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, ~~2021~~2022


☐			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.)
1260 East Stringham Avenue, 6th Floor, Salt Lake City, UT						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

Preferred Stock Purchase Rights

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, 2021,~~3, 2022, the registrant had ~~94,421,658~~96,699,554 shares of common stock outstanding.

QUOTIENT TECHNOLOGY INC.

INDEX

REPORT ON

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, ~~2021~~2022


PART I FINANCIAL INFORMATION
Item 1 Financial Statements (unaudited):						4
Condensed Consolidated Balance Sheets as of September 30, ~~2021~~2022 and December 31, ~~2020~~2021						4
Condensed Consolidated Statements of Operations for the Three and Nine months ended September 30, ~~2021~~2022 and ~~2020~~2021						5
Condensed Consolidated Statements of Comprehensive Loss for the Three and Nine months ended September 30, ~~2021~~2022 and ~~2020~~2021						6
Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine months ended September 30, ~~2021~~2022 and ~~2020~~2021						7
Condensed Consolidated Statements of Cash Flows for the Nine months ended September 30, ~~2021~~2022 and ~~2020~~2021						8
Notes to Condensed Consolidated Financial Statements						9
Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations						3133
Item 3 Quantitative and Qualitative Disclosures About Market Risk						4548
Item 4 Controls and Procedures						4548
PART II OTHER INFORMATION
Item 1—Legal Proceedings						4749
Item 1A—Risk Factors						4951
Item 2—Unregistered Sales of Equity Securities and Use of Proceeds						8891
Item 3—Defaults Upon Senior Securities						8891
Item 4—Mine Safety Disclosures						8891
Item 5—Other Information						8891
Item 6—Exhibits						8992
SIGNATURES						9094

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, 2021		December 31, 2020			September 30, 2022		December 31, 2021
		(unaudited)					(unaudited)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	244,945	$	222,752	Cash and cash equivalents	$	208,394	$	237,417
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
Accounts receivable, net of allowance for credit losses of $998 and $2,500 at September 30, 2022 and December 31, 2021, respectively						Accounts receivable, net of allowance for credit losses of $998 and $2,500 at September 30, 2022 and December 31, 2021, respectively	96,058		177,216
Prepaid expenses and other current assets	Prepaid expenses and other current assets	14,437		18,547		Prepaid expenses and other current assets	20,400		19,312
Total current assets	Total current assets	415,786		378,948		Total current assets	324,852		433,945
Property and equipment, net	Property and equipment, net	21,819		17,268		Property and equipment, net	26,364		22,660
Operating lease right-of-use assets	Operating lease right-of-use assets	20,755		16,222		Operating lease right-of-use assets	15,353		23,874
Intangible assets, net	Intangible assets, net	15,978		44,898		Intangible assets, net	5,461		13,003
Goodwill	Goodwill	128,427		128,427		Goodwill	128,427		128,427
Other assets	Other assets	1,774		1,029		Other assets	11,597		13,571
Total assets	Total assets	$	604,539	$	586,792	Total assets	$	512,054	$	635,480
Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	14,997	$	15,959	Accounts payable	$	23,796	$	18,021
Accrued compensation and benefits	Accrued compensation and benefits	19,604		14,368		Accrued compensation and benefits	10,994		20,223
Other current liabilities	Other current liabilities	80,978		70,620		Other current liabilities	62,014		95,279
Deferred revenues	Deferred revenues	21,154		12,027		Deferred revenues	17,561		26,778
Contingent consideration related to acquisitions	Contingent consideration related to acquisitions	21,655		8,524		Contingent consideration related to acquisitions	—		22,275
Convertible senior notes, net						Convertible senior notes, net	199,844		188,786
Total current liabilities	Total current liabilities	158,388		121,498		Total current liabilities	314,209		371,362
Operating lease liabilities	Operating lease liabilities	22,182		15,956		Operating lease liabilities	22,597		26,903
Other non-current liabilities	Other non-current liabilities	746		2,358		Other non-current liabilities	472		522
Contingent consideration related to acquisitions		—		20,930
Convertible senior notes, net		185,823		177,168
Deferred tax liabilities	Deferred tax liabilities	1,853		1,853		Deferred tax liabilities	1,991		1,991
Total liabilities	Total liabilities	368,992		339,763		Total liabilities	339,269		400,778
Commitments and contingencies (Note 14)		0		0
Commitments and contingencies (Note 13)						Commitments and contingencies (Note 13)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
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		1		1
Preferred stock, $0.00001 par value—10,000,000 shares authorized; 250,000 shares designated as Series A Junior Participating Preferred Stock; and no shares issued or outstanding at September 30, 2022 and December 31, 2021						Preferred stock, $0.00001 par value—10,000,000 shares authorized; 250,000 shares designated as Series A Junior Participating Preferred Stock; and no shares issued or outstanding at September 30, 2022 and December 31, 2021	—		—
Common stock, $0.00001 par value—250,000,000 shares authorized; 96,501,690 and 94,779,442 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively						Common stock, $0.00001 par value—250,000,000 shares authorized; 96,501,690 and 94,779,442 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively	1		1
Additional paid-in capital	Additional paid-in capital	725,401		698,333		Additional paid-in capital	708,297		731,672
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(1,093)		(1,001)		Accumulated other comprehensive loss	(1,543)		(1,099)
Accumulated deficit	Accumulated deficit	(488,762)		(450,304)		Accumulated deficit	(533,970)		(495,872)
Total stockholders’ equity	Total stockholders’ equity	235,547		247,029		Total stockholders’ equity	172,785		234,702
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	604,539	$	586,792	Total liabilities and stockholders’ equity	$	512,054	$	635,480

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,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues	Revenues	$	135,884	$	121,116	$	375,080	$	303,358	Revenues	$	70,336	$	135,884	$	218,043	$	375,080
Cost of revenues	Cost of revenues	86,535		73,603		240,680		185,445		Cost of revenues	36,765		86,535		123,110		240,680
Gross Margin		49,349		47,513		134,400		117,913
Gross profit										Gross profit	33,571		49,349		94,933		134,400
Operating expenses:	Operating expenses:									Operating expenses:
Sales and marketing	Sales and marketing	29,401		24,555		85,233		73,403		Sales and marketing	19,939		29,401		63,334		85,233
Research and development	Research and development	11,074		9,744		34,541		28,958		Research and development	4,899		11,074		21,727		34,541
General and administrative	General and administrative	12,244		12,099		40,086		39,457		General and administrative	16,401		12,244		81,978		40,086
Change in fair value of contingent consideration	Change in fair value of contingent consideration	245		1,562		772		5,788		Change in fair value of contingent consideration	—		245		—		772
Total operating expenses	Total operating expenses	52,964		47,960		160,632		147,606		Total operating expenses	41,239		52,964		167,039		160,632
Loss from operations	Loss from operations	(3,615)		(447)		(26,232)		(29,693)		Loss from operations	(7,668)		(3,615)		(72,106)		(26,232)
Interest expense	Interest expense	(3,809)		(3,646)		(11,306)		(10,830)		Interest expense	(1,837)		(3,809)		(4,170)		(11,306)
Other income (expense), net	Other income (expense), net	(96)		(59)		(130)		708		Other income (expense), net	200		(96)		(181)		(130)
Loss before income taxes	Loss before income taxes	(7,520)		(4,152)		(37,668)		(39,815)		Loss before income taxes	(9,305)		(7,520)		(76,457)		(37,668)
Provision for income taxes		323		66		790		261
Provision for (benefit from) income taxes										Provision for (benefit from) income taxes	(2,138)		323		374		790
Net loss	Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)	Net loss	$	(7,167)	$	(7,843)	$	(76,831)	$	(38,458)
Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.08)	$	(0.05)	$	(0.41)	$	(0.44)	Net loss per share, basic and diluted	$	(0.07)	$	(0.08)	$	(0.80)	$	(0.41)
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	94,133		90,585		93,408		90,113		Weighted-average number of common shares used in computing net loss per share, basic and diluted	96,389		94,133		95,567		93,408

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,
		2021		2020		2021		2020			2022		2021		2022		2021
Net loss	Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)	Net loss	$	(7,167)	$	(7,843)	$	(76,831)	$	(38,458)
Other comprehensive income (loss):	Other comprehensive income (loss):									Other comprehensive income (loss):
Foreign currency translation adjustments	Foreign currency translation adjustments	12		115		(92)		(129)		Foreign currency translation adjustments	(95)		12		(444)		(92)
Comprehensive loss	Comprehensive loss	$	(7,831)	$	(4,103)	$	(38,550)	$	(40,205)	Comprehensive loss	$	(7,262)	$	(7,831)	$	(77,275)	$	(38,550)

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,
		2021		2020		2021		2020			2022		2021		2022		2021
Total stockholders' equity, beginning balances	Total stockholders' equity, beginning balances	$	239,772	$	262,345	$	247,029	$	285,222	Total stockholders' equity, beginning balances	$	174,978	$	239,772	$	234,702	$	247,029

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	$	721,796	$	684,286	$	698,333	$	671,061	Beginning balances	$	703,229	$	721,796	$	731,673	$	698,333
Cumulative-effect adjustment due to adoption of ASU 2020-06										Cumulative-effect adjustment due to adoption of ASU 2020-06	—		—		(49,090)		—
Stock-based compensation	Stock-based compensation	4,783		6,584		17,338		21,374		Stock-based compensation	5,329		4,783		28,650		17,338
Exercise of employee stock options	Exercise of employee stock options	—		45		13,199		529		Exercise of employee stock options	—		—		—		13,199
Issuance of common stock for services provided	Issuance of common stock for services provided	—		228		223		456		Issuance of common stock for services provided	—		—		—		223
Issuance of common stock, purchase plan	Issuance of common stock, purchase plan	—		—		1,595		1,050		Issuance of common stock, purchase plan	—		—		824		1,595
Payments for taxes related to net share settlement of equity awards	Payments for taxes related to net share settlement of equity awards	(1,177)		(2,129)		(5,286)		(5,456)		Payments for taxes related to net share settlement of equity awards	(260)		(1,177)		(3,759)		(5,286)
Ending balance	Ending balance	$	725,402	$	689,014	$	725,402	$	689,014	Ending balance	$	708,298	$	725,402	$	708,298	$	725,402

Accumulated other comprehensive loss:	Accumulated other comprehensive loss:									Accumulated other comprehensive loss:
Beginning balances	Beginning balances	$	(1,105)	$	(1,160)	$	(1,001)	$	(916)	Beginning balances	$	(1,448)	$	(1,105)	$	(1,099)	$	(1,001)
Other comprehensive income (loss)		12		115		(92)		(129)
Other comprehensive loss										Other comprehensive loss	(95)		12		(444)		(92)
Ending balance	Ending balance	$	(1,093)	$	(1,045)	$	(1,093)	$	(1,045)	Ending balance	$	(1,543)	$	(1,093)	$	(1,543)	$	(1,093)

Accumulated deficit:	Accumulated deficit:									Accumulated deficit:
Beginning balances	Beginning balances	$	(480,919)	$	(420,781)	$	(450,304)	$	(384,923)	Beginning balances	$	(526,803)	$	(480,919)	$	(495,872)	$	(450,304)
Cumulative-effect adjustment due to adoption of ASU 2020-06										Cumulative-effect adjustment due to adoption of ASU 2020-06	—		—		38,733		—
Net loss	Net loss	(7,843)		(4,218)		(38,458)		(40,076)		Net loss	(7,167)		(7,843)		(76,831)		(38,458)
Ending balance	Ending balance	$	(488,762)	$	(424,999)	$	(488,762)	$	(424,999)	Ending balance	$	(533,970)	$	(488,762)	$	(533,970)	$	(488,762)

Total stockholders' equity, ending balances	Total stockholders' equity, ending balances	$	235,547	$	262,970	$	235,547	$	262,970	Total stockholders' equity, ending balances	$	172,785	$	235,547	$	172,785	$	235,547

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,
2021 2020
Cash flows from operating activities:
Net loss $ (38,458) $ (40,076)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 24,425 26,522
Stock-based compensation 17,074 21,021
Amortization of debt discount and issuance cost 8,655 8,203
Impairment of intangible assets 9,086 —
Allowance for credit losses 115 542
Deferred income taxes 790 261
Change in fair value of contingent consideration 772 5,788
Other non-cash expenses 3,236 2,546
Changes in operating assets and liabilities:
Accounts receivable (18,871) 2,615
Prepaid expenses and other current assets 3,264 158
Accounts payable and other current liabilities 7,952 4,893
Payments for contingent consideration and bonuses (2,901) (15,418)
Accrued compensation and benefits 5,445 (4,334)
Deferred revenues 9,127 450
Net cash provided by operating activities 29,711 13,171
Cash flows from investing activities:
Purchases of property and equipment (10,773) (6,648)
Purchase of intangible assets — (3,000)
Net cash used in investing activities (10,773) (9,648)
Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans 14,794 1,579
Payments for taxes related to net share settlement of equity awards (5,286) (5,456)
Principal payments on promissory note and capital lease obligations (169) (100)
Payments for contingent consideration (6,121) (14,582)
Net cash provided by (used in) financing activities 3,218 (18,559)
Effect of exchange rates on cash and cash equivalents 37 126
Net increase (decrease) in cash and cash equivalents 22,193 (14,910)
Cash and cash equivalents at beginning of period 222,752 224,764
Cash and cash equivalents at end of period $ 244,945 $ 209,854
Supplemental disclosures of cash flow information:
Cash paid for income taxes $ 202 $ 149
Cash paid for interest $ 1,774 $ 1,753
Supplemental disclosures of noncash investing and financing activities:
Fixed asset purchases not yet paid $ 1,057 $ 924
Intangible asset acquisitions not yet paid $ — $ 2,250


	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities:
Net loss	$	(76,831)	$	(38,458)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	14,028		24,425
Stock-based compensation	27,849		17,074
Impairment of long-lived and right-of-use assets	11,448		—
Impairment of intangible assets	—		9,086
Amortization of debt discount and issuance cost	823		8,655
Allowance (recovery) for credit losses	(1,412)		115
Deferred income taxes	—		790
Change in fair value of contingent consideration	—		772
Other non-cash expenses	5,060		3,236
Changes in operating assets and liabilities:
Accounts receivable	82,570		(18,871)
Prepaid expenses and other assets	(1,941)		3,264
Accounts payable and other liabilities	(30,525)		7,952
Payments for contingent consideration and bonuses	(19,008)		(2,901)
Accrued compensation and benefits	(9,332)		5,445
Deferred revenues	(9,217)		9,127
Net cash (used in) provided by operating activities	(6,488)		29,711

Cash flows from investing activities:
Purchases of property and equipment	(14,216)		(10,773)
Net cash used in investing activities	(14,216)		(10,773)

Cash flows from financing activities:
Proceeds from issuances of common stock under stock plans	824		14,794
Payments for taxes related to net share settlement of equity awards	(3,759)		(5,286)
Payments for debt issuance costs	(33)		—
Principal payments on promissory note and finance lease obligations	(106)		(169)
Payments for contingent consideration	(5,686)		(6,121)
Net cash (used in) provided by financing activities	(8,760)		3,218
Effect of exchange rates on cash and cash equivalents	441		37
Net (decrease) increase in cash and cash equivalents	(29,023)		22,193
Cash and cash equivalents at beginning of period	237,417		222,752
Cash and cash equivalents at end of period	$	208,394	$	244,945

Supplemental disclosures of cash flow information:
Cash paid for income taxes	$	4,781	$	202
Cash paid for interest	$	1,765	$	1,774

Supplemental disclosures of noncash investing and financing activities:
Fixed asset purchases not yet paid	$	992	$	1,057

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"), is an industry leading digital media and promotions technology company that powers cohesive omnichannel brand-building and sales-driving marketing campaigns for advertisers and retailers to influence purchasing decisions throughout a shopper's path to purchase. These marketing campaigns are planned, delivered and ~~consumers. The Company's omnichannel platform is powered by exclusive consumer spending~~measured using our technology platforms and data location intelligence and purchase intent data to reach millions of shoppers daily and deliver measurable, incremental sales. Additionally, the Company has a broad network of digital properties to drive measurable sales results and customer loyalty.analytics tool. The Company's network includes the digital properties of retail partners, publisher partners and advertiser customers (also known as consumer packaged goods ~~"(CPGs"~~("CPG") manufacturers or brands), social media platforms, ~~third-party properties,~~ its consumer ~~brand~~brands Coupons.com ~~properties~~ and Shopmium, and its digital out-of-home ("DOOH") properties. This network provides the Company with proprietary and licensed data, including retailers’ in-store point-of-sale ("POS") shopper data, purchase intent and online behavior, and location ~~intelligence to deliver more valuable outcomes for advertisers, retailers, and consumers. Customers~~intelligence. With such data powering its platforms, customers and partners use Quotient to leverage consumer data and insights, engage consumers via digital channels, and integrate marketing and merchandising programs to drive measurable sales ~~results.~~

results and consumer engagement.

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, ~~2020.~~2021 filed on March 1, 2022, as amended by its subsequent Form 10-K/A, Amendment No. 1, filed on April 29, 2022 (collectively, "Annual Report on Form 10-K").

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, ~~2021~~2022 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.

Liquidity

The Company has financed its operations and capital expenditures through cash flows from operations as well as from the proceeds of the issuance of convertible senior notes in 2017. As of September 30, 2022 its principal source of liquidity was cash and cash equivalents of $208.4 million, which was held for working capital purposes. The Company's cash equivalents are comprised primarily of money market funds.

In November 2017, the Company issued $200.0 million aggregate principal amount of 1.75% convertible senior notes due December 1, 2022 (the "Maturity Date") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, (the “Notes”). Refer to Note 8 for further details related to the Notes. Management's intent is to meet its repayment obligation pursuant to the Notes and as of November 2, 2022 has executed commitment letters with each of two lenders regarding the obtaining of debt financing of $105.0 million. Refer to Note 16 for further details related to the commitment letters. To the extent that current and anticipated future sources of liquidity are insufficient to fund the Company’s future business activities

and requirements, the Company may be required to seek additional equity or debt financing. In the event that future additional financing is required from outside sources beyond those levels currently contemplated, the Company may not be able to raise funding on terms acceptable to it or at all.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts ~~reported~~of assets and ~~disclosed in~~liabilities and disclosure of contingent liabilities at the ~~Company’s condensed consolidated~~date of the financial statements as well as the reported amounts of revenues and ~~accompanying notes.~~expenses during the reporting period. 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 recoverability of long-lived assets and goodwill, stock-based compensation, ~~measurement of contingent consideration, restructuring accruals,~~ 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.

~~The COVID-19 pandemic has created and may continue to create uncertainty in macroeconomic~~ ~~conditions, which~~may cause further business slowdowns or shutdowns, depress demand for the Company’s advertising business, and adversely impact the Company’s results of operations, even in light of mass vaccination efforts that

~~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~~Recently 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.~~Equity ("ASU 2020-06"). 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 Company adopted this standard is effective ~~for the Company beginning~~ January 1, 2022 ~~and interim periods within that reporting period, and early adoption is permitted. The Company is currently evaluating~~using the ~~impact of adopting this new accounting guidance on~~modified retrospective approach. Therefore, the condensed consolidated financial ~~statements.~~statements for the three and nine months ended September 30, 2022 are presented under the new standard, while the comparative periods presented are not adjusted and continue to be reported in accordance with the Company’s historical accounting policy.

In connection with the adoption of this standard, the Company recognized a cumulative effect adjustment of $38.7 million to retained earnings on the Company’s condensed consolidated balance sheet as of January 1, 2022. This adjustment was primarily driven by the derecognition of interest expense related to the accretion of the debt discount associated with the embedded conversion option recorded in the prior period as required under the legacy guidance. In addition, the Company reclassified $50.7 million and issuance costs of $1.6 million from additional paid-in-capital to convertible senior notes, net on the Company’s condensed consolidated balance sheet as of January 1, 2022. The reclassification was recorded in order to combine the two legacy units of account into a single instrument classified as a liability since the bifurcation of the instrument into two units of account is no longer required under the new standard. Under the new guidance, the Company will no longer incur interest expense related to the accretion of the debt discount associated with the embedded conversion option. The Company will use the if-converted method to calculate diluted earnings-per-share (EPS). If the Company makes an irrevocable election to settle the principal of the convertible senior notes in cash and the excess conversion spread in shares, the if-converted method will result in a reduced number of shares issued to reflect only the excess conversion. Since the Company had a net loss for the three and nine months ended September 30, 2022, the convertible senior notes were determined to be anti-dilutive and therefore had no impact to basic or diluted net loss per share for the period as a result of adopting ASU 2020-06.

