support our growth and business objectives, an increase in restructuring charges of $0.6 million related to severance for senior leadership and non-leadership employees, an increase in intangible asset amortization expense of ~~$1.8~~$1.0 million, ~~related to our acquisitions~~the collective impact of which was partially offset by reduced spending in travel, entertainment and ~~an increase in restructuring charges~~other costs of ~~$0.5 million related to severance for impacted employees.~~$2.5 million.

We expect sales and marketing expenses, as a percentage of revenue, to remain relatively consistent in future periods as we work to align sales and marketing resources with the appropriate levels needed to support our customers and retail partners following the forthcoming wind down and termination of the Albertsons relationship over the next few months. Over the long term, we plan to continue to invest in sales and marketing in order to support our growth and business objectives.

Research and Development


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,										Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020			2019			$ Change		% Change		2020			2019			$ Change		% Change		(in thousands, except percentages)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change
Research and development	Research and development	$	9,744		$	9,236		$	508	6	%	$	28,958		$	28,305		$	653	2	%	Research and development	$	11,074		$	9,744		$	1,330	14	%	$	34,541		$	28,958		$	5,583	19	%
Percent of revenues	Percent of revenues	8		%	8		%					10		%	9		%					Percent of revenues	8		%	8		%					9		%	10		%

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

Research and development expenses for the three months ended September 30, ~~2020~~2021 increased by ~~$0.5~~$1.3 million, or 6%14%, as compared to the same period in ~~2019.~~2020. The increase was primarily due to an increase in compensation costs of ~~$0.7~~$1.4 million related to ~~acquisitions and~~ hiring additional employees to support our growth and business objectives, an increase in restructuring charges of $0.5 million related to severance for senior leadership and non-leadership employees, the collective impact of which was partially offset by an increase in capitalization of internal use software development costs of $0.5 million, and a decrease of $0.1 million in overhead expenses related to facilities and infrastructure ~~support of $0.2 million.~~support.

Research and development expenses for the nine months ended September 30, ~~2020~~2021 increased by ~~$0.7~~$5.6 million, or 2%19%, as compared to the same

period in ~~2019.~~2020. The increase was primarily due to an increase in compensation costs of ~~$1.9~~$5.2 million related to acquisitions and hiring additional employees to support our growth and business objectives, an increase in overhead expenses related to facilities and infrastructure support of $0.4 million, and an increase in restructuring charges of ~~$0.3~~$0.2 million related to severance for ~~impacted~~senior leadership and non-leadership employees, the collective impact of which was partially offset by an increase in capitalization of internal use software development costs of ~~$1.5 million.~~$0.2 million, .

We believe that continued investment in technology is critical to attaining our strategic objectives, and we intend to balance our investment in research and development with our continued operational and cost optimization efforts. WeHowever, we expect ~~to incur additional~~ research and development expenses, in absolute dollars, to decline in future periods as we consolidate our engineering function to drive efficiencies. Over the long term, we will continue to expand our tools and products that will enable our business to scale and provide more offerings to our customers.

General and Administrative


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,										Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020			2019			$ Change		% Change		2020			2019			$ Change		% Change		(in thousands, except percentages)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change
General and administrative	General and administrative	$	12,099		$	17,643		$	(5,544)	(31)	%	$	39,457		$	44,101		$	(4,644)	(11)	%	General and administrative	$	12,244		$	12,099		$	145	1	%	$	40,086		$	39,457		$	629	2	%
Percent of revenues	Percent of revenues	10		%	15		%					13		%	14		%					Percent of revenues	9		%	10		%					11		%	13		%

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

General and administrative expenses for the three months ended September 30, ~~2020 decreased~~2021 increased by ~~$5.5~~$0.1 million, or ~~31%~~1%, as compared to the same period in ~~2019.~~2020. The ~~decrease~~increase was primarily due to ~~a decrease~~an increase in professional service fees of $0.7 million and an increase in restructuring charges of ~~$4.2~~$0.4 million ~~due to the benefit of the non-recurring restructuring costs recorded in the third quarter of 2019~~ related to ~~the impairment of capitalized software development costs associated with a non-strategic product and~~ severance for ~~certain executive management changes,~~senior leadership and non-leadership employees, all partially offset by a decrease in compensation costs of $0.7 million and a decrease in other administrative expenses of ~~$0.7 million, a decrease in acquisition related charges of $0.6 million, a decrease in compensation costs of $0.2 million, partially offset by an increase in professional service fees of $0.2~~$0.3 million.

General and administrative expenses for the nine months ended September 30, ~~2020 decreased~~2021 increased by ~~$4.6~~$0.6 million, or ~~11%~~2%, as compared to the same

period in ~~2019.~~2020. The ~~decrease~~increase was primarily due to ~~a decrease~~an increase in ~~restructuring charges~~professional service fees of ~~$3.6~~$2.7 million due to the benefit of the non-recurring restructuring costs recorded in the third quarter of 2019 related to the impairment of capitalized software development costs associated with a non-strategic product and ~~severance for certain executive management changes, a decrease~~an increase in acquisition related charges of ~~$1.3~~$0.3 million, ~~and~~all partially offset by a decrease in other administrative expenses of ~~$0.5~~$1.2 million, ~~partially offset by an increase~~a decrease in ~~professional service fees~~compensation costs of ~~$0.8~~$1.1 million and a decrease in restructuring charges of $0.1 million.

We expect ~~to continue to incur additional~~ general and administrative expenses, in absolute dollars, to remain relatively consistent in future periods as we ~~continue to invest in corporate infrastructure and we intend to~~ balance our investment in corporate infrastructure with our continued operational and cost optimization efforts.

Change in Fair Value of Contingent Consideration


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,										Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020			2019			$ Change		% Change		2020			2019			$ Change		% Change		(in thousands, except percentages)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change
Change in fair value of contingent consideration	Change in fair value of contingent consideration	$	1,562		$	999		$	563	56	%	$	5,788		$	1,052		$	4,736	450	%	Change in fair value of contingent consideration	$	245		$	1,562		$	(1,317)	(84)	%	$	772		$	5,788		$	(5,016)	(87)	%
Percent of revenues	Percent of revenues	1		%	1		%					2		%	—		%					Percent of revenues	—		%	1		%					—		%	2		%

During the three ~~and nine~~ months ended September 30, ~~2020,~~2021 we recorded a net charge of ~~$1.6~~$0.2 million ~~and $5.8 million, respectively,~~ related to the ~~change in fair value~~re-measurement of contingent ~~consideration. During the three and nine months ended September 30, 2020, we recorded a charge of $4.8 million and $9.3 million, respectively for the re-measurement of~~consideration associated with Ubimo, contingent consideration due to the increase in expected achievement of certain financial metrics over the contingent consideration period, and a benefit of $3.2 million and $3.5 million, respectively, for the re-measurement of Elevaate contingent consideration due to a decrease in expected achievement of certain financial metrics over the contingent consideration period.

During the three and nine months ended September 30, 2019, we recorded a net charge of $1.0 million and $1.1 million, respectively, related to the change in fair value of contingent consideration. During the three and nine months ended September 30, 2019, we recorded a charge of $1.0 million and $4.2 million, respectively for ~~the remeasurement of Ahalogy contingent consideration~~ due to the increase in expected achievement of certain financial metrics over the contingent consideration period. During the nine months ended September 30, ~~2020,~~2021 we recorded a ~~benefit~~net charge of ~~$3.1~~$0.8 million ~~for~~related to the ~~remeasurement~~re-measurement of ~~Elevaate~~ contingent consideration associated with both Ubimo and Elevaate, due to the ~~decrease~~increase in expected achievement of certain financial metrics over the contingent consideration ~~period~~.period. During the three and nine months ended September 30, 2020 we recorded a net charge of $1.6 million and $5.8 million related to the re-measurement of contingent consideration associated with both Ubimo and Elevaate, due to the increase in expected achievement of certain financial metrics over the contingent consideration period.

Interest Expense and Other Income (Expense), Net

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except percentages) 2020 2019 $ Change % Change 2020 2019 $ Change % Change
Interest expense $ (3,646) $ (3,507) (139) 4 % $ (10,830) $ (10,416) $ (414) 4 %
Other income (expense), net (59) 1,175 (1,234) (105) % 708 4,214 (3,506) (83) %
$ (3,705) $ (2,332) $ (1,373) 59 % $ (10,122) $ (6,202) $ (3,920) 63 %


	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except percentages)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
Interest expense	$	(3,809)	$	(3,646)	(163)		4	%	$	(11,306)	$	(10,830)	$	(476)	4	%
Other income (expense), net	(96)		(59)		(37)		63	%	(130)		708		(838)		(118)	%
	$	(3,905)	$	(3,705)	$	(200)	5	%	$	(11,436)	$	(10,122)	$	(1,314)	13	%

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

Other income (expense), net consists primarily of interest income on U.S. Treasury Bills held as cash equivalents. The decrease in other income (expense), net during the ~~three and~~ nine months ended September 30, ~~2020,~~2021, as compared to the same period in ~~2019,~~2020, was due to lower interest income earned on U.S. Treasury Bills held as cash equivalents, net of the effect of re-measuring balances in foreign currency due to exchange rate fluctuations.

Provision for Income Taxes


		Three Months Ended September 30,								Nine Months Ended September 30,									Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except percentages)	(in thousands, except percentages)	2020		2019		$ Change		% Change		2020		2019		$ Change		% Change		(in thousands, except percentages)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change
Provision for income taxes	Provision for income taxes	$	66	$	215	$	(149)	(69)	%	$	261	$	375	$	(114)	(30)	%	Provision for income taxes	$	323	$	66	$	257	390	%	$	790	$	261	$	529	203	%

The provision for income taxes of $0.3 million and $0.8 million for the three and nine months ended September 30, 2021, respectively, was primarily attributable to our foreign operations, amortization of tax-deductible goodwill from previous acquisitions, and state taxes. The provision for income taxes of $0.1 million and $0.3 million for the three and nine months ended September 30, 2020, respectively, was primarily attributable to our foreign operations, federal and state taxes, and amortization of ~~tax deductible~~tax-deductible goodwill from prior ~~year~~ acquisitions.

~~The provision for income taxes~~

We have a full valuation allowance against our UK net deferred tax assets in the amount of ~~$0.2~~$4.7 million ~~and $0.4 million for the~~ ~~three and nine~~ ~~ended~~ as of September 30, ~~2019, respectively was primarily attributable~~2021 and intend to ~~our foreign~~continue maintaining a full valuation allowance on these net deferred assets until there is sufficient evidence to support the release of all or some portion of these allowances. Based on current income from continuing operations and ~~amortization~~anticipated future earnings, we believe there is a reasonable possibility that within the next twelve months sufficient positive evidence may become available to allow a conclusion to be reached that a significant portion, if not all, of the valuation allowance will be released. Release of some or all of the valuation allowance would result in the recognition of certain deferred tax ~~deductible goodwill from prior year acquisitions.~~assets and an increase in deferred tax benefit for any period in which such a release may be recorded. However, the exact timing and amount of any valuation allowance release are subject to change, depending upon the level of profitability that we are able to achieve and the net deferred tax assets available.

3941

Liquidity and Capital Resources

We have financed our operations and capital expenditures through cash flows from ~~operation~~operations and the issuance of convertible senior notes. As of September 30, ~~2020, we had $209.9 million in~~2021, our principal source of liquidity were cash and cash equivalents of $244.9 million which were held for working capital purposes. Our cash equivalents are comprised primarily of money market funds.

We have incurred and expect to continue to incur legal, accounting, regulatory compliance and other costs in future periods as we continue to invest in corporate ~~infrastructure.~~infrastructure and in connection with litigation matters. In addition, we may use cash to fund acquisitions or invest in other businesses, or incur capital expenditures including leasehold improvements or technologies. We expect lower cash inflow as a result of lower expected revenue related to the forthcoming termination of the Albertsons partnership. We also expect lower operating expenses due to the cost saving actions we are taking to better align costs with forecasted revenue. We intend to continue to manage our operating expenses in line with our existing cash and available financial resources, and in the long-term, we ~~anticipate we will~~expect to incur increased spending in future periods in order to execute our long-term business plan and to support our growth to fund our operating expenses.

Our Board of Directors ~~previously~~has approved programs for usthe Company to repurchase shares of ~~our~~its common stock. In ~~August 2019, our~~February 2021, the Company’s Board of Directors authorized a ~~one-year~~one year share repurchase program (the ~~“August 2019~~“2021 Program”) for usthe Company to repurchase up to $50.0 million of ~~our~~its common stock from ~~August 2019~~February 2021 through ~~August 2020.~~February 2022. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2021 Program at any time without prior notice. During the three and nine months ended September 30, ~~2020, we~~2021, the Company did not repurchase any shares of ~~our~~its common ~~stock and~~stock. As of September 30, 2021, $50.0 million remains available for future share repurchases under the ~~August 2019 Program expired in August 2020.~~2021 Program.

Some of our agreements with retailers include an upfront payment for exclusive service rights for the term of the agreement. These payments are generally recognized as an expense or contra-revenue over the term of the exclusive rights. We expect payments related to exclusive service rights to total approximately $16.0 million over the next two fiscal quarters.

In addition, some of our agreements with retailers include certain ~~prepaid or~~ guaranteed distribution ~~fees.~~fees which, in some cases, may apply to multiple annual periods. If wethe adoption and usage of our platforms do not meet ~~contractual~~projections or minimums, these ~~prepaid or~~ guaranteed distribution fees may not be recoverable and any shortfall may be payable by us at the end of the applicable period. ~~Implementation of~~We considered various factors in our assessment including our historical experience with the transaction volumes through the retailer and comparative retailers, ongoing communications with the retailer to increase its marketing efforts to promote the digital platform, as well as the projected revenues and associated revenue share payments. For example, in 2020 the Company's efforts to implement, with Albertsons, one of our solutions ~~with a retailer experienced slower than expected adoption due to a variety~~resulted in multiple disputes being raised by each of ~~factors, including impacts related to~~ the ~~spread~~parties against the other, one of ~~COVID-19 and~~which disputes resulted in the ~~retailer's failure to perform certain obligations under the agreement. In light of these factors, we were~~Company not being able to meet the contractual minimum ~~under such arrangement~~ at the end of the applicable period ~~which~~under the agreement. In order to resolve certain of the disputes regarding the parties' respective obligations, we recognized a loss of $8.8 million during the year ended December 31, 2020, to settle such matter. This loss was ~~originally scheduled~~included in cost of revenues on our consolidated statements of operations. During the second quarter of 2021, the Company notified Albertsons that due to ~~end~~Albertsons' failure to meet certain obligations under the agreement, the Company is not obligated to meet the contractual minimums for the period that ended in October ~~2020.~~2021. In connection with renewal discussions between the parties, we received a letter in October 2021 from Albertsons notifying us of their intent to early terminate our agreement related to the delivery of promotions and media campaigns, effective December 31, 2021. We informed Albertsons that we disputed their right to terminate the agreement prior to March 31, 2022. The parties are in discussions regarding an orderly wind down of the partnership, including with respect to the specific termination date. However, there can be no assurance that we are able to negotiate a specific termination date and/or an orderly wind down of the Albertsons partnership on terms favorable or acceptable to us, or at all. If the contractual minimum ~~and~~ applicable to the period ~~remain~~that ended in October 2021 remains enforceable, ~~in light of these factors, we~~the Company may recognize a loss that, depending on a variety of factors, ~~could~~is estimated to be as high as the high single digit millions. Accordingly, we have accrued $2.0 million related to such guaranteed distribution fee arrangement in other current liabilities on the condensed consolidated balance sheets as of September 30, 2020.$8.5 million.

We believe our existing cash, cash equivalents and cash flow from operations will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. To the extent that current and

anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. In the event additional financing is required from outside sources, we may not be able to raise it on terms acceptable to us or at all. During the period of uncertainty of volatility related to the COVID-19 pandemic, we will continue to monitor our liquidity. See Part II, Item 1A, Risk Factors, for an additional discussion of risks related to COVID-19.

Cash Flows

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


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2020		2019			2021		2020
Net cash provided by operating activities	Net cash provided by operating activities	$	13,171	$	29,991	Net cash provided by operating activities	$	29,711	$	13,171
Net cash used in investing activities	Net cash used in investing activities	(9,648)		(1,485)		Net cash used in investing activities	(10,773)		(9,648)
Net cash used in financing activities		(18,559)		(92,401)
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	3,218		(18,559)
Effect of exchange rates on cash and cash equivalents	Effect of exchange rates on cash and cash equivalents	126		1		Effect of exchange rates on cash and cash equivalents	37		126
Net decrease in cash and cash equivalents		$	(14,910)	$	(63,894)
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	$	22,193	$	(14,910)

Operating Activities

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

During the nine months ended September 30, ~~2020,~~2021, net cash provided by operating activities of ~~$13.2~~$29.7 million reflects our net loss of ~~$40.1~~$38.5 million, adjusted for net non-cash expenses of ~~$64.9~~$64.2 million, ~~and~~as well as cash ~~used as a result~~

ofprovided resulting from changes in working capital of ~~$11.6~~$4.0 million. Non-cash expenses included depreciation and amortization, stock-based compensation, amortization of debt discount and issuance costs, allowance for credit losses, deferred income taxes, change in fair value of contingent consideration, impairment of certain intangible assets and other non-cash expenses, including amortization of right-of-use asset and loss on disposal of property and equipment. The primary ~~uses~~sources of cash from working capital items included an increase in deferred revenues of $9.1 million, an increase in accounts payable and other current liabilities of $8.0 million, an increase in accrued compensation benefits of $5.4 million, and a decrease in prepaid expenses and other current assets of $3.3 million, the collective impact of which was partially offset by an increase in accounts receivable of $18.9 million, and payment for ~~Ahalogy~~Elevaate contingent consideration of ~~$15.4~~$2.9 million related to the changes in fair value over the contingent consideration period and bonuses, and a decrease in accrued compensation and benefits of $4.3 million related to the payout of the annual bonuses, partially offset by a decrease in accounts receivable of $2.6 million, an increase in deferred revenues of $0.4 million, an increase in accounts payable and other current liabilities of $4.9 million, and a decrease in prepaid expenses and other current assets of $0.2 million.period.

Investing Activities

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

During the nine months ended September 30, ~~2020,~~2021, net cash used in investing activities of ~~$9.6~~$10.8 million reflects ~~purchase~~purchases of property and equipment, ~~of $6.6 million,~~ which includes capitalized software development costs, and purchases of technology hardware and software to support our ~~growth and payment of $3.0 million to acquire certain exclusive rights pursuant to a strategic partnership agreement.~~growth.

Financing Activities

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

During the nine months ended September 30, ~~2020,~~2021, net cash ~~used in~~provided by financing activities of ~~$18.6~~$3.2 million reflects $14.8 million, net, in proceeds received from exercises of stock options under equity incentive plans and purchases of ESPP shares, partially offset by payments for ~~Ahalogy~~Elevaate contingent consideration of ~~$14.6~~$6.1 million ~~(initially~~

(initially measured and included as part of purchase consideration on the date of acquisition), payments made for shares withheld to cover the required payroll withholding taxes of ~~$5.5~~$5.3 million, and payments on promissory note and finance lease obligations of ~~$0.1 million, partially offset by proceeds received from exercises of stock options under equity incentive plans, ESPP, and other, net of $1.6~~$0.2 million.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, ~~2020.~~2021.

Contractual Obligations and Commitments

Refer to Note 14 of our notes to condensed consolidated financial statements contained in this Quarterly Report on Form 10-Q for further information. There have been no significant changes outside the ordinary course of business, during the three and nine months ended September 30, ~~2020~~2021, to our commitments and contingencies disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed on ~~March 2, 2020~~February 23, 2021 with the SEC.

Critical Accounting Policies and Estimates

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

There were no significant changes in our critical accounting policies and estimates during the three and nine months ended September 30, ~~2020,~~2021, as compared to the critical accounting policies and estimates disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed on ~~March 2, 2020~~February 23, 2021 with the ~~SEC.~~SEC except as noted below.

Goodwill and Intangible Assets

Intangible assets with a finite life are amortized over their estimated useful lives. Goodwill is not subject to amortization but is tested for impairment at least annually, and more frequently upon the occurrence of certain events that may indicate that the carrying value of goodwill may not be recoverable. The Company, which operates in a single reporting unit, typically completes its annual impairment test during the fourth quarter of each year. However, due to circumstances surrounding the forthcoming termination of its partnership with Albertsons, the Company determined a triggering event had occurred and completed its annual impairment test during the third quarter of 2021.

The Company evaluates intangible assets for potential impairment indicators at least quarterly and more frequently upon the occurrence of events that could impact prior conclusions. Judgment regarding the existence of impairment indicators is based on market conditions and as well as the operational performance of its businesses. Additionally, future events could cause the Company to conclude that impairment indicators exist, and therefore its intangible assets could be impaired.