Revenue Recognition

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

~~We determine~~The Company determines 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~~the Company satisfies a performance obligation

The Company provides digital promotions, including digital coupons, and/or media programs to its customers, which consist of advertisers, retail partners and advertising ~~agencies whereby it~~agencies. The Company uses its proprietary technology platforms to create, target, deliver and analyze these ~~programs.~~programs for customers. The Company typically generates revenue, derived from ~~its customers through the~~customer 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~~basis, and customers are typically billed monthly. Duration-based campaigns are generally billed prior to campaign launch.

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~~consumer's action of activating a digital promotion through the Company’s proprietary technology ~~platform~~platforms 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 basis. The Company typically recognizes revenues for digital promotion campaign fees as clicks occur.

The Company also has a duration-based National Promotions offering, as part of its National Promotion business. This offering provides advertisers access to the Company’s proprietary platforms for a specific period of time (the campaign period) in exchange for a fixed fee. The Company provides a single service consisting of making the advertiser’s promotions available for use on its network each day during the campaign period, which generally is between seven and twenty-eight days. The Company has a stand-ready performance obligation that is satisfied over time; therefore, the Company recognizes revenue ratably over the campaign period.

The Company’s media programs enable advertisers and retailers to distribute digital media to promote their brands and products on its retailers’ websites and mobile applications, and through a network of affiliate publishers and non-publisher third parties that display its media offerings on their websites or mobile applications. Pricing for media campaigns is usually determined on a cost-per-click, 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 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 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 media and 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~~reporting revenues on a gross basis) or agent (i.e., ~~report~~reporting revenues on a net basis). The Company typically reports ~~certain~~ digital promotion and media advertising revenues for campaigns placed on third-party owned properties on a gross ~~basis,~~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, by its being the party primarily responsible to its customers, and by its having discretion in establishing pricing for the delivery of the digital promotions and media, or a combination of these.

In other cases (e.g., sponsored search and DOOH offerings), 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 real-time 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~~it is 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~~prices.

The Company also offers retailer-specific promotion and media campaign solutions (either, or both, also known as "shopper" offerings). The Company has determined that it is an agent in these arrangements as the ~~auction marketplace.~~customer (i.e., the retailer) controls the delivery of shopper promotion and media programs on its website and sets the pricing. The Company’s obligation in these arrangements is to provide use of its platforms to the retailers. The retailer determines how shopperpromotions and media programs are executed through the Company’s platforms. Under these arrangements, the Company reports revenue on a net basis.

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~~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 the 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 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, 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 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 upon delivery of media impressions, or upon campaign duration, 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~~decrease of $9.2 million in the deferred revenue balance for the nine months ended September 30, ~~2021 is primarily driven~~2022 was due to $44.6 million of recognized revenue, partially offset by cash payments of $35.4 million received or due in advance of satisfying the Company’s performance obligations, ~~of $33.2~~including $3.3 million ~~partially offset by $24.0 million of~~which the Company determined should have been recognized ~~revenue.~~in prior periods as the underlying performance obligations were satisfied in prior periods. Management determined these amounts were not material to the previously issued annual and interim financial statements.

The Company’s payment terms vary by the type and size of its customers. For certain products or services and customer types, ~~we require~~the Company requires 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,
2021 2020 2021 2020
Promotion $ 65,538 $ 62,376 $ 194,729 $ 168,714
Media 70,346 58,740 180,351 134,644
Total Revenue $ 135,884 $ 121,116 $ 375,080 $ 303,358


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Promotion	$	44,749	$	65,538	$	137,516	$	194,729
Media	25,587		70,346		80,527		180,351
Total Revenue	$	70,336	$	135,884	$	218,043	$	375,080

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 ~~renewal~~initial contracts are commensurate with sales commissions related to ~~initial~~renewal contracts. These costs are recorded ~~within~~in sales and marketing expenses onwithin 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, 2021									September 30, 2022
		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	$	104,996	—		—		$	104,996	Money market funds	$	105,550	—		—		$	105,550
Total	Total	$	104,996	$	—	$	—	$	104,996	Total	$	105,550	$	—	$	—	$	105,550
Liabilities:	Liabilities:									Liabilities:
Contingent consideration related to acquisitions	Contingent consideration related to acquisitions	—		—		21,655		21,655		Contingent consideration related to acquisitions	—		—		—		—
Total	Total	$	—	$	—	$	21,655	$	21,655	Total	$	—	$	—	$	—	$	—

December 31, 2020
Level 1 Level 2 Level 3 Total
Assets:
Cash equivalents:
Money market funds $ 104,964 — — $ 104,964
Total $ 104,964 $ — $ — $ 104,964
Liabilities:
Contingent consideration related to acquisitions — — 29,454 29,454
Total $ — $ — $ 29,454 $ 29,454


	December 31, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Cash equivalents:
Money market funds	$	105,004	—		—		$	105,004
Total	$	105,004	$	—	$	—	$	105,004
Liabilities:
Contingent consideration related to acquisitions	—		—		22,275		22,275
Total	$	—	$	—	$	22,275	$	22,275

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

As of ~~$1.0.~~

~~The~~December 31, 2021, the contingent consideration relates to the ~~acquisitions~~acquisition of ~~MLW Squared Inc. (“Ahalogy”), Elevaate Ltd. (“Elevaate”) and~~ Ubimo Ltd. (“Ubimo”). As of December 31, 2021, there was no contingent consideration relating to the acquisition of Elevaate Ltd.

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

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

Three Months Ended September 30, 2021 Nine Months Ended September 30, 2021
Ubimo Elevaate Ubimo Elevaate
Level 3 Level 3 Level 3 Level 3
Balance at the beginning of period $ 21,410 $ — $ 20,930 $ 8,524
Change in fair value during the period 245 — 725 47
Payments made during the period — — — (8,571)
Total $ 21,655 $ — $ 21,655 $ —


	Three Months Ended September 30, 2022				Nine Months Ended September 30, 2022
	Ubimo		Elevaate		Ubimo		Elevaate
	Level 3		Level 3		Level 3		Level 3
Balance at the beginning of period	$	—	$	—	$	22,275	$	—
Change in fair value during the period	—		—		—		—
Payments made during the period	—		—		(22,275)		—
Total	$	—	$	—	$	—	$	—

Three Months Ended September 30, 2020 Nine Months Ended September 30, 2020
Ubimo Elevaate Ahalogy Ubimo Elevaate Ahalogy
Level 3 Level 3 Level 3 Level 3 Level 3 Level 3
Balance at the beginning of period $ 10,239 $ 3,207 $ — $ 5,686 $ 3,534 $ 27,000
Change in fair value during the period 4,769 (3,207) — 9,322 (3,534) —
Payments made during the period $ — $ — $ — — — (27,000)
Total $ 15,008 $ — $ — $ 15,008 $ — $ —


	Three Months Ended September 30, 2021				Nine Months Ended September 30, 2021
	Ubimo		Elevaate		Ubimo		Elevaate
	Level 3		Level 3		Level 3		Level 3
Balance at the beginning of period	$	21,410	$	—	$	20,930	$	8,524
Change in fair value during the period	245		—		725		47
Payments made during the period	—		—		—		(8,571)
Total	$	21,655	$	—	$	21,655	$	—

The Company recorded a charge of zero during the three and nine months ended September 30, 2022, respectively, and $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, 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,~~2022, the Company paid ~~$8.6~~$22.3 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~~Ubimo's achievement of financial metrics subject to contingent consideration during the measurement period ending December 31, ~~2019,~~2021, and as a result, no liability existed as of September 30, ~~2020.~~2022. Out of the total consideration paid, ~~$14.6~~$5.7 million was originally measured and recorded on the acquisition date, and ~~$12.4~~$16.6 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, ~~2021~~2022 and December 31, ~~2020,~~2021, the fair value of the Company’s 1.75% convertible senior notes due 2022 was ~~$184.1~~$190.4 million and ~~$196.5~~$193.8 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,
		2021		2020		2021		2020			2022		2021		2022		2021
Balance at the beginning of period	Balance at the beginning of period	$	1,962	$	2,079	$	2,070	$	2,021	Balance at the beginning of period	$	3,715	$	1,962	$	2,500	$	2,070
Provision for expected credit losses		649		279		1,234		542
Write-offs charged against the allowance, net of recoveries		(570)		(94)		(1,263)		(299)
Change in provision for expected credit losses										Change in provision for expected credit losses	(2,659)		126		(1,438)		127
Write-offs charged against the allowance										Write-offs charged against the allowance	(58)		(47)		(64)		(156)
Balance at the end of period	Balance at the end of period	$	2,041	$	2,264	$	2,041	$	2,264	Balance at the end of period	$	998	$	2,041	$	998	$	2,041

5. Balance Sheet Components

Property and Equipment, Net

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

September 30,
2021 December 31,
2020
Software $ 51,296 $ 47,357
Computer equipment 23,478 23,912
Leasehold improvements 8,055 6,197
Furniture and fixtures 2,612 2,533
Total 85,441 79,999
Accumulated depreciation and amortization (69,048) (65,959)
Projects in process 5,426 3,228
Total property and equipment, net $ 21,819 $ 17,268


	September 30, 2022		December 31, 2021
Software	$	67,704	$	51,093
Computer equipment	20,264		23,696
Leasehold improvements	5,746		8,362
Furniture and fixtures	2,281		2,552
Total	95,995		85,703
Accumulated depreciation and amortization	(69,727)		(68,052)
Projects in process	96		5,009
Total property and equipment, net	$	26,364	$	22,660

Depreciation and amortization expense related to property and equipment was $2.5 million and $6.5 million for the three and nine months ended September 30, 2022, respectively, and $2.1 million and $5.6 million for the three and nine months ended September 30, 2021, ~~respectively,~~respectively.

The Company capitalized internal-use software development and ~~$1.8~~enhancement costs of $5.5 million and ~~$5.2~~$13.7 million ~~for~~during the three and nine months ended September 30, ~~2020, respectively.~~

~~The Company capitalized internal use software development~~2022, respectively, 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. During the three and nine months ended September 30, 2022, the Company had $1.8 million and $4.1 million, respectively, and ~~$1.7~~$1.1 million and ~~$5.3~~$2.9 million during the three and nine months ended September 30, ~~2020, respectively. During the three and nine months ended September 30,~~ 2021, ~~the Company had $1.1 million and $2.9 million,~~ respectively, in amortization expense related to ~~internal use~~internal-use software, which is included in property and equipment depreciation and amortization expense, and which is recorded as cost of ~~revenues, as compared to $0.8 million and $2.3 million during the three and nine months ended September 30, 2020, respectively. Once the~~revenues. Capitalized internal-use software ~~is placed into service, the asset is~~development costs are included in ~~software~~Software within ~~"property~~"Property and equipment, net". The unamortized capitalized development costs were ~~$10.8~~$19.8 million and ~~$8.6~~$11.6 million as of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively.

During the third quarter of 2022, the Company performed an interim assessment of its long-lived assets to determine if any indicators of impairment existed and determined that there were no indicators of impairment. During the three and nine months ended September 30, 2022, the Company recorded an impairment charge of zero and $1.4 million, respectively, related to capitalized software.

Accrued Compensation and Benefits

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


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Payroll and related expenses						Payroll and related expenses	$	3,662	$	4,253
Bonus	Bonus	$	7,371	$	3,150	Bonus	3,143		9,045
Payroll and related expenses		6,073		3,116
Commissions	Commissions	4,976		7,247		Commissions	3,054		5,838
Vacation	Vacation	1,184		855		Vacation	1,135		1,087
Total accrued compensation and benefits	Total accrued compensation and benefits	$	19,604	$	14,368	Total accrued compensation and benefits	$	10,994	$	20,223

Other Current Liabilities

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


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Distribution fees	Distribution fees	$	46,511	$	36,245	Distribution fees	$	24,941	$	46,313
Liability related to litigation settlements						Liability related to litigation settlements	9,750		—
Operating lease liabilities						Operating lease liabilities	6,002		4,935
Traffic acquisition cost	Traffic acquisition cost	10,257		9,756		Traffic acquisition cost	5,967		12,033
Operating lease liabilities		3,959		3,650
Prefunded liability	Prefunded liability	3,185		3,067		Prefunded liability	3,486		4,782
Rebate liability	Rebate liability	3,065		2,696		Rebate liability	1,754		2,444
Interest payable	Interest payable	1,157		282		Interest payable	1,167		292
Marketing expenses	Marketing expenses	643		2,251		Marketing expenses	60		636
Deferred cost related to a retailer agreement						Deferred cost related to a retailer agreement	—		8,000
Other	Other	12,201		12,673		Other	8,887		15,844
Total other current liabilities	Total other current liabilities	$	80,978	$	70,620	Total other current liabilities	$	62,014	$	95,279

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 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 iswas 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~~As of December 31, 2021, the date that the contingent consideration ~~will be re-measured through earnings every reporting period. Refer~~period ended, Ubimo achieved certain financial metrics. During the nine months ended September 30, 2022, the Company paid $24.7 million, of which $22.3 million related to ~~Note 3 for the fair value of~~ contingent consideration atand $2.4 million related to certain bonuses; and as a result, no liability existed as of September 30, ~~2021.~~2022. Of the total $24.7 million that was paid, $5.7 million was classified within financing activity and the remaining $19.0 million was classified within operating activity on the Company's condensed consolidated statements of cash flows.

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 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 was 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 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~~During the year ended December 31, 2021, the Company paid ~~out $9.0~~$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.~~bonuses; and, as a result, no liability existed as of December 31, 2021. 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, 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 customer relationship management ("CRM") platform designed to help brands build and track loyalty programs with their consumers.

The total acquisition consideration at closing consisted of $7.5 million in cash. In addition, SavingStar 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 zero 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 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 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 was 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 was 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 year ended December 31, 2020, of which $27.0 million related to contingent consideration and $3.0 million related to certain bonuses; and as a result, no liability existed as of December 31, 2020. Of the total $30.0 million that was paid, $14.6 million was classified within financing activity and the remaining $15.4 million was classified within operating activity on the Company’s consolidated statements of cash flows.

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. None of the goodwill recorded from 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.

~~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,~~2022, the Company, which operates in a single reporting unit, determined that a goodwill triggering event had occurred. The Company performed a ~~qualitative interim assessment.~~quantitative assessment to evaluate goodwill. In performing its ~~qualitative~~quantitative impairment assessment, the Company ~~considered (i)~~estimated the ~~results~~fair value of its ~~impairment testing from~~reporting unit using the ~~most recent testing date, which was~~income approach and market approach. The income approach uses projected operating results and cash flows that are discounted using a market-participant discount rate based on a weighted-average cost of capital. The financial projections reflect management's best estimate of economic and market conditions over the projected period including forecasted revenue growth rate, earnings before interest, taxes, depreciation and amortization ("EBITDA") margin, tax rate, capital expenditures, depreciation and amortization and changes to working capital requirements. The market approach estimates fair value by using comparable industry multiples, such as multiples of revenue and EBITDA.

The key assumptions used 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~~discounted cash flow model included forecasted growth rate, forecasted EBITDA margins and ~~(iv) declines in market capitalization.~~discount rate. The interim test resulted in the Company’s determination that the fair ~~values~~value 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,~~2022, there can be no ~~assurances~~assurance that goodwill will not be impaired in future periods. The Company will continue to monitor ~~the~~its operating results, cash forecasts and challenges from declines in current business and market conditions, as well as impacts of COVID-19, for possible future goodwill impairments to 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, 2021
Gross Accumulated
Amortization Net Weighted
Average
Amortization
Period
(Years)
Media service rights $ 35,582 $ (31,169) $ 4,413 1.0
Developed technologies 27,170 (21,434) 5,736 2.0
Promotion service rights 24,426 (23,043) 1,383 0.9
Customer relationships 22,690 (18,673) 4,017 2.5
Data access rights 10,206 (10,206) — 0.0
Domain names 5,948 (5,596) 352 0.0
Trade names 2,823 (2,785) 38 0.3
Patents 975 (936) 39 1.1
$ 129,820 $ (113,842) $ 15,978 1.7


	September 30, 2022
	Gross		Accumulated Amortization		Net		Weighted Average Amortization Period (Years)
Media service rights	$	35,582	$	(35,582)	$	—	0.0
Developed technologies	27,170		(24,381)		2,789		1.1
Promotion service rights	24,426		(24,426)		—		0.0
Customer relationships	22,690		(20,373)		2,317		1.7
Data access rights	10,206		(10,206)		—		0.0
Domain names	5,948		(5,596)		352		0.0
Trade names	2,823		(2,823)		—		0.0
Vendor relationships	2,510		(2,510)		—		0.0
Patents	975		(972)		3		0.1
Registered users	420		(420)		—		0.0
	$	132,750	$	(127,289)	$	5,461	1.3

1918


		December 31, 2020								December 31, 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	$	(25,688)	$	10,246	1.4	Media service rights	$	35,582	$	(32,282)	$	3,300	0.7
Developed technologies									Developed technologies	27,170		(22,235)		4,935		1.7
Promotion service rights	Promotion service rights	33,566		(17,234)		16,332		1.9	Promotion service rights	24,426		(23,419)		1,007		0.6
Developed technologies		27,170		(18,511)		8,659		2.5
Customer relationships	Customer relationships	22,690		(16,105)		6,585		2.7	Customer relationships	22,690		(19,311)		3,379		2.4
Data access rights	Data access rights	10,801		(8,420)		2,381		1.0	Data access rights	10,206		(10,206)		—		0.0
Domain names	Domain names	5,948		(5,596)		352		0.0	Domain names	5,948		(5,596)		352		0.0
Trade names	Trade names	2,823		(2,546)		277		0.6	Trade names	2,823		(2,823)		—		0.0
Vendor relationships									Vendor relationships	2,510		(2,510)		—		0.0
Patents	Patents	975		(909)		66		1.8	Patents	975		(945)		30		0.8
Registered users									Registered users	420		(420)		—		0.0
		$	139,907	$	(95,009)	$	44,898	2.0		$	132,750	$	(119,747)	$	13,003	1.5

As of September 30, ~~2021~~2022 and December 31, ~~2020,~~2021, 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 $2.3 million and $7.5 million during the three and nine months ended September 30, 2022, respectively, and $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. Estimated future amortization expense related to intangible assets as of September 30, ~~2021~~2022 is as follows (in thousands):


		Total			Total
2021, remaining three months		$	2,975
2022		8,508
2022, remaining three months				2022, remaining three months	$	967
2023	2023	3,583		2023	3,583
2024	2024	559		2024	559
2025	2025	—		2025	—
2026 and beyond		—
2026				2026	—
2027 and beyond				2027 and beyond	—
Total estimated amortization expense	Total estimated amortization expense	$	15,625	Total estimated amortization expense	$	5,109

As of September 30, 2022, the Company performed an analysis of the impact of recent events, including business and market disruption, on the fair values of its intangible assets, and determined that an impairment does not exist. However, there can be no assurance that intangible assets will not be impaired in future periods, and the Company will continue to monitor its operating results, cash flow forecasts and challenges from declines in current market conditions, as well as impacts of COVID-19, for future determinations regarding 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~~The terms of the notes ~~may~~provide that the holders of the notes were entitled to 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~~five-business day period after any 5five 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. OnThe terms of the notes further provide that, on or after September 1, 2022, holders ~~may~~are entitled to 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 terms of the notes provide that the Company ~~may~~was not entitled to redeem the notes prior to December 5, 2020. ItThe terms of the notes further provide that the Company may redeem for cash all or any portion of the notes, at its option, on or after December 5, 2020 if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending not more than three trading days preceding the date on which it provides notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the notes.

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

In accounting for the issuance of the notes, prior to the adoption of ASU 2020-06 on January 1, 2022, 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”) iswas amortized to interest expense over the term of the notes at an effective interest rate of 5.8%.

~~The~~Prior to the adoption of ASU 2020-06 on January 1, 2022, 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~~were 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.

Subsequent to the adoption of ASU 2020-06 on January 1, 2022, which the Company elected to adopt using the modified retrospective method, the Company removed the impact of recognizing the equity component of the notes (at issuance and subsequent accounting impact of additional interest expense from debt discount amortization). The cumulative effect of the accounting change as of January 1, 2022 was an increase to the carrying amount of the convertible notes of $10.4 million, an increase to beginning retained earnings of $38.7 million, and a reduction to additional paid-in capital of $49.1 million.

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,
2021 December 31,
2020
Principal $ 200,000 $ 200,000
Unamortized debt discount (13,088) (21,046)
Unamortized debt issuance costs (1,089) (1,786)
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, 2021 and December 31, 2020.


	September 30, 2022		December 31, 2021
Principal	$	200,000	$	200,000
Unamortized debt discount	—		(10,358)
Unamortized debt issuance costs	(156)		(856)
Net carrying amount of the liability component	$	199,844	$	188,786

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,
	2022		2021		2022		2021
Contractual interest expense	$	875	$	875	$	2,625	$	2,625
Amortization of debt discount	—		2,691		—		7,958
Amortization of debt issuance costs	234		233		700		697
Total interest expense related to the Notes	$	1,109	$	3,799	$	3,325	$	11,280

ABL Credit Agreement

On November 17, 2021, the Company, as borrower, and certain subsidiaries of the Company as guarantors, entered into a Loan, Guaranty and Security Agreement (the "ABL Credit Agreement") with Bank of America, N.A., a national banking association, and certain other financial institutions from time to time that may become parties to the agreement (the "Lenders").

Prior to the First Amendment and Limited Waiver to Loan, Guaranty and Security Agreement dated August 5, 2022 (the "First Amendment"), (as more fully described below), the ABL Credit Agreement provided for an asset-based revolving credit facility (the "ABL Facility") for available borrowings up to $100.0 million with the actual amount dependent on a "borrowing base" number consisting of the sum of various categories of eligible accounts receivable (the lesser of such number and $100.0 million, the "Line Cap"). Prior to the First Amendment, the ABL Credit Agreement provided that the ABL Facility was to mature and all outstanding amounts, if any, become due and payable on November 17, 2026 ("fixed ABL maturity date"), except that the maturity date shall be accelerated to the date that is 91 days prior to the maturity of the Company’s outstanding 1.75% Convertible Senior Notes due 2022 (the “Notes”), unless (i) the Notes are repaid in full or converted to equity at least 91 days prior to the maturity of the Notes, (ii) the Notes are refinanced and/or extended to a maturity date that is at least 91 days after the fixed ABL maturity date, or (iii) during the 91 day period prior, the Company has sufficient cash to repay the Notes in full, the Company meets a certain liquidity test after giving pro forma effect to the repayment to the Notes, and there is no event of default under the ABL Facility. Prior to the First Amendment, the ABL Credit Agreement provided that the commitments of the Lenders under the ABL Facility will terminate and outstanding borrowings under the ABL Facility will mature on the fifth anniversary of the closing of the ABL Facility or sooner as described above.

Prior to the First Amendment, the ABL Credit Agreement included conditions to borrowings, representations and warranties, affirmative and negative covenants and events of default customary for financings of this type and size, and provided that, in the event of default, all obligations will be automatically due and payable and all commitments will terminate. Prior to the First Amendment, the ABL Credit Agreement required the Company to maintain a minimum fixed charge coverage ratio at all times and limited the Company’s and its subsidiaries’ ability to, among other things, incur additional indebtedness, create liens on any assets, pay dividends or make certain restricted payments, consummate certain assets sales and merge, consolidate and/or sell or dispose of certain assets. Prior to the First Amendment, the ABL Credit Agreement also required that if the Company's Excess Availability (defined as the Line Cap less borrowed amounts or issued letters of credit) were less than the greater of (i) the Line Cap and (ii) $10.0 million, the Company w maintain a fixed coverage charge ratio of at least 1.00 to 1.00. In addition, the ABL Credit Agreement included customary events of default, which would possibly have required the Company to pay an additional 2% interest on the outstanding loans under the ABL Credit Agreement. Prior to the First Amendment, borrowings under the ABL Facility initially would bear interest at a rate equal to, for BSBY Loans, the BSBY Rate plus the Applicable Margin or, for Base Rate Loans, the Base Rate plus the Applicable Margin. The Applicable Margin was to be determined based on average daily borrowing availability.

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
As of June 30, 2022, the Company was not in compliance with the above covenants; however, on August 5, 2022, the Company entered into the First Amendment. Pursuant to the First Amendment, the Company was provided a waiver of a covenant violation for the quarter ended June 30, 2022. In addition, the terms of the ABL Facility were amended to reduce the aggregate value of the credit facility to $50.0 million, modify the fixed charge coverage ratio ("FCCR") covenant conditions for the next three fiscal quarters, revise the springing maturity date, and impose a temporary reduction of $5.0 million in funding available based on the Company's FCCR.

On September 1, 2022, the ABL Credit Agreement, as modified by the First Amendment, terminated pursuant to its own terms. As of September 30, 2022, there had been no borrowings or repayments under the ABL Facility.

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”), and performance-based stock ~~and~~ units ("PSUs") 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~~incentive stock options (ISOs) and ~~NSOs~~non-qualified stock options (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:


		Nine Months Ended September 30,			Three Months Ended September 30,		Nine Months Ended September 30,
		2021	2020		2022	2021	2022	2021
Expected life (in years)	Expected life (in years)	—	6.02	Expected life (in years)	6.02	0.00	6.02	0.00
Risk-free interest rate	Risk-free interest rate	—	0.96%	Risk-free interest rate	2.90%	—%	2.90% - 2.96%	—%
Volatility	Volatility	—	50%	Volatility	50%	—%	50%	—%
Dividend yield	Dividend yield	—	—	Dividend yield	—	—	—	—

There were no option grants during the three and nine months ended September 30, ~~2021 and during the three months ended September 30, 2020.~~2021. The weighted-average grant date fair value of options ~~was $4.26~~were $1.62 and $1.85 during the three and nine months ended September 30, ~~2020.~~

2022, respectively.

Restricted Stock Units and Performance-Based Restricted Stock Units

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

On March 1, 2021, the Company granted a total of 938,831 performance-based restricted stock units (“2021 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~~The 2021 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 2021 PSU Award was measured using a Monte Carlo simulation. As of September 30, ~~2021,~~2022, 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, 2022 and September 30, 2021, no compensation expense was recognized in the Company's condensed consolidated financial statements related to the 2021 PSU Awards. During the second quarter of 2022, certain of the 2021 PSU Awards were modified in connection with a separation agreement between the Company and ~~any previously~~its former chief executive officer ("former CEO"). Refer to "Stock-based Compensation Expense" below for further details.

On March 1, 2022, (“2022 Grant Date”), the Company granted a total of 1,171,494 performance-based restricted stock units (“2022 PSU Awards”), under the 2013 Equity Incentive Plan, to certain executive leaders with a grant date fair value of $4.82, $3.87 and $3.14, for each respective tranche. On August 1, 2022, the Company granted an additional 2022 PSU Award of 470,383 shares to an executive with a grant date fair value of $1.14, $0.81, and $0.60 for each respective tranche. The 2022 PSU Awards represent the right to receive shares of the Company’s common stock upon meeting certain vesting conditions. The 2022 PSU Awards vest subject to the achievement of stock performance goals and the awardee being an employee at the time of vesting. Any unvested portion of the 2022 PSU Awards will be forfeited on the third anniversary of the 2022 Grant Date. The fair value of the PSU Award was measured using a Monte Carlo simulation. During the three and nine months ended September 30, 2022, the expense recognized ~~compensation expense~~in the Company's condensed consolidated financial statements related to the 2022 PSU Awards was ~~reversed.~~$0.5 million and $2.6 million, respectively. During the second quarter of 2022, certain of the 2022 PSU Awards were modified in connection with a separation agreement between the Company and its former CEO. Refer to "Stock-based Compensation Expense" below for further details.

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, 2020		8,467,143	4,708,854	$	9.09	8,160,221	$	11.21	5.03	$	7,100
Balance at December 31, 2021												Balance at December 31, 2021	10,168,061	5,381,039	$	10.78	6,897,993	$	11.32	4.89	$	1,596
Increase in shares authorized	Increase in shares authorized	3,669,732	—	—		—	—		—	—		Increase in shares authorized	3,791,177	—	—		—	—		—	—
Options granted	Options granted	—	—	—		—	—		—	—		Options granted	(1,125,000)	—	—		1,125,000	3.64		—	—
Options exercised	Options exercised	—	—	—		(1,245,453)	$	10.60	—	$	3,777	Options exercised	—	—	—		—	—		—	—
Options canceled or expired	Options canceled or expired	—	—	—		—	—		—	—		Options canceled or expired	598,763	—	—		(598,763)	$	7.83	—	—
RSUs granted	RSUs granted	(3,935,802)	3,935,802	$	12.03	—	—		—	—		RSUs granted	(7,189,055)	7,189,055	$	3.87	—	—		—	—
RSUs vested	RSUs vested	—	(1,497,223)	$	9.71	—	—		—	—		RSUs vested	—	(2,473,384)	$	8.91	—	—		—	—
RSUs canceled or expired	RSUs canceled or expired	872,612	(872,612)	$	9.88	(5,600)	$	10.53	—	—		RSUs canceled or expired	1,795,096	(1,795,096)	$	9.47	—	—		—	—
RSUs vested and withheld for taxes	RSUs vested and withheld for taxes	472,103	—	—		—	—		—	—		RSUs vested and withheld for taxes	988,859	—	—		—	—		—	—
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						5,350,062	$	12.13	4.29	$	642
Balance as of September 30, 2022												Balance as of September 30, 2022	9,027,901	8,301,614	$	5.64	7,424,230	$	6.61	4.64	$	—
Vested and exercisable as of September 30, 2022												Vested and exercisable as of September 30, 2022					5,870,342	$	7.02	3.51	$	—

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 $1.7 million and $3.6 million during the three and nine months ended September 30, 2022, respectively, and $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.

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,
		2021	2020	2021	2020		2022	2021	2022	2021
Expected life (in years)	Expected life (in years)	0.5	0.5	0.5	0.5	Expected life (in years)	0.5	0.5	0.50	0.5
Risk-free interest rate	Risk-free interest rate	0.03%	0.15%	0.03% - 0.12%	0.15% - 1.59%	Risk-free interest rate	1.54%	0.03%	0.07% - 1.54%	0.03% - 0.12%
Volatility	Volatility	75%	60%	60% - 75%	55% - 60%	Volatility	65%	75%	60% - 65%	60% - 75%
Dividend yield	Dividend yield	—	—	—	—	Dividend yield	—	—	—	—

As of September 30, ~~2021,~~2022, a total of ~~2,179,103~~2,639,420 shares of common stock were issued under the ESPP since inception of the plan. As of September 30, ~~2021,~~2022, a total of ~~1,820,897~~1,760,580 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,
		2021		2020		2021		2020			2022		2021		2022		2021
Cost of revenues	Cost of revenues	$	525	$	442	$	1,349	$	1,264	Cost of revenues	$	442	$	525	$	1,474	$	1,349
Sales and marketing	Sales and marketing	1,411		1,187		3,847		3,912		Sales and marketing	777		1,411		2,480		3,847
Research and development	Research and development	1,076		1,003		3,025		2,723		Research and development	411		1,076		2,052		3,025
General and administrative	General and administrative	1,678		3,857		8,853		13,122		General and administrative	3,350		1,678		21,843		8,853
Total stock-based compensation expense	Total stock-based compensation expense	$	4,690	$	6,489	$	17,074	$	21,021	Total stock-based compensation expense	$	4,980	$	4,690	$	27,849	$	17,074

In the second quarter of 2022, the Company recorded $12.0 million of stock-based compensation expense related to the modification of stock options, RSUs and PSUs granted to the Company's former CEO pursuant to a separation agreement between the Company and its former CEO entered into during the second quarter of 2022. Under the original terms of the grant agreements, the unvested stock options, RSUs and PSUs were to be forfeited upon

termination of the former CEO's employment. The separation agreement extended the period over which the vested options can be exercised, repriced certain stock options, and allowed for accelerated vesting of unvested stock options, RSUs and PSUs upon the former CEO's termination of employment, which occurred on June 29, 2022. The expense was included in general and administrative expense in the Company's condensed consolidated statement of operations. Such modification of these options and awards resulted in a change to deferred tax assets fully offset by a valuation allowance.

As of September 30, ~~2021,~~2022, there was ~~$56.6~~$39.7 million of unrecognized stock-based compensation expense, of which ~~$6.4~~$3.7 million is related to stock options and ESPP shares, and ~~$50.2~~$36.0 million is related to RSUs. The total unrecognized stock-based compensation expense related to stock options and ESPP shares as of September 30, ~~2021~~2022 will be amortized over a weighted-average period of ~~1.98~~2.43 years. The total unrecognized stock-based compensation expense related to RSUs as of September 30, ~~2021~~2022 will be amortized over a weighted-average period of ~~3.00~~2.64 years.

During the three and nine months ended September 30, ~~2021,~~2022, the Company capitalized ~~$0.1~~$0.3 million and ~~$0.3~~$0.8 million, respectively, and $0.1 million and $0.3 million during the three and nine months ended September 30, ~~2020,~~2021, respectively, of stock-based compensation expense inassociated with projects in process and recorded as part of property and equipment, net on the accompanying condensed consolidated balance sheets.

~~10.~~ Common Stock ~~Repurchase Programs~~Repurchases

The Board of Directors ~~has~~previously approved programs for the Company to repurchase shares of its common stock. In February 2021, the Company’s Board of Directors authorized ~~a one year share repurchase program (the “2021 Program”) for~~ the Company to repurchase up to $50.0 million of its common stock from February 2021 through 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 the2022 (the "February 2021 ~~Program at any time without prior notice.~~Program"). During the ~~three and~~ nine months ended September 30, ~~2021,~~2022, the Company did not repurchase any shares of its common ~~stock. As~~stock, nor did the Company repurchase any of ~~September 30,~~its common stock thereafter. The Company terminated the February 2021 ~~$50.0 million remains available for future share repurchases under the 2021 Program.~~Program prior to its expiration.

~~11.~~

10. Income Taxes

The Company recorded a benefit from income taxes of $2.1 million and a provision for income taxes of $0.4 million during the three and nine months ended September 30, 2022, respectively, and 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. The provision for (benefit from) income taxes ~~for the three and nine months ended September 30, 2021~~ was primarily attributable to the Company’s foreign operations, amortization of tax deductible goodwill from previous acquisitions, and state taxes. The 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~~an adjustment resulting in a $1.9 million benefit during the third quarter related to prior ~~year acquisitions.~~

periods that management determined is not material to the previously issued annual and interim financial statements.

~~12.~~11. 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,
		2021		2020		2021		2020			2022		2021		2022		2021
Net loss	Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)	Net loss	$	(7,167)	$	(7,843)	$	(76,831)	$	(38,458)

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	94,133		90,585		93,408		90,113		Weighted-average number of common shares used in computing net loss per share, basic and diluted	96,389		94,133		95,567		93,408

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.08)	$	(0.05)	$	(0.41)	$	(0.44)	Net loss per share, basic and diluted	$	(0.07)	$	(0.08)	$	(0.80)	$	(0.41)

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,
		2021	2020		2022	2021
Stock options and ESPP	Stock options and ESPP	7,052	9,226	Stock options and ESPP	7,560	7,052
Restricted stock units	Restricted stock units	6,275	5,769	Restricted stock units	8,302	6,275
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
		24,848	26,516		27,383	24,848

12. Leases

~~13. Leases~~

The Company has entered into operating leases primarily for office facilities. These leases have terms which typically range from 1 year to 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~~is 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, ~~2021,~~2022, the Company’s lease commitment of ~~$5.4~~$5.0 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, 2022, the Company recognized $1.2 million and $4.0 million, respectively, in total lease costs, which is comprised of $1.2 million and $3.9 million, respectively, in operating lease costs for right-of-use assets, and zero and $0.1 million, respectively, in short-term lease costs related to short-term operating leases. 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.

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.

During the first quarter of 2022, the Company exited occupancy of its leased office space in San Francisco, California. During the second quarter of 2022, the Company exited occupancy of a leased office space in Santa Clara, California, and a portion of its leased office space in New York, New York. The exits of these leased office spaces are intended to align with the Company's continued operational and cost optimization efforts. The Company has the ability and intent to sublease these office spaces for the remainder of the respective lease terms. The Company determined that a triggering event had occurred that required an interim impairment assessment for certain of its long-lived and right-of-use assets.

The Company performed an interim impairment assessment in the first and second quarter of 2022. In measuring the estimated amount of long-lived and right-of-use asset impairment, the Company considered estimated future sublease income including the consideration of local real estate market conditions. The Company also factored the time to identify a tenant and to enter into an agreement. Based on a discounted cash flow analysis, the Company concluded that the carrying value of certain long-lived and right-of-use assets was not recoverable. As such, during the three and nine months ended September 30, 2022, the Company recorded an impairment charge of zero and $10.0 million, respectively, within general and administrative expenses on its condensed consolidated statements of operations.

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,
		2021		2020		2021		2020			2022		2021		2022		2021
Cash paid for operating lease liabilities	Cash paid for operating lease liabilities	$	1,332	$	975	$	3,475	$	2,885	Cash paid for operating lease liabilities	$	1,635	$	1,332	$	4,616	$	3,475
Right-of-use assets obtained in exchange for lease obligations	Right-of-use assets obtained in exchange for lease obligations	3,610		1,523		7,552		12,297		Right-of-use assets obtained in exchange for lease obligations	—		3,610		—		7,552

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


		September 30, 2021			December 31, 2020				September 30, 2022			December 31, 2021
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	$	20,755		$	16,222		Operating lease right-of-use assets	$	15,353		$	23,874

Operating lease liabilities reported as:	Operating lease liabilities reported as:							Operating lease liabilities reported as:
Other current liabilities	Other current liabilities	$	3,959		$	3,650		Other current liabilities	$	6,002		$	4,935
Operating lease liabilities		22,182			15,956
Other non-current liabilities								Other non-current liabilities	22,597			26,903
Total operating lease liabilities	Total operating lease liabilities	$	26,141		$	19,606		Total operating lease liabilities	$	28,599		$	31,838

Weighted average remaining lease term (in years)	Weighted average remaining lease term (in years)	6.7			7.2			Weighted average remaining lease term (in years)	5.5			6.2
Weighted average discount rate	Weighted average discount rate	5.2		%	5.8		%	Weighted average discount rate	5.1		%	5.0		%

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

Operating Leases
2021, remaining three months $ 1,108
2022 5,194
2023 5,480
2024 4,923
2025 3,761
2026 and thereafter 11,272
Total lease payments $ 31,738
Less: Imputed Interest (5,597)
Total $ 26,141


	Operating Leases
2022, remaining three months	$	2,188
2023	6,803
2024	6,162
2025	4,794
2026	3,344
2027 and thereafter	9,837
Total lease payments	$	33,128

Less: Imputed Interest	(4,529)
Total	$	28,599

~~14.~~13. Commitments and Contingencies

Purchase Obligations

The Company has unconditional purchase commitments, primarily related to distribution fees, software license fees and marketing services, of ~~$9.5~~$19.7 million as of September 30, ~~2021.~~2022.

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 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 Companies, Inc. ("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. This loss was included in cost of revenues on our consolidated statements of operations.

During the second quarter of 2021, the Company notified Albertsons that due to ~~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 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. On November 16, 2021, the Company notified Albertsons it was terminating the Agreement effective November 18, 2021, due to Albertsons’ failure to cure its material breach of the Agreement. Consistent with its offer, the Company continued to provide certain services past the termination date for the benefit of its CPG customers; and ceased providing the last of such services on February 26, 2022.The parties are currently 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.litigation. If the contractual minimum applicable to the period that ended in October 2021 ~~remains~~is enforceable, the Company may recognize a loss that, depending on a variety of factors, is estimated to be as high as $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 ~~reserves~~liabilities 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 former CEO, ~~(“CEO”)~~Steven Boal, 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~~In October 2022, the parties, without admitting any liability, reached a settlement of the ~~third party~~third-party lawsuit, and the ~~Company~~settlement agreement has been submitted to the U.S. Bankruptcy Court for approval. If the settlement agreement is ~~required to indemnify~~finally approved by the ~~CEO for a loss,~~court, the Company may be required to ~~make an indemnity payment.~~indemnify Mr. Boal for a loss. Accordingly, the Company accrued $5.0 million related to the settlement agreement. While the Company maintains directors’ and officers’ liability insurance, such insurance may not be applicable or 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 reached a settlement of an existing claim and therefore recorded an accrual as of September 30, 2022, in addition to the accrual related to the settlement agreement described in "Indemnification" above. The Company believes that material liabilities associated with other existing claims are ~~remote;~~remote, and therefore, the Company has not recorded any additional accrual for the other existing claims as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. The Company expenses legal fees in the period in which they are incurred.