The Company considers the following to be some examples of indicators that may trigger an impairment review: (i) actual undiscounted cash flows significantly below historical or projected future undiscounted cash flows for the associated assets; (ii) significant changes in the manner or use of the assets or in our overall strategy with respect to the manner or use of the acquired assets or changes in its overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures; and (v) a significant decline in its stock price for a sustained period of time.

Once the Company determines that a potential impairment indicator exists, it performs the test for recoverability by comparing the estimated future undiscounted cash flows associated with the intangible assets with the intangible asset’s carrying amount. Where the carrying value of the intangible asset exceeds the future undiscounted cash flows associated with the intangible assets, it is determined that the value of those intangible assets cannot be recovered. For an intangible asset failing the recoverability test, an impairment charge is recorded for the difference between the carrying value and the estimated fair value.

The key assumptions used in the Company's estimates of projected cash flow of its intangible assets deal largely with forecasts of sales levels, gross margins, and operating costs. These forecasts are typically based on historical trends and take into account recent developments as well as the Company's plans and intentions. Any material change in the Company's assumptions could significantly impact projected future cash flows of the intangible assets and these factors are considered in evaluating impairment. Other factors, such as increased competition or a decrease in the desirability of our products, could lead to lower projected sales levels, which would adversely impact cash flows. A significant decrease in cash flows in the future could result in an impairment of our intangible assets or long-lived assets.

Due to circumstances surrounding the forthcoming termination of its partnership with Albertsons, the Company determined a triggering event had occurred during the three months ended September 30, 2021, that required an interim impairment assessment for its goodwill reporting unit and intangible assets. As a result of performing its interim intangibles impairment test due to the triggering event noted above, during the three months ended September 30, 2021, the Company recorded an intangible asset impairment charge of $6.5 million, related to promotion service rights, media service rights, and data access rights.

In the third quarter of 2021, the Company performed a qualitative interim assessment at the reporting unit level. In performing its qualitative impairment assessment, the Company considered (i) the results of its impairment testing from the most recent testing date (in particular, the magnitude of the excess of fair value over carrying value observed), (ii) downward revisions to internal forecasts, (iii) trends in market multiples, and (iv) declines in market capitalization. The interim assessment resulted in the Company’s determination that the fair values of the reporting unit exceeded its carrying value and, therefore, its goodwill was not impaired.

Use of Estimates

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

The COVID-19 pandemic has created and may continue to create ~~significant~~ uncertainty in macroeconomic conditions, which may cause further business slowdowns or shutdowns, depress demand for our advertising business, and adversely impact our results of operations. We expect uncertainties around our key accounting estimates to continue to evolve depending on the duration and degree of impact associated with the COVID-19 pandemic. Our estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in our consolidated financial statements.

Recently Issued and Adopted Accounting Pronouncements

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

During the three and nine months ended September 30, ~~2020,~~2021, there were no significant changes to our quantitative and qualitative disclosures about market risk. Please refer to Quantitative and Qualitative Disclosures About Market Risk included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 filed on ~~March 2, 2020~~February 23, 2021 with the SEC for a more complete discussion on the market risks we encounter.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our chief executive officer (“CEO”) and our chief financial officer (“CFO”), after evaluating the effectiveness of our “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of September 30, ~~2020,~~2021, have concluded that our disclosure controls and procedures were effective at the reasonable assurance level and are effective to provide reasonable assurances that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the third quarter of ~~2020~~2021 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our disclosure controls and procedures or our internal controls are not designed to prevent all errors and all frauds. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control

systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~For~~We do not list all routine litigation matters with which we are a ~~discussion~~party. We discuss below certain pending matters. In determining whether to discuss a pending matter, we consider both quantitative and qualitative factors to assess materiality, such as, among others, the amount of ~~legal proceedings, see Note 14, “Commitments~~damages alleged and ~~Contingencies,”~~the nature of other relief sought, if specified; our view of the ~~Notes~~merits of the claims and of the strength of our defenses; and whether the action purports to ~~Condensed Consolidated Financial Statements~~be, or is, a class action the jurisdiction in which the proceeding is pending.

Catalina Marketing Corp. v. Quotient Technology Inc. On February 24, 2021, Catalina Marketing Corporation filed a complaint in the Florida Circuit Court of the Sixth Judicial District against us asserting claims for unlawful and unfair trade practices; tortious interference with business relationship; and tortious interference with prospective business relationship. The complaint alleges that we engaged in predatory pricing practices and misleading communications with potential customers in connection with our in-lane coupon solution. The complaint seeks unspecified compensatory and punitive damages and injunctive relief. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this ~~Form 10-Q.~~action, we believe that Catalina’s claims lack merit.

Result Marketing Group, Ltd. v. Southeastern Grocers et al. On June 17, 2021, Result Marketing Group, Ltd. (“RMG”) filed a complaint in the U.S. District Court for the Middle District of Florida, against Southeastern Grocers, LLC, Bio-Lo, LLC, Winn-Dixie Stores, Inc. (collectively, "SEG") and us. The complaint alleges SEG breached its non-disclosure agreement with RMG by providing us with RMG's trade secrets, including the business concept of and "playbook" for a retail media hub. The complaint alleges we and SEG misappropriated such trade secrets to develop the SEG Media Hub, and that we further misappropriated such trade secrets to develop our "retail performance media platform", which we sell to end users. The complaint further alleges that we interfered with RMG's contract and prospective business relationship with SEG. RMG contends that SEG defrauded it of no less than $59 million, and that we and SEG are jointly and severally liable for treble damages of no less than $177 million. The complaint seeks compensatory and punitive damages, a constructive trust, and attorney's fees. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, we believe that RMG’s claims lack merit.

Fortis Advisors LLC v. Quotient Technology, Inc. On August 20, 2021, Fortis Advisors LLC, as the SavingStar stockholder representative, ("Fortis") filed a complaint in the Delaware Court of Chancery alleging breach of contract, declaratory judgment, and in the alternative, breach of the implied covenant of good faith and fair dealing. The complaint alleges that we ceased to make generally available the SavingStar customer relationship management (CRM) business, which would trigger an earnout payment of $8.5 million under the terms of the Agreement and Plan of Merger, dated August 23, 2018, between Quotient Technology Inc. and SavingStar, Inc. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, we believe that Fortis's claims lack merit.

Summary of Risk Factors

Our business is subject to a number of risks, including risks that may prevent us from achieving our business objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects. These risks are discussed more fully under "Item 1A. Risk Factors" below and include, but are not limited to, risks related to:

Risks Related to Our Business

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

•Our revenue and business will be negatively affected if we fail to retain and expand, or renew on substantially the same terms, our relationships with retailers and obtain retailer commitment and support for our platforms.

•The loss, or decrease in spending by any significant customer or support from any significant partner, could materially and adversely affect our revenues, results of operations and financial condition.

•If the distribution, revenue sharing or other fees that we pay increase or we are unable to meet contractual minimums under guaranteed distribution fee arrangements, our gross profit and business will be negatively affected.

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

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

•If we are unable to successfully respond to changes in the digital promotions market, our business could be negatively affected.

•If we fail to maintain and expand the use by consumers of digital promotions on our platform, our revenues and business will be negatively affected.

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

•We depend in part on advertising agencies as intermediaries, and if we fail to develop and maintain these relationships, our business may be negatively affected.

•Our failure to attract, integrate and retain other highly qualified personnel in the future, could harm our business.

•The effects of health epidemics, including the COVID-19 pandemic, have had, and may continue to have, an adverse impact on our business, operations and the markets and communities in which we and our partners operate, even in light of the mass vaccination efforts that are underway. The loss or decrease in spending of any significant customer could materially and adversely affect our results of operations and financial condition.

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

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

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

•Indemnity provisions in various agreements and our corporate documents potentially expose us to substantial liability for intellectual property infringement and other claims.

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

Risks Related to Government Regulation, Tax Law or Accounting Standards

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

•If our estimates or judgements relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.

Risks Related to Our Platforms, Technology and Intellectual Property

•If our security measures or information we collect and maintain are compromised or publicly exposed, advertisers, retailers and consumers may curtail or stop using our platforms and we could be subject to claims, penalties and fines.

•If the use of mobile device identifiers, third-party cookies or other tracking technology is rejected by consumers, restricted by third parties outside of our control or otherwise subject to unfavorable regulation, the benefits of our offerings and solutions could diminish and we could lose customers and revenue.

•Our ability to generate revenue and properly capture the occurrence of certain revenue-generating events depends on the collection, reliability, and use of significant amounts of data from various sources, which may be restricted by consumer choice, restrictions imposed by retailers, publishers and browsers or other software developers, changes in technology, and new developments in laws, regulations and industry requirements or standards.

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

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

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

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

Risks Related to Ownership of our Common Stock

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

Risks Related to Our Convertible Senior Notes

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

General Risks

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

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

•Global economic conditions could materially adversely affect our revenue and results of operations.

Item 1A. Risk Factors.

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

Risks Related to Our Business

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

We have incurred net losses of $65.4 million and $37.1 million in 2020 and ~~$28.3 million in~~ 2019, ~~and 2018,~~ respectively, and incurred net losses of ~~$4.2~~$7.8 million and $38.5 million for the three and nine months ended September 30, ~~2020, respectively.~~2021. We have an accumulated deficit of ~~$425.0~~$488.8 million as of September 30, ~~2020.~~2021. We anticipate that our costs and expenses will increase in the foreseeable future as we continue to invest in:

•retailer partnerships;

•sales and marketing;

•research and development, including new product development;

•our technology infrastructure, business processes, and automation;

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

•expanding into new ~~markets;~~markets and verticals; and

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

For example, we have incurred and expect to continue to incur expenses in developing ~~improving, integrating, investing, marketing~~ and ~~maintaining our Promotions, Media, Audience~~retaining retailer partnerships and ~~Analytics platforms~~developing self-service capabilities and ~~solutions, which include Retailer iQ, Retail Performance Media, Quotient Analytics, and Coupons.com app and website and we~~automation. We may not succeed in increasing our revenues sufficiently to offset these expenses.

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

We may not achieve revenue growth.

We may not be able to achieve revenue growth, and we may not be able to generate sufficient revenues to achieve profitability. ~~In addition, historically~~Historically the growth rate of our business, and as a result, our revenue growth, has varied from quarter-to-quarter and year-to-year, and we expect that variability to continue. For example, some of our products and services experience seasonal sales and buying patterns mirroring those in the CPG, retail, and eCommerce markets, including back-to-school and holiday campaigns, where demand increases during the second half of our fiscal year. Our revenues may fluctuate due to changes in marketing budgets of advertisers (within which term CPGs are included) and retailers and the timing of their marketing spend. Marketing spend by CPGs is considered the most flexible and easiest to cut ~~for instance, at the end of a quarter or fiscal year if a CPG is facing budget pressures~~ and CPGs can change their spend without ~~notice. As a~~notice, which can result ~~we are not always able~~in our inability to anticipate such fluctuations. For example, budget pressures or unspent budgets at the end of a CPG’s fiscal year may lead to respectively, unexpected reduced or increased spending on our platforms.

Decisions by CPGs or retailers to delay or reduce their digital ~~promotion and media spending, or divert spending away from digital promotions, digital media campaigns, or other digital~~ marketing ~~from~~on our platforms or choose a solution from one of our competitors, changes in our fee arrangements with CPGs, retailers and other commercial partners, or the termination of a partnership with a retailer,such as the forthcoming termination of our relationship with Albertsons, could also slow our revenue growth or reduce our revenues. For instance, beginning in mid-March of 2020, decisions by CPGs and retailers to mostly pause or delay, and in some cases cancel, marketing campaigns due to the uncertainty, supply-chain disruption, and consumer purchasing behavior changes caused by the COVID-19 pandemic had an adverse impact on our ~~revenues~~revenue and revenue growth for the second quarter of 2020. While CPGs and retailers ~~have generally~~ resumed or

~~rescheduled paused and delayed campaigns for the third and fourth quarter of 2020. We have seen CPGs and retailers resume~~ digital marketing in the second half of ~~2020. But with~~2020 generally, certain CPGs and retailers still are experiencing supply chain disruption, and ~~as circumstances change,~~brands and retailers are experiencing inflationary pressures that are increasing their costs. Accordingly, we may continue to see ~~lower~~reduced digital marketing levels and postponed or cancelled campaigns, particularly if COVID-19 outbreaks ~~worsen in~~persist or, more broadly, the ~~winter.~~pandemic worsens.

Our business is complex and evolving. We may offer new ~~solutions,~~capabilities, pricing, service models, process and delivery methods to ~~CPGs~~advertisers and retailers. These new ~~solutions~~capabilities may change the way we generate and/or recognize revenue, which could impact our operating results. IfFor example, in the third quarter of 2021 we ~~shift a greater number of our arrangements with CPGs to new models and~~announced that we are ~~not able to deliver on the results,~~shifting our ~~revenue growth~~focus away from a lower-margin, labor-intensive managed services business and ~~revenues could be harmed. In addition, we announced in the first quarter of 2020 that effective second quarter of 2020, we would modify the way we process~~are moving towards more self-service and ~~deliver certain media products to enhance customer experience.~~platform-based solutions. As a result of these changes and the application of the accounting rules relating to such changes, we ~~have recognized~~are recognizing certain media revenue on a net basis as compared to the prior recognition on a gross basis and this has caused a decrease in our revenue growth and impacted our revenues. As another example, we are shifting from a cost-per-action pricing model for promotions to non-quantity-based pricing models, such as duration-based promotions.

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

•increase our share of ~~CPG marketing~~advertiser spend on promotions and media (collectively, “marketing spend”) through our platforms, ~~and~~ increase the number of brands that are using our platforms within each ~~CPG;~~advertiser or CPG, and expand our advertiser or CPG base;

•adapt to changes in marketing goals, strategies and budgets of ~~CPGs~~advertisers and retailers and the timing of their marketing spend;

•maintain and grow our retailer network ~~through direct~~ and ~~indirect commercial partnerships;~~expand into new verticals;

•capitalize on the shift from offline to digital marketing and growth in eCommerce;

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

•successfully execute and expand our digital media solutions into areas such as ~~Retail Performance Media,~~retail performance media, social influencer marketing, sponsored product search, DOOH, and programmatic media;

•successfully execute and expand our promotions solutions into areas such as in-lane, targeted promotions, national rebates, and loyalty rewards programs;

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

•maintain and grow the size of our targetable audience;

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

•~~successfully execute and grow Retail Performance Media programs;~~

•~~successfully expand our promotions solutions into new areas such as in-lane targeted promotions, national rebates and loyalty rewards programs;~~

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

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

•~~launch new products or retail partnerships as planned;~~ capabilities;

•expand the use by consumers of our ~~digital~~media and promotions ~~and media offerings and broaden the selection and use of digital promotions, national rebates and coupon codes;~~

•~~successfully enter into new markets;~~offerings;

•successfully integrate our newly acquired companies into our business;

•~~manage the~~successfully execute on our announced strategy shift away from ~~desktop to mobile devices;~~a lower-margin, labor-intensive services business and are moving towards more self-service and platform-based solutions;

•~~manage the transition from digital print coupons~~capitalize on new pricing models, such as our shift to ~~digital paperless coupons;~~non-quantity-based (e.g., duration-based) promotions pricing;

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

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

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

•hire, integrate, train and retain talented personnel;

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

•successfully compete with existing and new competitors.

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

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

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

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

~~Historically, a significant portion of sales and client~~ support services were conducted in person. Currently, as a result of the work and travel restrictions related to the ongoing COVID-19 pandemic, substantially all of our sales and client support services activities are being conducted remotely. As of the date of this report, we have no indication of remote working having a negative impact on our ability to attract, serve, retain or upsell CPGs and retailers our services. However, there are no guarantees remote working will not have a negative impact if it continues.

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

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

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

As consumer demand for digital promotions has increased, promotion spending has shifted from traditional promotions through traditional offline or analog channels, such as newspapers and direct mail, to digital coupons. However, it is difficult to predict whether the pace of transition from traditional to digital promotions will continue at the same rate and whether the growth of the digital promotions market will continue. Some large retailers do not yet use digital paperless promotions. If a retailer decides not to accept digital paperless promotions or a CPG reduces

its spend in digital promotions, our business could be harmed. For example, we saw a decrease in promotion spending with us by three of our top CPG customers in much of 2019. In order to expand our business, we must appeal to and attract consumers who historically have used traditional promotions to purchase goods or may prefer alternatives to our offerings, such as those of our competitors. If the demand for digital promotions does not continue to grow as we expect, or if we fail to successfully address this demand, our business will be harmed. For example, the growth of our revenues will require increasing the number of brands that are using our digital promotions solutions within each CPG. If our projections regarding the adoption and usage of Quotient Promotions and Retailer iQ by retailers, CPGs and consumers, do not occur or are slower than expected, our business, financial condition, results of operations and prospects will be harmed. A variety of factors could slow the success of Quotient Promotions and Retailer iQ generally, including insufficient time, resources or funds committed by retailers to the promotion of our platforms and solutions, a retailer’s decision to forego marketing our platforms, our inability to obtain sufficient data rights to maximize the functionality of our platforms and our inability to monetize enhanced platform functionality, and our inability to efficiently integrate our platforms and Retailer iQ with a retailer’s system. Even if we are successful in driving the adoption and usage of our platforms and Retailer iQ by retailers, CPGs and consumers, if Retailer iQ fee arrangements or transaction volumes, or the mix of offers, change or do not meet our projections, our revenues may be harmed. We expect that the market will evolve in ways which may be difficult to predict. For instance, although we expect CPGs to stop spending on the offline free-standing insert (FSI), our expectations regarding the timing of such change or our expectations that CPGs will shift some of their FSI budgets to our solutions or about the timing of such shifts may not be accurate. It is also possible that digital promotion offerings generally could lose favor with CPGs, retailers or consumers. In the event of these or any other changes to the market, our continued success will depend on our ability to successfully adjust our strategy to meet the changing market dynamics. In addition, we will need to continue to grow demand for our digital promotions platform by CPGs, retailers and consumers, including through continued innovation and implementation of new initiatives associated with the digital promotions. For example, if consumer demand for our software-free print solution, in-lane targeted promotions, national rebates, or our mobile applications does not grow as we expect or decreases, our business may be harmed. If we are unable to grow or successfully respond to changes in the digital promotions market, our business could be harmed and our results of operations could be negatively impacted. For example, some retailers discontinued the acceptance of paper coupons for a variety of reasons, including to address the fear that COVID-19 may be transmitted through paper. If retailers and consumers refuse to use our solutions involving paper, such as digital print, in-lane targeted offers and national rebates, our business could be harmed. Our revenues may also be harmed if we are unable to manage the transition and the growth of digital paperless coupons is slower than the decline in digital print coupons. Conversely, acceleration of this shift (from, for example, acceptance of digital paperless coupons by new retailers) could lead to unanticipated increases in revenue.platforms.

The success and scale of our ~~solutions and~~ platforms depend ~~in part,~~ on our strategic relationships with ~~retail partners~~retailers and the level of retailer commitment and support ~~by retailers.~~

~~Our Promotions, Media, Audience, and Analytics platforms and solutions, which include Retail Performance Media (RPM), Retailer iQ, and Quotient Analytics, depend in part to~~for our ~~strategic relationships with retail partners, which provide us with access to retailer data, consumer, web and mobile properties, and scale.~~platforms. If we do not ~~maintain and~~ expand these relationships, if we do not renew these relationships on as favorable terms as were in place immediately prior to renewal, if we lose one or more retailers, or if we do not add new ~~retailer partners,~~retailers to our platforms, our business will be ~~harmed.~~negatively affected.

For ~~example, retailer support and commitment are central to the success and scale of RPM. In turn, RPM fuels the data and insights that drive~~instance, our ~~other solutions and platforms. Our revenues~~revenue and growth may be adversely impacted if ~~RPM~~ retailers do not support ~~RPM~~our platforms. The success of our platforms requires integration with a retailer’s POS, loyalty programs and consumer channels. Certain platform capabilities may require integration with other retailer systems as well. This integration requires time and effort from the retailer; and may require us to work with a retailer’s third-party service providers, some of whom may be our competitors. In addition, the success of our platforms requires consumer and advertiser adoption which requires significant marketing and other support from retailers, including retailer programs that drive more advertiser spend on our platforms. If retailers do not provide sufficient or ~~if we are unable to add new RPM retail partners. For~~timely resources and support, platform launches could be delayed and consumer and/or advertiser adoption could be slow or minimal, which would negatively impact our revenue, costs of revenue, and recoverability of certain assets. As an example, delays in the launch of in-lane promotions and sponsored search and display adversely impacted our ~~revenues were harmed~~revenue growth for the second half of 2019. Also, our revenue was negatively affected in the first ~~and second quarter~~half of 2020 when retailers mostly paused or delayed, and in some cases cancelled, ~~RPM~~marketing campaigns on our platforms in response to supply-chain challenges and out-of-stock product at shelf, consumer purchasing behavior changes, and other issues resulting from the COVID-19 pandemic.