Legal Proceedings

The Company does not list all routine litigation matters with which it is a party. The Company discusses below certain pending matters. In determining whether to discuss a pending matter, the Company considers both quantitative and qualitative factors to assess materiality, such as, among others, the amount of damages alleged and the nature of other relief sought, if specified; its view of the merits of the claims and of the strength of its defenses; and whether the action purports to 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 the Company asserting claims for unlawful and unfair trade practices; tortious interference with business relationship; and tortious interference with prospective business relationship. The complaint alleges that the Company engaged in predatory pricing practices and misleading communications with potential customers in connection with its 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 action, the Company believes 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 the Company, which complaint was amended by RMG on September 13, 2021 (the "First Amended Complain"). SEG and the Company (the "Defendants") filed motions to dismiss RMG's First Amended Complaint on September 27, 2021 and on August 26, 2022, the Court issued an order granting in part and denying in part the Defendants’ motions to dismiss. Specifically, the Court dismissed counts IV (civil theft) and VII (unjust enrichment) of the First Amended Complaint without prejudice and denied the motions with respect to the other counts. On September 19, 2022, RMG filed its second amended complaint. In the second amended complaint, RMG dropped its civil theft claim and unjust enrichment claim against the Company.The second amended complaint alleges that (i) SEG breached its non-disclosure agreement with

RMG by providing the Company with RMG's trade secrets, including the business concept of and "playbook" for a retail media hub; (ii) the Company and SEG misappropriated such trade secrets to develop the SEG Media Hub, and that the Company further misappropriated such trade secrets to develop its "retail performance media platform", which it sells to end users; and (iii) the Company interfered with RMG's contract and prospective business relationship with SEG. RMG contends that SEG defrauded it of no less than $59 million and seeks compensatory and punitive damages, a constructive trust, and attorney's fees. On October 7, 2022, Company answered the second amended complaint denying all claims alleged by RMG and asserting affirmative defenses. While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, the Company believes 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 the Company 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 the Company continues to believe the allegations underlying Fortis's complaint lack merit, in June 2022 the parties, without admitting to any liability, reached a settlement for an amount that did not have a material impact on the Company’s future business, operating results, or financial condition.

Albertsons Companies, Inc. v. Quotient Technology, Inc. On November 16, 2021, the Company informed Albertsons Companies, Inc. (“Albertsons”) that, in light of Albertsons' failure to cure its material breach of the Services and Data Agreement ("the Agreement"), it was terminating the Agreement effective November 19, 2021. The Company offered to continue to provide certain services beyond the termination date for the benefit of the its CPG customers. On November 19, 2021, Albertsons filed a complaint against the Company in the Superior Court of the State of California, County of Santa Clara alleging claims of breach of contract and breach of implied covenant of good faith and fair dealing. The complaint alleges that the Company failed to achieve alleged minimum revenue targets, failed to make certain revenue share payments in the amount of $5.0 million, failed to pay a guaranteed annual minimum payment of $10.0 million under Statement of Work (SOW) No. 5, and improperly terminated the Agreement. On November 22, 2021, consistent with the Company's offer in its November 16, 2021 termination letter, the parties entered into a stipulation, where the Company agreed to sell campaigns through December 15, 2021, and provide services and support for those campaigns through February 26, 2022 so long as Albertsons provided the necessary logistical steps to enable the Company to deliver the services and support. The Company also agreed to support the In-Lane Tool through December 10, 2021. On December 9, 2021, Albertsons filed for a temporary restraining order to prevent the Company from discontinuing its digital-coupon-service or its In-Lane Tool or otherwise refusing to support Albertsons advertising and coupon programs, and for an order to show cause re preliminary injunction. On December 13, 2021, the Court issued an order denying Albertsons’ request for a temporary restraining order and order to show cause re preliminary injunction because, on the basis of the evidence presented by Albertsons, it found that Albertsons was unlikely to prevail on its claims at trial. On September 26, 2022, the Company filed its answer, denying all claims alleged by Albertsons, and filed a cross-complaint. In the cross complaint, the Company claimed that Albertsons failed to meet its obligations under the SOW, including its failure to make the In-Lane Tool commercially available in all required stores and its failure to support sales of In-Lane to CPGs. Additionally, the complaint alleges Albertsons was responsible for technical errors in the implementation of the In-Lane tool in Albertsons’ stores. The Company further alleges that Albertsons breached the Agreement and SOW by terminating the Agreement and SOW early without cause. The Company seeks restitution for amounts paid and damages caused by Albertsons’ breaches in an amount to be determined at trial.While it is not possible at this time to predict with any degree of certainty the ultimate outcome of this action, the Company believes that Albertsons’ claims lack merit.

~~15.~~

14. 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 of continuous employment. The Company’s matching contribution expense was $0.5 million and $1.8 million during the three and nine months ended September 30, 2022, respectively, and $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.

~~16.~~15. 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.

16. Subsequent Events

On November 2, 2022, the Company entered into (i) a binding commitment letter with PNC Bank, N.A. ("PNC"), in respect of PNC's commitment to provide the Company with a senior secured asset-based revolving credit facility in an initial aggregate principal amount of $50.0 million (the "PNC Facility") and (ii) a binding commitment letter with Blue Torch Capital LP ("BT"), in respect of BT's commitment to provide the Company with a senior secured term loan facility in an aggregate principal amount of up to $55.0 million (the "BT Facility").

The proceeds of the revolving loans under the PNC Facility and the term loans under the BT Facility, as applicable, shall be used by the Company (i) to repay the principal, accrued and unpaid interest, fees, premiums, if any, and other amounts under the Company’s 1.75% convertible senior notes, (ii) to pay fees, commissions and expenses in connection with the transactions contemplated thereunder, including entering into each of the PNC Facility and the BT Facility and the funding of the loans thereunder, and (iii) for ongoing working capital needs and other general corporate purposes of the Company and its subsidiaries.

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

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K filed on ~~February 23, 2021~~March 1, 2022 with the ~~SEC.~~SEC, as amended by our Form 10-K/A, Amendment No. 1, filed on April 29, 2022 with the SEC (collectively, "Annual Report on Form 10-K"). In addition to historical financial information, the following discussion contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934. The forward-looking statements reflect our plans, estimates, beliefs and expectations that involve risks and uncertainties, 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 media and promotions technology company that powers cohesive omnichannel brand-building and sales-driving marketing campaigns for advertisers and retailers to influence purchasing decisions throughout a shopper's path to purchase. These marketing campaigns are planned, delivered and ~~consumers.~~measured using our technology platforms and data analytics tool. Our ~~omnichannel~~vision is to build the world's leading performance marketing platform that delivers a variety of targeted digital marketing solutions which advertisers and retailers can purchase to drive measurable improvements in sales and customer loyalty.

Our customers consist primarily of consumer-packaged goods ("CPG") companies and their brand marketers (together referred to as "advertisers") who want to drive sales and positive brand engagement with shoppers. Our digital marketing platform is ~~powered~~designed to produce returns on marketing investment for advertisers by ~~exclusive~~utilizing consumer ~~spending data, location intelligence~~behavior and ~~purchase~~ intent data to ~~reach millions~~deliver the right marketing message to the right shopper at the right time, through multiple touchpoints while they are engaged online, out of ~~shoppers daily~~home and ~~deliver measurable, incremental sales. Additionally,~~in-store. We partner with retailers, who primarily sell through local, physical stores as well as through eCommerce properties. Traditionally, we have ~~a broad network of digital properties~~been primarily focused on the U.S.-based grocery retail market and the advertisers who sell products through that channel. However, we are aiming to ~~drive measurable sales and customer loyalty. Our network includes~~expand outside the ~~digital properties of our~~grocery retail space, such as with partners ~~and advertiser customers~~in certain vertically-integrated industries (also known as ~~consumer packaged goods ("CPGs"~~"verticals") manufacturers or brands), social media platforms, third-party properties, our consumer brand Coupons.com properties and digital out-of-home ("DOOH") properties. This network provides Quotient with proprietary and licensed data, including retailers’ in-store point-of-sale (“POS”) shopper data, purchase intent and online behavior and location intelligence to deliver more valuable outcomes for advertisers, retailers, and consumers. Customers and partners use Quotient to leverage consumer data and insights, consumers via digital channels, integrate marketing and merchandising programs, and to drive measurable sales results..

For our retail partners, we provide Quotient Retailer Promotions Platform, formerly known as Quotient Retailer iQ, 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 and use shopper data to deliver relevant digital media and promotions solutions from brand marketers and retailers to consumers. By partnering with Quotient, retailers can ~~leverage~~monetize their proprietary sales data and digital properties to build ~~new~~an alternative revenue ~~streams~~stream and offer effective marketing opportunities for their brand partners to engage consumers, ~~all while measuring~~with the ~~impact~~aim of ~~every partnership.~~achieving higher sales through their physical stores and eCommerce sites.

Over the last five years, we have grown our platform capabilities and our network of marketing channels to reach shoppers through a combination of in-house innovation, partnerships, and acquisitions. Our network includes the digital properties of our retail partners, publisher partners, and advertiser customers (also known as CPG manufacturers or brands), social media platforms, our consumer brands Coupons.com and Shopmium, and DOOH properties. This network provides Quotient with proprietary and licensed data, including retailers' POS shopper data, consumer behavior and purchase intent data, and location intelligence. With such data powering our platforms, customers and partners use Quotient to leverage consumer data and insights, engage consumers via digital channels, and integrate marketing and merchandising programs to drive measurable sales results and consumer engagement.

We provide value to three constituencies: over ~~2,000~~2,500 brands from approximately ~~800 CPGs or advertisers;~~900 CPGs; retail partners across multiple classes of trade such as grocery retailers, drug, automotive, mass merchant, dollar, club, and convenience merchandise channels; and consumers visiting our and our retailer and other network partners' websites, mobile properties and social ~~channels within~~channels.

We believe the breadth of our ~~network.~~

~~Through these three groups, we have~~relationships has created a network effect, which ~~we believe gives~~generates increased engagement with consumers and provides us a competitive advantage over both offline and online competitors. As our network expands and consumer audience increases, we generate more consumer data and insights, which further improves our ability to deliver targeted and personalized media and promotions, and also strengthens our measurement and data insight solutions. We believe this will make our platforms ~~become~~ more valuable to advertisers and ~~their brands, and~~

retailers ~~which, in turn, rely more heavily on our platforms~~ for their digital ~~media and promotions. In addition,~~marketing campaigns. We expect that the breadth of media and promotion content ~~offered~~delivered through Quotient platforms from leading brands will increase and enables us to attract and retain more retailers and ~~shoppers. As~~consumers.

Furthermore, we believe our strategy is adaptable to current trends in the industry. For example, as retail media evolves with more retailers bringing retail media in-house, a fragmented buying landscape is emerging for CPGs. We see opportunity in these industry trends and dynamics through building a regional retailer ad network ~~expands,~~and, as we ~~generate more consumer data~~continue to focus on bringing automation and ~~insights, which improves~~self-service to our ~~ability~~media platform, we aim to ~~deliver more relevant, targeted~~make media buying across multiple retailers and ~~personalized~~retail media ~~and promotions, and strengthens our measurement and data insights solutions.~~networks easier.

We primarily generate revenue byfrom advertisers and retailers using our technology platforms to ~~create,~~help achieve their digital marketing objectives in four distinct ways: (i) plan and buy media and promotions campaigns to reach the right shoppers; (ii) target ~~deliver, analyze~~advertising, promotions and messaging to shoppers for maximum impact; (iii) sell advertising space and activate the shopper data that retailers collect through loyalty programs and digital transactions; and (iv) measure the impact of advertisements, promotions or messages that have been planned, sold or placed with "closed loop" measurement, defined as the use of consumer data to help understand and evaluate how certain digital ~~media and/or promotional programs for~~campaigns impact our advertiser ~~customers, retail partners~~customers' and ~~advertising agencies.~~ retailer partners' sales.

Using shopper data from our retail partners and our proprietary data and audience segments, we deliver targeted and/or personalized digital media and promotions to shoppers through our ~~network, including our websites and mobile applications, as well as those of our publishers, retail partners and other third-party properties.~~network. As our customers and partners shift more of their marketing spend to digital channels, our solutions help them optimize the performance of such digital channels. Our ~~solutions'~~platforms measure performance ~~is measured~~ by attribution of digital campaigns to retail purchases in near real time, demonstrating return on spend for our customers and partners.

Our ~~promotional~~promotions products include digital paperless coupons, digital print coupons, in-lane on receipt promotions, digital national promotions, shopper promotions, digital rebates and loyalty offers. Our media solutions include display, social, DOOH, Retailer.com display and sponsored search, shoppable brand pages, and audiences. A growing number of campaigns that our customers purchase are ~~purchased as an~~ integrated ~~campaign~~campaigns, which ~~combines~~combine a mix of digital media and/or promotions solutions inwithin a single campaign. ~~The~~While the revenue we earn from these programs is generally ~~based~~determined on a cost-per-click, cost-per-impression, or ~~cost-per-acquisition. During the second half of 2021,~~cost-per-acquisition basis, we ~~have continued to migrate customers to a~~are increasingly generating revenues based on duration-based ~~model for digital national promotions — a model we sometimes refer to as "rates and dates". This model allows customers to book time on~~pricing with our ~~network for a 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 digitally.National Promotions offering, launched during 2021.

We generally pay a distribution fee or revenue share to retailers and publishers for activation or redemption of a digital promotion, for media campaigns, and for use of data for targeting or measurement. We also pay a fee to third-party publishers for traffic acquisition, which consists of delivering campaigns on certain networks or properties. ~~These~~In cases where we control the digital promotion and media advertising inventory before it is transferred to our customers, these distribution, revenue share and third-party service fees are included in our cost of revenues.

In cases where we do not control the digital promotion and media advertising inventory, we record revenues on a net basis, and the distribution, revenue-share and third-party service fees are deducted from gross revenues to arrive at net revenues.

Seasonality

Some of our products experience seasonal sales and buying patterns mirroring those in the CPG, retail, advertising, and eCommerce markets, including back-to-school and holiday campaigns, where demand increases during the second half of 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%, ~~54%~~59% and 54% of our annual revenue during the second half of 2021, 2020 and 2019, ~~and 2018,~~ 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 ongoing 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.~~impacted. Many government measures initially imposed to contain COVID-19 or slow its spread, including orders to close all businesses not deemed “essential,” isolate residents to their homes or places of residence, and practice social distancing, have been lifted in certain global locations and have been lifted widely in the U.S., although as a result of new virus variants ~~to the virus~~and subvariants arising, 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, even though ~~mass~~ vaccination efforts ~~have been undertaken~~are continuing throughout the United States and, to varying extents, in other countries. ~~While we observed revenue growth during~~Although as of the ~~first nine months~~fall of ~~2021, we cannot estimate~~2022 the ~~impact COVID-19 will have in~~extent of restriction-lifting has been widespread, the ~~future as government entities~~residual effects of such restrictions and ~~businesses make decisions about whether~~prolonged alternative working arrangements are unknown and ~~when~~the eventual effectiveness of the vaccination efforts likewise remains uncertain, including with respect 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, ~~especially as it remains uncertain how strong or lasting~~ the ~~impact~~productivity of ~~the vaccinations will be.~~our employee base and our sales and operations functions.

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 brands or retailers pause, delay, or cancel campaigns due to the continuing uncertainty, supply-chain disruption, and inflationary input-cost factors affecting advertiser and retailers, and also due to the consumer purchasing behavior changes caused by COVID-19, there may be an adverse impact on our promotion and media revenues and, ~~associated growth.~~accordingly, the growth of our business. The full extent of the impact of the ongoing 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 ~~2021~~2022 Overview

Quarterly revenues of ~~$135.9~~$70.3 million in the third quarter of ~~2021 increased~~2022 decreased by ~~$14.8~~$65.5 million, or ~~12%~~48%, as compared to the same period in ~~2020.~~2021. The year over year ~~increase~~decrease in our quarterly revenues was largely due to ~~growth in 2021 primarily attributable to retailer programs driving more advertising spend on~~the termination of our ~~platform~~partnership with the Albertsons Companies, Inc. ("Albertsons"), the decline in media revenues as certain retail partners "in-house" media services, and the impact of ongoing macroeconomic challenges affecting CPG businesses. Revenues also decreased as a result of recognizing a higher portion of our revenue ~~as well as growth in promotion revenue as brands increase spend~~ on a net basis due to our ~~platform.~~recent business model changes.

Our net loss of ~~$7.8~~$7.2 million in the third quarter of ~~2021 increased~~2022 decreased by ~~$3.6~~$0.6 million, as compared to the net loss of ~~$4.2~~$7.8 million in the same period in ~~2020.~~2021. The year over year ~~increase~~decrease in our quarterly net loss was primarily due to a decrease in interest expense as a result of the adoption of ASU 2020-06 and the benefit of a non-recurring impairment ~~charges~~charge recorded in the third quarter of 2021 related to certain intangible assets due to circumstances surrounding the termination of our partnership with ~~Albertsons~~Albertsons. Additionally, capitalized labor costs attributed to internally developed software increased due to a higher proportion of our engineering, product, and design efforts being focused on building new platforms, features and functionality. This was partially offset by a decrease in revenues as discussed previously, restructuring charge related to a workforce reduction plan, litigation settlements, and overall higher operating expenses, as a percentage of revenue, incurred to support our business ~~objectives, offset in part by an increase in revenues, as discussed previously, along with a decrease in the changes in fair value of contingent consideration.~~objectives. 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 decline in absolute dollars as we remove costs from the business, ~~but~~in connection with our ongoing business transformation efforts. However, we also expect operating expenses to increase as a percentage of revenue as more of our future revenue is recognized on a net basis compared to the prior periods due to the ~~advertisers' control over campaign execution for certain product offerings resulting in recognizing revenue net of certain costs as compared to recognizing revenue on a gross basis. As~~business model changes. When revenues begin to grow again, we expect to increase spending to support that growth.

Non-GAAP Financial Measure and Key Operating Metrics

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), a ~~non-GAAP~~non-U.S. 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 long-lived and right-of-use assets, impairment of certain intangible assets, shareholder activism response costs, litigation settlements, certain acquisition related costs, and restructuring charges. We exclude certain items because we believe that these costs (benefits) do not reflect expected future operating expenses. Additionally, certain items are inconsistent in amounts and frequency, making it difficult to contribute to a meaningful evaluation of our current or past operating performance.

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,
	2022		2021		2022		2021
Net loss	$	(7,167)	$	(7,843)	$	(76,831)	$	(38,458)
Adjusted EBITDA	10,028		17,327		1,660		28,492

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, depreciation, amortization of acquired intangible assets, change in fair value of contingent consideration, interest expense, other (income) expense, net, provision for (benefit from) income taxes, impairment of certain long-lived and right-of-use assets, impairment of certain intangible assets, shareholder activism response costs, litigation settlements, certain acquisition related costs, and restructuring charges; and

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

A reconciliation of Adjusted EBITDA to net loss, the most directly comparable U.S. 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,
		2021		2020		2021		2020			2022		2021		2022		2021
Net loss	Net loss	$	(7,843)	$	(4,218)	$	(38,458)	$	(40,076)	Net loss	$	(7,167)	$	(7,843)	$	(76,831)	$	(38,458)
Adjustments:	Adjustments:									Adjustments:
Stock-based compensation	Stock-based compensation	4,690		6,489		17,074		21,021		Stock-based compensation	4,980		4,690		27,849		17,074
Depreciation and amortization	Depreciation and amortization	7,287		10,685		24,425		30,020		Depreciation and amortization	4,797		7,287		14,028		24,425
Acquisition related costs and other (1)		8,720		387		12,453		991
Other (1)										Other (1)	7,919		8,720		31,889		12,453
Change in fair value of contingent consideration	Change in fair value of contingent consideration	245		1,562		772		5,788		Change in fair value of contingent consideration	—		245		—		772
Interest expense	Interest expense	3,809		3,646		11,306		10,830		Interest expense	1,837		3,809		4,170		11,306
Other (income) expense, net	Other (income) expense, net	96		59		130		(708)		Other (income) expense, net	(200)		96		181		130
Provision for income taxes		323		66		790		261
Provision for (benefit from) income taxes										Provision for (benefit from) income taxes	(2,138)		323		374		790
Total adjustments	Total adjustments	$	25,170	$	22,894	$	66,950	$	68,203	Total adjustments	$	17,195	$	25,170	$	78,491	$	66,950

Adjusted EBITDA	Adjusted EBITDA	$	17,327	$	18,676	$	28,492	$	28,127	Adjusted EBITDA	$	10,028	$	17,327	$	1,660	$	28,492

(1)For the three and nine months ended September 30, 2022, Other includes a charge of zero and $11.4 million, respectively, related to the impairment of certain long-lived and right-of-use assets; $5.0 million and $9.8 million, respectively, related to litigation settlements; $2.8 million and $5.5 million, respectively, related to restructuring charges; and $0.1 million and $5.2 million, respectively, related to shareholder activism response costs. For the three and nine months ended September 30, 2021, ~~"other"~~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~~Albertsons; restructuring charges of $1.8 million and $2.0 million, ~~respectively, for such periods. For the three~~respectively; and ~~nine months ended September 30, 2020, "other" includes restructuring charges~~acquisition related costs of ~~zero~~$0.4 million and ~~$1.5~~$1.3 million, respectively, and a $2.0 million loss contingency for both respective periods, related to a contract dispute with Albertsons associated with a guaranteed distribution fee arrangement. Restructuring charges relate to severance for certain impacted employees.respectively. Acquisition related costs primarily include certain bonuses contingent upon the acquired company meeting certain financial metrics over the contingent consideration period, ~~together with~~as well as diligence, accounting, and legal expenses incurred related to certain acquisitions. Restructuring charges relate to severance for impacted employees.

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

Grow our network.The success and scale of our platforms and our ability to grow revenue will depend on our ability to grow our publishing network, expand our reach to engaged consumers, and drive volume of transactions on our platforms. If we do not add network partners or expand our relationship with existing network partners, or if network partners do not deliver active users to our platforms, our business and revenue growth will be negatively impacted.

Obtaining high quality promotions, ~~and~~ increasing the number of brand-authorized ~~activations.~~activations, and capitalizing on new pricing/revenue models for promotions. Our ability to grow revenue will depend upon our ability to shift more dollars to our platforms from our brand customers, to continue to obtain high quality promotions, ~~and~~to increase the number of brand-authorized activations available through our ~~platform.~~platforms, and to capitalize on new pricing/revenue models for promotions, such as duration-based pricing. If we are unable to do any of these, growth in our revenue ~~will~~may be adversely affected.

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

Variability in promotional and media spend by advertisers or brands. Our revenues may fluctuate due to changes in promotional or media spending budgets of advertisers ~~and~~as well as the timing of their promotional and media spending. Decisions by major advertisers, whether or not due to the ongoing impact of COVID-19 and related supply chain and inflation input-cost issues, to delay or reduce their promotional and media spending, move campaigns, or divert spending away from digital promotions or media could slow our revenue growth or reduce our revenues.

Ability to retain and expand our relationships with retailers, obtain commitment and support for our platforms from retailers, and successfully renegotiate or amend retailer agreements.The success and scale ~~Quotient Retailer Performance Media Platform and further integrate with additional retailers.~~ ~~Our ability to grow~~of our ~~revenues will~~platforms depend ~~upon~~ on our ~~ability~~strategic relationships with retailers. The success and scale of our platforms also depends on the level of commitment and support for our platforms from retailers. Renewals or amendments of existing retailer relationships may become more challenging for us in light of our business model and pricing changes. These changes require restructuring our agreements and the way we operate with retailers and revenue arrangements for certain services. If we do not expand these relationships, if we do not renew or amend these relationships on as favorable terms as were in place immediately prior to renewal or amendment, if we lose significant retailers, or if we do not add new retailers to our platforms, our business will be negatively affected. In the near term, we expect the termination of our relationship with Albertsons, as well as retailers bringing retail media in-house, to continue to ~~successfully implement and scale~~have a negative impact on our Quotient Retailer Promotion Platform and Quotient Retail Performance Media Platform solutions with new retailers. If we are unable to continue to successfully maintain our current Quotient Retailer Promotion Platform and Quotient Retail Performance Media Platform partners, or if our retail partners do not provide sufficient support to our platforms, the growthfinancial performance.

Innovation 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~~media and promotions ~~and media into retailers’ loyalty or POS systems and other channels so that advertisers and retailers can more effectively engage consumers and drive their own sales.~~

~~Growth~~offerings, expansion of our consumer ~~selection~~reach and ~~digital offerings.~~growth of our data analytics capabilities. Our ability to grow our revenue in the future will depend on our ability to (i) innovate and invest in promotion and media solutions, ~~including Quotient Retailer Promotion Platform, Quotient Retail Performance Media Platform, sponsored search, mobile solutions for consumers,; leverage our reach~~particularly with regard to ~~consumers~~automation and ~~the strength of our platforms to broaden the selection~~self-service offerings; and consumers use of digital coupons and rebates as well as in-lane targeted promotions; manage the transition from digital print coupons to digital paperless coupons as well as the transition from desktop to mobile platforms; and(ii) invest in solutions around our data and analytic capabilities, referred to as Quotient Analytics and Audiences, for 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 ~~Ahalogy,~~MLW Squared Inc. ("Ahalogy"), Crisp Media, Inc. ("Crisp"), Elevaate, SavingStar, Inc. ("SavingStar"), Shopmium SAS ("Shopmium"), and Ubimo, and ~~their integration~~our ability to integrate such acquisitions with the core business of the Company.

3538

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)	2021				2020				2021				2020				(in thousands, except percentages)	2022				2021				2022				2021
Revenues	Revenues	$	135,884	100.0	%	$	121,116	100.0	%	$	375,080	100.0	%	$	303,358	100.0	%	Revenues	$	70,336	100.0	%	$	135,884	100.0	%	$	218,043	100.0	%	$	375,080	100.0	%
Cost of revenues	Cost of revenues	86,535		63.7	%	73,603		60.8	%	240,680		64.2	%	185,445		61.1	%	Cost of revenues	36,765		52.3	%	86,535		63.7	%	123,110		56.5	%	240,680		64.2	%
Gross Margin		49,349		36.3	%	47,513		39.2	%	134,400		35.8	%	117,913		38.9	%
Gross profit																		Gross profit	33,571		47.7	%	49,349		36.3	%	94,933		43.5	%	134,400		35.8	%
Operating expenses:	Operating expenses:																	Operating expenses:
Sales and marketing	Sales and marketing	29,401		21.6	%	24,555		20.3	%	85,233		22.7	%	73,403		24.2	%	Sales and marketing	19,939		28.3	%	29,401		21.6	%	63,334		29.0	%	85,233		22.7	%
Research and development	Research and development	11,074		8.1	%	9,744		8.0	%	34,541		9.2	%	28,958		9.5	%	Research and development	4,899		7.0	%	11,074		8.1	%	21,727		10.0	%	34,541		9.2	%
General and administrative	General and administrative	12,244		9.0	%	12,099		10.0	%	40,086		10.7	%	39,457		13.0	%	General and administrative	16,401		23.3	%	12,244		9.0	%	81,978		37.6	%	40,086		10.7	%
Change in fair value of contingent consideration	Change in fair value of contingent consideration	245		0.2	%	1,562		1.3	%	772		0.2	%	5,788		1.9	%	Change in fair value of contingent consideration	—		—	%	245		0.2	%	—		—	%	772		0.2	%
Total operating expenses	Total operating expenses	52,964		38.9	%	47,960		39.6	%	160,632		42.8	%	147,606		48.7	%	Total operating expenses	41,239		58.6	%	52,964		38.9	%	167,039		76.6	%	160,632		42.8	%
Loss from operations	Loss from operations	(3,615)		(2.7)	%	(447)		(0.4)	%	(26,232)		(7.0)	%	(29,693)		(9.8)	%	Loss from operations	(7,668)		(10.9)	%	(3,615)		(2.7)	%	(72,106)		(33.1)	%	(26,232)		(7.0)	%
Interest expense	Interest expense	(3,809)		(2.8)	%	(3,646)		(3.0)	%	(11,306)		(3.0)	%	(10,830)		(3.6)	%	Interest expense	(1,837)		(2.6)	%	(3,809)		(2.8)	%	(4,170)		(1.9)	%	(11,306)		(3.0)	%
Other income (expense), net	Other income (expense), net	(96)		(0.1)	%	(59)		—	%	(130)		—	%	708		0.2	%	Other income (expense), net	200		0.3	%	(96)		(0.1)	%	(181)		(0.1)	%	(130)		—	%
Loss before income taxes	Loss before income taxes	(7,520)		(5.6)	%	(4,152)		(3.4)	%	(37,668)		(10.0)	%	(39,815)		(13.1)	%	Loss before income taxes	(9,305)		(13.2)	%	(7,520)		(5.6)	%	(76,457)		(35.1)	%	(37,668)		(10.0)	%
Provision for income taxes		323		0.2	%	66		—	%	790		0.2	%	261		0.1	%
Provision for (benefit from) income taxes																		Provision for (benefit from) income taxes	(2,138)		(3.0)	%	323		0.2	%	374		0.2	%	790		0.2	%
Net loss	Net loss	$	(7,843)	(5.8)	%	$	(4,218)	(3.4)	%	$	(38,458)	(10.2)	%	$	(40,076)	(13.2)	%	Net loss	$	(7,167)	(10.2)	%	$	(7,843)	(5.8)	%	$	(76,831)	(35.3)	%	$	(38,458)	(10.2)	%

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)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change		(in thousands, except percentages)	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Promotion	Promotion	$	65,538	$	62,376	$	3,162	5	%	$	194,729	$	168,714	$	26,015	15	%	Promotion	$	44,749	$	65,538	$	(20,789)	(32)	%	$	137,516	$	194,729	$	(57,213)	(29)	%
Media	Media	70,346		58,740		11,606		20	%	180,351		134,644		45,707		34	%	Media	25,587		70,346		(44,759)		(64)	%	80,527		180,351		(99,824)		(55)	%
Total Revenue	Total Revenue	$	135,884	$	121,116	$	14,768	12	%	$	375,080	$	303,358	$	71,722	24	%	Total Revenue	$	70,336	$	135,884	$	(65,548)	(48)	%	$	218,043	$	375,080	$	(157,037)	(42)	%

3639

Comparison of the Three and Nine months ended September 30, ~~2021~~2022 and ~~2020~~2021

Revenues

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change
Revenues $ 135,884 $ 121,116 $ 14,768 12 % $ 375,080 $ 303,358 $ 71,722 24 %


	Three Months Ended September 30,								Nine Months Ended September 30,
(in thousands, except percentages)	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Revenues	$	70,336	$	135,884	$	(65,548)	(48)	%	$	218,043	$	375,080	$	(157,037)	(42)	%

Revenues for the three months ended September 30, ~~2021 increased~~2022 decreased by ~~$14.8~~$65.5 million, or ~~12%~~48%, as compared to the same period in ~~2020.~~2021. The ~~increase~~decrease in digital promotion revenues was primarily due to the ~~growth in 2021~~termination of ~~retailer programs driving more advertising spend on~~ our ~~platform in media revenue~~partnership with Albertsons, 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~~more revenue on a net ~~of certain costs.~~basis due to business model changes. The ~~higher growth~~decrease in media revenues ~~in 2021 have been~~was primarily due to ~~retailer programs that drive~~the termination of our partnership with Albertsons; as a result of recognizing more ~~brand spending through Quotient's Retailer Performance Media ("RPM") platform. These retailer programs incentivize advertisers~~revenue on a net basis due to ~~invest in marketing programs that target the retailer's shoppers~~business model changes; and due to ~~increase sales and also generate more distribution fees payments to our retailer partners.~~certain retail partners bringing media services in-house. Revenues from digital promotion and media campaigns were ~~48%~~64% and ~~52%~~36%, respectively, of total revenues for the three months ended September 30, 2022, as compared to 48% and 52%, respectively, of total revenues during the same period in 2021.

Revenues for the nine months ended September 30, 2022 decreased by $157.0 million, or 42%, as compared to the same period in 2021 and include the recognition of $3.3 million of revenue previously deferred that should have been recognized in prior periods as the underlying performance obligations were satisfied in prior periods. The decrease in digital promotion revenues was primarily due to the termination of our partnership with Albertsons, and as a result of recognizing more revenue on a net basis due to business model changes. The decrease in media revenues was primarily due to the termination of our partnership with Albertsons; as a result of recognizing more revenue on a net basis due to business model changes; and due to certain retail partners bringing media services in-house. Revenues from digital promotion and media campaigns were 63% and 37%, respectively, of total revenues for the nine months ended September 30, 2022, 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 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 nine months ended September 30, 2021, as compared to 56% and 44%, respectively, of total revenues during the same period in 2020.

2021.

We expect ~~our revenues in future periods~~promotion revenue to decline as we continue to recognize a higher proportion of revenue on a net basis. We recognize revenue on a net basis for arrangements when we act as an agent and do not control the service provided by the retailer or the price charged by the partner. CPGs and retailers are responsible for the determination of where a campaign is delivered, and retailers are responsible for providing the underlying services. We expect media revenue to continue to be negatively impacted ~~by the forthcoming wind-down and termination of our partnership with Albertsons related~~due to ~~the delivery of promotions and~~retail partners bringing media ~~campaigns.~~

services in-house.

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)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change		(in thousands, except percentages)	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
Cost of revenues	Cost of revenues	$	86,535		$	73,603		$	12,932	18	%	$	240,680		$	185,445		$	55,235	30	%	Cost of revenues	$	36,765		$	86,535		$	(49,770)	(58)	%	$	123,110		$	240,680		$	(117,570)	(49)	%
Gross profit	Gross profit	$	49,349		$	47,513		$	1,836	4	%	$	134,400		$	117,913		$	16,487	14	%	Gross profit	$	33,571		$	49,349		$	(15,778)	(32)	%	$	94,933		$	134,400		$	(39,467)	(29)	%
Gross margin	Gross margin	36		%	39		%					36		%	39		%					Gross margin	48		%	36		%					44		%	36		%

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, ~~2021 increased~~2022 decreased by ~~$12.9~~$49.8 million, or ~~18%~~58%, as compared to the same period in ~~2020.~~2021. The ~~increase~~decrease was primarily due ~~an increase~~to (i) a net decrease of ~~$8.5~~$37.8 million in distribution fees paid to our ~~retailer~~ partners for media and promotion ~~campaigns~~revenues delivered through ~~our platform,~~their platforms, associated with the decrease in revenues as discussed previously, and data and traffic acquisition costs for offsite media on non-owned-and-operated properties, a portion of which is now reported net with revenues; (ii) the benefit of a non-recurring charge during the third quarter of 2021 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~~Albertsons; (iii) a decrease in amortization expense of $2.4 million related to acquired intangible assets; (iv) a decrease in compensation costs of ~~$1.2 million,~~$2.0 million; and ~~an increase~~(v) a

decrease in overhead expenses of ~~$0.3~~$1.6 million related to facilities and infrastructure support, ~~the collective impact of which was~~ partially offset by ~~the benefit~~an increase in restructuring charges 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 fee arrangement, and a decrease in amortization expense of $1.6 million related to acquired intangible assets.

$0.5 million.

Cost of revenues for the nine months ended September 30, ~~2021 increased~~2022 decreased by ~~$55.2~~$117.6 million, or ~~30%~~49%, as compared to the same period in ~~2020. This increase~~2021. The decrease was primarily due to (i) a net ~~increase~~decrease of ~~$47.8~~$94.7 million in distribution fees paid to our ~~retailer~~ partners for media and promotion ~~campaigns~~revenues delivered through ~~our platform, offset by a~~their platforms, associated with the decrease in revenues as discussed previously, as well as data and ~~media~~traffic acquisition costs for offsite media on non-owned-and-operated ~~properties;~~properties, a ~~charge~~portion of which is now reported net with revenues; (ii) a decrease in amortization expense of $9.8 million related to acquired intangible assets; (iii) the benefit a non-recurring charges during the second and third quarters of 2021 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 fee arrangement; and(iv) a decrease in overhead expenses of ~~$0.1~~$3.5 million related to facilities and infrastructure ~~support.~~support; and (v) a decrease in compensation costs of $2.4 million, partially offset by a charge of $1.4 million related to the impairment of certain capitalized software assets and an increase in restructuring charges of $0.5 million.

Gross margin for the three and nine months ended September 30, ~~2021 decreased~~2022 increased to 48% and 44%, respectively, as compared to 36% ~~during~~for each respective period ~~as compared to 39% during each respective period during the same periods~~ in ~~2020.~~2021. The ~~decrease is~~increase was primarily due ~~a charge~~to lower amortization expense related to ~~the impairment~~acquired intangible assets and a higher proportion of revenue recognized net of certain ~~intangible assets as well as~~costs, partially offset by operating leverage on the ~~shift in our product~~reduction of net revenues and sales mix ~~towards more media revenues, which have higher cost~~ of ~~sales due to media acquisition costs~~32% and ~~distribution fees and which increased as a percentage of our total revenue as compared to our promotion revenue.~~29%, respectively.

We expect the cost of revenues during the remainder of 2022 to continue to decline, in absolute dollars, ~~during the fourth quarter~~as we expect a higher proportion of ~~fiscal 2021 due~~our revenue to ~~the advertisers' control over campaign execution for certain product offerings resulting in recognizing revenue~~be recognized on a net ~~of certain costs as compared to recognizing~~basis. We recognize revenue on a ~~gross basis.~~net basis for arrangements when we act as an agent and do not control the service provided by the retailer or the price charged by the partner. CPGs and retailers are responsible for the determination of where a campaign is delivered, and retailers are responsible for providing the underlying services.

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)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change		(in thousands, except percentages)	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
Sales and marketing	Sales and marketing	$	29,401		$	24,555		$	4,846	20	%	$	85,233		$	73,403		$	11,830	16	%	Sales and marketing	$	19,939		$	29,401		$	(9,462)	(32)	%	$	63,334		$	85,233		$	(21,899)	(26)	%
Percent of revenues	Percent of revenues	22		%	20		%					23		%	24		%					Percent of revenues	28		%	22		%					29		%	23		%

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. Sales and marketing expenses also include~~personnel, as well as facility costs and other related overhead costs; marketing programs; amortization of acquired intangibles; and travel costs.

Sales and marketing expenses for the three months ended September 30, ~~2021 increased~~2022 decreased by ~~$4.8~~$9.5 million, or ~~20%~~32%, as compared to the same period in ~~2020.~~2021. The ~~increase~~decrease was primarily the result of ~~an increase~~a decrease in compensation costs of ~~$3.5~~$6.4 million related to ~~hiring additional employees to support~~lower personnel costs in connection with our ~~growth~~expense management efforts; a decrease of $2.9 million in promotional, advertising and ~~business objectives, an increase~~other costs; and a decrease of $0.2 million 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 $0.6 million, the collective impact of which was partially offset by reduced spending in travel, entertainment and other costs of $0.2 million.~~

charges.

Sales and marketing expenses for the nine months ended September 30, ~~2021 increased~~2022 decreased by ~~$11.8~~$21.9 million, or ~~16%~~26%, as compared to the same period in ~~2020.~~2021. The ~~increase~~decrease was primarily the result of ~~an increase~~a decrease in compensation costs of ~~$12.7~~$13.5 million related to ~~hiring additional employees to support~~lower personnel costs in connection with our ~~growth~~expense management efforts; a decrease of $8.2 million in promotional, advertising and ~~business objectives,~~other costs; and a decrease of $0.4 million in restructuring charges, partially offset by an increase in ~~restructuring charges~~amortization of ~~$0.6 million related to severance for senior leadership and non-leadership employees, an increase in intangible asset amortization expense~~acquired intangibles of ~~$1.0 million, the collective impact of which was partially offset by reduced spending in travel, entertainment and other costs of $2.5~~$0.2 million.

We expect sales and marketing expenses ~~as a percentage of revenue,~~ to remain relatively ~~consistent~~flat, in ~~future periods~~absolute dollars, 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)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change		(in thousands, except percentages)	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
Research and development	Research and development	$	11,074		$	9,744		$	1,330	14	%	$	34,541		$	28,958		$	5,583	19	%	Research and development	$	4,899		$	11,074		$	(6,175)	(56)	%	$	21,727		$	34,541		$	(12,814)	(37)	%
Percent of revenues	Percent of revenues	8		%	8		%					9		%	10		%					Percent of revenues	7		%	8		%					10		%	9		%

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.

During 2022, we have been primarily focused on the development of new features and functionality of our technology which has increased our overall capitalization of internal use software development costs. The development includes focus on our technology for U.S. Shopmium and our Quotient Media, Rebates, and Promotion Platforms.

Research and development expenses for the three months ended September 30, ~~2021 increased~~2022 decreased by ~~$1.3~~$6.2 million, or ~~14%~~56%, as compared to the same period in ~~2020.~~2021. The ~~increase~~decrease was primarily due to ~~an increase~~a decrease in compensation ~~costs~~ of ~~$1.4~~$3.2 million related to ~~hiring additional employees to support~~lower personnel costs in connection with 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 byexpense management efforts; an increase in capitalization of internal use software development costs of ~~$0.5 million,~~$3.1 million; and a decrease of $0.1 million in restructuring charges; offset by an increase in overhead expenses related to facilities and infrastructure ~~support.~~

support of $0.2 million.