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

We may develop products that require integration with a retailer’s systems and the systems of their service providers. The success of these products and our ability to launch them on time as planned similarly depend,depends in part on our use of consumer sales data provided by retailers, our access to retailer’s consumer channels, the size and quality of retailer support. Delays by the retailer or their service providers could adversely impact our business. For example, delays in the launch of in-lane targeted promotions and sponsored product search adversely impacted our revenue growth for the second half of 2019. Further delays or lack of support from retailers on these products may negatively impact our revenues, costs of revenues, and recoverability of certain assets.

As our retail partners focus on the unprecedented challenges that COVID-19 has posed, they may not provide the support necessary for our product launches, which could cause delays. For example, our targeted in-lane at checkout and our eCommerce sponsored search products require resources and support from our retail partnersaudiences, and the ~~success of these products has been adversely impacted by delays in planned launches for this year~~national scale and ~~by other lack of support.~~

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

Our Promotions, Media, Audience and Analytics platforms and solutions, which include Retailer iQ, our targeted promotions and media offerings, and Quotient Analytics, are powered in part by data we obtain from our retail partners. Our access to this data is governed by data-rights agreements with somereach of our ~~retail partners. These data-rights agreements have complex rules and are required to be renewed periodically.~~retailer network. If we fail to secure, ~~additional data rights~~ or ~~renew expiring data-rights agreements, if we~~ are found to be in violation of ~~any~~the terms of, ~~our obligations under these agreements, or if retailers lose their~~such data, ~~rights,~~access and scale, we could lose access to retailer ~~data. Without retailer~~ data and our ~~Promotions, Media, Audience and Analytics~~ platforms ~~and solutions~~ would be less valuable to ~~our CPG customers, publishers, ad tech~~advertisers and ~~retail~~other business partners.

In addition, ~~changes~~we depend on retailers to ~~international, federal, state, local and municipal~~comply with laws, regulations and industry standards ~~that relate~~relating to privacy ~~electronic communications, data protection, intellectual property, eCommerce, competition, price discrimination, consumer protection, taxation,~~ and the use of ~~promotions may require us to amend, or alter our practices under, our data rights agreements.~~consumer data. If we and our retail partners cannot timely respond ~~timely~~ to ~~such~~ legal, regulatory and ~~regulatory~~industry changes, or if retailers decide to limit or prohibit use of their data to comply with such changes, our revenue and growth would be impaired. For instance, if the California Consumer Privacy Act of 2018 (the " CCPA"), is amended to prohibit the “sale” (as defined in the CCPA) of loyalty program data, or if retailers materially restrict our use of ~~purchase~~sales and loyalty card data in light of the CCPA or similar laws or regulations, our business will be ~~harmed.~~negatively affected. See the risk factor below titled “~~Our~~“Our business is subject to complex and evolving laws, regulations and

industry standards, and unfavorable interpretations of, or changes in, or failure by us to comply with these laws, regulations and industry standards could substantially harm our business and results of ~~operations~~”operations” for additional information.

Our ~~ability~~sales cycle with retailers tends to be long and we may make investments and incur significant expenses before an agreement or renewal is reached, if at all, and before we are able to generate any revenue ~~depends~~from such agreement or renewal. There are no guarantees that we will be able to recoup such investments and expenses, which would have an adverse effect on our ~~collection~~business, financial condition and ~~use~~results of operations.

The loss, or decrease in spending by any significant ~~amounts of data~~customer or support from various sources, which may be restricted by consumer choice, restrictions imposed by retailers, publishers and browsers or other software developers, changes in technology, and new developments in laws, regulations and industry standards.

Our ability to deliver our Promotions, Media, Audience and Analytics platforms and solutions depends on our ability to successfully leverage data, including data that we collect from consumers, data we receive from retail partners and third parties, and data from our own operating history. Using cookies, loyalty card numbers both on-line and in-store, device identifiers (including Google AdID and Apple IDFA), and other tracking technologies, we, our retail partners and other data providers collect information about the interactions of consumers with our retail partners’ digital properties and in-store, our own and operated properties, and certain other publisher sites and apps. Our ability to successfully leverage such data depends on our continued ability to access and use such data, which can be restricted by a number of factors, including consumer choice, success in obtaining consumer consent, restrictions imposed by our retail and other data partners or other third parties, publishers and web browser developers or other software developers, changes in technology, including changes in web browser technology, and new developments in, or new interpretations of laws, regulations and industry standards. For example, Apple has recently announced several changes to iOS that will require consumers to opt-in to sharing data with publisher sites and app, which may adversely impact our business. Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanism as a result of industry regulatory and/or legal developments, the adoption by consumers of browsers settings or “ad-blocking” software and the development and deployment of new technologiesany significant partner, could materially ~~impact~~and adversely affect our ~~ability to collect data or reduce our ability to deliver relevant promotions or media, which could materially impair the~~revenues, results of ~~our operations. See the risk factor below titled “~~operations and financial condition.

Our business is ~~subject~~exposed to risks related to customer concentration, particularly among advertisers, and partner concentration, particularly among retailers. The loss of or decrease in spending by any of our significant customers, or the loss of or decrease in support from any of our significant partners, or a deterioration in our relationships with any of them, could materially and adversely affect our revenues, results of operations and financial condition. As an example, the loss of a retailer, such as the forthcoming termination of our partnership with Albertsons, may negatively impact the amount that advertisers spend on our platforms.

If the distribution, revenue sharing or other fees that we pay increase or we are unable to meet contractual minimums under guaranteed distribution fee arrangements, our gross profit and business will be negatively affected.

We generally pay a distribution fee to retailers and publishers when we deliver media and promotions on their digital properties or through their loyalty programs. We also pay fees to retailers for use of their data to power our platforms. Such fees have increased as a percentage of our revenue in recent periods. As we renew agreements or enter into new ones, we may face pressure to pay higher distribution fees. If such fees continue to increase, our cost of revenue could increase and our operating results would be adversely affected. In addition, calculations of such fees are complex and ~~evolving laws, regulations~~if retailers disagree with our calculations in an audit, it could have an adverse impact on our business.

Some of our agreements with retailers include certain guaranteed distribution fees, which, in some cases, may apply to multiple annual periods. If the adoption and usage of our platforms do not meet projections or minimums, these guaranteed distribution fees may not be recoverable and any shortfall may be payable by us at the end of the applicable period. We consider various factors in our assessment of whether these prepaid or guaranteed distribution fees may not be recoverable, including our historical experience with the transaction volumes through the retailer and comparative retailers, ongoing communications with the retailer to increase its marketing efforts to promote the digital platform, as well as the projected revenue, and associated revenue share payments. For example, in 2020, the Company's efforts to implement, with Albertsons, one of the Company’s solutions resulted in multiple disputes being raised by each of the parties against the other, one of which disputes resulted in the Company not being able to meet the contractual minimum at the end of the applicable period under the agreement. In order to resolve certain of the disputes regarding the parties' respective obligations, the Company recognized a loss of $8.8 million during the year ended December 31, 2020.During the second quarter of 2021, the Company notified Albertsons that, due to Albertsons failure to meet certain obligations under the agreement, the Company is not obligated to meet the contractual minimums for the current period that ended in October 2021. In connection with renewal discussions between the parties, we received a letter in October 2021 from Albertsons notifying us of their intent to early terminate our agreement related to the delivery of promotions and media campaigns, effective December 31, 2021. We informed Albertsons that we disputed their right to terminate the agreement prior to March 31, 2022. The parties are in discussions regarding an orderly wind down of the partnership, including with respect to the specific termination date. However, there can be no assurance that we are able to negotiate a specific termination date and/or an orderly wind down of the Albertsons partnership on terms favorable or acceptable to us, or at all.If the contractual minimum applicable to the period that ended in October 2021 remains enforceable, the Company may recognize a loss that, depending on a variety of factors, is estimated to be as high as $8.5 million.

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

The factors potentially affecting our gross margins include:

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~~and industry standards, and unfavorable interpretations of, or changes~~•our product mix since we have significant variations in ~~or failure by us to comply with these laws, regulations and industry standards~~our gross margin among products. Any substantial change in product mix could ~~substantially harm~~change our ~~business and results of operations” for additional information.~~aggregate gross margin;

~~Unfavorable publicity~~•growth and ~~negative public perception about~~expansion of our ~~industry~~lower-margin media products, including programmatic ads delivered through third-party ad-tech partners and publishers;

•our efforts to add higher-margin solutions to our suite of offerings, for example transitioning from managed service offerings to self-service and automated offerings;

•our ability to meet contractual minimums under guaranteed distribution fee arrangements;

•increasing costs of maintaining, expanding and adding retailer relationships;

•increasing data acquisition and media acquisition costs;

•evolving fee arrangements with advertisers and retailers, which might have an impact on our gross margins;

•success of our pricing strategies, including duration-based pricing strategies;

•our decision to exit higher margin non-strategic products or ~~data collection~~business lines;

•success of our investments in technology and ~~use could adversely affect~~automation or through acquisitions to gain cost efficiencies;

•increasing pricing pressures from competitors, advertisers and agencies representing advertisers;

•success of higher-margin new products; and

•business model or solution delivery changes, with respect to a portion of our ~~business~~offerings, that result in revenue being recognized on a net, as opposed to a gross, basis.

We have seen pressure on our gross margins, which we principally attribute to the factors described above and ~~operating results.~~

~~With the~~we expect this pressure to continue while our growth ~~of online advertising~~strategy evolves and ~~eCommerce, there is increasing awareness~~our product mix continues to change. For instance, lower-margin media products have increased in our product mix and concern among the general public, privacy advocates, mainstream media, governmental bodies and others regarding marketing, advertising, and privacy matters, particularly as they relate to individual privacy interests. Any unfavorable publicity or negative public perception about our use of data or other data focused industries could affect our business and results of operations, and may lead digital publishers like Facebook to change their business practice, or trigger additional regulatory scrutiny or lawmaking that affects us. For example, in recent years, consumer advocates, mainstreamwe face margin pressure arising from increased media and ~~elected officials have increasingly and publicly criticized~~ data ~~and marketing companies for their collection, storage and use of personal data. The negative public attention could cause CPGs or our retail partners~~acquisition costs due, in part, to discontinue using our targeted advertising solutions. This public scrutiny may also lead to general distrust of data and marketing companies, consumer reluctance to share and permit use of personal datareduced inventory and increased consumer ~~opt-out rates, any~~ability to opt out of ~~which~~permitting their personal information to be used for marketing purposes. See Risk Factor below entitled "If the use of mobile device identifiers, third-party cookies or other tracking technology is rejected by consumers, restricted by third parties outside of our control, or otherwise subject to unfavorable regulation, the benefits of our offerings and solutions could ~~negatively influence, change or reduce~~diminish, our ~~current~~data and ~~prospective customers’ demand for our products~~media acquisition costs could increase and ~~services~~we could lose customers and ~~adversely affect~~revenue". Although we expect to gain leverage as our business expands, our platforms transition to self-service, and ~~operating results.~~through automation, there is no guarantee that we will succeed.

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

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

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

•our ability to ~~grow our revenues by increasing our share~~adapt to changes in marketing goals, strategies and budgets of ~~CPG spending~~advertisers and retailers and the ~~number~~timing of ~~brands using~~ their marketing spend;

•our ~~platforms, including Retailer iQ, increasing media spending on~~ability to maintain or expand our ~~platforms, the timing~~retailer network and ~~extent of CPGs switching from free standing inserts~~expand into new verticals;

•our ability to ~~digital promotions, further integrating~~maintain and expand our data rights with our retailers, adding new CPGs and retailers to our network and growing our current consumer base and expanding into new industry segments such as convenience, specialty/franchise retail, restaurants and entertainment;retailer network;

•our ability to leverage retailer demands to increase CPG spend on ~~RPM;~~retailer performance media;

•the impact of competitors or competitive products and services, and our ability to ~~grow~~compete in digital marketing;

•the impact of pricing pressures from our ~~revenues will depend on CPGs’ annual marketing budgets which are affected~~competitors, advertisers or CPGs, and agencies representing advertisers or CPGs;

•the impact of increasing media acquisition and data acquisition costs;

•the impact of litigation involving us, our industry or both, including investigations by ~~economic headwinds facing the CPG industry;~~regulators or claims made by our competitors or other third parties;

•reduction in demand or volatility in demand for one or more of our products, which may be caused by, among other things: delay or cancellation of marketing campaigns by ~~CPGs~~advertisers and retailers as they focus on manufacturing in-demand products, replenishing out-of-stock items, adjust to changes in consumer

purchasing behavior, contend with supply-chain challenges, and other issues arising out of the COVID-19 pandemic;

•disruption of planned themed marketing campaigns by ~~CPGs~~advertisers and retailers, including campaigns that were adversely impacted by shelter-in-place orders and social distancing due to the COVID-19 pandemic;

•reduction in overall media spend by ~~CPGs~~advertisers in reaction to the COVID-19 pandemic, which primarily ~~harmed~~had a negative effect on our media business starting March of 2020 and into the second quarter of 2020 and despite a return of bookings in the second half of 2020, could have an adverse effect through ~~the rest of 2020;~~

•~~our ability to successfully respond to changes in the digital promotions and media market and continue to grow the market and demand for our platforms;~~2021;

•our ability to grow existing consumer ~~selection and use~~usage of, ~~our digital promotion offerings~~ and attract new consumers to, our ~~platforms;~~

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

•~~the impact of global business or macroeconomic conditions,~~more generally to interactions with our platform, including ~~the resulting effects on the level of coupon and trade promotion spending by CPGs and spending by consumers;~~

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

•~~the impact of competitors or competitive products and services,~~retailer partner sites and our ~~ability to compete in digital marketing;~~publisher network;

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

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

•our ability to control costs including the costs of investing, maintaining and enhancing our technology infrastructure;

•increased legal and compliance costs associated with data protection laws and regulations in various jurisdictions, including the CCPA, which went into effect on January 1, ~~2020;~~2020, and invalidation of the EU-U.S. Privacy Shield framework and Swiss-U.S. Privacy Shield Framework in July 2020 and September 2020, respectively;

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

•whether new products successfully launch on time;

•our ability to manage our growth, including scaling our platform;

•our ability to manage innovation, including extent of investments in and success in deploying new offerings, and our ability to manage transitions from legacy platforms and solutions ~~developing~~to new platforms and ~~growing our Media, Audience~~solutions such as those with self-service and ~~Analytics Cloud platforms;~~automation capabilities;

•the success of our sales and marketing efforts;

•~~the costs of acquiring new companies;~~

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

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

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

•our ability to collect payment for services timely, as any significant persistence or worsening of the COVID-19 pandemic, supply chain challenges, and inflation may cause liquidity issues for some of our customers;

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

•the effectiveness of our internal controls;

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

•changes in accounting rules, tax laws or interpretations thereof; and

•business model or solution delivery changes that result in ~~the way we process and deliver our services, which could affect~~differences in accounting treatment, including whether revenue is recognized on a net or gross basis.

The effects of these factors individually or in combination, including the uncertainty created by the COVID-19 pandemic, could cause our quarterly and annual operating results to fluctuate, and affect our ability to forecast those results and our ability to achieve those forecasts. As a result, comparing our operating results on a period-to-period basis may not be meaningful. You should not rely on our past results as an indication of our future

performance. This variability and unpredictability could also result in our failing to meet or exceeding the expectations of our investors or financial analysts for any period. In addition, we may release guidance in our quarterly earnings conference calls, quarterly earnings releases, investor day, or otherwise, based on predictions of our management, which are necessarily uncertain in nature. The guidance provided depends on our prediction of ~~CPG marketing budgets~~demand for our platform, maintaining and growing our retailer network, cost of maintaining retailer partnerships which can fluctuate greatly and are beyond our control. Our guidance may vary materially from actual results. If our revenue or operating results, or the rate of growth of our revenue or operating results, fall below or above the expectations of our investors or financial analysts, or below or above any forecasts or guidance we may provide to the market, or if the forecasts we provide to the market are below or above the expectations of analysts or investors, the price of our common stock could decline or increase substantially. Such a stock price decline or increase could occur even when we have met our own or other publicly stated revenue or earnings forecasts. Our failure to meet our own or other publicly stated revenue or earnings forecasts, or even when we meet our own forecasts but fall short of analyst or investor expectations, could cause our stock price to decline and expose us to costly lawsuits, including securities class action suits. Such litigation against us could impose substantial costs and divert our management’s attention and resources. If we exceed our own or other publicly stated revenue or earnings forecasts, or even when we meet our own forecasts but exceed analyst or investor expectations, our stock price could increase.

If we are unable to successfully respond to changes in the digital promotions market, our business could be negatively affected.

As consumer demand for digital promotions has increased, promotion spending has shifted from traditional promotions through traditional offline or analog channels, such as newspapers and direct mail, to digital coupons. Although we expect advertisers to reduce and eventually stop spending on the offline free-standing insert ("FSI"), our expectations regarding the timing of such change or our expectations that advertisers will shift some of their FSI budgets to our platforms or about the timing of such shifts may not be accurate. It is also difficult to predict whether advertisers will decide to shift FSI budgets to other marketing channels if digital promotions lose favor with advertisers, retailers or consumers. For example, some large retailers do not yet use digital paperless promotions.

In the event of these or any other changes to the market, our continued success will depend on our ability to successfully adjust our strategy to meet the changing market dynamics. We will need to continue to grow demand for our platforms by advertisers, retailers and consumers, including through continued innovation and implementation of new initiatives associated with digital promotions. If a retailer decides not to accept digital paperless promotions, advertisers reduce spend in digital promotions, or advertisers chooses our competitors’ products and services, our business could be negatively affected.

If the demand for digital promotions does not continue to grow as we expect, or if we fail to successfully address this demand, our business will be harmed. For example, the growth of our revenue and gross margins require increasing or maintaining the number of brands that are using our promotions platforms within each CPG. If our projections regarding the adoption and usage of our promotions platforms by retailers, advertisers (including CPGs) and consumers, do not occur or are slower than expected, our business, financial condition, results of operations and prospects will be harmed. Even if we are successful in driving the adoption and usage of promotions platforms by retailers, advertisers and consumers, if our fee arrangements or transaction volumes, or the mix and quality of offers, change or do not meet our projections, our revenues may be negatively affected. We expect that the market will evolve in ways which may be difficult to predict. For example, if consumer demand for our national and shopper promotions or our mobile applications does not grow as we expect or decreases, our business may be negatively affected. If we are unable to grow or successfully respond to changes in the digital promotions market, our business could be negatively affected and our results of operations could be negatively impacted. For example, some retailers discontinued the acceptance of paper coupons for a variety of reasons, including to address the fear that COVID-19 may be transmitted through paper. If retailers and consumers refuse to use our solutions involving paper, such as digital print, in-lane offers and national rebates, our business could be negatively affected. Our revenues may also be negatively affected if we are unable to manage the transition and the growth of digital paperless coupons is slower than the decline in digital print coupons. Conversely, acceleration of this shift (from, for example, acceptance of digital paperless coupons by new retailers) could lead to unanticipated increases in revenue.

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

We must continue to maintain and expand the use by consumers of digital promotions on our owned-and-operated sites, on retailer sites and on our publisher network in order to increase the attractiveness of our platforms to advertisers and retailers, and to increase revenues and achieve profitability. If consumers do not perceive that we offer a broad selection of relevant and high-quality digital promotions, or that the usage of digital promotions is easy and convenient through our platforms, we may not be able to attract or retain consumers. In addition, as consumer behavior in accessing digital promotions changes and new distribution channels emerge, if we do not successfully respond and do not develop products or solutions that are widely accepted, we may be unable to retain consumers or attract new consumers and as a result our business may suffer. We also depend on our retail partners to devote sufficient time, resources or funds to the promotion of our platforms and marketing of our digital promotions to consumers. If we are unable to maintain and expand the use by consumers of digital promotions on our platforms and consumer properties, as well as the digital properties and channels of retailers and other publishers in our network, or if we do not do so to a greater extent than our competitors, advertisers may find that offering digital promotions on our platforms do not reach consumers with the scale and effectiveness that is compelling to them. Likewise, if retailers find that use of our platforms does not increase sales of the promoted products and consumer loyalty to the retailer to the extent they expect, then the revenues we generate may not increase to the extent we expect or may decrease. Any of these could harm our business. Additionally, consumer shopping behavior has changed dramatically in response to the COVID-19 pandemic. For instance, shoppers continue to minimize shopping trips, rely on online grocery shopping, change buying habits as their lifestyles were impacted by state and local orders and social distancing. If consumers decide not to use our products that involve paper as a result of the COVID-19 pandemic and do not find our purely digital products compelling, our business could be harmed.