Research and development expenses for the nine months ended September 30, ~~2021 increased~~2022 decreased by ~~$5.6~~$12.8 million, or ~~19%~~37%, as compared to the same

period in ~~2020.~~2021. The ~~increase~~decrease was primarily due to an increase in capitalization of internal use software development costs of $7.6 million; a decrease in compensation ~~costs~~ of $5.2 million related to ~~acquisitions~~lower personnel costs in connection with our expense management efforts; and ~~hiring additional employees to support our growth and business objectives,~~a decrease of $0.2 million in restructuring charges; offset by an increase in overhead expenses related to facilities and infrastructure support of ~~$0.4 million, and an increase in restructuring charges of~~ $0.2 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 $0.2 million, .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. However, we expect 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~~plan to 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,
(in thousands, except percentages)	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
General and administrative	$	16,401		$	12,244		$	4,157	34	%	$	81,978		$	40,086		$	41,892	105	%
Percent of revenues	23		%	9		%					38		%	11		%

~~General and Administrative~~

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except percentages) 2021 2020 $ Change % Change 2021 2020 $ Change % Change
General and administrative $ 12,244 $ 12,099 $ 145 1 % $ 40,086 $ 39,457 $ 629 2 %
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, ~~2021~~2022 increased by ~~$0.1~~$4.2 million, or 1%34%, as compared to the same period in ~~2020.~~2021. The increase was primarily due to an increase of $5.0 million related to litigation settlements; an increase in restructuring charges of $0.9 million; an increase in professional service fees of $0.7 ~~million and~~million; an increase ~~in restructuring charges of $0.4 million related to severance for senior leadership and non-leadership employees, all partially offset by a decrease~~ in compensation costs of ~~$0.7 million~~$0.4 million; and shareholder activism response costs of $0.1 million; partially offset by a decrease in other administrative expenses of $2.6 million and a decrease in acquisition related costs of $0.3 million.

General and administrative expenses for the nine months ended September 30, ~~2021~~2022 increased by ~~$0.6~~$41.9 million, or 2%105%, as compared to the same

period in ~~2020.~~2021. The increase was primarily due to an increase in stock-based compensation costs of $12.0 million related to the stock option, RSU award and PSU award modifications for our former CEO in connection with his separation agreement; an impairment charge related to certain long-lived and right-of-use assets of $10.0 million due to the exit of occupancy of office space; an increase of $9.7 million related to litigation settlements; shareholder activism response costs of $5.1 million; an increase in restructuring charges of $3.4 million related to severance for impacted employees; an increase in professional service fees of ~~$2.7~~$2.0 million including higher legal fees due to litigation matters; and an increase in ~~acquisition related charges~~compensation costs of ~~$0.3 million, all~~$1.8 million; partially offset by a decrease in acquisition related costs of $1.3 million and an decrease in other administrative expenses of ~~$1.2 million, a decrease in compensation costs of $1.1 million and a decrease in restructuring charges of $0.1~~$0.8 million.

We expect general and administrative expenses, in absolute dollars, to ~~remain relatively consistent~~decrease in future periods as we 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)	2021			2020			$ Change		% Change		2021			2020			$ Change		% Change		(in thousands, except percentages)	2022			2021			$ Change		% Change		2022			2021			$ Change		% Change
Change in fair value of contingent consideration	Change in fair value of contingent consideration	$	245		$	1,562		$	(1,317)	(84)	%	$	772		$	5,788		$	(5,016)	(87)	%	Change in fair value of contingent consideration	$	—		$	245		$	(245)	(100)	%	$	—		$	772		$	(772)	(100)	%
Percent of revenues	Percent of revenues	—		%	1		%					—		%	2		%					Percent of revenues	—		%	—		%					—		%	—		%

During the three and nine months ended September 30, 2022, we did not record any charge related to the change in fair value of contingent consideration. As of December 31, 2021, Ubimo's contingent consideration period ended upon achieving certain financial metrics. During the first quarter of 2022, we paid $24.7 million and, as such, no liability existed as of September 30, 2022.

During the three months ended September 30, 2021, we recorded a net charge of $0.2 million related to the re-measurement of contingent consideration associated with Ubimo, due to the increase in expected achievement of certain financial metrics over the contingent consideration period. During the nine months ended September 30, 2021, we recorded a net charge of $0.8 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. 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)	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Interest expense	$	(1,837)	$	(3,809)	1,972		(52)	%	$	(4,170)	$	(11,306)	$	7,136	(63)	%
Other income (expense), net	200		(96)		296		(308)	%	(181)		(130)		(51)		39	%
	$	(1,637)	$	(3,905)	$	2,268	(58)	%	$	(4,351)	$	(11,436)	$	7,085	(62)	%

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. Interest expense for the three and nine months ended September 30, 2022 decreased by $2.0 million and $7.1 million, respectively, primarily due to the adoption of ASU 2020-06, under which guidance the Company no longer incurs interest expense related to the accretion of the debt discount associated with the convertible note. Refer to Note 2 for further details related to the adoption of the new standard.

Other income (expense), net consists primarily of interest income on U.S. Treasury Bills held as cash ~~equivalents.~~equivalents and banking-related fees. The ~~decrease~~increase in other income (expense), net during the three and nine months ended September 30, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, 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 (benefit from) 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)	2021		2020		$ Change		% Change		2021		2020		$ Change		% Change		(in thousands, except percentages)	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Provision for income taxes		$	323	$	66	$	257	390	%	$	790	$	261	$	529	203	%
Provision for (benefit from) income taxes																		Provision for (benefit from) income taxes	$	(2,138)	$	323	$	(2,461)	(762)	%	$	374	$	790	$	(416)	(53)	%

The benefit from income taxes of $2.1 million and provision for income taxes of $0.4 million for the three and nine months ended September 30, 2022, respectively, and 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 goodwill from~~an adjustment resulting in a $1.9 million benefit during the third quarter related to prior ~~acquisitions.~~

~~We have a full valuation allowance against our UK net deferred tax assets in~~periods that management determined is not material to the ~~amount of $4.7 million as of September 30, 2021~~previously issued annual and intend to 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 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 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.interim financial statements.

4144

Liquidity and Capital Resources

We have financed our operations and capital expenditures through cash flows from operations ~~and~~as well as from the proceeds from the issuance of convertible senior ~~notes.~~notes in 2017. As of September 30, ~~2021,~~2022, our principal source of liquidity ~~were~~was cash and cash equivalents of ~~$244.9~~$208.4 million, which ~~were~~was 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 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~~As a result of ~~lower~~legal matters settled previously, we expect to pay approximately $9.8 million, of which approximately $7.3 million is expected ~~revenue related~~ to be paid during the ~~forthcoming termination~~fourth quarter 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.~~ 2022.

We intend to continue to manage our operating expenses in line with our existing cash and available financial ~~resources, and~~resources. In July 2022, we initiated a workforce reduction plan in ~~the long-term,~~connection with our ongoing business transformation efforts. Under this plan, we ~~expect to incur increased spending in future periods in order to execute~~eliminated approximately 7% of our ~~long-term business plan and to support our growth to fund our operating expenses.~~

~~Our Board~~regular, full-time, global workforce, which we anticipate will generate annual cost savings of Directors has approved programs for the Company to repurchase shares of its common stock. In February 2021, the Company’s Board of Directors authorized a one year share repurchase program (the “2021 Program”) for the Company to repurchase up to $50.0 million of its common stock from February 2021 through 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, 2021, the Company did not repurchase any shares of its common stock. As of September 30, 2021, $50.0 million remains available for future share repurchases under the 2021 Program.approximately $19.0 million.

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 as a contra-revenue item 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.~~right benefit.

In addition, 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 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 related to ~~increase its~~the retailer's marketing efforts to promote the digital platform, ~~as well as the projected~~and revenues and associated revenue share ~~payments.~~payments for the particular retailer relationship that were projected. For example, in 2020 the Company's efforts to implement, with Albertsons, one of our 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, we recognized a loss of $8.8 million during the year ended December 31, ~~2020, to settle such matter.~~2020. This loss was included in cost of revenues on our consolidated statements of operations. 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 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. On November 16, 2021, the Company notified Albertsons it was terminating the Agreement effective November 18, 2021, due to Albertsons’ failure to cure its material breach of the Agreement. Consistent with its offer, the Company continued to provide certain services past the termination date for the benefit of its CPG customers; and ceased providing the last of such services on February 26, 2022. The parties are currently 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.litigation. If the contractual minimum applicable to the period that ended in October 2021 ~~remains~~is enforceable, the Company may recognize a loss that, depending on a variety of factors, is estimated to be as high as $8.5 million.

In November 2017, we issued $200.0 million aggregate principal amount of 1.75% convertible senior notes due 2022 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, (the “Notes”). The Notes are unsecured obligations of the company and bear interest at a fixed rate of 1.75% per annum, payable semi-annually in arrears on June 1 and December 1 of each year, commencing on June 1, 2018. The Notes will mature on December 1, 2022 ("Maturity Date"), unless earlier repurchased, redeemed, or converted in accordance with their terms. Our intent is to meet the repayment obligation pursuant to the Notes and as of November 2, 2022 we have executed commitment letters with each of two lenders regarding the obtaining of debt financing in the amount of $105.0 million. If the Notes are neither repaid nor refinanced on or prior to the Maturity date, we may not have the ability to meet our obligations as they become due.

In November 2021, we entered into a Loan, Guaranty, and Security Agreement (the "ABL Credit Agreement", which prior to the First Amendment (as defined in the next paragraph) provided for an asset-backed revolving credit facility in the aggregate amount of $100.0 million and a sublimit for letters of credit of $10.0 million (the ABL Credit

Agreement, as amended, the "ABL Facility"). Prior to the First Amendment, the ABL Facility was to have matured on November 17, 2026 with a springing maturity under certain circumstances as set forth in the First Amendment.

On August 5, 2022, we entered into a First Amendment and Limited Waiver to the ABL Credit Agreement (the "First Amendment"). The First Amendment, among other things, waived an event of default that occurred as a result of the Company's non-compliance, as of June 30, 2022, with a covenant requiring us to maintain a minimum fixed charge coverage ratio ("FCCR") of 1.0 over a lookback period of twelve months measured from June 30, 2022. The First Amendment also amended such FCCR covenant for the next three quarters and required the original FCCR requirement to resume beginning the quarter-ended June 30, 2023, and to maintain such covenant requirement with respect to all succeeding quarters.

In addition, the First Amendment (i) redefined the term "Termination Date" to extend the springing maturity date, to November 1, 2022, that would have been triggered in the absence of a refinancing of our 1.75% Convertible Senior Notes due 2022 ("Notes") and to remove, as an option to avoid the triggering of the revised springing maturing date, a cash payoff occurring later than September 1, 2022; (ii) reduced the aggregate principal amount available for borrowing to up to $50.0 million; and (iii) included a temporary $5.0 million reduction in funding available, otherwise known as an availability block, based on our FCCR.

The ABL Credit Agreement, as modified by the First Amendment, terminated pursuant to its own terms on September 1, 2022. There were no borrowings under the ABL Credit Agreement, as modified by the First Amendment, prior to its termination.

We believe our existing cash, cash equivalents and cash flow from operations, and access to financing sources, including the debt financing transactions contemplated by the commitment letters executed with two lenders, will be sufficient to meet our existing and expected future scheduled debt repayment obligations, working capital and capital expenditure needs for ~~at least~~ the next 12 ~~months.~~months and beyond. 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 future additional financing is required from outside sources beyond those levels currently contemplated, we may not be able to raise it on terms acceptable to us or at all. During the period of uncertainty ofand volatility related to the ongoing 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,
2021 2020
Net cash provided by operating activities $ 29,711 $ 13,171
Net cash used in investing activities (10,773) (9,648)
Net cash provided by (used in) financing activities 3,218 (18,559)
Effect of exchange rates on cash and cash equivalents 37 126
Net increase (decrease) in cash and cash equivalents $ 22,193 $ (14,910)


	Nine Months Ended September 30,
	2022		2021
Net cash (used in) provided by operating activities	$	(6,488)	$	29,711
Net cash used in investing activities	(14,216)		(10,773)
Net cash (used in) provided by financing activities	(8,760)		3,218
Effect of exchange rates on cash and cash equivalents	441		37
Net (decrease) increase in cash and cash equivalents	$	(29,023)	$	22,193

Operating Activities

Cash from operating activities 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, ~~2021,~~2022, net cash ~~provided by~~used in operating activities of ~~$29.7~~$6.5 million ~~reflects~~reflected our net loss of ~~$38.5~~$76.8 million, adjusted for net non-cash expenses of ~~$64.2~~$57.8 million, and cash used as ~~well as cash provided resulting from~~a result of changes in working capital of ~~$4.0~~$12.5 million. Non-cash expenses included depreciation and amortization, stock-based compensation, amortization of debt discount and issuance costs, allowance (recovery) for credit losses, deferred income taxes, change in fair value of contingent consideration, impairment of ~~certain intangible~~long-lived and right-of-use assets, and other non-cash expenses, including amortization of right-of-use asset, amortization of deferred cost, and loss on disposal of property and equipment. The primary ~~sources~~uses of cash from working capital items included ~~an increase in deferred revenues of $9.1 million, an increase~~a decrease in accounts payable and other ~~current~~ liabilities of ~~$8.0~~$30.5 million ~~an increase in accrued compensation benefits~~due to timing of ~~$5.4 million,~~services 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~~payments

including payment for ~~Elevaate~~a deferred cost related to a retailer agreement, a Ubimo contingent consideration payment of ~~$2.9~~$19.0 million related to the changes in fair value over the contingent consideration ~~period.~~period, a decrease in deferred revenues of $9.2 million due to reduced billings for campaigns, a decrease in accrued compensation and benefits of $9.3 million due to annual bonus payouts, and an increase in prepaid expenses and other assets of $2.0 million, partially offset by a decrease in accounts receivable of $82.5 million due to timing of invoicing and collections.

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, ~~2021,~~2022, net cash used in investing activities of ~~$10.8~~$14.2 million ~~reflects~~reflected purchases of property and equipment, which includes ~~capitalized software development costs, and purchases of~~ technology hardware and software to support our ~~growth.~~growth as well as capitalized software development costs.

Financing Activities

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

During the nine months ended September 30, ~~2021,~~2022, net cash ~~provided by~~used in financing activities of ~~$3.2~~$8.8 million ~~reflects $14.8~~reflected $5.7 million ~~net,~~ in ~~proceeds received from exercises of stock options under equity incentive plans and purchases of ESPP shares, partially offset by~~ payments for ~~Elevaate~~Ubimo contingent consideration ~~of $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 ~~$5.3~~$3.7 million ~~and~~in connection with vesting of equity grant awards, payments on promissory note and finance lease obligations of ~~$0.2~~$0.1 million, and payments for debt issuance costs of $0.1 million, partially offset by proceeds received from issuance of common stock of $0.8 million.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, ~~2021.~~2022.

Contractual Obligations and Commitments

Refer to Note 148 and Note 13 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, ~~2021,~~2022 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, 2020 filed on February 23, 2021 with the SEC.~~except as noted in Note 13 "Commitments and Contingencies".

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, ~~2021,~~2022, 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, 2020 filed on February 23, 2021 with the 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.10-K.

4447

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 reported amounts ~~reported~~of assets and ~~disclosed in our condensed consolidated~~liabilities and disclosure of contingent liabilities at the date of the financial statements as well as the reported amounts of revenues and ~~accompanying notes.~~expenses during the reporting period. 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, ~~measurement of contingent consideration, restructuring accruals,~~stock-based compensation, 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 ongoing COVID-19 pandemic has created and may continue to create 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.~~operations, even in light of ongoing vaccination efforts. 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, ~~2021,~~2022, 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, 2020 filed on 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”~~("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, ~~2021,~~2022, 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 ~~2021~~2022 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.

4648

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

~~We do not list all routine litigation matters with which we are~~For a ~~party. We discuss below certain pending matters. In determining whether to discuss a pending matter, we consider both quantitative~~discussion of legal proceedings, see Note 13, “Commitments and ~~qualitative factors to assess materiality, such as, among others, the amount of damages alleged and the nature of other relief sought, if specified; our view~~Contingencies,” of the ~~merits of the claims and of the strength of our defenses; and whether the action purports~~Notes to ~~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 outcomeCondensed Consolidated Financial Statements of this ~~action, we believe that Catalina’s claims lack merit.~~Form 10-Q.

~~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.

•We may not achieve revenue growth, including as a result of changes to our business model.

•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~~if we fail to obtain ~~retailer~~ commitment and support for our platforms from retailers, and if we do not successfully renegotiate or amend retailer agreements.

•Our revenue and business will be negatively affected if we fail to develop, increase the number of and expand relationships with network partners that contribute to the growth of audiences engaging on our platforms.

•The loss or decrease in spending by any significant customer, or the loss or decrease in 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 if 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,~~platforms, 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, and in the near term is an increasing challenge due to market conditions and strategic transitions in 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.operate.

•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.

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

•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.

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

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.

•

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, our data and media acquisition costs could increase, and we could lose customers and revenue.

•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.

•Our tax benefits preservation plan, which will remain in effect until January 2, 2023, may reduce the volume of trading in our stock because it limits the ability of persons or entities from acquiring a significant percentage of our outstanding stock.

•Our business could be negatively affected as a result of actions of stockholders.

Risks Related to ~~Our Convertible Senior Notes~~Debt Financing Transactions

•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, including impacts relating to persistent inflation and the risk of a global economic slowdown, 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 $45.6 million and $65.4 million in 2021 and ~~$37.1 million in~~ 2020, ~~and 2019,~~ respectively, and incurred net losses of ~~$7.8~~$7.2 million and ~~$38.5~~$76.8 million for the three and nine months ended September 30, ~~2021.~~2022, respectively. We have an accumulated deficit of ~~$488.8~~$534.0 million as of September 30, ~~2021.~~2022. We anticipate that our costs and expenses will increase in the foreseeable future as we continue to invest in:

•retailer partnerships;

•network growth;

•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 and verticals; and

•strategic opportunities and commercial relationships.

For example, we have incurred and expect to continue to incur expenses in developing and retaining retailer partnerships and developing self-service capabilities and 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.~~growth, including as a result of changes to our business model.

We may not be able to achieve revenue growth, and we may not be able to generate sufficient revenues to achieve profitability. 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.~~ continue, particularly as we transform our business model from primarily managed services to more self-service and automated solutions through our

platforms. We are also implementing transitions in our promotions pricing, from a cost-per-acquisition model to a duration-based model.

Business model changes such as these carry operational risks, and our expectations regarding the execution, success, timing, and impact of these changes may not be met. For example, an operational risk relating to our shift to self-service and automated solutions is that these new offerings may not be preferred by advertisers and retailers to alternative offerings from our competitors.

There are also financial risks, such as our ability to establish metrics and forecast performance targets associated with these business model changes. We may not, accordingly, realize financial targets based on the business model changes, and as a result our results of operations could be negatively impacted.

Our revenues may also 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~~advertisers is considered the most flexible and easiest to cut, and ~~CPGs~~advertisers can change their spend without notice, which can result in our inability to anticipate such fluctuations. For example, ~~budget pressures or~~ unspent budgets at the end of a CPG’s fiscal year, or budget pressures including those related to inflation and continuing supply chain issues, may lead to, respectively, unexpected ~~reduced~~increased or ~~increased~~reduced spending on our platforms.

Decisions by ~~CPGs~~advertisers or retailers to delay or reduce their digital marketing on our platforms or choose a solution from one of our ~~competitors,~~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 revenue and revenue growth for the second quarter of 2020. While CPGs and retailers resumed digital marketing in the second half of 2020 generally, certain CPGs and retailers still are experiencing supply chain disruption, and brands and retailers currently are experiencing increasing inflationary pressures that are increasing their ~~costs.~~costs, which in turn have reduced advertising spend generally and have negatively impacted many segments of the advertising and adtech industry of which we are a part. Accordingly, we may continue to see reduced digital marketing levels and postponed or cancelled ~~campaigns, particularly~~campaigns. Such reductions in advertising spend could also be exacerbated if COVID-19 outbreaks persist or, more broadly, the pandemic worsens.

Our business is complex and evolving. We may offer new capabilities, pricing, service models, process and delivery methods to advertisers and retailers. These new capabilities may change the way we generate and/or recognize revenue, which could impact our operating results. For example, ~~in the third quarter of 2021~~ we have announced that we are shifting our focus away from a lower-margin, labor-intensive managed services business and are moving towards more self-service and platform-based solutions. As a result of these changes, and the application of the accounting rules relating to such changes, we 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.~~basis. As another example, we are shifting from a ~~cost-per-action~~cost-per-acquisition pricing model for promotions to ~~non-quantity-based pricing~~non-quantity-based-pricing models, such as duration-based promotions.