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

We expect competition in digital marketing to continue to increase. This industry is competitive, fragmented and rapidly changing. We compete against a variety of companies with respect to different aspects of our business, including:

•providers of digital promotions such as Valassis’ Redplum.com, Catalina Marketing Corporation’s Cellfire, Inmar/You Technology, Neptune Retail Services’ (formerly known as News America Marketing)

SmartSource; companies that offer cash back solutions such as iBotta, Inc., Neptune Retail Services’ Checkout 51; companies providing other eCommerce based services that allow consumers to obtain direct or indirect discounts on purchases; and companies that offer coupon codes such as RetailMeNot, Inc., which recently entered into an agreement to be purchased by J2 Global, Inc., Groupon, Inc., Exponential Interactive, Inc.’s TechBargains.com, Savings.com, Inc., Honey Science Corporation, which was acquired by PayPal Holdings, Inc., and Rakuten, Inc.;

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

•retailers who develop and manage digital advertising or data products in-house, such as The Kroger Company with its wholly owned subsidiary of 84.51°;

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

•companies offering online and marketing services to retailers and advertisers, such as Mi9 Retail, Inc. and Flipp Corp.; and

•companies offering digital advertising technology, inventory, data, and services solutions and channels for advertisers and retailers including: Alphabet Inc., Facebook, Inc., Pinterest, Inc., Amazon.com, Inc., Adobe Inc., The Trade Desk Inc., Oracle Corporation, Criteo S.A., Microsoft Corporation, CitrusAd, and others.

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

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

•scale and reach of a company's retailer network;

•scale and reach of a company's targetable audience data;

•ability to attract consumers to a company's platform;

•platform security, usability, scalability, reliability and availability;

•integration with retailer applications, POS systems, and consumer channels;

•access to consumer data;

•measurement that demonstrates the effectiveness of campaigns;

•quality of tools, reporting and analytics for planning, development and optimization of digital marketing campaigns;

•integration of products and solutions;

•rapid deployment of products and services for customers;

•breadth, quality and relevance of a company's solutions;

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

•brand recognition and reputation; and

•ability to recruit, retain and train employees.

choose to offer digital promotions and media and audiences as an add-on to their core business on their own or in partnership with one of our competitors that would directly compete with ours. Many of our larger actual and potential competitors have the resources to significantly change the nature of the digital promotions industry to their advantage, which could materially disadvantage us. For example, Alphabet Inc. and Facebook, Inc., retailers such as Kroger, online retailers such as Amazon have highly trafficked industry platforms which they have leveraged, or could leverage, to distribute digital promotions and media that could negatively affect our business. In addition, these potential competitors may have greater access to first-party data, be able to respond more quickly than we can to new or emerging technologies and changes in consumer habits. These competitors may engage in more extensive research and development efforts, undertake more far-reaching marketing campaigns and adopt more aggressive pricing policies, which may allow them to attract more consumers and, as a result, more advertisers and retailers, or generate revenues more effectively than we do. Our competitors may offer digital promotions or targeted media campaigns that are similar to the digital promotions and targeted media campaigns we offer or that achieve greater market acceptance than those we offer. We are also subject to competition from smaller companies that launch similar or new products and services that we do not offer and that could gain market acceptance. We may also face claims or lawsuits from our competitors.For example, in February 2021, Catalina Marketing Corporation filed a complaint against us, alleging that we engaged in predatory pricing practices and misleading communications with potential customers in connection with our in-lane promotions solution, and in June 2021, Result Marketing Group, Ltd. filed a complaint against us, alleging misappropriation of trade secrets, interference with contract, interference with prospective business relationships and unjust enrichment.While we believe that these claims are without merit, these matters could cause us to incur substantial costs and resources defending against the claims, could distract our management from our business and could cause uncertainty among our customers or prospective customers, all of which could have an adverse effect on our business, operating results and financial condition. For additional information regarding these matters, see Item 1, “Legal Proceedings,” contained in Part II of this report.

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

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

We also directly compete with retailers who develop and manage digital advertising or data products in-house, such as The Kroger Company with its wholly owned subsidiary of 84.51°. Many retailers market and offer their own digital advertising solutions, including retailer performance media, targetable audiences and sponsor search, directly to advertisers. We also compete with retailers directly and indirectly for consumer traffic. Retailers will market promotions and media directly to consumers using their own websites, email newsletters and alerts, mobile applications and social media channels. Additionally, some retailers also market and offer their own digital promotions and media directly to consumers using our platforms for which we earn no revenue. Our retailers could be more successful than we are at marketing their own digital promotions and media, could develop or expand their own in-house capabilities, and could decide to terminate their relationship with us or renew the relationship on less favorable terms than existed previously.

We may face competition from companies we do not yet know about. If existing or new companies develop, market or offer competitive digital coupon solutions, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and our operating results could be negatively affected. For example, in March 2019, Inmar announced that it completed the acquisition of Kroger’s subsidiary You Technology and entered into a long-term service agreement to provide digital coupon services to the Kroger family of stores. Following this acquisition, Inmar terminated our agreement with You Technology as of December 2019. This adversely affected our ability to distribute digital promotions through You Technology, which generated less than 5% of our revenue in 2019.

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

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

Our sales could be adversely impacted by industry changes relating to the use of advertising agencies. Moreover, to the extent that we do not have a direct relationship with advertisers or retailers, the value we provide to advertisers and retailers may be attributed to the advertising agency rather than to us, further limiting our ability to develop long-term relationships directly with advertisers and retailers. Advertisers and retailers may move from one advertising agency to another, and we may lose the underlying business. The presence of advertising agencies as intermediaries between us and the advertisers and retailers thus create a challenge to building our own brand awareness and affinity with the advertisers and retailers that are the ultimate source of our revenues. In addition, advertising agencies conducting business with us could develop similar digital marketing solutions. As such, these advertising agencies are, or may become, our competitors. If they further develop their own capabilities, they may be more likely to offer their own solutions to advertisers, and our ability to compete effectively could be significantly compromised and our business, financial condition and operating results could be adversely affected.

Our failure to attract, integrate and retain other highly qualified personnel in the future, could harm our business.

As an industry leading digital promotions and media company we compete for sales, engineering and other technical talent in a highly competitive environment against large, well-established technology companies and well-funded start-ups, which have significantly greater financial and other resources than we do. If we do not succeed in attracting, hiring and integrating qualified personnel, or retaining and motivating existing personnel, we may be unable to grow effectively, and our operating results may be harmed. For example, following the easing of the COVID-19 pandemic restrictions in 2021, we have experience higher employee attrition and an increasingly competitive market for talent.

We may be limited in our ability to recruit global talent by U.S. immigration laws, including those related to H1-B visas. The demand for H1-B visas to fill highly-skilled technology and computer science jobs is greater than the number of H-1B visas available each year. In addition, the regulatory environment related to immigration under the current presidential administration may increase the likelihood that immigration laws may be modified to further limit the availability of H1-B visas. If a new or revised visa program is implemented, it may impact our ability to recruit, hire and retain qualified skilled personnel, which could adversely impact our business, operating results and financial condition.

The effects of health epidemics, including the COVID-19 pandemic, have had, and may continue to have, an adverse impact on our business, operations and the markets and communities in which we and our partners operate.

Our business and operations have been and may continue to be adversely affected by health epidemics, including the recent COVID-19 pandemic, impacting the markets and communities in which we and our partners operate. In December 2019, a novel strain of coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, was reported to have surfaced in Wuhan, China. Since then, COVID-19 has spread to and persists in many countries worldwide, including the United States.

In response to the COVID-19 pandemic, many state, local and foreign governments have put in place, and others in the future may put in place, quarantines, executive orders, shelter-in-place orders and similar government orders and restrictions in order to control the spread of the disease. Such orders or restrictions, or the perception that such orders or restrictions could occur, have resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, travel restrictions and cancellation of events, among other effects that could negatively impact productivity and disrupt our operations and those of our partners. Certain jurisdictions ~~have begun lifting~~lifted such orders or restrictions only to return to these restrictions in the face of increases in new COVID-19 ~~cases. The~~cases, even as mass vaccination efforts are being undertaken throughout the United States and in certain other countries. Although as of the fall of 2021 the pace of removing restrictions is increasing, the residual effects of ~~these indefinite travel~~such restrictions and prolonged alternative working arrangements are unknown and the eventual effectiveness of the mass vaccination efforts likewise remains uncertain, and these may negatively impact the productivity of our employee base and have a disproportionately negative impact on our sales and operations functions, which could have an adverse effect on our business, operating results, and financial condition.

In addition, ~~while~~ the potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular isare difficult to assess or predict, the pandemic has resulted in, and continues to result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.predict. A recession or market correction resulting from the spread of new or existing variants of COVID-19 and its impacts could decrease marketing spend, particularly in media, adversely affecting the demand for our ~~products,~~solutions, our business, and the value of our common stock. While we have seen advertisers or CPGs ~~historically continue to~~spend or increase their spend on promotions during economic downturns, there is no guarantee they will ~~continue~~do so in a future economic downturn, including one that may be presently taking shape due to ~~do so.~~the persistence of the COVID-19 pandemic or inflationary pressures brought about as a consequence of the pandemic.

The global COVID-19 pandemic ~~of COVID-19~~ continues to rapidly evolve, and we will continue to monitor the COVID-19 situation closely. The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to ~~change.~~change, even in light of the mass vaccination efforts that have been ongoing. We do not yet know the full extent of potential delays or impacts on our business, operations or the global economy as a whole. The COVID-19 pandemic, and the various responses to it, may also have the effect of heightening many of the other risks discussed in this “Risk Factors” section.

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

When we deliver promotions or media on a retailer’s receipt, website or mobile app or through its loyalty program, or the website or mobile app of a publisher, or through our Retailer iQ platform, and the consumer takes certain actions, we pay a distribution fee to the retailer or other publisher, which, in some cases may be prepaid or guaranteed prior to being incurred. We also pay fees to retailers for use of their data in our Promotions, Media, Analytics, and Audience platforms and solutions. Such fees have increased as a percentage of our revenues in recent periods. If such fees as a percentage of our revenues continue to increase, our cost of revenues as a percentage of revenues could increase and our operating results would be adversely affected. In addition, calculations of such fees are complex and if retailers disagree with our calculations in an audit, it could have an adverse impact on our business.

Some of our agreements with retailers include certain prepaid or guaranteed distribution fees. If the adoption and usage of Retailer iQ, targeted in-lane at checkout offers, and our other platforms and solutions do not meet projections or minimums, these prepaid or guaranteed distribution fees may not be recoverable and any shortfall may be payable by us at the end of the applicable period. For example, during the third quarter of 2016, we recorded a one-time charge associated with certain distribution fees under an arrangement with a retail partner that were deemed unrecoverable. We considered various factors in our assessment including our historical experience with the transaction volumes through the retailer and comparative retailers, ongoing communications with the retailer to increase its marketing efforts to promote the digital platform, as well as the projected revenues, and associated revenue share payments. Accordingly, during the third quarter of 2016, we recognized a loss of $7.4 million related to such distribution fee arrangement. In 2020, implementation of one of the Company’s solutions with a retailer experienced slower than expected adoption due to a variety of factors, including impacts related to the spread of COVID-19 and the retailer's failure to perform certain obligations under the agreement. In light of these factors, the Company was not able to meet the contractual minimum under such arrangement at the end of the applicable period, which was originally scheduled to end in October 2020. If the contractual minimum and applicable period remain enforceable in light of these factors, the Company may recognize a loss that, depending on a variety of factors, could be as high as the high single digit millions. Accordingly, the Company has accrued $2.0 million related to such guaranteed distribution fee arrangement in other current liabilities as of September 30, 2020.

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

~~The factors potentially affecting our gross margins include:~~

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

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

•~~increasing data and traffic acquisition costs for offsite media on non-owned-and-operated properties;~~

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

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

•~~success of our pricing strategies, including strategies that guarantee certain outcomes;~~

•~~success of our investments in technology and automation or through acquisitions to gain cost efficiencies; and~~

•~~pricing and acceptance of higher-margin new products.~~

For instance, we have seen pressure on our gross margins, which we principally attribute to the factors described above and we expect this pressure to continue as our growth strategy evolves and our product mix continues to change. Although we expect to gain leverage as our business expands and through automation, there is no guarantee that we will succeed.

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

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

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

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

Consumer shopping behavior has changed dramatically in response to the COVID-19 pandemic. For instance, shoppers continue to minimize shopping trips, rely on online grocery shopping, change buying habits as their lifestyles were impacted by state and local orders and social distancing . If consumers decide not to use our products that involve paper as a result of COVID-19 and do not find our purely digital products compelling, our business could be harmed.

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

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

Our sales could be adversely impacted by industry changes relating to the use of third-party advertising agencies. For example, if CPGs or retailers seek to bring their campaigns in-house rather than using an agency, we would need to develop direct relationships with the CPGs or retailers, which we might not be able to do and which could increase our sales and marketing expenses. Moreover, to the extent that we do not have a direct relationship with CPGs or retailers, the value we provide to CPGs and retailers may be attributed to the third-party advertising agency rather than to us, further limiting our ability to develop long-term relationships directly with CPG and

retailers. CPGs and retailers may move from one third-party advertising agency to another, and we may lose the underlying business. The presence of third-party advertising agencies as intermediaries between us and the CPGs and retailers thus creates a challenge to building our own brand awareness and affinity with the CPGs and retailers that are the ultimate source of our revenues. In addition, third-party advertising agencies conducting business with us may offer their own digital marketing solutions. As such, these third-party advertising agencies are, or may become, our competitors. If they further develop their own capabilities they may be more likely to offer their own solutions to advertisers, and our ability to compete effectively could be significantly compromised and our business, financial condition and operating results could be adversely affected.

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

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

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

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

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

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

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

•providers of digital promotions such as Valassis’ Redplum.com, Catalina Marketing Corporation’s Cellfire, Inmar/You Technology, News America Marketing’s SmartSource; companies that offer cash back solutions such as iBotta, Inc., News America Marketing’s Checkout 51; and companies providing other eCommerce based services that allow consumers to obtain direct or indirect discounts on purchases; and companies that offer coupon codes such as RetailMeNot, Inc., Groupon, Inc., Exponential Interactive, Inc.’s TechBargains.com, Savings.com, Inc., Honey Science Corporation, which was acquired by PayPal Holdings, Inc., and Rakuten, Inc.;

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

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

•companies offering digital advertising technology, inventory, data, and services solutions for CPGs and Retailers including: Google, Facebook, Pinterest, Adobe, The Trade Desk, Oracle, Criteo, Microsoft, and others.

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

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

•~~ability to attract consumers to use digital promotions and media delivered by it;~~

•~~platform security, scalability, reliability and availability;~~

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

•~~access to retailer data;~~

•~~measurement that demonstrates the effectiveness of campaigns;~~

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

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

•~~integration of products and solutions;~~

•~~rapid deployment of products and services for customers;~~

•~~breadth, quality and relevance of the Company’s digital promotions and media and audiences;~~

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

•~~brand recognition and reputation;~~

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

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

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

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

Our success may also depend on our ability to compete against incumbent competitors that our customers use and we may not be successful in persuading CPGs and their agencies to use our platforms and services.

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

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

We may face competition from companies we do not yet know about. If existing or new companies develop, market or offer competitive digital coupon solutions, acquire one of our existing competitors or form a strategic alliance with one of our competitors, our ability to compete effectively could be significantly compromised and our operating results could be harmed. For example, on March 13, 2019, Inmar announced that it completed the acquisition of Kroger’s subsidiary You Technology and entered into a long-term service agreement to provide digital coupon services to the Kroger family of stores. Following this acquisition, Inmar terminated our agreement with You Technology as of December 2019. This adversely affected our ability to distribute digital promotions through You Technology, which generated less than 5% of our revenue in 2019.

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

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

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

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

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

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

•disputes as a result of certain terms and conditions of our transactions, such as payment of contingent consideration, compliance with covenants, or closing adjustments;

•the need to integrate technical operations and security protocols, which may lead to significant security breaches of, technical difficulties with, or interruptions to, the delivery and use of our products and services;

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

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

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

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

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

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

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

•difficulties valuing intangibles related to acquired businesses, which could lead to write-offs or charges related to acquired assets or goodwill; and

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

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

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

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

We have significantly expanded our operations and anticipate expanding further to pursue our growth strategy. Through acquisitions we have added multiple additional offices within the last ~~two~~three years. Although most of our personnel continue to work from home, we recently moved our principal executive offices to Salt Lake City, Utah from Mountain View, California. Such office expansion and transition increases the complexity of our business and places significant demands on our management, operations, technical performance, financial resources and internal control over financial reporting functions. Continued growth could strain our ability to deliver ~~digital promotions and media~~solutions on our platforms, develop and improve our operational, financial, legal and management controls, and enhance our reporting systems and procedures. Failure to manage our expansion may limit our growth, damage our reputation and negatively affect our financial performance and harm our business.

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

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

Providing our products and services to our ~~CPGs,~~advertisers, retailers and consumers is costly and we expect our expenses to continue to increase in the future as we grow our business with existing and new ~~CPGs~~advertisers and retailers and develop new products and services that require enhancements to our technology infrastructure. In addition, our operating expenses, such as our sales, marketing and engineering expenses are expected to continue to grow to support our anticipated future growth. As a result of the requirements of being a public company we incur significant legal, accounting and other expenses. Our expenses may grow faster than our revenues, and our expenses may be

greater than we anticipate. Managing our growth will require significant expenditures and allocation of valuable management resources. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business, operating results and financial condition would be ~~harmed.~~

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

We market our services and products directly to CPGs and retailers. New CPG and retailer relationships typically take time to obtain and finalize. Existing CPG and retailer relationships may change and take time to re-establish due to market consolidation and personnel changes. A significant time period may pass between selection of our services and products by key decision-makers and the signing of a contract. The length of time between the initial sales call and the realization of a final contract is difficult to predict. As a result, it is difficult to predict when we will obtain new CPGs and retailers and when performance and delivery of services will be initiated with these potential CPGs and retailers. In addition, our customers typically have no obligation to renew their agreements with us after their initial term, and in order for us to maintain or improve our results of operations, it is important that our customers renew their agreements with us when the initial term expires. As part of our sales and renewal cycle, we may incur significant expenses before executing or renewing a definitive agreement with a prospective or existing CPG or retailer and before we are able to generate any revenues from such agreement or renewal. If conditions in the marketplace generally or with a specific prospective CPG or retailer change negatively it is possible that no definitive agreement will be executed or renewed, and we will be unable to recover any expenses incurred before a definitive agreement is executed or renewed, which would in turn have an adverse effect on our business, financial condition and results of operations.

Our sales cycles with CPGs and retailers have been prolonged as a result of the uncertainty and restrictions caused by the COVID-19 pandemic. Sales meetings are conducted remotely due to shelter-in-place orders and work and travel restrictions.

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

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

~~We currently have not experienced disruptions to our network or operations as a result of COVID-19 but there are no guarantees there will not be disruptions in the future.~~affected.

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

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

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

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

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

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

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

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

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

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

Our ability to provide services to consumers depends on our ability to communicate with CPGs, retailers and customers through the public Internet and electronic networks that are owned and operated by third parties. Our products and services also depend on the ability of our users to access the public Internet. In addition, in order to provide services promptly, our computer equipment and network servers must be functional 24 hours per day, which requires access to telecommunications facilities managed by third parties and the availability of electricity, which we do not control. A severe disruption of one or more of these networks, including as a result of utility or third-party system interruptions, could impair our ability to process information, which could impede our ability to provide digital promotions and media to consumers, harm our reputation, result in a loss of customers or CPGs and retailers and adversely affect our business and operating results. For example, currently, as a result of work and travel restrictions related to the ongoing COVID-19 pandemic, all of our employees are working remotely and dependent upon their respective internet service providers to be able to access the internet, our systems and systems of our service providers. In other words, our business workflows now rely on availability of residential broadband bandwidth as well as connectivity which is currently under considerable strain. If the residential broadband and internet access break down under strain, our business and operations would be harmed.

If our security measures or information we collect and maintain are compromised or publicly exposed, CPGs, retailers and consumers may curtail or stop using our platforms and we could be subject to claims, penalties and fines.

We collect and maintain data about consumers, including personally identifiable information or personal data, as well as other confidential or proprietary information. Like all businesses that use computer systems and the Internet, our security measures as well as those of companies we may acquire and our third-party service providers and partners, may not detect or prevent all attempts to gain access to our systems, denial-of-service attacks, viruses, malicious software including malware and ransomware, break-ins, phishing attacks, social engineering, human error, security breaches or other attacks and similar disruptions (including those caused by national disasters, terrorism, war and telecommunication and electric failures). Such events may jeopardize the security of

information stored in or transmitted by our systems or solutions or that we or our third-party service providers and partners otherwise maintain, including payment systems, any of which could lead to interruptions, delays, or website shutdowns, causing loss of critical data or the unauthorized disclosure, access to, acquisition of or use of personally identifiable or other confidential information or proprietary data, or subject us to fines or higher transaction fees or limit or result in the termination of our access to certain payment methods. The costs to us to mitigate network security problems, bugs, viruses, worms, malicious software programs and other security vulnerabilities could be significant. Due to the COVID-19 pandemic, our employees are temporarily working remotely, which may pose additional data security risks. If we, or our service providers and partners, experience compromises to our security that result in performance or availability problems, the complete shutdown of one or more of our websites and mobile applications, or the misuse, loss or unauthorized access to or disclosure of confidential information, personally identifiable information, or other personal or proprietary data, CPGs, retailers, and consumers may lose trust and confidence in us and decrease their use of our platforms or stop using our platforms entirely. Such compromises to personal or sensitive information or proprietary data could lead to litigation or other adversarial actions by business partners such as retailers or consumers.

Because the techniques used to obtain unauthorized access are often sophisticated and change frequently, neither we nor third-party service providers and partners can guarantee that our systems will not be breached. In addition, consumer information including email addresses, phone numbers, transaction data, and data on consumer usage of our and our retailer partners’ websites and mobile applications could be hacked, hijacked, altered or otherwise claimed or controlled by unauthorized persons. Security breaches can also occur as a result of nontechnical issues, including intentional or inadvertent actions by our employees or by persons with whom we have commercial relationships that lead to exposure of any types of personal, sensitive or proprietary information. Any or all of these issues, or the perception that any of them has occurred, even if inaccurate, could negatively impact our reputation and our ability to attract and retain CPGs and retailers as well as consumers or could reduce the frequency with which our platforms are used, cause existing or potential CPG or retailer customers to cancel their contracts or subject us to third-party lawsuits, regulatory fines or other action or liability, and harm our business and results of operations. In addition, such a breach may require notification to governmental agencies, supervisory bodies, credit reporting agencies, the media, individuals or other parties pursuant to various foreign, domestic (federal and state) data protection, privacy and security laws, regulations and guidelines, industry standards and contracts, if applicable. Accordingly, a security breach or privacy violation that leads to unauthorized access to, disclosure of, or acquisition of personally identifiable information, could result in fines, increased costs or loss of revenue as a result of: harm to our reputation; additional compliance obligations or enforcement measures under foreign, federal or state laws; and remediation and corrective action we undertake as required by law or as otherwise necessary.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

•performance marketing networks may compete with us; and

•economic uncertainty related to the COVID-19 pandemic and its impact on consumer spending.

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

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

Digital promotions can be in the form of redeemable coupons, coupon codes with unique identifiers, loyalty card linked offers, and national rebates. It is possible that third parties may create counterfeit digital coupons,

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

Indemnity provisions in various agreements and our corporate documents potentially expose us to substantial liability for intellectual property infringement and other claims.

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

In addition, in accordance with our bylaws and pursuant to indemnification agreements entered into with directors, officers and certain employees, we have indemnification obligations for claims brought against these persons arising out of certain events or occurrences while they are serving at our request in such capacities. For example, our founder and CEO is subject to a claim from a third party, alleging that he owes certain amounts to the third party in connection with fundraising activities for Quotient that occurred between 1998 and 2006.We agreed to advance certain defense costs, subject to an undertaking to repay us such amounts if, and to the extent that, it is ultimately determined that he is not entitled to indemnification.The matter is ongoing.If this matter is resolved in favor of the third party and we are required to indemnify our founder and CEO for a loss, we may be required to make an indemnity payment.While we maintain directors’ and officers’ liability insurance, such insurance may not be applicable, adequate or cover all liabilities that we may incur.

Large indemnity payments, individually or in the aggregate, could have a material impact on our financial position.

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

We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing our brand is critical to expanding our base of advertisers, retailers and consumers. Maintaining and enhancing our brands may require us to make substantial investments and these investments may not be successful. If we fail to promote and maintain our brands, or if we incur excessive expenses in this effort, our business would be negatively affected. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive.

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

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

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

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

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

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

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

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

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

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

•interruptions to our operations in the countries where our research and development activities and operations are located as a result of floods and other natural catastrophic events as well as other events beyond our control such as power disruptions, terrorism or the persistence of the COVID-19 pandemic.

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

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

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

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

•the cost and resources required to localize our platform;

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

•differences in how trade marketing spend is allocated;

•differences in the way digital promotions and media are delivered and how consumers access and use digital promotions;

•technology compatibility;

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

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

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

•higher product return rates;

•seasonal reductions in business activity;

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

•political and economic instability.

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

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

Risks Related to Government Regulation, Tax Law or Accounting Standards

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

We collect, receive, access, process, generate, store, disclose, share, make accessible, protect, secure, and dispose of, and use (collectively "Process" or "Processing") business and personal information belonging to our users and customers, and because of this, we are subject to a variety of foreign, federal, state, local and municipal laws, regulations and industry standards that relate to privacy, electronic communications, data protection, intellectual property, eCommerce, competition, price discrimination, consumer protection, taxation, and the use of promotions. The number and scope of such laws, regulations and industry standards are changing, are subject to differing applications and interpretations and may be inconsistent among countries, or conflict with other rules, laws or data protection obligations. We expect that there will continue to be new data protection laws and data protection obligations, and we cannot yet determine the impact such future laws and obligations may have on our business.

Many of these laws, regulations, and standards are still evolving and being tested in courts, and industry standards are still developing. As a result, the regulatory framework for privacy, information security, data protection and data Processing worldwide is, and is likely to remain, uncertain for the foreseeable future, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules or practices. Our business, including our ability to operate and expand, could be adversely affected if legislation, regulations or industry standards are adopted, interpreted or

implemented in a manner that is inconsistent with our current business practices and that require changes to these practices or the design of our platform. Existing and future laws, regulations and industry standards could restrict our operations, and our ability to retain or increase our ~~CPGs~~

advertisers and retailers and consumers’ use of digital promotions delivered on our ~~platform~~platforms may be adversely affected and we may not be able to maintain or grow our revenues as anticipated.

For example, California also enacted legislation, the California Consumer Privacy Act of 2018, or the CCPA, which affords consumers expanded privacy protections as of January 1, 2020. The potential effects of this legislation are far reaching and has required us to modify our data processing practices and policies and to incur substantial costs and expenses in an effort to comply. For example, the CCPA ~~came into effect~~requires companies that process information on ~~January 1, 2020; the CCPA has already been amended and grants~~ California residents ~~new rights with respect~~ to ~~their personal information. The CCPA includes a framework with potentially severe statutory damages and private rights of action. The CCPA requires covered businesses to provide~~make new disclosures to ~~California residents~~consumers about their data collection, use and ~~provide them new ways~~sharing practices, and allows consumers to ~~opt-out~~opt out of ~~certain disclosures~~the sale of personal ~~information. In addition, the~~information with third parties and provides a private right of action and statutory damages for data breaches. The CCPA ~~allows~~also provides for civil penalties for violations, as well as a ~~new cause~~private right of action for data ~~breaches. It remains unclear how~~breaches that may increase the ~~CCPA will be interpreted, but as currently written, it may impact our business activities and exemplifies the vulnerability~~risk of ~~our business to the evolving regulatory environment related to personal data. As we expand our operations, the CCPA~~data breach litigation, all of which may increase our compliance costs and potential ~~liability,~~liability. In addition, California voters recently approved the California Privacy Rights Act of 2020, or CPRA, that goes into effect on January 1, 2023. The CPRA would, among other things, give California residents the ability to limit the use of their sensitive information, provide for penalties for CPRA violations concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the law.

The enactment of the CCPA is prompting a wave of similar legislative developments in other states in the United States, which could create the potential for a patchwork of overlapping but different state laws. Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the ~~U.S. Other~~United States, which could increase our potential liability and adversely affect our business, results of operations, and financial condition. For example, Virginia enacted the Consumer Data Protection Act that may impose obligations similar to or more stringent than those we may face under other data protection laws. Compliance with any newly enacted privacy and data security laws or regulations may be challenging, costly and time-intensive, and we may be required to put in place additional mechanisms to comply with applicable legal requirements. Such legislative initiatives, to the extent that they become privacy and data security laws or regulations in various states, may have potentially conflicting requirements that would make compliance challenging. Some countries also are ~~beginning to propose~~considering or have passed legislation requiring local storage and Processing of data, or similar ~~laws.~~

requirements, which could increase the cost and complexity of operating our products and services and other aspects of our business.

Compliance with these and any other applicable privacy, data protection, data security, marketing and consumer protection guidelines, laws and regulations is a rigorous and time-intensive process, and we may be required to put in place additional mechanisms to ensure compliance with them. We believe our policies and practices comply in material respects with these guidelines, laws and regulations. However, if our belief is incorrect, or if these guidelines, laws or regulations or their interpretation change or new legislation or regulations are enacted, we may face significant fines and penalties that could adversely affect our business, financial condition and result of operations. Further, we could be compelled to provide additional disclosures to our consumers, obtain additional consents from our consumers before collecting, using, or disclosing their information or implement new safeguards or business processes to help individuals manage our use of their information, among other changes. We also cannot control our retail partners’ approach or interpretation of CCPA, the CPRA or other privacy regulations, which may impact their willingness or ability to provide us data that our platforms and solutions are dependent upon, or the terms on which they are willing or able to provide it. Changes to our data sources may restrict our ability to maintain or grow our revenues as anticipated.

If our estimates or judgements relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.

The preparation of financial statements in conformity with generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to business combinations,

goodwill and intangible assets, treatment of our convertible senior notes, revenue recognition, promotion revenue, media revenue, gross versus net revenue reporting, arrangements with multiple performance obligations, stock-based compensation and provision for income taxes. For example, the recognition of our revenue is governed by certain criteria that determine whether we report revenue either on a gross basis, as a principal, or net basis, as an agent, depending upon the nature of the sales transaction. Historically, our media products revenue has generally been recognized on a gross basis. However, effective second quarter of 2020, we modified the way we process and deliver certain media products to enhance the customer experience. As a result of these changes, we have begun to recognize certain media revenue on a net basis, as compared to the prior recognition on a gross basis, and we expect this will cause a decrease in our revenue growth and impact our revenues. We may have gross reporting for portions of our media products and other revenue in the future as a result of the evolution of our existing business practices, development of new products, acquisitions, or changes in accounting standards or interpretations, that in any case result in transactions with characteristics that dictate gross reporting. It is also possible that revenue reporting for existing businesses may change from gross to net or vice versa as a result of changes in contract terms or transaction mechanics. We may experience significant fluctuations in revenue in future periods depending upon, in part, the nature of our sales and our reporting of such revenue and related accounting treatment, without proportionate correlation to our underlying activity or net income. Any combination of net and gross revenue reporting would require us to make estimates and assumptions about the mix of gross and net-reported transactions based upon the volumes and characteristics of the transactions we think will make up the total mix of revenue in the period covered by the projection. Those estimates and assumptions may be inaccurate when made, or may be rendered inaccurate by subsequent circumstances, such as changing the characteristics of our offerings or particular transactions in response to client demands, market developments, regulatory pressures, acquisitions, and other factors. Even apparently minor changes in transaction terms from those initially envisioned can result in different accounting conclusions from those foreseen. In addition, we may incorrectly extrapolate from revenue recognition treatment of prior transactions to future transactions that we believe are similar, but that ultimately are determined to have different characteristics that dictate different revenue reporting treatment. These factors may make our financial reporting more complex and difficult for investors to understand, may make comparison of our results of operations to prior periods or other companies more difficult, may make it more difficult for us to give accurate guidance, and could increase the potential for reporting errors.

Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.

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

We Process data about consumers, including personally identifiable information or personal data, as well as other confidential or proprietary information necessary to operate our business, for legal and marketing purposes, and for other business-related purposes. We collect such information from individuals located both in the United States and abroad and may store or Process such information outside the country in which it was collected.

Data privacy and regulation of privacy, information security and Processing has become a significant issue in the United States, countries in Europe and the United Kingdom, and in other countries across the globe. The legal and regulatory framework for privacy and security issues is rapidly evolving and is expected to increase our compliance costs and exposure to liability. We and our service providers and partners are subject to a variety of federal, state and foreign laws, regulations and industry standards regarding privacy, data protection, data security, marketing and consumer protection, which address the Processing of data relating to individuals, as well as the tracking of consumer behavior and other consumer data (“Data Protection Laws”). We are also subject to laws, regulations and industry standards relating to endorsements and influencer marketing. Many of these laws, regulations and industry standards are changingand expanding, including to offer consumers additional privacy rights with regard to profiling and online behavioral advertising.These laws, regulations and industry standards may be subject to differing interpretations, may be inconsistent among countries or conflict with other rules, may becostly to comply with or inconsistent among jurisdictions, or may conflict with other rules, laws or Data Protection Obligations (defined below).

Various industry standards on privacy and data security have been developed and are expected to continue to develop, which may be adopted by industry participants at any time. We have committed to comply, and generally require our customers and partners to comply, with applicable self-regulatory principles, such as the Network Advertising Initiative’s Code of Conduct and the Digital Advertising Alliance’s Self-Regulatory Principles for Online Behavioral Advertising in the U.S. Trade associations and industry self-regulatory groups have also promulgated best practices and other industry standards relating to targeted advertising. Our efforts to comply with these self-regulatory principles include offering Internet users notice and choices about when advertising is served to them based, in part, on their interests. If we, our clients or partners make mistakes in the implementation of these principles, or if self-regulatory bodies expand these guidelines or government authorities issue different guidelines regarding Internet-based advertising, or opt out mechanisms fail to work as designed, or if Internet users misunderstand our technology or our commitments with respect to these principles, we may, as a result, be subject to negative publicity, government investigation, government or private litigation, or investigation by self-regulatory bodies or other accountability groups. Any such action against us, or investigations, even if meritless, could be costly and time consuming, require us to change our business practices, cause us to divert management’s attention and our resources, and be damaging to our brand, reputation, and business. In addition, privacy advocates and industry groups may propose new and different self-regulatory standards that either legally or contractually apply to us. We cannot yet determine the impact such future standards may have on our business.

We are or may also be subject to the terms of our external and internal privacy and security policies, codes, representations, certifications, industry standards, publications and frameworks (“Privacy Policies”) and contractual obligations to third parties related to privacy, data protection, and information security and Processing, including contractual obligations to indemnify and hold harmless third parties from the costs or consequences of non-compliance with Data Protection Laws or other obligations (“Data Protection Obligations”). Our solutions depend in part on our ability to use data that we obtain in connection with our offerings, and our ability to use this data may be subject to restrictions in our commercial agreements and subject to the privacy policies of the entities that provide us with this data. Our service providers or our partners’, failure to adhere to these third-party restrictions on data use may result in claims, proceedings or actions against us by our business counterparties or other parties, or other liabilities, including loss of business, reputational damage, and remediation costs, which could adversely affect our business.

We expect that there will continue to be new Data Protection Laws and Data Protection Obligations, and we cannot yet determine the impact such future Data Protection Laws and Data Protection Obligations may have on our business. Any significant change to Data Protection Laws and Data Protection Obligations, including without limitation, regarding the manner in which the express or implied consent of customers for Processing is obtained, could increase our costs and require us to modify our operations, possibly in a material manner, which we may be unable to complete and may limit our ability to store and Process data and operate our business.

Data Protection Laws and data protection worldwide is, and is likely to remain, uncertain for the foreseeable future, and our actual or perceived failure to address or comply with these laws could: increase our compliance and operational costs; limit our ability to market our products or services and attract new and retain current customers; limit or eliminate our ability to Process data; expose us to regulatory scrutiny, actions, investigations, fines and penalties; result in reputational harm; lead to a loss of business result in litigation and liability, including class action litigation; cause to incur significant costs, expenses and fees (including attorney fees); cause a material adverse impact to business operations or financial results, and; otherwise result in other material harm to our business (“Adverse Data Protection Impact”).

We are subject to Data Protection Laws, Privacy Policies and Data Protection Obligations as well as applicable foreign, federal, state, local and municipal laws, regulations and industry standards that relate to electronic communications, intellectual property, eCommerce, competition, price discrimination, consumer protection, taxation, and the use of promotions. We strive to comply with applicable laws, policies, contractual and other legal obligations as well as industry standards of conduct relating to privacy, data security, data protection, marketing and consumer protection to the extent possible, but we may at times fail to do so, or may be perceived to have failed to do so. These obligations and standards of conduct often are complex, vague, and difficult to comply with fully, and it is possible that these obligations and standards of conduct may be interpreted and applied in new ways and/ or in a manner that is inconsistent with each other or that new laws, regulations or other obligations may be enacted.

Moreover, despite our efforts, we may not be successful in achieving compliance if our employees, partners or vendors do not comply with applicable Data Protection Laws, Privacy Policies and Data Protection Obligations. We

may be subject to, and may experience, an Adverse Data Protection Impact if we fail (or are perceived to have failed) to comply with applicable Data Protection Laws, Privacy Policies and Data Protection Obligations, or if our Privacy Policies are, in whole or part, found to be inaccurate, incomplete, deceptive, unfair, or misrepresentative of our actual practices. In addition, any such failure or perceived failure could result in public statements against us by consumer advocacy groups, the media or others, which may cause us material reputational harm.Our actual or perceived failure to comply with Data Protection Laws, Privacy Policies and Data Protection Obligations could also subject us to litigation, claims, proceedings, actions or investigations by governmental entities, authorities or regulators, which could result in an Adverse Data Protection Impact, including required changes to our business practices, the diversion of resources and the attention of management from our business, regulatory oversights and audits, discontinuance of necessary Processing, or other remedies that adversely affect our business.

We also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, and information security proposed and enacted in various jurisdictions. In Europe, the General Data Protection Regulation (2016/679) (“EU GDPR”) went into effect in May 2018 and introduced strict requirements for Processing the personal data of data subjects. The EU GDPR has direct effect in all EU Member States and has extraterritorial effect where organizations outside of the European Economic Area ("EEA) Process personal data of individuals in the EEA in relation to the offering of goods or services to those individuals (“targeting test”) or the monitoring of their behavior (“monitoring test”). As such, the EU GDPR applies to us to the extent we are established in an EU Member State or we meet the requirements of either the targeting test or the monitoring test. Companies that must comply with the EU GDPR face increased compliance obligations and risk, including more robust regulatory enforcement of data protection requirements, an order prohibiting Processing of personal data of data subjects in the EU, and potential fines for noncompliance of up to €20 million or 4% of consolidated annual worldwide gross revenues of the noncompliant company, whichever is greater. The EU also confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from violations of the EU GDPR. European data protection laws including the EU GDPR also prohibit the transfer of personal data from Europe, including the EEA, and Switzerland, to the United States and other countries that the European Commission does not recognize as having “adequate” data protection laws (“third countries”) unless the parties to the transfer have implemented an appropriate data transfer mechanism in accordance with the EU GDPR. One of the primary mechanisms allowing U.S. companies to import personal data from Europe in compliance with the EU GDPR has historically been certification to the EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield frameworks administered by the U.S. Department of Commerce. However, the Court of Justice of the European Union, in the “Schrems II” ruling, invalidated the EU-U.S. Privacy Shield framework. The Swiss Federal Data Protection and Information Commissioner also recently opined that the Swiss-U.S. Privacy Shield is inadequate for transfers of personal data from Switzerland to the U.S.

The Schrems II decision also imposed further restrictions on the use of one of the primary alternatives to the EU-U.S. Privacy Shield, namely, the European Commission’s Standard Contractual Clauses (“SCCs”), including a requirement for companies to carry out a transfer privacy impact assessment which, among other things, assesses laws governing access to personal data in the recipient country and considers whether supplementary measures that provide privacy protections additional to those provided under SCCs will need to be implemented to ensure an essentially equivalent level of data protection to that afforded in the EEA. At present, there are few, if any, viable alternatives to the “SCCs. The European Commission recently adopted new SCCs, and additional regulatory guidance has been released that seeks to imposes additional obligations on companies seeking to rely on the SCCs. These SCCs must be used in new contracts from September 27, 2021, with existing contracts requiring updating by December 27, 2021. As such, any transfers by us or our vendors of personal data from Europe may not comply with European data protection law; may increase our exposure to the EU GDPR’s heightened sanctions for violations of its cross-border data transfer restrictions and may reduce demand from companies subject to European data protection laws. Moreover, where we rely on SCCs, we must now evaluate and implement supplementary measures that provide privacy protections additional to those provided under SCCs. This evaluation will, in particular, include an assessment as to whether the types of personal data transferred pursuant to SCCs may be subject to government surveillance in the data importer’s country, and an assessment as to whether the data importer can meet its contractual obligations under the SCCs.Additionally, other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our products and operating our business.

In addition, we may be required to put in place additional mechanisms to ensure compliance with the EU GDPR. This includes inter alia: (i) accountability and transparency requirements, and enhanced requirements for

obtaining valid consent; (ii) obligations to consider data protection as any new products or services are developed, and to limit the amount of personal data processed; (iii) obligations to implement appropriate technical and organizational measures to safeguard personal data and to report certain personal data breaches to the supervisory authority without undue delay (and no later than 72 hours where feasible); and (iv) obligations to provide individuals with various data protection rights (e.g., the right to erasure of personal data).Compliance with the EU GDPR involves rigorous and time-intensive processes that may increase our cost of doing business or require us to change our business practices. There may also be a risk that the measures will not be implemented correctly or that individuals within the business will not be fully compliant with the required procedures.