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

•successfully execute on our shift away from a lower-margin, labor-intensive services business and towards more self-service and platform-based solutions;

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

•maintain and grow retailers in our network, increase the number of network partners in our network, and expand our network with new verticals;

•adapt to industry changes in, and the evolution of, retail media networks as well as how CPGs leverage such networks;

•succeed with new pricing models, such as our shift to time-based (e.g. duration-based) promotions pricing;

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

•~~maintain and grow our retailer network and expand into new verticals;~~

•capitalize on the shift from offline to digital marketing and growth in ~~eCommerce;~~e-commerce;

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

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

•demonstrate the value of our 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;

•deploy, execute, and continue to develop our analytics capabilities;

•expand the use by consumers of our media and promotions offerings;

•successfully integrate our newly acquired companies into our business;

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

•~~capitalize on new pricing models, such as our shift to non-quantity-based (e.g., duration-based) promotions pricing;~~

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

•expand the number, variety, quality, and relevance of promotions available on our platforms and through our 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~~provide assurance that we will successfully accomplish any of these actions. Failure to do so could harm our business and cause our operating results to suffer.

Our revenue and business will be negatively affected if we fail to retain and expand our relationships with retailers, ~~and~~if we fail to obtain ~~retailer~~ commitment and support for our ~~platforms.~~platforms from retailers, and if we do not successfully renegotiate or amend retailer agreements.

The success and scale of our platforms depend on our strategic relationships with ~~retailers~~retailers. The success and scale of our platforms also depends on the level of ~~retailer~~ commitment and support for our ~~platforms.~~platforms from retailers. For example, retailers are increasingly interested in bringing retail media and shopper programs in house. If we are unable to adapt to this evolution of retail media and maintain and grow retailer support for our platforms and solutions, such as our retail ad network, our business and revenue will be adversely impacted.

Renewals or amendments of existing retailer relationships may become more challenging for us in light of our business model and pricing changes. These changes require restructuring our agreements and the way we operate with retailers and revenue arrangements for certain services. There is no assurance that retailers will agree to such changes, or that renewals or amendments will occur at all or on terms as favorable as the pre-renewal or pre-amendment terms. Should any such circumstance occur, our business could be adversely affected. More generally, if we do not 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~~significant retailers, or if we do not add new retailers to our platforms, our business will be negatively affected.

For instance, our revenue and growth may be adversely impacted if retailers do not support 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 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 revenue growth for the second half of 2019. Also, our revenue was negatively affected in the first half of 2020 when retailers mostly paused or delayed, and in some cases cancelled, 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.

The success of our platforms also depends in part on our use of consumer sales data provided by retailers, our access to ~~retailer’s~~retailer consumer channels, the size and quality of retailer audiences, and the national scale and reach of our retailer network. If we fail to secure, or are found to be in violation of the terms of, such data, access and scale, we could lose access to retailer data and our platforms would be less valuable to advertisers and other business partners.

In addition, we depend on retailers to comply with laws, regulations and industry standards relating to privacy and the use of consumer data. If we and our retail partners cannot timely respond to legal, regulatory and 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 in response to changes in state privacy laws such as the California Consumer Privacy Act of 2018 (the " CCPA"), ~~is amended to~~business partners contractually prohibit the “sale” (as defined in the CCPA) of loyalty program data, or if retailers otherwise materially restrict our use of sales and loyalty card data in light of the CCPA or similar laws or regulations, our business will be negatively affected. See the risk factor below titled “Our business is subject to complex and evolving laws, regulations and

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

Our sales cycle with retailers tends to be ~~long and we~~long. We may make investments and incur significant expenses before an agreement or renewal with a retailer is reached, if at all, and before we are able to generate any revenue 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 business, financial condition and results of operations.

Our revenue and business will be negatively affected if we fail to develop, increase the number of and expand relationships with network partners that contribute to the growth of audiences engaging on our platforms.

The success and scale of our platforms also depends on growing our publishing network of retailer and non-retailer partners, which we sometimes refer to as network partners.These network partners are a significant factor in our effort to increase audience and volume on our platforms and thereby enable our network to deliver the scale and reach that advertisers, and the advertising agencies that sometimes act on their behalf, are seeking. These partners can also be important in connection with the launch and marketing of new offerings, such as our self-service and automated solutions.If we are unable to grow our network or our network partners do not increase our aggregate audience reach and drive volume on our platforms, our revenue and business may be negatively impacted.

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

Our business is 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 or retailer support, such as the ~~forthcoming~~ termination of our partnership with Albertsons ~~may~~or retailers taking retail media in-house, negatively ~~impact~~impacts the amount that advertisers spend on our platforms.

If the distribution, revenue sharing or other fees that we pay increase, or if 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~~retailer and ~~publishers~~non-retailer partners in our publishing network 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 if ~~retailers~~network partners disagree with our calculations in an audit, itthe result of such disagreement could have an adverse impact on our business.

~~Some~~In addition, some of our agreements with retailers include certain upfront fees/payments or 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, if applicable, may be payable by us at the end of the applicable period. We consider various factors in our assessment of whether these ~~prepaid~~upfront 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~~our digital ~~platform,~~platforms, 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~~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 from Albertsons 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. On November 16, 2021, the Company notified Albertsons it was terminating the Agreement effective November 18, 2021, due to Albertsons’ failure to cure its material breach of the Agreement. Consistent with its offer, the Company continued to provide certain services past the termination date for the benefit of its CPG customers; and ceased providing the last of such services on February 26, 2022. The parties are currently 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.litigation. If the contractual minimum applicable to the period that ended in October 2021 ~~remains~~is 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:

52•impacts of changes in our business model including transitioning the pricing of promotions offerings from cost-per-acquisition to duration-based pricing, and the degree and timing of advertiser and retailer response to this transition, and also increasing the proportion of self-service and automated offerings;

•

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

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

•growth and expansion of our 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 and other network partner relationships;

•increasing data acquisition and media acquisition costs;

•evolving fee arrangements with advertisers, as well as with retailer and ~~retailers,~~other network partners, 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 business lines;

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

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

•success of higher-margin new ~~products; and~~

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

We have seen pressure on our gross margins, which we principally attribute to the factors described above and we expect this pressure to continue while our growth strategy evolves and our product mix continues to change. For instance, lower-margin media products have increased in our product mix, and we face margin pressure arising from increased media and data acquisition costs due, in part, to reduced inventory and increased consumer ability to opt out of permitting their personal information to be used for marketing purposes. See Risk Factor below entitled ~~"If~~"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, our data and media acquisition costs could increase and we could lose customers and ~~revenue~~"revenue". Although we expect to gain leverage as our business expands, our platforms transition to self-service, and 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 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.~~growth, and especially uncertainty relating to our business model changes. 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 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:

•impacts of changes in our business model, including transitioning the pricing of promotions offerings from cost-per-acquisition to duration-based pricing and the degree of advertiser and retailer response to this transition, and increasing the proportion of self-service and automated offerings;

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

•a reduction in overall advertising spend by advertisers in reaction to rising inflation, continuing supply chain disruption and economic uncertainty, particularly in verticals that comprise a significant portion of our revenue such as the food category;

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

•our ability to maintain orand grow the retailer component of our network, to expand our ~~retailer~~ network with new verticals, and ~~expand into new verticals;~~to increase our number of network partners and publishers;

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

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

•adapt to industry changes in, and the evolution of, retail media networks as well as how CPGs leverage such networks;

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

•the impact of pricing pressures from our 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 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 advertisers and retailers as they focus on manufacturing in-demand products, replenishing out-of-stock items, ~~adjust~~adjusting to changes in consumer purchasing behavior, ~~contend~~contending with supply-chain challenges, and other issues arising out of the COVID-19 pandemic;

•disruption of planned themed marketing campaigns by 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 advertisers in reaction to the COVID-19 pandemic, which primarily 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 2021;

•our ability to grow existing consumer usage of, and attract new consumers to, our digital promotion offerings and more generally to interactions with our ~~platform,~~platforms, including through our retailer partner sites and our 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 advertisers, retailers and us;

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

•increased legal and compliance costs associated with data protection laws and regulations in various jurisdictions, including state privacy laws like the CCPA, which went into effect on January 1, 2020, or new state laws in Virginia, Colorado, Connecticut and Utah which go into effect in 2023, the invalidation of the EU-U.S. Privacy Shield framework and Swiss-U.S. Privacy Shield Framework in July 2020 and September 2020, ~~respectively;~~respectively, and new follow-on compliance obligations;

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

•whether new products successfully launch on time;

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

•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 to new platforms and solutions such as those with self-service and automation capabilities;

•the success of our sales and marketing efforts;

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

•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,~~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~~whether or not related to changes in U.S. immigration policies;

•the effectiveness of our internal controls; and

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

•
~~business model or solution delivery changes that result in 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 continuing uncertainty created by the COVID-19 pandemic, supply chain issues, inflation-related impacts, our business model changes and the resulting accounting changes, could cause our quarterly and annual operating results to fluctuate, ~~and~~as well as 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~~predictions relating to demand for our ~~platform,~~platforms, the rate and extent of market acceptance to our business model changes, maintaining and growing our retailer network and the cost of maintaining retailer partnerships, and the expansion of our network audience through publishing distribution and other partnerships, which predictions 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~~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~~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, if advertisers reduce spend in digital promotions, or if advertisers ~~chooses~~choose 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 (including the shift to duration-based pricing) 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. IfAlso, the success of our transitioning the pricing of promotions offerings from cost-per-acquisition to duration-based pricing depends on meeting forecasted campaign outcomes, and if we do not deliver the forecasted outcomes, advertisers may not respond to this pricing model transition to the degree we anticipate, and our business could be adversely impacted. More generally, 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 pricing model transition, ~~and~~or if the growth of digital paperless coupons is slower than the decline in digital print coupons. Conversely, acceleration of this shift ~~(from, for~~(for example, through greater-than-expected 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,~~platforms, 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. One of our growth strategies is to increase the number of consumers using digital promotions on our platforms through growth and expansion of our publisher network. If we do not add new network partners or our partners do not experience increased consumer use of digital promotions on our platforms as expected, our revenuesand business will be harmed. We also depend on our retail and other network partners to devote sufficient time, resources or funds to the promotion of our platforms and the 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~~as a consequence the COVID-19 pandemic. For instance, shoppers ~~continue to minimize~~have minimized shopping trips, ~~rely~~relied on online grocery shopping, ~~change~~and adjusted buying habits asin response to their lifestyles ~~were~~having been 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~~pandemic. To the extent consumers do not find our ~~purely digital~~ products compelling given changed consumer buying behavior, 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,~~Valassis Communications, Inc.; Catalina Marketing Corporation’s ~~Cellfire,~~Cellfire; Inmar/You ~~Technology,~~Technology; Neptune Retail Services’ (formerly known as News America Marketing)

SmartSource; companies that offer cash back solutions such as iBotta, Inc.,; Fetch Rewards; and 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~~FSIs or other forms, including Valassis Communications, Inc., Neptune Retail Services and Catalina Marketing Corporation;

•retailers who develop and manage, with or without a third-party vendor, digital advertising or data products in-house, such as Albertsons' recently-announced launch of the Albertsons Media Collective, or The Kroger Company ("Kroger") 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: Meta Platforms, Inc.( doing business as Facebook), Alphabet, Inc.~~, Facebook, Inc.~~ ("Alphabet"), Pinterest, Inc., Amazon.com, Inc. ("Amazon"), Adobe Inc., The Trade Desk Inc., Oracle Corporation, Criteo S.A., Microsoft Corporation, Publicis Groupe's CitrusAd, and others.

In certain instances, we have entered into, and in the future we may enter into, strategic alliances or partnerships with companies that are competitors in other areas of our business. 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~~numbers 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.

We are subject to competition from large, well-established companies which have significantly greater financial, marketing and other resources than we do, and which have offerings that compete with our platforms 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, Alphabet ~~Inc.~~ and Facebook, ~~Inc.,~~ retailers such as Kroger 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, and may 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, orand thereby 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~~in 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~~devices or elsewhere, consumers may become dissatisfied with our platforms and decide not to use our digital promotions, ornot interact with our digital media, ~~and~~and/or elect to use or view instead 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 opt to 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 with consumer ~~channels, and~~channels. In any of these circumstances, 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~~platforms. Additionally, 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~~for marketing ~~spending.~~dollar spending (also referred to as "spend"). 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, with or without a third-party vendor, digital advertising or data products in-house, such as Albertsons' recently-announced launch of the Albertsons Media Collective, or The Kroger Company with its wholly owned subsidiary of 84.51°. ~~Many~~Specifically, many retailers market and offer their own digital advertising solutions, including retailer performance media, targetable audiences and ~~sponsor~~sponsored 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 or decide to manage retailer performance media in-house, and accordingly 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~~platforms.

Because they act on behalf of our advertiser customers, advertising agencies are an area of business focus for us, not only as regards utilization of our legacy platforms but also, and especially, our newer self-service and automated solutions. Accordingly, inaccurate descriptions of our legacy or newer self-service/automated platforms by advertising agencies, over whom we have no ~~control,~~control; negative recommendations by advertising agencies regarding use of our ~~service offerings~~offerings; or failure by advertising agencies 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 the business 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~~creates 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, and in the near term is an increasing challenge due to market conditions and strategic transitions in our business.

As an ~~industry leading~~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~~motivating and ~~motivating~~retaining existing personnel, we may be unable to grow effectively and our operating results may be harmed. ~~For example, following~~We initiated a reduction-in-force in July 2022 which impacted 7% of our global workforce, and at present we have imposed limits on new hiring. As we continue pursuing our current business transformation strategy, which includes a focus on cost management, we may undergo further restructuring initiatives.

Following the easing of the COVID-19 pandemic restrictions in 2021, we have ~~experience~~experienced higher employee attrition and an increasingly competitive market for ~~talent.~~talent, as factors associated with the so-called Great Resignation have impacted our company as they have other companies. In addition, if changes in our business such as the transformation of our business strategy and business model and the related operational changes in various areas of our business such as sales, cause us to experience a higher-than-anticipated attrition in certain key areas of our business or if we are unable to hire and onboard new talent quickly enough to materially meet operational needs, our results of operations could be negatively impacted.

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,~~To the extent that the immigration-related regulatory environment, ~~related to immigration under the current presidential administration may increase the likelihood that immigration laws may be modified to further limit the~~including H1-B visa availability, ~~of H1-B visas. If a new or revised visa program is implemented, it may impact~~hampers our ability to recruit, hire and retain qualified skilled personnel, ~~which could adversely impact~~ our business, operating results and financial ~~condition.~~

condition could be adversely impacted.

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.~~States, and remains a persistent worldwide problem due to the rise of variant stains of the virus.

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 lifted such orders or restrictions only to return to these restrictions in the face of increases in new COVID-19 cases, even as ~~mass~~ vaccination efforts are ~~being~~ continuing to be

undertaken throughout the United States and in certain other ~~countries.~~countries, in response to new virus variants. Although as of the fall of ~~2021~~2022 the ~~pace~~extent of ~~removing restrictions is increasing,~~restriction-lifting has been widespread, the residual effects of such restrictions and prolonged alternative working arrangements are unknown, and the eventual effectiveness of the ~~mass~~ vaccination efforts in response to existing and future variants likewise remains ~~uncertain, and these may~~uncertain. Any significant worsening of the COVID situation could 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, the potential ultimate impact and duration of the COVID-19 pandemic on the global economy and on our business in particular are difficult to assess or predict. A recession or market correction resulting from the spread of new or existing variants of COVID-19 and ~~its~~corresponding impacts, including resumption of shelter-in-place orders and similar restrictions, could decrease marketing spend, particularly in media, adversely affecting the demand for our solutions, the growth of our business, and the value of our common stock. While we have seen advertisers or CPGs ~~spend~~maintain or increase their spend on promotions during economic downturns, there is no guarantee they will do so in a future economic downturn, including one that may be presently taking shape due to the persistence of the COVID-19 pandemic or inflationary pressures brought about as a consequence of the pandemic.

The global COVID-19 pandemic 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, 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.

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~~to standards appropriate for a public company, atcontrols, procedures and policies of acquired 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 fulfill 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. In addition, we have been subject to litigation and disputes related to our acquisitions. For example, in August 2021, 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 alleged that the Company ceased to make generally available the SavingStar CRM business, which would trigger an earnout payment of $8.5 million under the terms of the SavingStar, Inc. acquisition agreement. In June 2022, the parties, without admitting to any liability, reached a settlement. We may experience future claims or settlements, which could impact our liquidity and financial condition. In addition, we cannot ~~assure you~~provide assurance 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 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 inwithin the expected time frame, ~~expected~~ or could cause us to incur unanticipated liabilities, ~~and harm~~in any or all such instances potentially harming 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 three ~~years. Although most of our personnel continue to work from home,~~years, and during that period we ~~recently~~ moved our principal executive offices to Salt Lake City, Utah from Mountain View, California. Such ~~office~~ expansion, together with workplace transitions including maintaining remote and ~~transition~~hybrid working arrangements for a significant portion of our employees. 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 solutions on our ~~platforms,~~platforms; develop and improve our operational, financial, legal and management ~~controls,~~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 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 advertisers and retailers, and as we 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 negatively 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 Alphabet's search engine called 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 at times have fallen relative to the same time ~~last~~in the prior 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 Amazon's Alexa, Google Assistant or Apple's 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 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.~~

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 fees we earn for coupon codes accessed through our 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 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 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 or the same receipt twice 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 former 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. (Our founder and former CEO left the Company for unrelated reasons in June 2022.) 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~~A settlement of the ~~third party~~third-party lawsuit, without an admission of liability by any of the parties, was agreed to and ~~we are required~~has been submitted to ~~indemnify our founder and CEO~~the U.S. Bankruptcy Court for ~~a loss, we~~approval. If the settlement is finally approved, the Company may be required to ~~make an indemnity payment.~~indemnify the former CEO for a loss. While we maintain directors’ and officers’ liability insurance, such insurance may not be applicable, be 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 that 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.~~Israel. 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 enable us to achieve 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 ("EU"), 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~~as well as 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 the 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, privacy and Internet infrastructure frameworks in other countries may make it more difficult for us to replicate our business ~~model.~~model in non-U.S. locations. 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 competition with foreign companies entering the same markets;

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

•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,~~laws; anti-competition ~~regulations~~regulations; and different liability standards, any of 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 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~~customers. 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 may conflict with other rules, laws or data protection obligations. Several new privacy laws will go into effect in 2023, and legislators in other U.S. states and in foreign countries are considering additional new privacy laws and regulations. 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.~~platforms. Existing and future laws, regulations and industry standards could restrict our operations, and our ability to retain or increase our advertisers and retailers and consumers’ use of digital promotions delivered on our platforms may be adversely affected, and we may not be able to maintain or grow our revenues as anticipated.

For example, California ~~also~~has 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~~as well as caused us to incur substantial costs and expenses in an effort to comply. For example, 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 also provides for civil penalties for violations, as well as a private right of action for data breaches that may increase the risk of data breach litigation, all of which may increase our compliance costs and potential liability. ~~In addition,~~Then, California voters ~~recently~~ approved the California Privacy Rights Act of 2020, or CPRA, ~~that~~to amend the CCPA. The CPRA 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~~prompted 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 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~~Colorado, Utah and Connecticut have passed comprehensive privacy legislation that ~~may~~ impose obligations similar to, ~~or more stringent than those we may face under~~but not exactly the same as California laws, and many other ~~data protection laws.~~states are considering their own privacy legislation. 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~~Legislative initiatives in other states, to the extent that they become privacy and data security laws or regulations in ~~various~~such 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 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 isor interpretations of the law are incorrect, or if these guidelines, laws or regulations or their ~~interpretation~~interpretations change, or if 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.~~information. We also cannot control our retail partners’ approach or interpretation of ~~CCPA, the CPRA~~evolving state or other new and emerging privacy laws and 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 U.S. generally accepted accounting principles ("U.S. 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 of this Report 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 on a 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~~beginning the second quarter of 2020 and continuing thereafter, we ~~modified~~have been making changes to the ~~way~~manner in which we process and deliver certain media ~~products~~products. These business changes, over time, have led to ~~enhance the customer experience. As~~our recognizing a ~~result~~greater proportion of ~~these changes, we have begun to recognize certain~~our media ~~revenue~~revenues 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~~At the same time, we continue to have gross reporting for other portions of our media products, ~~and~~as well as for other ~~revenue~~revenue. Our determinations are made in ~~the future as a result~~light 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~~with transactions ~~with~~being evaluated for characteristics that dictate, as appropriate, gross or net 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 that we ~~think~~believe will ~~make up~~comprise 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~~to future transactions, revenue recognition treatment of prior transactions ~~to future transactions~~ that initially we believe ~~are~~to be similar but ~~that ultimately~~later are determined to have sufficiently different characteristics ~~that dictate~~as to require a 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~~and thereby result 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 across the globe, 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 tothose that 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 be costly 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 standards 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, orif 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 of us, 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 away from business activities, 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~~. We are also subject to 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 may result in our incurring 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 which may limit our ability to store and Process data and operate our business. In particular, it should be noted that the AdTech industry has in the last few years received increased scrutiny from consumers, media outlets, regulators and lawmakers.This has been demonstrated by the €250,000 fine imposed on the Interactive Advertising Bureau Europe by the Belgian Data Protection Authority in February 2022, following an investigation into its Transparency and Consent Framework (“TCF”)--a framework adopted widely for the collection/management of consent to the use of cookies for targeted advertising in the EU. This decision will require us to reassess our reliance on the TCF.