Further, following a referendum in June 2016 in which voters in the United Kingdom approved an exit from the EU, the United Kingdom government has initiated a process to leave the EU, known as Brexit. Following December 31, 2020, the EU GDPR’s data protection obligations continue to apply to the United Kingdom in substantially unvaried form under the so called “UK GDPR” or more explicitly, the EU GDPR continues to form part of the laws in the United Kingdom by virtue of section 3 of the European Union (Withdrawal) Act 2018, as amended (including by the various Data Protection, Privacy and Electronic Communications (EU Exit) Regulations), which potentially exposes us to two parallel data protection regimes, each of which authorizes fines and the potential for divergent enforcement actions. Under the UK GDPR, companies not established in the UK but who process personal data in relation to the offering of goods or services to individuals in the UK, or to monitor their behavior, will be subject to the UK GDPR – the requirements of which are (at this time) largely aligned with those under the EU GDPR and, as such, may lead to similar compliance and operational costs with potential fines of up to £17.5 million or 4% of global turnover. In addition, the UK has not approved use of the new EU SCCs for transfers subject to the UK GDPR. The UK data protection authority (the Information Commissioner’s Office) is at present consulting on its own form of data transfer agreement (including a UK addendum to the new SCCs) and transfer risk assessment, which are expected to be finalized towards the end of 2021. For the time being, when implementing new contracts, if such transfer is subject to both the EU GDPR and the UK GDPR we may be required to implement two forms of transfer mechanism to address the transfer of personal data outside the EEA and the UK, respectively.

Any failure or perceived failure by us to comply with applicable laws and regulations or any of our other legal obligations relating to privacy, data protection, or information security may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us,Any of the foregoing could result in significant liability or cause our customers to lose trust in us, any of which could have an adverse effect on our reputation, operations, financial performance and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the adoption and use of, and reduce the overall demand for, our products and services.

In the United States, Data Protection Laws include rules and regulations promulgated under the authority of the Federal Trade Commission, the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the California Consumer Privacy Act and other similar state comprehensive privacy laws, and other state and federal laws relating to privacy and data security. The CCPA requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices, and allows consumers to opt out of the sale of personal information with third parties and provides a private right of action and statutory damages for data breaches. The CCPA may increase our compliance costs and potential liability. In addition, the California Privacy Rights Act of 2020, or CPRA, is scheduled to take effect on January 1, 2023, and would, among other things, give California residents the ability to limit the use of their sensitive information, provide for penalties for CPRA violations concerning California residents under the age of 16, and establish a new California Privacy Protection Agency to implement and enforce the law. The enactment of the CCPA is prompting a wave of similar legislative developments in other states in the United States, including laws already passed in Virginia and Colorado that will go into effect in 2023, and which could create the potential for a patchwork of overlapping but different state laws and more stringent United States privacy requirements, which could increase our potential liability and adversely affect our business, results of operations, and financial condition. Compliance with the increasing number of newly enacted privacy and data security laws and regulations may be challenging, costly and time-intensive, and we may be required to put in place additional mechanisms to comply with applicable legal requirements. Such laws and pending legislative initiatives, to the extent that they become privacy and data security laws or regulations in various states, may have potentially conflicting requirements that would make compliance challenging. Some countries also are considering or have passed legislation requiring local storage and Processing of data, or similar requirements, which could increase the cost and complexity of providing our products and services and other aspects of our business.

We expect that there will continue to be new proposed laws, regulations and industry standards concerning privacy, data protection and information security in the United States and other jurisdictions, and we cannot yet determine the impact such future laws, regulations and standards may have on our business. With laws and regulations in the EU,the United States, and globally imposing new and relatively burdensome obligations, and with substantial uncertainty over the interpretation and application of these and other laws and regulations, there is a risk that the requirements of these laws and regulations, or of contractual or other obligations relating to privacy, data protection, or information security, are interpreted or applied in a manner that is, or is alleged to be, inconsistent with our management and Processing practices, our policies or procedures, or our products and services.For instance, with the increased focus on the use of data for advertising, the anticipation and expectation of future laws, regulations, standards and other obligations could impact us and our existing and potential business partners and delay certain business partnerships or deals until there is greater certainty. In addition, as we expand our data analytics and other data-related product offerings there may be increased scrutiny on our use of data and we may be subject to new and unexpected regulations. Future laws, regulations, standards and other obligations could, for example, impair our ability to collect or use information that we utilize to provide targeted digital promotions and media to consumers, advertisers and retailers, thereby impairing our ability to maintain and grow our total customers and increase revenues. Future restrictions on the collection, use, sharing or disclosure of our users’ data or additional requirements for express or implied consent of users for the use and disclosure of such information could require us to modify our solutions, possibly in a material manner, and could limit our ability to develop or outright prohibit new solutions and features.

We may face challenges in addressing their requirements of any such new laws, regulations, other legal obligations or industry standards, or any changed interpretation of existing laws, regulations or other standards and making necessary changes to our policies and practices, and such changes may require us to incur additional costs and restrict our business operations. Although we endeavor to comply with our Privacy Policies and other privacy-, data protection-, or information security-related obligations, we may at times fail to do so or may be perceived to have failed to do so. Moreover, despite our efforts, we may not be successful in achieving compliance if our employees or vendors to comply with our Privacy Policies and other privacy-, data protection-, or information security-related obligations. Any failure or perceived failure by us to comply with our Privacy Policies and our privacy-, data protection-, or information security-related obligations to customers or other third parties or any of our other legal obligations relating to privacy, data protection, information security, marketing or consumer protection, we may be subject to litigation, regulatory investigations, fines or other liabilities, as well as negative publicity or public statements against us by consumer advocacy groups or others and could result in significant liability or cause a loss of trust in us, which could have an adverse effect on our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, and policies that are applicable to the businesses of our customers may limit the adoption and use of, and reduce the overall demand for, our products and services. Moreover, if future laws, regulations, other legal obligations or industry standards, or any changed interpretations of the foregoing limit our users’, advertisers’ or retailers’ ability to use and share personally identifiable information or our ability to store, process and share personally identifiable information or other data, demand for our solutions could decrease, our costs could increase, our revenue growth could slow,and our business, financial condition and operating results could beharmed.

Additionally, if third parties we work with, such as vendors or developers, violate Data Protection Laws, Privacy Policies and Data Protection Obligations, such violations may also put our customers’ content at risk and could in turn have an adverse effect on our business. Any significant change to Data Protection Laws, Data Protection Obligations, or industry practices regarding the collection, use, retention, security, or disclosure of our customers’ content, or regarding the manner in which the express or implied consent of customers for the collection, use, retention, or disclosure of such content is obtained, could increase our costs and require us to modify our products and services, possibly in a material manner, which we may be unable to complete and may limit our ability to store and Process customer data or develop new applications and features.

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

We are required under U.S. GAAP to review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Goodwill is required to be tested for impairment at least annually. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used, or any other significant adverse change that would indicate that the carrying amount of an asset or group of

assets may not be recoverable. The events and circumstances we consider include the business climate, legal factors, operating performance indicators and competition. In the future we may be required to record a significant charge to earnings in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined. The determination and recording of a significant impairment charge could adversely impact our results of operations, as for example occurred during the third quarter of 2021 in connection with the circumstances surrounding the forthcoming termination of our partnership with Albertsons, and also could harm our business.

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

We prepare our financial statements to conform to U.S. GAAP. These accounting principles are subject to interpretation by the FASB, American Institute of Certified Public Accountants (“AICPA”), the SEC and various bodies formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced. Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. For example, in August 2020, the FASB issued a new standard ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which generally requires companies to report our convertible debt instrument as a single liability instrument with no separate accounting for the embedded conversion features. Additionally, this ASU amends the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method. The treasury stock method is no longer available. This new standard is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2020.

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

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

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

Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, our common stock may not be able to remain listed on the NYSE.

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

State and foreign laws regulating money transmission could impact our rebates solutions.

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

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

In general, under Section 382 of the U.S. Internal Revenue Code of 1986, as amended, or the Code, and similar state law provisions, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, to offset post-change taxable income. If we have experienced an ownership change our existing NOLs may be subject to limitations under Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control, also could result in an ownership change under Section 382 of the Code. Additionally, our NOLs arising in tax years beginning prior to January 1, 2018 are subject to expiration and may expire prior to being utilized. Under the Tax Act, as modified by the CARES Act, NOLs arising in tax years beginning after December 31, 2017, are not subject to expiration and may be carried forward indefinitely, but the deductibility of such NOLs in tax years beginning after December 31, 2020, is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to the Tax Act or the CARES Act. There is also a risk that our NOLs could otherwise be unavailable to offset future income tax liabilities due to changes in the law, including regulatory changes, such as suspensions on the use of NOLs or other unforeseen reasons. In addition, at the state level, there may be periods during which the use of net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed. We do not expect this to have a material impact on our financials because we currently maintain a full valuation allowance on our U.S. deferred tax assets. For these reasons, we may not be able to utilize all of our NOLs, even if we attain profitability.

Changes in the U.S. and foreign tax law or challenges by taxing authorities of the jurisdictions in which we operate could increase our worldwide effective tax rate and have a negative effect on our financial position and results of operations.

Changes in the U.S. taxation of international activities may increase our worldwide effective tax rate and harm our financial condition and results of operations. The taxing authorities of the jurisdictions in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences, which could increase our worldwide effective tax rate and harm our financial position and results of operations. Significant judgment will be required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there will be many transactions and calculations for which the ultimate tax determination is uncertain. As we expand our business to operate in numerous taxing jurisdictions, the application of tax laws may be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions. It is not uncommon for taxing authorities in different countries to have conflicting views. In addition, tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance.

Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act, or the Tax Act, enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation. For example, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, modified certain provisions of the Tax Act. In addition, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act, or any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Act or future reform legislation could have a material impact on the value of our deferred tax assets, could result in significant one-time charges, and could increase our future U.S. income tax expense.

Risks Related to Our Platforms, Technology and Intellectual Property

If our security measures or information we collect and maintain are compromised or publicly exposed, advertisers, retailers and consumers may curtail or stop using our platforms and we could be subject to claims, penalties and fines.

We process data about consumers, including personally identifiable information or personal data, as well as other confidential or proprietary information necessary to operate our business, for legal and marketing purposes, and for other business-related purposes.

While we and our third-party service providers have implemented security measures designed to protect against security breaches, like all businesses that use computer systems and the Internet, our security measures, as well as those of companies we may acquire and our third-party service providers and partners, could fail or may be insufficient, resulting in the unauthorized disclosure, modification, misuse, unavailability, destruction, or loss of our or our customers’ data or other sensitive information. Any security breach of our operational systems, physical facilities, or the systems of our third-party partners, or the perception that one has occurred, could result in litigation, indemnity obligations, regulatory enforcement actions, investigations, fines, penalties, mitigation and remediation costs, disputes, reputational harm, diversion of management’s attention, and other liabilities and damage to our business. Even though we do not control the security measures of third parties, we may be responsible for any breach of such measures or suffer reputational harm even where we do not have recourse to the third party that caused the breach. In addition, any failure by our retail partners or other third-party partners to comply with applicable law or regulations could result in proceedings against us by governmental entities or others.

Cyberattacks, denial-of-service attacks, ransomware attacks, business email compromises, computer malware, viruses, social engineering (including phishing) and other malicious internet-based activity are prevalent in our industry and our customers and partners’ industries and continue to increase. In addition, we may experience attacks, unavailable systems, unauthorized access or disclosure due to employee or other theft or misuse, denial-of-service attacks, sophisticated attacks by nation-state and nation-state supported actors, and advanced persistent threat intrusions. We and our third party service providers regularly defend against and respond to a variety of cybersecurity attacks and incidents. Despite our efforts to ensure the security, privacy, integrity, confidentiality, availability, and authenticity of the information technology networks and systems, processing and information, we may not be able to anticipate or to implement effective preventive and remedial measures against, or adequately respond to mitigate the impact of, all data security and privacy threats and attacks. We cannot guarantee that the recovery systems, security protocols, network protection mechanisms and other security measures that we have integrated into our systems, networks and physical facilities, which are designed to protect against, detect and minimize security breaches, will be adequate to prevent or detect service interruption, system failure data loss or theft, or other material adverse consequences. No security solution, strategy, or measures can address all possible security threats or block all methods of penetrating a network or otherwise perpetrating a security incident. The risk of unauthorized circumvention of our security measures or those of our third-party providers, clients and partners has been heightened by advances in computer and software capabilities and the increasing sophistication of hackers who employ complex techniques, including without limitation, the theft or misuse of personal and financial information, counterfeiting, “phishing” or social engineering incidents, ransomware, extortion, publicly announcing security breaches, account takeover attacks, denial or degradation of service attacks, malware, fraudulent payment and identity theft. The techniques used to sabotage, disrupt or to obtain unauthorized access to our applications, systems, networks, or physical facilities in which data is stored or through which data is transmitted change frequently, and we may be unable to implement adequate preventative measures or stop security breaches while they are occurring. The recovery systems, security protocols, network protection mechanisms and other security

measures that we have integrated into our applications, systems, networks and physical facilities, which are designed to protect against, detect and minimize security breaches, may not be adequate to prevent or detect service interruption, system failure or data loss. Our applications, systems, networks, and physical facilities could be breached or personal information could be otherwise compromised due to employee error or malfeasance, if, for example, third parties attempt to fraudulently induce our employees, customers or partners to disclose information or user names and/or passwords, or otherwise compromise the security of our networks, systems and/or physical facilities. Third parties may also exploit vulnerabilities in, or obtain unauthorized access to, platforms, applications, systems, networks and/or physical facilities utilized by our vendors. We have and may in the future become the target of cyber-attacks by third parties seeking unauthorized access to our or our customers or partners’ data or to disrupt our operations or ability to provide our services. While we have been successful in preventing such unauthorized access and disruption in the past, we may not continue to be successful against these or other attacks in the future.

Due to the COVID-19 pandemic, our employees are temporarily working remotely, which may pose additional data security risks. If we, or our service providers and partners, experience compromises to security that result in performance or availability problems, the complete shutdown of one or more of our platforms, digital properties and mobile applications, or the misuse, loss or unauthorized access to or disclosure of confidential information, personally identifiable information, or other personal or proprietary data, advertisers, retailers, and consumers may lose trust and confidence in us and decrease their use of our platforms or stop using our platforms entirely. Such compromises to personal or sensitive information or proprietary data could lead to litigation or other adversarial actions by business partners such as retailers or consumers.

The costs to respond to a security breach and/or to mitigate any security vulnerabilities that may be identified could be significant, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service, negative publicity, and other harm to our business and our competitive position.We could be required to fundamentally change our business activities and practices in response to a security breach or related regulatory actions or litigation, which could have an adverse effect on our business.

We have contractual and legal obligations to notify relevant stakeholders of security breaches. Most jurisdictions have enacted laws requiring companies to notify individuals, regulatory authorities, and others of security breaches involving certain types of data. In addition, our agreements with certain customers and partners may require us to notify them in the event of a security breach involving customer or partner data on our systems or those of subcontractors processing customer or partner data on our behalf. Such mandatory disclosures are costly, could lead to negative publicity, may cause our customers to lose confidence in the effectiveness of our security measures, and require us to expend significant capital and other resources to respond to or alleviate problems caused by the actual or perceived security breach may cause us to breach customer contracts. Depending on the facts and circumstances of such an incident, these damages, penalties and costs could be significant and may not be covered by insurance or could exceed our applicable insurance coverage limits. Such an event also could harm our reputation and result in litigation against us. Any of these results could materially adversely affect our financial performance. Our agreements with certain customers may require us to use industry-standard, reasonable, or other specified measures to safeguard sensitive personal information or confidential information, and any actual or perceived breach of such measures may increase the likelihood and frequency of customer audits under our agreements, which is likely to increase the costs of doing business. An actual or perceived security breach could lead to claims by our customers, or other relevant stakeholders that we have failed to comply with such legal or contractual obligations. As a result, we could be subject to legal action or our customers could end their relationships with us. There can be no assurance that any limitations of liability in our contracts, which we have in certain agreements, would be enforceable or adequate or would otherwise protect us from liabilities or damages.

Litigation resulting from security breaches may adversely affect our business. Unauthorized access to our applications, systems, networks, or physical facilities could result in litigation with our customers or other relevant stakeholders. These proceedings could force us to spend money in defense or settlement, divert management’s time and attention, increase our costs of doing business, or adversely affect our reputation. We could be required to fundamentally change our business activities and practices or modify our business and operational capabilities in response to such litigation, which could have an adverse effect on our business. If a security breach were to occur, and the confidentiality, integrity or availability of our data or the data of our partners or our customers was disrupted, we could incur significant liability, or our applications, systems, or networks may be perceived as less desirable, which could negatively affect our business and damage our reputation.

If we fail to detect or remediate a security breach in a timely manner, or a breach otherwise affects a large amount of data of one or more customers or partners, or if we suffer a cyberattack that impacts our ability to operate our applications, systems, or networks, we may suffer material damage to our reputation, business, financial condition, and results of operations. Further, we may not have adequate insurance coverage for security incidents or breaches, including fines, judgments, settlements, penalties, costs, attorney fees and other impacts that arise out of incidents or breaches. Depending on the facts and circumstances of such an incident, the damages, penalties and costs could be significant and may not be covered by insurance or could exceed our applicable insurance coverage limits. If the impacts of a security incident or breach, or the successful assertion of one or more large claims against us that exceeds our available insurance coverage, or results in changes to our insurance policies (including premium increases or the imposition of large deductible or co-insurance requirements), it could have an adverse effect on our business. In addition, we cannot be sure that our existing insurance coverage and coverage for errors and omissions will continue to be available on acceptable terms or that our insurers will not deny coverage as to all or part of any future claim or loss. Our risks are likely to increase as we continue to expand our applications, systems, or networks, grow our customer base, and Process, store, and transmit increasingly large amounts of proprietary and sensitive data.

Remediation of any potential cyber security breach may involve significant time, resources, and expenses, whichmayresultinpotentialregulatoryinquiries,litigationorotherinvestigations,andcanaffectourfinancialand operationalcondition.

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

Our ability to generate revenue, and properly capture the occurrence of certain revenue-generating events, depends on the collection, reliability, and use of significant amounts of data from various sources, including data that we receive from retailers and other parties. Additionally, our ability to deliver our solutions depends on our ability to successfully leverage data, including data that we collect from consumers, data we receive from retailers and other parties, and data from our own operating history. Using loyalty card numbers both on-line and in-store, device identifiers (including Google AdID and Apple IDFA), cookies, and other tracking technologies, we, our retail partners and other data providers collect information about the interactions of consumers with our retail partners’ digital properties and in-store, our owned and operated properties, and certain other publisher sites and mobile applications, as well as other data such as location. We may enhance this data with other data, such as demographic information that we obtain from data providers.

As an example, for certain media campaigns, we receive tracking information from the systems of retailers, their service providers, and other third parties. If those parties fail to provide us information, fail to provide information in a timely fashion, or provide incorrect information, or if for other reasons we are unable to properly track such information, our results of operations and our ability to timely determine our revenue share payment obligation to retailers could be adversely impacted. Additionally, our ability to successfully leverage such data depends on our continued ability to access and use data from various sources, which can be restricted by a number of factors, including consumer choice, the success in obtaining consumer consent, restrictions imposed by our retail and other data partners or other third parties, publishers and web browser developers or other software developers, changes in technology, including changes in web browser technology, and new developments in, or new interpretations of laws, regulations and industry standards. For example, Apple in 2021 began implementing several changes to iOS that will require consumers to opt-in to sharing data with publisher sites and app, which may adversely impact our business. Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanism as a result of industry regulatory and/or legal developments, the adoption by consumers of browsers settings or “ad-blocking” software and the development and deployment of new technologies could materially impact our ability to collect data or reduce our ability to deliver relevant promotions or media, which could materially impair the results of our operations. See the risk factor below titled “Our business is subject to complex and evolving laws, regulations and industry standards, and unfavorable interpretations of, or changes in, or failure by us to comply with these laws, regulations and industry standards could substantially harm our business and results of operations” for additional information.

In addition, unfavorable publicity and negative public perception about our industry or data collection and use could adversely affect our business and operating results. With the growth of online advertising and eCommerce, there is increasing awareness and concern among the general public, privacy advocates, mainstream media, governmental bodies and others regarding marketing, advertising, and privacy matters, particularly as they relate to individual privacy interests. Any unfavorable publicity or negative public perception about our use of data or other data focused industries could affect our business and results of operations, and may lead digital publishers like Facebook to change their business practices, or trigger additional regulatory scrutiny or lawmaking that affects us. Negative public attention could cause advertisers or our retail partners to discontinue using our targeted advertising solutions and limit our ability to measure campaigns delivered through our platforms. This public scrutiny may also lead to general distrust of data and marketing companies, consumer reluctance to share and permit use of personal data and increased consumer opt-out rates, any of which could negatively influence, change or reduce our current and prospective customers’ demand for our products and services and adversely affect our business and operating results.

If the use of mobile device identifiers, third-party cookies or other tracking technology is rejected by ~~Internet users,~~consumers, restricted by third parties outside of our control, or otherwise subject to unfavorable regulation, the benefits of our ~~performance~~offerings and solutions could ~~decline~~diminish, our data and media acquisition costs could increase and we could lose customers and revenue.

We and our third-party partners might use a number of technologies to collect information used to deliver our solutions. For instance, wemobile device identifiers such as Apple IDFA and Google AdID help us and our third-party partners identify, target and measure relevant promotions and media to consumers. Advertising shown on mobile applications can also be affected by blocking or restricting use of mobile device identifiers. Data regarding interactions between users and devices are tracked mostly through stable, pseudonymous advertising identifiers that are built into the device operating system with privacy controls that allow users to express a preference with respect to data collection for advertising, including to disable the identifier. These identifiers and privacy controls are defined by the developers of the platforms through which the applications are accessed and could be changed by the platforms in a way that may negatively impact our business. For example, in April 2021 Apple shifted to require user opt-in before permitting access to Apple’s unique identifier, or IDFA. Apple initially targeted fall of 2020 for implementing these changes but has implemented it as of early 2021. This shift from enabling user opt-out to an opt-in requirement is likely to have a substantial impact on the mobile advertising ecosystem, increase data and media acquisition costs, and could harm our growth.

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

Cookies may be deleted or blocked by ~~Internet users.~~consumers. The most commonly used Internet browsers (including Chrome, Firefox, ~~Internet Explorer,~~ and Safari) allow ~~Internet~~their users to prevent cookies from being accepted by their browsers. ~~Internet users~~Consumers can also delete cookies from their computers. Some ~~Internet users~~consumers also download "ad blocking" software that prevents cookies from being stored on a user's computer. If more ~~Internet users~~consumers adopt these settings or delete their cookies more frequently than they currently do, our business could be ~~harmed.~~negatively affected. In addition, certain web browsers may block third-party cookies by default, and other browsers may do so in the future. Unless such default settings in browsers are altered by ~~Internet users~~consumers to permit the placement of third-party cookies, we would be

able to set fewer of our cookies in users’ browsers, which could adversely affect our business. In addition, companies such as Google have publicly disclosed their intention to move away from cookies to another form of

persistent unique identifier, or ID, to identify individual ~~Internet users~~consumers or Internet-connected devices in the bidding process on advertising exchanges. If companies do not use shared IDs across the entire ecosystem, this could have a negative impact on our ability to find the same user across different web properties, and reduce the effectiveness of our ~~solution.~~solutions.

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

~~Failure~~We allow our clients to ~~comply~~utilize application programming interfaces ("APIs"), with ~~federal, state~~our platform, which could result in outages or security breaches and ~~foreign privacy,~~negatively impact our business, financial condition and results of operations.

The use of APIs by our customers and retail partners have significantly increased in recent years. Our APIs allow customers and retail partners to integrate their own business system with our platforms. The increased use of APIs increases security and operational risks to our systems, including the risk for intrusion attacks, data ~~protection, marketing~~theft, or denial of service attacks. Furthermore, while APIs allow greater ease and power in accessing our platform, they also increase the risk of overusing our systems, potentially causing outages. While we have taken measures intended to decrease security and outage risks associated with the use of APIs, we cannot guarantee that such measures will be successful. Our failure to prevent outages or security breaches resulting from API use could result in government enforcement actions against us, claims for damages by consumers and other affected individuals, costs associated with investigation and remediation damage to our reputation and loss of goodwill, any of which could harm our business, financial condition and results of operations.

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

Changes in laws ~~regulations and industry standards,~~ or ~~the expansion of current or the enactment or adoption of new privacy, data protection, marketing and consumer protection laws,~~ regulations, or ~~industry standards, could adversely affect our business.~~

~~We and our service providers and partners are subject to a variety~~changes in interpretations of ~~federal, state and foreign~~existing laws or regulations, ~~and industry standards regarding privacy, data protection, data security, marketing and consumer protection, which address~~including the collection, storing, sharing, using, processing, disclosure and protection of data relating to individuals, as well as the tracking of consumer behavior and other consumer data. We are also subject to laws, regulations and industry standards relating to endorsements and influencer marketing. Many of these laws, regulations and industry standards are changing and may be subject to differing interpretations and are costly to comply with or inconsistent among jurisdictions. For example, the Federal Trade Commission, or the FTC, expects companies like ours to comply with guidelines issued under the Federal Trade CommissionTelephone Consumer Protection Act that govern the collection, use, disclosure, and storage of consumer information, and establish principles relating to notice, consent, access and data integrity and security. The laws and regulations in many foreign countries relating to privacy, data protection, data security, marketing and consumer protection often are more restrictive than("TCPA") in the United States and ~~may~~laws regarding commercial electronic messaging in some cases be interpreted to have a greater scope. Additionally, the laws, regulations and industry standards, both foreign and domestic, relating to privacy, data protection, data security, marketing and consumer protection are dynamic and may be expanded or replaced by new laws, regulations or industry standards.

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

We strive to comply with applicable laws, policies, contractual and other legal obligations as well as industry standards of conduct relating to privacy, data security, data protection, marketing and consumer protection. However, these obligations and standards of conduct often are complex, vague, and difficult to comply with fully, and it is possible that these obligations and standards of conduct may be interpreted and applied in new ways and/or in a manner that is inconsistent with each other or that new laws, regulations or other obligations may be enacted. It is possible that our practices may be argued or held to conflict with applicable laws, policies, contractualimpose additional

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requirements upon us in connection with sending such communications could also adversely impact our business. For example, the Federal Communications Commission amended certain of its regulations under the TCPA in recent years in a manner that could increase our exposure to liability for certain types of telephonic communication with customers, including but not limited to text messages to mobile phones. Under the TCPA, plaintiffs may seek actual monetary loss or statutory damages per violation, whichever is greater, and courts may treble the damage award for willful or knowing violations. Given the enormous number of communications we send to consumers, the actual or perceived improper sending of communications or a determination that there have been violations of the TCPA or other ~~legal obligations,~~communications-based statutes could subject us to potential risks including liabilities or ~~applicable industry standards of conduct~~claims relating to ~~privacy, data security, data~~consumer protection ~~marketing~~laws and expose us to significant damage awards that could, individually or ~~consumer protection.~~in the aggregate, materially harm our business. Moreover, even if we prevail, such litigation against us could impose substantial costs and divert our management’s attention and resources.

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

Our business depends on our ability to expand internationally, foreign privacy, data security, data protection, marketing or consumer protection-related laws, regulations, contractual obligations or self-regulatory principles or other industry standards could resultmaintain and scale the network infrastructure necessary to operate our platforms, including our websites and mobile applications, and any significant disruption in ~~claims, proceedings or actions against us by governmental entities or others, other liabilities,~~service could result in a loss of ~~consumers using~~advertisers, retailers and consumers.

We deliver digital promotions and media via our ~~digital coupons or loss~~platforms, including over our websites and mobile applications, as well as through those of ~~CPGs~~our advertisers and retailers and our publishers and other third parties. Our reputation and ability to acquire, retain and serve advertisers and retailers, as well as consumers who use digital promotions or ~~harm~~view media on our platforms are dependent upon the reliable performance of our platforms. As the number of our advertiser customers, retailers and consumers and the number of digital promotions, digital media and information shared through our platforms continue to grow, we will need an increasing amount of network capacity and computing power. Our technology infrastructure and platforms are hosted across two data centers in co-location facilities in California and Virginia.We also operate our ~~reputation. Any~~applications and services in Microsoft Azure and Google GCP cloud platforms. We have spent and expect to continue to spend substantial amounts in our data centers, cloud platforms, and equipment and related network infrastructure to handle the traffic on our platforms. The operation of these circumstances could adversely affect our business. Further, if third parties we work with violate applicable laws, our policies or other privacy-related obligations, such violations may also put our consumers’ information at risksystems is expensive and complex and could result in ~~turn have an adverse effect~~operational failures. In the event that the number of transactions or the amount of traffic on our ~~business.~~

Globally, virtually every jurisdiction in which we operate has established its own data security and privacy frameworks with which we must comply. For example, the collection, use, disclosure, transfer or other processing of personal data regarding individuals in the United Kingdom and European Union, is subject to the European Union General Data Protection Regulation (EU) 2016/679, or the GDPR, which took effect across all member states of the European Union, or EU, in May 2018. The GDPR is wide-ranging in scope and imposes numerous requirements on companies that process personal data or personally identifiable information, including requirements relating to obtaining consent of the individuals to whom the personal data relates, establishing a legal basis for processing personal data, providing information to individuals regarding data processing activities, implementing safeguards to protect the security and confidentiality of personal data that requires the adoption of administrative, physical and technical safeguards, providing notification of data breaches to appropriate data protection authorities or data subjects, establishing means for data subjects to exercise rights in relation to their personal data and taking certain measures when engaging third-party processors. The GDPR also permits data protection authorities to require destruction of improperly gathered or used personal data and/or impose substantial fines for violations of the GDPR, which can be up to four percent of global revenue or 20 million Euros, whichever is greater, and confers a private right of action on data subjects and consumer associations to lodge complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages resulting from GDPR violations. In addition, the GDPR provides that EU member states may make their own further laws and regulations limiting the processing of personal data.

European data protection laws, including the GDPR, generally restrict the transfer of personal data from Europe, including the EEA, United Kingdom and Switzerland (collectively, "Europe"), to the United States and most other countries unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data. Although there are legal mechanism to allow for the transfer of personal data from the EEA, Switzerland and United Kingdom to the United States, uncertainty about compliance with such data protection laws remains and such mechanisms may not be available or applicable with respect to the personal data processing activities necessary for our business.One of the primary safeguards allowing U.S. companies to import personal data from Europe to the United States has been certification to the EU-U.S. Privacy Shield and Swiss-U.S. Privacy Shield frameworks administered by the U.S. Department of Commerce. However, in July 2020, the Court of Justice of the European Union invalidated the EU-U.S. Privacy Shield. The same decision also raised questions about whether one of the primary alternatives to the EU-U.S. Privacy Shield, namely, the European Commission’s Standard Contractual Clauses, can lawfully be used to transfer personal data from Europe to the United States or other countries. At present, there are few if any viable alternatives to the Privacy Shield and the Standard Contractual Clauses, the latter of which is a mechanism upon which we have relied for transfers of personal data from the EU to the United States. The Swiss Federal Data Protection and Information Commissioner similarly announced the use of the Swiss-U.S. Privacy Shield is inadequate for personal data transfers from Switzerland to the U.S.Authorities in the UK may similarly invalidate use of the EU-U.S. Privacy Shield for transfers of personal data from the United Kingdom to the U.S. As such, if we are unable to implement a valid solution for personal data transfers from Europe, we may face increased exposure to regulatory actions, sanctions, and injunctions against processing personal data from Europe, andplatforms grows more quickly than anticipated, we may be required to ~~increase~~incur significant additional costs. In addition, as we scale, we must continually invest in our ~~data processing capabilities~~information technology, and continue to invest in ~~Europe at significant expense. Inability to import personal data from Europe~~information security, infrastructure and automation. Deployment of new software or processes may ~~decrease demand for our services as our customers that are subject to European data protection laws seek alternative services that do not involve personal data transfers out~~adversely affect the performance of Europe. Additionally, other countries outside of Europe have enacted or are considering enacting similar cross-border data transfer restrictions and laws requiring local data residency, which could increase the cost and complexity of delivering our services and ~~operating~~harm the customer experience. If we fail to support our platforms or provide a strong customer experience, our ability to retain and attract customers may be negatively affected. Interruptions in these systems or service disruptions, whether due to system failures, computer viruses, malware, ransomware, denial of service attacks, attempts to degrade or disrupt services, or physical or electronic break-ins, could affect the security or availability of our websites and platforms, and prevent advertisers, retailers or consumers from accessing our platforms. A substantial portion of our network infrastructure is hosted by third-party providers. Any disruption in these services or any failure of these providers to handle existing or increased traffic could significantly harm our business. ~~In addition, we~~Any financial or other difficulties these providers face may ~~experience reluctance or refusal by European consumers, retailers or CPGs to continue to using~~adversely affect our ~~solutions,~~business, and we ~~may be at risk of enforcement actions taken by a European data protection authority until we ensure that all applicable data transfers~~exercise little control over these providers, which increases our vulnerability to ~~us from Europe are compliant~~problems with the ~~European data protection laws.~~

services they provide. If we do not maintain or expand our network infrastructure successfully or if we experience operational failures, we could lose current and potential advertisers, retailers and consumers, which could harm our operating results and financial condition.

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~~Additionally,~~We currently have not experienced disruptions to our network or operations as a result of COVID-19 but there are no guarantees there will not be disruptions in the ~~United Kingdom has exited from~~future. However, due to the ~~EU, commonly referred~~continuing impact of the COVID-19 pandemic both inside and outside the U.S., and especially in India where a significant portion of our operations, engineering and IT personnel are situated, we could experience disruptions to ~~as “Brexit,”~~our operations, network or product development activities, which could ~~also lead~~impact our provision of services to ~~further legislative~~customers as well as our internal operations and regulatory changes. While the UK Data Protection Act of 2018, that “implements” and complements the GDPR is effective in the United Kingdom, it remains unclear whether transfer of data from the EEA to the United Kingdom will remain lawful under the GDPR following the Brexit transition period ending on December 31, 2020. During the period of “transition” (i.e., until December 31, 2020), EU law will continue to apply in the UK, including the GDPR, and transfers of data from the EU to the United Kingdom are permitted without the need for any “adequacy mechanism.” Unless the EU Commission makes an “adequacy finding” in respect of the United Kingdom before January 1, 2021, from that date the United Kingdom will be a “third country” under the GDPR and transfers of personal data from the EU to the United Kingdom will require an “adequacy mechanism,” such as the Standard Contractual Clauses.support functions.

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

Our ability to provide services to consumers depends on our ability to communicate with advertisers, retailers and consumers through the public Internet and electronic networks that are owned and operated by third parties. Our solutions and services also depend on the ability of our users to access the public Internet. In addition, in order to provide services promptly, our computer equipment and network servers must be functional 24 hours per day, which requires access to telecommunications facilities managed by third parties and the availability of electricity, which we do not control. Severe disruptions, outages, defects, or other security performance and quality problems with one or more of these networks, including as a result of utility or third-party system interruptions, or any material change in our contractual and other ~~operational losses under the GDPR and applicable EU Member States, Switzerland and United Kingdom privacy laws in connection~~business relationships with any measures we take to comply with them. Additionally, the CCPA creates new individual privacy rights for California residents and places increased privacy and security obligations on entities handling personal data of California residents.

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

Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement and other losses including unauthorized use or disclosure of consumer data.

~~Our agreements with CPGs, retailers and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred~~For example, currently, as a result of ~~claims~~work and travel restrictions related to the ongoing COVID-19 pandemic, our employees are working remotely and dependent upon their respective internet service providers to be able to access the internet, our systems and systems of ~~intellectual property infringement or~~our service providers. In other ~~liabilities relating to or arising from~~words, our ~~products, services or other contractual obligations including those relating to data use~~business workflows now rely on availability of residential broadband bandwidth as well as connectivity which is currently under considerable strain. If the residential broadband and ~~consumer consent. The term of these indemnity provisions generally survives termination or expiration of the applicable agreement. Large indemnity payments could harm~~internet access break down under strain, our ~~business.~~business and operations would be negatively affected.

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

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

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

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

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

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

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

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

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

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

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

We believe that the brand identity that we have developed has significantly contributed to the success of our business. We also believe that maintaining and enhancing our brands are critical to expanding our base of CPGs, retailers and consumers. Maintaining and enhancing our brands may require us to make substantial investments

and these investments may not be successful. If we fail to promote and maintain our brands, or if we incur excessive expenses in this effort, our business would be harmed. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive. Maintaining and enhancing our brands will depend on our ability to continue to provide sufficient quantities of reliable, trustworthy and high quality digital coupons, which we may not do successfully.

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

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

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

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

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

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

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

The price of ~~doing business internationally,~~our common stock may change in response to variations in our operating results and also may change in response to other factors, including ~~the following:~~

•~~competition with strong local competitors and preference for local providers, or foreign~~factors specific to technology companies, ~~entering the same markets;~~

•~~the cost and resources required to localize our platform;~~

•~~burdens~~many of ~~complying with a wide variety of different laws and regulations, including intellectual property laws and regulation of digital coupons and media, Internet services, privacy and data protection,~~which are beyond

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~~marketing and consumer protection laws, anti-competition regulations and different liability standards, which~~our control. As a result, our stock price may ~~limit or prevent us from offering of~~experience significant volatility. Among other factors that could affect our ~~solutions in some jurisdictions or limit our ability to enforce contractual obligations;~~stock price are:

•~~differences~~the financial projections that we or analysts may choose to provide to the public, any changes in ~~how trade promotion spending is allocated;~~these projections or our failure for any reason to meet these projections;

•~~differences~~actual or anticipated changes or fluctuations in ~~the way digital coupons and advertising are delivered and how consumers access and use digital coupons;~~

•~~technology compatibility;~~

•~~difficulties in recruiting and retaining qualified employees and managing foreign~~our results of operations;

•~~different employee/employer relationships and~~whether our results of operations meet the ~~existence~~expectations of ~~workers’ councils and labor unions;~~securities analysts or investors;

•~~shorter payment cycles, different accounting practices and greater problems in collecting accounts receivable;~~addition or loss of significant customers or commercial business partners;

•~~higher product return rates;~~price and volume fluctuations in the overall stock market from time to time;

•~~seasonal reductions~~fluctuations in ~~business activity;~~the trading volume of our shares or the size of our public float;

•~~adverse tax effects~~success of competitive products or services;

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

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

•announcements relating to litigation;

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

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

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

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

•our entry into new markets;

•regulatory developments in the United States or foreign ~~exchange controls making it difficult to repatriate earnings and cash;~~countries;

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

•business model or solution delivery changes that result in differences in accounting treatment, including whether revenue is recognized on a net or gross basis; and

•~~political~~changes in accounting principles.

If any of the foregoing occurs, it could cause our stock price or trading volume to decline. In addition, the stock market in general has experienced substantial price and ~~economic instability.~~

~~Changes~~volume volatility that is often seemingly unrelated to the operating results of any particular companies. Moreover, if the market for technology stocks or the stock market in general experiences uneven investor confidence, the market price of our common stock could decline for reasons unrelated to our business, operating results or financial condition. The market price for our stock might also decline in reaction to events that affect other companies within, or outside, our industry, even if these events do not directly affect us. Some companies that have experienced volatility in the ~~U.S. taxation~~trading price of ~~international activities may increase our worldwide effective tax rate and harm our financial condition and results~~their stock have been subject of ~~operations. The taxing authorities~~securities litigation. If we are the subject of the jurisdictions in which we plan to operate may challenge our methodologies for valuing developed technology or intercompany arrangements, including our transfer pricing, or determine that the manner in which we operate our business does not achieve the intended tax consequences, which could increase our worldwide effective tax rate and harm our financial position and results of operations. Significant judgment will be required in evaluating our tax positions and determining our provision for income taxes. During the ordinary course of business, there will be many transactions and calculations for which the ultimate tax determination is uncertain. As we expand our business to operate in numerous taxing jurisdictions, the application of tax laws may be subject to diverging and sometimes conflicting interpretations by tax authorities of these jurisdictions. It is not uncommon for taxing authorities in different countries to have conflicting views. In addition, tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time, which could adversely affect our business operations and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. For example, legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act, or the Tax Act, enacted many significant changes to the U.S. tax laws. Future guidance from the Internal Revenue Service and other tax authorities with respect to the Tax Act may affect us, and certain aspects of the Tax Act could be repealed or modified in future legislation. For example, the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, modified certain provisions of the Tax Act. In addition,such litigation, it is uncertain if and to what extent various states will conform to the Tax Act, the CARES Act, or any newly enacted federal tax legislation. Changes in corporate tax rates, the realization of net deferred tax assets relating to our operations, the taxation of foreign earnings, and the deductibility of expenses under the Tax Act or future reform legislation could have a material impact on the value of our deferred tax assets, could result in ~~significant one-time charges,~~substantial costs and a diversion of management’s attention and resources.

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

Sales of a substantial number of shares of our common stock in the public market could depress the market price of our common stock and could ~~increase our future U.S. income tax expense.~~

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

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

~~The loss of key personnel, including key members of management as well as our marketing, sales, product development and technology personnel, could disrupt our operations and have an adverse effect on~~impair our ability to ~~grow~~raise capital through the sale of additional equity securities. We have approximately 94,268,564 shares of common stock outstanding as of September 30, 2021, assuming no exercise of our ~~business.~~outstanding options or vesting of our outstanding RSUs.

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

The concentration of our common stock ownership with our executive officers, directors and owners of 5% or more ~~mature company, we may find~~of our ~~recruiting and retention efforts more challenging. We are seeking to continue to hire a significant number of personnel, including certain key management personnel. We may be limited in~~outstanding common stock will limit our ability to ~~recruit global talent by U.S. immigration laws, including those related to H1-B visas. The demand for H1-B visas to fill highly-skilled IT~~influence corporate matters.

Our executive officers, directors and ~~computer science jobs is greater than~~owners of 5% or more of our outstanding common stock together beneficially own approximately 31% of our outstanding common stock, based on the number of ~~H-1B visas available each year. In addition,~~shares outstanding as of September 30, 2021. These stockholders therefore have significant influence over management and affairs and over all matters requiring stockholder approval, including the ~~regulatory environment related to immigration under~~election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the current presidential administration may increase the likelihood that immigration laws may be modified to further limit the availability of H1-B visas. If a new or revised visa program is implemented, it may impact ourforeseeable future. This concentrated control limits your ability to ~~recruit, hire~~influence corporate matters and, retain qualified skilled personnel, which could adversely impact our business, operating results and financial condition. If we do not succeed in attracting, hiring and integrating qualified personnel, or retaining and motivating existing personnel, we may be unable to grow effectively.

~~If our estimates or judgements relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.~~

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant assumptions and estimates used in preparing our consolidated financial statements include those related to business combinations, goodwill and intangible assets, treatment of our convertible senior notes, revenue recognition, promotion revenue, media revenue, gross versus net revenue reporting, arrangements with multiple performance obligations, stock-based compensation and provision for income taxes. For example, the recognition of our revenue is governed by certain criteria that determine whether we report revenue either on a gross basis, as a principal, or net basis, as an agent, depending upon the nature of the sales transaction. Historically, our media products revenue has generally been recognized on a gross basis. However, in the first quarter of 2020, we announced that effective second quarter of 2020, we plan to modify the way we process and deliver certain media products to enhance the customer experience. As a result of these changes, we expect that we will recognize certain revenue on a net basis, as compared to the prior recognition on a gross basis, and expect that this will cause a decrease in our revenue growth and impact our revenues. We may have gross reporting for portions of our media products and other revenue in the future as a result, we may take actions that our stockholders do not view as beneficial. This ownership could affect the value of your shares of common stock.

Our stock repurchase program could affect the ~~evolution~~price of our ~~existing business practices, development of new products, acquisitions,~~common stock and increase volatility and may be suspended or ~~changes in accounting standards or interpretations, that in~~terminated at any ~~case~~time, which may result in ~~transactions with characteristics that dictate gross reporting. It is also possible that revenue reporting for existing businesses may change from gross to net or vice versa as~~ a result of changes in contract terms or transaction mechanics. We may experience significant fluctuations in revenue in future periods depending upon, in part, the nature of our sales and our reporting of such revenue and related accounting treatment, without proportionate correlation to our underlying activity or net income. Any combination of net and gross revenue reporting would require us to make estimates and assumptions about the mix of gross and net-reported transactions based upon the volumes and characteristics of the transactions we think will make up the total mix of revenue in the period covered by the projection. Those estimates and assumptions may be inaccurate when made, or may be rendered inaccurate by subsequent circumstances, such as changing the characteristics of our offerings or particular transactions in response to client demands, market developments, regulatory pressures, acquisitions, and other factors. Even apparently minor changes in transaction terms from those initially envisioned can result in different accounting conclusions from those foreseen. In addition, we may incorrectly extrapolate from revenue recognition treatment of prior transactions to future transactions that we believe are similar, but that ultimately are determined to have different characteristics that dictate different revenue reporting treatment. These factors may make our financial reporting more complex and difficult for investors to understand, may make comparison of our results of operations to prior periods or other companies more difficult, may make it more difficult for us to give accurate guidance, and could increase the potential for reporting errors.

~~Changes to financial accounting standards or the SEC’s rules and regulations may affect our financial statements and cause~~Our Board of Directors has approved share repurchase programs for us to ~~change~~repurchase shares of our ~~business practices.~~common stock. In February 2021, our Board of Directors authorized a one-year share repurchase program (“2021 Program”) for us to repurchase up to $50.0 million of our common stock from February 2021 through February 2022. The 2021 Program could cause the price of our common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock. Additionally, repurchases under any stock repurchase program will diminish our cash reserves, which could impact our ability to further develop our technology, access and/or retrofit additional facilities and service our indebtedness. In addition, we may face media or other scrutiny for past and any future stock repurchase programs. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares. Any failure to repurchase shares after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price. Although our stock repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

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

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

We ~~prepare our financial statements~~do not intend to ~~conform to U.S. GAAP. These accounting principles are subject to interpretation by the FASB, American Institute of Certified Public Accountants (“AICPA”), the SEC and various~~

bodies formed to interpret and create appropriate accounting policies. A change in those policies can have a significant effect on our reported results and may affect our reporting of transactions completed before a change is announced. Changes to those rules or the questioning of current practices may adversely affect our reported financial results or the way we conduct our business. For example, in August 2020, the FASB issued a new standard ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity, which generally requires companies to report our convertible debt instrument as a single liability instrument with no separate accountingpay dividends for the embedded conversion features. Additionally, this ASU amends the diluted earnings per share calculation for convertible instruments by requiring the use of the if-converted method. The treasury stock method is no longer available. This new standard is effective for fiscal years beginning after December 15, 2021. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2020.foreseeable future.

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

~~To date, we have generated almost~~retain all of our ~~revenues from within~~earnings for the ~~United States.~~foreseeable future to finance the operation and expansion of our business and do not anticipate paying cash dividends on our common stock. As a result, ~~we currently do not have significant revenues or expenses~~you can expect to receive a return on your investment in our international operations and we do not hedge our foreign currency exchange risk. However, we plan to grow our operations and offerings through expansion in existing international markets and by partnering with our existing CPGs and retailers to enter new geographies that are important to them. For example, we opened a research and development facility in Bangalore, India and acquired Ubimo, which has research and development operations in Tel-Aviv, Israel. As we expand our business outside the United States we will face exposure to adverse movements in currency exchange rates. We will be exposed to foreign exchange rate fluctuations from the conversion of collections and expenses not denominated in U.S. dollars. If the U.S. dollar weakens against foreign currencies, the conversion of these foreign currency denominated transactions will result in increased revenues, operating expenses and net income. Similarly,common stock only if the ~~U.S. dollar strengthens against foreign currencies,~~market price of the ~~conversion~~stock increases.

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

Provisions in our certificate of incorporation and by-laws may have the effect of delaying or preventing a change of control or changes in our management. Amongst other things, these foreign currency denominated transactions will result in decreased revenues, operating expenses and net income. As exchange rates vary, sales and other operating results, when translated, may differ materially from expectations. Our risks related to currency fluctuations will increase as our international operations become an increasing portion of our business. In addition, we face exposure to fluctuations in interest rates which may impact our investment income unfavorably.

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

•~~difficulty hiring and retaining appropriate personnel due~~authorize the issuance of “blank check” preferred stock that could be issued by our Board of Directors to ~~intense competition for such resources and resulting wage inflation in the cities where our research and development activities and operations are located;~~

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

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

•~~fluctuations in currency exchange rates and regulatory compliance in the countries where our research and development activities and operations are located; and~~defend against a takeover attempt;

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

~~Difficulties resulting~~which the successors to the directors whose terms have expired will be elected to serve from the ~~factors above could increase our research~~time of election and ~~development or operational expenses, delay~~qualification until the ~~introduction~~third annual meeting following their election;

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

•provide that vacancies on the Board of ~~new products, or impact our product quality,~~Directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;

•prevent stockholders from calling special meetings; and

•prohibit stockholder action by written consent, requiring all actions to be taken at a meeting of the ~~occurrence of any of which could adversely affect our business and operating results.~~stockholders.

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

~~Our headquarters is located in Mountain View, California. Our current technology infrastructure is hosted across two data centers in co-location facilities in California and Nevada.~~ In addition, we ~~use two other co-location facilities in California and Virginia to host our Retailer iQ platform. Our services, operations and~~are governed by the data centers from which we provide our services are vulnerable to damage or interruption from earthquakes, fires, floods, public health crises such as pandemics and epidemics, power losses, telecommunications failures, terrorist attacks, actsprovisions of war, human errors, break-ins and similar events (such as the COVID-19 pandemic). A significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, financial condition and results of operations and our insurance coverage may be insufficient to compensate us for losses that may occur. Acts of terrorism could cause disruptions to the Internet, our business or the economy as a whole. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting areas where data centers upon which we rely are located, and our business interruption insurance may be insufficient to compensate us for losses that may occur. Such disruptions could negatively impact our ability to run our websites, which could harm our business.

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

We may in the future be required to raise additional capital through public or private financing or other arrangements. Such financing may not be available on acceptable terms, or at all, and our failure to raise capital when needed could harm our business. Additional equity or equity-linked financing, such as our convertible senior notes, may dilute the interests of our stockholders, and debt financing, if available, may involve restrictive covenants and could reduce our profitability. If we cannot raise funds on acceptable terms, we may not be able to grow our business. In addition, while the potential impact and durationSection 203 of the ~~COVID-19 pandemic~~Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in a broad range of business combinations with any “interested” stockholder for a period of three years following the date on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity in the future.

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

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

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

Risks Related to Our Convertible Senior Notes

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

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

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

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

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

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

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

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

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

accounting rules to reclassify all or a portion of the outstanding principal of the notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

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

Under Accounting Standards Codification 470-20, Debt with Conversion and Other Options (“ASC 470-20”), an entity must separately account for the liability and equity components of the convertible debt instruments (such as the notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The effect of ASC 470-20 on the accounting for the notes is that the equity component is required to be included in the additional paid-in capital section of stockholders’ equity on our consolidated balance sheet at the issuance date and the value of the equity component would be treated as debt discount for purposes of accounting for the debt component of the notes. As a result, we will be required to record a greater amount of non-cash interest expense as a result of the amortization of the discounted carrying value of the notes to their face

amount over the term of the notes. We will report larger net losses (or lower net income) in our financial results because ASC 470-20 will require interest to include both the amortization of the debt discount and the instrument’s nonconvertible coupon interest rate, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the notes.

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

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

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

General Risks ~~Related to Ownership of our Common Stock~~

~~The market price of our common stock has been, and~~Our business is ~~likely to continue to be,~~ subject to ~~wide fluctuations~~interruptions, delays or failures resulting from earthquakes, other natural catastrophic events or terrorism.

Our headquarters is currently located in Salt Lake City, Utah. Our current technology infrastructure is hosted across two data centers in co-location facilities in California and Virginia. In addition, we use Microsoft Azure and Google GCP cloud providers to host our applications and services. Our services, operations and the data centers from which we provide our services are vulnerable to damage or interruption from earthquakes, fires, floods, public health crises such as pandemics and epidemics, power losses, telecommunications failures, terrorist attacks, acts of war, human errors, break-ins and similar events (such as the COVID-19 pandemic). A significant natural disaster, such as an earthquake, fire or flood, could ~~subject us to litigation.~~

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

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

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

•~~whether our~~ results of operations ~~meet~~and our insurance coverage may be insufficient to compensate us for losses that may occur. Acts of terrorism could cause disruptions to the ~~expectations of securities analysts or investors;~~

•~~addition or loss of significant customers or commercial~~Internet, our business ~~partners;~~

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

•~~fluctuations in the trading volume of our shares~~ or the ~~size of~~economy as a whole. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting areas where data centers upon which we rely are located, and our ~~public float;~~

•~~success of competitive products or services;~~

•~~the public’s response~~business interruption insurance may be insufficient to ~~press releases or other public announcements by~~compensate us ~~or others, including our filings with the SEC;~~

•~~disputes or other developments related to proprietary rights, including patents, litigation matters or~~for losses that may occur. Such disruptions could negatively impact our ability to ~~obtain intellectual property protection for~~run our ~~technologies;~~

•~~announcements relating to litigation;~~

•~~speculation about~~websites, which could harm our ~~business in the press or the investment community;~~

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

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

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

•~~our entry into new markets;~~

•~~regulatory developments in the United States or foreign countries;~~

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

•~~changes in accounting principles.~~business.

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

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

~~Sales of a substantial number of shares of our common stock in the public market could depress the market price of our common stock and could impair our~~Our ability to raise capital ~~through~~in the sale of additional equity securities. We have approximately 89,371,199 shares of common stock outstanding as of December 31, 2019, assuming no exercise of our outstanding options or vesting of our outstanding RSUs.

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

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

Our executive officers, directors and owners of 5% or more of our outstanding common stock together beneficially own approximately 41% of our outstanding common stock, based on the number of shares outstanding as of September 30, 2020. These stockholders therefore have significant influence over management and affairs and over all matters requiring stockholder approval, including the election of directors and significant corporate transactions, such as a merger or other sale of our company or its assets, for the foreseeable future. This concentrated control limits your ability to influence corporate matters and, as a result, we may take actions that our stockholders do not view as beneficial. This ownership could affect the value of your shares of common stock.

~~Our stock repurchase program could affect the price of our common stock and increase volatility and~~future may be ~~suspended or terminated at any time, which~~limited, and our failure to raise capital when needed could prevent us from growing.

We may ~~result in a decrease~~ in the ~~trading price of our common stock.~~

Our Board of Directors previously approved programs for us to repurchase shares of our common stock. In April 2019, our Board of Directors authorized a one-year share repurchase program (“May 2019 Program”) for us to repurchase up to $60.0 million of our common stock from May 2019 through May 2020. In August 2019, our Board of Directors authorized a one-year share repurchase program (the “August 2019 Program”) for us to repurchase up to $50.0 million of our common stock from August 2019 through August 2020. In March 2020, we suspended the August 2019 Program, as a precautionary measure to maximize liquidity and increase available cash on hand during this time of uncertainty and the August 2019 Program expired in August 2020. If our Board of Directors were to authorize a new repurchase program, the existence of such program could cause the price of our common stock to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our common stock. Additionally, repurchases under any stock repurchase program will diminish our cash reserves, which could impact our ability to further develop our technology, access and/or retrofit additional facilities and service our indebtedness. In addition, we may face media or other scrutiny for past and any future stock repurchase programs. There can be no assurance that any stock repurchases will enhance stockholder value because the market price of our common stock may decline below the levels at which we repurchased such shares. Any failure to repurchase shares after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price. Although our stock repurchase program is intended to enhance long-term stockholder value, short-term stock price fluctuations could reduce the program’s effectiveness.

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

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

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to ~~develop or maintain effective controls, or any difficulties encountered in their implementation or improvement,~~raise capital when needed could harm our ~~operating results~~business. Additional equity or ~~cause us to fail to meet~~equity-linked financing, such as our ~~reporting obligations~~convertible senior notes, may dilute the interests of our stockholders, and debt financing, if available, may involve restrictive covenants and could ~~result in a restatement of~~reduce our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting thatprofitability. If we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effectcannot raise funds on ~~the trading price of our common stock. In addition, if~~acceptable terms, we ~~are unable to continue to meet these requirements, our common stock~~ may not be able to ~~remain listed~~grow our business. In addition, while the potential impact and duration of the COVID-19 pandemic on the ~~NYSE.~~global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and could result in, significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity in the future.

~~Any failure~~Global economic conditions could materially adversely affect our revenue and results of operations.

Our business has been and may continue to ~~maintain effective disclosure controls~~be affected by a number of factors that are beyond our control, such as general geopolitical, economic and ~~internal control over~~business conditions, conditions in the financial ~~reporting~~markets, and changes in the overall demand for, or supply of, consumer packaged goods products. A severe and/or prolonged economic downturn could adversely affect our customers' financial condition and the levels of marketing spend of our customers. While we have seen advertisers or CPGs spend or increase spend on promotions during economic downturns, there is no guarantee they will do so in a ~~material~~future economic downturn, including one that may be presently taking shape due to the persistence of the COVID-19 pandemic and inflationary pressures. Weakness in, and uncertainty about, global economic conditions may cause advertisers (including CPGs) and retailers to postpone marketing in response to tighter credit, negative financial news and/or declines in income or asset values. If inflation were to increase, advertisers and retailers could face higher manufacturing, supply chain or related input costs associated with the goods they produce and offer for sale, which could negatively impact their margins and otherwise make them less apt to utilize our solutions, which in turn would negatively impact our revenue. As also noted in the risk factor “The effects of health epidemics, including the COVID-19 pandemic, have had, and may continue to have, an adverse ~~effect~~impact on our business, operations and ~~operating results,~~the markets and ~~cause a decline~~communities in which we and our partners operate” above, the COVID-19 pandemic has significantly increased economic uncertainty. Some advertisers or CPGs continue to experience supply chain pressures and have not returned to pre-pandemic levels of promotional marketing spend. The economic slowdown that was severe in the ~~price~~initial months following the pandemic’s breakout in 2020 has moderated, but due to the persistent presence of ~~our common stock.~~

~~If securities analysts do not publish research or if securities analysts or other third parties publish inaccurate or unfavorable research about us,~~COVID-19 hotspots both in the ~~price~~U.S. and more significantly in non-U.S. countries, risks of ~~our common stock could decline.~~

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

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

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

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

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

•~~establish a classified Board of Directors,~~economic conditions, including as a result of ~~which~~ the ~~successors~~pandemic, can significantly harm demand for our marketing solutions (or change the mix of solutions demanded) and make it more challenging to ~~the directors whose terms have expired will be elected to serve from the time of election~~forecast our operating results and ~~qualification until the third annual meeting following their election;~~make business decisions.

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

•In addition, the economic problems affecting the financial markets and the uncertainty in global economic conditions resulted in a number of adverse effects including a low level of liquidity in many financial markets, extreme volatility in credit, equity, currency and fixed income markets, instability in the stock market and high unemployment. There could be a number of other follow-on effects from these economic developments on our business, including customer insolvencies; decreased demand for our marketing solutions; decreased~~provide that vacancies on the Board of Directors, including newly created directorships, may be filled only by a majority vote of directors then in office rather than by stockholders;~~customer ability to paytheir accounts; and increased collections risk and defaults.

•
~~prevent stockholders from calling special meetings; and~~

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

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

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

Issuer Purchases of Equity Securities

In ~~August 2019,~~February 2021, the Company’s Board of Directors authorized a ~~one-year~~one year share repurchase program (the “2021 Program”) for the Company to repurchase up to $50.0 million of its common stock from ~~August 2019~~February 2021 through ~~August 2020.~~February 2022. Stock repurchases may be made from time to time in open market transactions or privately negotiated transactions, and the Company may use a plan that is intended to meet the requirements of SEC Rule 10b5-1 to enable stock repurchases to occur during periods when the trading window would otherwise be closed. The Company may suspend, modify or terminate the 2021 Program at any time without prior notice. During the three and nine months ended September 30, ~~2020,~~2021, the Company did not repurchase any shares of its common ~~stock, and~~stock. As of September 30, 2021, $50.0 million remains available for future share repurchases under the ~~program expired in April 2020.~~2021 Program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Incorporated by Reference

Number

Exhibit Title

Form

File No.

Exhibit

Filing
Date

Filed
Herewith

3.1

Amended and Restated Certificate of Incorporation of the Registrant, as amended effective October 20, 2015.

10-K

001-36331

3.1

3/11/2016

3.2

Amended and Restated Bylaws of the Registrant.

8-K

001-36331

3.2

10/6/2015

4.1

Form of Registrant’s Common Stock Certificate.

S-1/A

333-193692

4.1

2/25/2014

4.2

Eighth Amended and Restated Investors’ Rights Agreement among the Registrant and certain holders of its capital stock, dated June 1, 2011.

S-1

333-193692

4.2

1/31/2014

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2

Certificate of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

Inline XBRL 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

Inline XBRL Taxonomy Extension Schema Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104

Cover Page Interactive Data File (formatted as inline XBRL with applicable taxonomy extension information contained in Exhibits 101)

The certifications attached as Exhibit 32.1 and 32.2 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of Quotient under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Form 10-Q, irrespective of any general incorporation language contained in such filing.

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SIGNATURES

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


	QUOTIENT TECHNOLOGY INC.


Dated: November ~~5, 2020~~4, 2021	By:	/s/ Steven Boal
		Steven Boal
		Chief Executive Officer
		(Principal Executive Officer)

Dated: November ~~5, 2020~~4, 2021	By:	/s/ Pamela Strayer
		Pamela Strayer
		Chief Financial Officer and Treasurer
		(Principal Financial Officer and Principal Accounting Officer)

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