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:~~could result in the following: 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;~~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~~with new laws, regulations or other obligations that 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 or actions, or to investigations by governmental entities, authorities or regulators, which could result in an Adverse Data Protection Impact including ~~required~~requiring changes to our business practices, causing the diversion of resources and the attention of management from our business, triggering regulatory oversights and audits, discontinuance of necessary Processing, or imposing 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)~~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, we are Processing personal data in the context of an establishment in the EU, 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~~

Under 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:~~compliance. These include, among other things: (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).

European data protection laws including the EU GDPR generally also prohibit the transfer of personal data from Europe to the United States and other countries ("third countries") that are not recognized as having "adequate" data protection laws unless the parties to the transfer have implemented specific safeguards to protect the transferred personal data. One of the primary safeguards allowing U.S. companies to import personal data from Europe 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 in 2020, invalidated the EU-U.S. Privacy Shield framework for purposes of international transfers. The Swiss Federal Data Protection and Information Commissioner also opined that the Swiss-U.S. Privacy Shield is inadequate for transfers of personal data from Switzerland to the U.S. On October 7, 2022, the U.S. President introduced an executive order to facilitate a new Trans-Atlantic Data Privacy Framework, which will act as a successor to the invalidated Privacy Shield. If approved by the European Commission and implemented, the agreement will facilitate the transatlantic flow of personal data and provide an alternative data transfer mechanism (in addition to EU Standard Contractual Clauses and Binding Corporate Rules) for companies transferring personal data from the EU to the U.S. However, before parties rely on the new Framework, there are still legislative and regulatory steps that must be undertaken in both the U.S. and in the EU.

The European Commission adopted new EU SCCs in June 2021, which impose onerous obligations on the contracting parties. These new EU SCCs must be used in all new contracts going forward (where there are restricted transfers of personal data), with existing contracts entered into before September 27, 2021 requiring updating by December 27, 2022. 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 in certain cases 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.

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~~UK's exit from the EU ~~the United Kingdom government has initiated a process to leave the EU, known as Brexit. Following December 31, 2020,~~("Brexit"), 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,~~(i.e., the EU GDPR as it continues to form part of ~~the laws~~law in the ~~United Kingdom~~UK 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 UK GDPR exists alongside the ~~potential for divergent enforcement actions.~~ UK Data Protection Act 2018 that implements certain derogations in the UK GDPR into UK law.Under the UK GDPR, companies not established in the UK but who process personal ~~data~~information 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,~~As a result we are potentially exposed to two parallel data protection regimes, each of which authorizes fines and the potential for divergent enforcement actions. It should also be noted that the UK Government 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~~published its own form of ~~data transfer agreement (including a~~EU SCCs known as the UK ~~addendum~~International Data Transfer Agreement (IDTA) together with an International Data Transfer Addendum (UK Addendum) to the new ~~SCCs)~~EU SCCs. The UK Information Commissioner’s Office (ICO) may also publish its version of the transfer impact assessment and ~~transfer risk assessment, which are expected to be finalized towards~~international guidance on international transfers, though it is unclear when this may take place. In terms of international data transfers between the ~~end of 2021. For the time being, when implementing new contracts, if such transfer is subject to both the EU GDPR~~U.K. and the ~~UK GDPR we may be required to implement two forms of transfer mechanism to address~~U.S., it is understood that the ~~transfer of personal data outside the EEA~~U.K. and the ~~UK, respectively.~~U.S. are negotiating an adequacy agreement.

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 also 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~~CCPA 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~~established 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, Colorado and ~~Colorado~~Utah 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 in turn 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 Kingdom, the United States, and ~~globally~~other global jurisdictions imposing new and ~~relatively burdensome~~

potentially costly or disruptive 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~~could be 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~~given 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.~~regulations, including proposals for regulation of artificial intelligence. 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 requirementsforexpressorimpliedconsentofusersfortheuseanddisclosureofsuchinformationcouldrequireus 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~~the 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-,~~privacy, data ~~protection-,~~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 todo not comply with our Privacy Policies and other ~~privacy-,~~privacy, data ~~protection-,~~protection or information ~~security-related~~security obligations. Any failure or perceived failure by us to comply with our Privacy Policies and our ~~privacy-,~~privacy, data ~~protection-,~~protection, or information security-related obligations to customers or other third parties, or our failure to comply with any of our other legal obligations relating to privacy, data protection, information security, marketing or consumer protection ~~we may be~~could subject us 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 be harmed.

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 which 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 isbecame effective for ~~fiscal years~~us beginning ~~after December 15, 2021. Early adoption is permitted for interim and annual reporting periods beginning after December 15, 2020.~~January 1, 2022.

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,~~costs; make some activities more difficult, time consuming and ~~costly,~~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.

Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations, and could result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC.

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

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 despite our having adopted a "tax benefits preservation plan" (as hereinafter defined) in November of 2021, 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 2017 Tax Cuts and Jobs Act (the "Tax Act"), as modified by the ~~CARES~~Coronavirus Aid, Relief and Economic Security Act (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.

On November 11, 2021, we adopted a tax benefits preservation plan to protect the value of tax assets associated with NOL carryforwards under Section 382 of the Code against a potential change in ownership as defined in Section 382. However, the tax benefits preservation plan does not guarantee against such a change in ownership.

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~~financial statements 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.

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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 software or other code vulnerabilities, 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 (IT) 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” attacks (including those directed toward SMS/texting services) 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

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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~~Additionally, to provide protection against the occurrence of a cybersecurity event, we rely on the IT professionals within our organization to monitor, diagnose and remediate threats arising within our network. To the extent we experience attrition in this area and are required to shift workloads, or acquire and train supplementary IT talent, we could face increased risks of experiencing a materially harmful cybersecurity event.

In addition, 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 been, 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,~~A significant percentage of our employees ~~are temporarily~~continue to work under remote or hybrid working ~~remotely,~~arrangements, which may pose additional data security risks. These risks will continue as we continue to operate both remote and hybrid arrangements for employees. If we, or our service providers and partners, experience compromises to security that result in performance or availability problems, or experience the complete shutdown of one or more of our platforms, digital properties and mobile applications, or suffer 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 to 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~~were to be 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 of our 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~~cybersecurity breach may involve significant time, resources, and expenses, which may result in potential regulatory inquiries, litigation or other investigations, and ~~can~~could affect our financial and operational condition.

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~~online 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, with our owned and operated properties, and with 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,~~consent; restrictions imposed by our retail and other data partners or other third parties, publishers and web browser developers or other software ~~developers,~~developers; changes in technology, including changes in web browser ~~technology,~~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~~above 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.

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~~about 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~~could affect 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 circumstances 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 consumers, restricted by third parties outside of our control, or otherwise subject to unfavorable regulation, the benefits of our offerings and solutions could diminish, our data and media acquisition costs could increase and we could lose customers and revenue.

We and our third-party partners use, or might opt to use, a number of technologies to collect information used to deliver our solutions. For instance, mobile 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~~ways that could impair our ability to target, deliver, or measure the effectiveness of our solutions, any of which may negatively impact our business. In addition, mobile operating system and browser providers have implemented product changes and may in the future implement changes to limit the ability of websites and application developers to collect and use these mobile device identifiers and other data to target and measure advertising. 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.

Our platforms use location data to localize and deliver geographically relevant content to shoppers. For instance, our DOOH solution tracks a mobile device user’s geographical proximity to the public DOOH display so that localized relevant marketing campaigns will be displayed to the user when they are nearby. Our ability to obtain and use location data could also become limited by consumer choice and subject to privacy-related restrictions. If such restrictions and regulations negatively impact our ability to use location data in our solutions, such as our ability to track identifiable mobile device users within the proximity of DOOH display screens, there could be less customer demand for our platforms and solutions and our business and revenue would be negatively impacted.

We also use small text files (referred to as "cookies"), placed through an Internet browser on 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.~~solutions. Certain of our cookies, including those that we predominantly use in delivering our ~~solution~~solutions through Internet browsers, are known as "third-party" cookies because they are delivered by third parties rather than by us. Our cookies collect information, such as when 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 United States, such as California, this information may be considered personal information under applicable data protection laws. When a consumer interacts with our solutions on a mobile device, we may also obtain 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 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 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 a customer's campaign and thereby may adversely affect the effectiveness of our solution and harm our business.

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

able to set fewer of our cookies in users’ browsers, which reduces our ability to achieve our customers' campaign goals, measure performance of these campaigns, and detect fraudulent activity, any of 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 consumers or Internet-connected devices in the bidding process on advertising exchanges. ~~If companies do~~Companies not ~~use~~using 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 thereby reduce the effectiveness of our solutions.

In addition, in the ~~European Union, or~~ EU Directive 2009/136/EC ~~commonly~~amending Directive 2002/22/EC, (collectively referred to as the "Cookie ~~Directive,"~~Directive") directs EU ~~member states~~Member States to ensure that collecting information on a consumer's computer, such as through a non-essential cookie, is allowed only if the consumer has appropriately given his or her prior freely given, specific, informed and unambiguous consent. Similarly, this Cookie 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,~~the "e-Privacy Regulation", which will replace the Cookie Directive with requirements that could be stricter in certain respects, will 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~~messages. Additional penalties for noncompliance ~~has~~have been proposed in connection with the e-Privacy Regulation, although at this time it is unclear whether itthe e-Privacy Regulation 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, may be time consuming to develop or costly to obtain, and may be less effective than our current use of cookies.

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

The use of APIs by our customers, as well as by retailer and ~~retail~~other network partners, ~~have~~has significantly increased in recent years. Our APIs allow customers, as well as retailer and ~~retail~~other network partners, to integrate their own business system with our platforms. The increased use of APIs increases security and operational risks to our systems, including risks relating to management of system access controls such as timely retirement of network user IDs as well as the ~~risk for~~risks of intrusion attacks, data theft, or denial of service attacks. Furthermore, while APIs allow greater ease and power in accessing our ~~platform,~~platforms, 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 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 may be viewed as “spam” by consumers, and thereby 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 ("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 in recent years 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 communications-based statutes, could subject us to potential risks including liabilities or claims relating to consumer protection laws, and 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,~~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~~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 to be 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.

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 deliver digital promotions and media via our platforms, including over our websites and mobile applications, as well as through those of 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 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~~consumers; the number of digital promotions, digital media and information shared through our ~~platforms~~platforms; and the number of network endpoints (for example, DOOH display screens) 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 applications and services ~~in Microsoft Azure and Google GCP~~on industry-leading 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 systems is expensive and complex, and could result in operational ~~failures.~~failures and/or slow remediation response times in the event of a network incident. 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 also continue to invest in information security, infrastructure and ~~automation.~~automation as we strive to reduce complexities and siloed elements of our platforms. Deployment of new software or processes, whether or not relating to the transition from legacy to new IT systems, 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 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. Any financial or other difficulties these providers face may adversely affect our business, and furthermore 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 advertisers, 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. However, due to the 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 our operations, network or product development activities, which could impact our provision of services to customers as well as our internal operations and support functions.

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 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, neither of 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 business relationships with third-party providers, could impair our ability to process information, which in turn could impede our ability to provide digital promotions and media to ~~consumers,~~consumers; harm our ~~reputation,~~reputation; increase expenses, including significant, unplanned capital investments and/or contractual ~~obligations,~~obligations; and result in a loss of consumers or advertisers and retailers, any of which could adversely affect our business, financial condition, and operating results.

For example, ~~currently, as a result of work and travel restrictions related to the ongoing COVID-19 pandemic,~~ our employees continue to work under remote or hybrid work arrangements, and accordingly 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 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~~and rights provided under foreign laws. ~~These~~Applicable 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 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”~~“Quotient.com” domain name, our ~~“Quotient.com”~~Shopmium.com domain name, and other valuable domain names. We are phasing out our use of the coupons.com domain, which we will replace with our Shopmium cash-back mobile app. If we lose the ability to use a domain name or brand names, 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 or brand names, which could cause us substantial harm, or to incur significant expense in order to purchase rights to the domain names or brand names in question. In addition, our competitors and others could attempt to capitalize on our brand recognition by using domain names or brand 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 or brand 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 or brand names may require litigation, which could result in substantial costs and diversion of management’s attention and thereby harm our business.

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~~plan to 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 that are 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.

Risks Related to Ownership of our Common Stock

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

The price of our common stock may change in response to variations in our operating results and also may change in response to other factors, including factors specific to technology companies, many of which are beyond

our control. As a result, our stock price may experience significant volatility. Among other factors that could affect our stock price are:

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

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

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

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

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

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

•success of competitive products or services;

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

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

•announcements relating to litigation;

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

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

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

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

•our entry into new markets;

•regulatory developments in the United States or foreign countries;

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

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

•actions instituted by activist stockholders or others;

•any significant changes in our management or our board of directors; and

•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 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.

Our tax benefits preservation plan, which will remain in effect until January 2, 2023, may reduce the volume of trading in our stock because it limits the ability of persons or entities from acquiring a significant percentage of our outstanding stock.

Our tax benefits preservation plan is designed to preserve the value of certain tax assets associated with NOL carryforwards under Section 382 of the Internal Revenue Code of 1986. For so long as the tax benefits preservation plan remains in effect, the inability of some stockholders to acquire a significant position in our common stock could substantially reduce the market liquidity of our common stock, making it more difficult for a stockholder to dispose of, or obtain accurate quotations for the price of, our common stock.

Our business could be negatively affected as a result of actions of stockholders.

We value constructive input from investors and regularly engage in dialogue with our stockholders regarding strategy and performance. Our board of directors and management team are committed to acting in the best interests of all of our stockholders. There is no assurance that the actions taken by our board of directors and management in seeking to maintain constructive engagement with certain stockholders will be successful.

On April 13, 2022, Engaged Capital Flagship Master Fund, LP, together with certain affiliates (collectively “Engaged”), filed a preliminary proxy statement seeking to solicit proxies in favor of the election of two director candidates to our board of directors at our 2022 annual meeting of stockholders ("2022 Annual Meeting"). Engaged also made public statements critical of our board of directors, management and operations. On May 16, 2022, the Company and Engaged entered into a Cooperation Agreement. The amounts of time, attention and resources that were required of our company and its board and executive leadership to address Engaged-related matters, including the potential proxy contest with Engaged and the settlement with Engaged, were substantial, and the residual impact of this diversion of the Company's resources and leadership away from operational matters on the Company's business and financial performance is uncertain.

Moreover, responding to these and any future actions by Engaged by other activist stockholders likewise could be costly and time-consuming, disruptive to our operations, and distracting to our management, our board of directors and our employees. Any future contested election with respect to the company's directors could require us to incur substantial legal, public relations and other advisory fees and proxy solicitation expenses. Further, in such situation we may choose to initiate, or may become subject to, litigation as a result of proposals by activist stockholders or proxy contests or matters relating thereto, which would serve as a further distraction to our board of directors and management and could require us to incur significant additional costs.

Additionally, perceived uncertainties as to our future direction as a result of stockholder activism or changes to the composition of our board of directors may lead to the perception of a change in the direction of our business or other instability, which may be exploited by our competitors and/or other activist stockholders and cause concern to our current or potential customers, employees, investors, partners and other constituencies, which could result in lost sales and the loss of business opportunities and make it more difficult to attract and retain qualified personnel and business partners. If customers choose to delay, defer or reduce business with us or do business with our competitors instead of us, then our business, financial condition and operating results would be adversely affected. In addition, our share price could experience periods of increased volatility as a result of stockholder activism.

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

Sales of a substantial number of shares of our common stock in the public market could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity

securities. We have approximately ~~94,268,564~~96,501,690 shares of common stock outstanding as of September 30, ~~2021,~~2022, 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 ~~31%~~41% of our outstanding common stock, based on the number of shares outstanding as of September 30, ~~2021.~~2022. 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~~stockholders' 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~~a stockholder's shares of common stock.

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

Our Board of Directors has approved share repurchase programs for us to repurchase shares of our 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 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~~a stockholder can expect to receive a return on ~~your~~the stockholder's investment in our common stock only if the market price of the stock increases.

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

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

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

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

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

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

•prevent stockholders from calling special meetings; and

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

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

Risks Related to ~~Our Convertible Senior Notes~~Debt Financing Transactions

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”), which are due and payable on December 1, 2022.

In November 2021, we entered into an asset-based credit agreement (the “ABL Credit Agreement”). The ABL Credit Agreement was amended as set forth in the First Amendment and Limited Waiver to Loan, Guaranty and Security Agreement dated August 5, 2022 (the "First Amendment"). The ABL Credit Agreement, as amended by the First Amendment, terminated pursuant to its terms on September 1, 2022.

As of November 2, 2022, we have entered into (i) a commitment letter (“PNC Commitment Letter”) with PNC Bank, N.A. (“PNC”), pursuant to which PNC has committed to provide the Company with a senior secured asset-based revolving credit facility in an initial aggregate principal amount of $50 million ("PNC Facility"), and (ii) a commitment letter ("BT Commitment Letter") with Blue Torch Capital, LP (“BT”), pursuant to which BT has committed to provide the Company with a senior secured term loan facility in an aggregate principal amount up to $55 million ("BT Facility"). Pursuant to the terms and conditions of the respective commitment letters, the proceeds of the revolving loans under the PNC Facility and the term loans under the BT Facility will be used by us to, among other things, repay the principal, accrued and unpaid interest, fees, premiums (if any) and other amounts due under the notes. The loans under the PNC Facility and the BT Facility will each be secured by the assets of the Company, subject to a split-lien intercreditor agreement, to be entered into among PNC, BT and us.

Our leveraged capital structure could have negative consequences, including, but not limited to, the following:

•our ability to maintain compliance with the financial covenants is dependent upon our future operating performance and future financial condition, both of which are subject to various risks and uncertainties;

•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, as well as maintain compliance with financial covenants under the PNC Facility and the BT Facility, 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~~Upon adoption of ASU 2020-06 as of the ~~convertible debt instruments (such as~~first quarter of 2022, 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 no longer 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~~share. Instead, the ~~extent that~~Company uses the ~~conversion value of such notes exceeds their principal amount.~~if-converted method for calculating diluted earnings per share. Under the treasury stock method, ~~for diluted earnings per share purposes,~~ the transaction iswas 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~~Under the ~~accounting standards in~~if-converted method, the ~~future will continue to permit~~transaction is accounted for as if the ~~use~~number of ~~the treasury~~shares of common stock ~~method. If we are unable or otherwise elect not to use the treasury stock method in accounting for the shares~~ issuable upon conversion occurs at the beginning of the reporting period. The consequence to the Company's financial results of using the if-converted method at present is not problematic because the Company is in a net loss position in the Company's consolidated statement of operations and the convertible senior notes were determined to be anti-dilutive. However, if the Company becomes in a net profit position, 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

Our business is subject to 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~~industry-leading 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 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. In addition, global climate change could result in certain types of natural disasters occurring more frequently or with more intense effects. 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 additional 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 ultimate potential impact and duration of the COVID-19 pandemic on the 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.

Global economic conditions, including impacts relating to persistent inflation and the risk of a global economic slowdown, could materially adversely affect our revenue and results of operations.

Our business has been and may continue to be affected by a number of factors that are beyond our control, such as general geopolitical, economic and business ~~conditions,~~conditions; conditions in the financial ~~markets,~~markets; and changes in the overall demand for, or supply of, ~~consumer packaged goods~~CPG 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 continue to spend, orand in certain cases increase spend, on promotions during economic downturns, there is no guarantee they will continue to do so in a future economic downturn, including one that may be presently taking shape due to the persistence of the COVID-19 pandemic and inflationary pressures. For example, CPGs are less likely to spend on promotions if consumers continue to buy products despite rising prices and inflation. If this consumer spending pattern continues, our business will be harmed.

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~~

The economic slowdown that was severe in the initial months following the pandemic's breakout in 2020 has moderated, but due to the widespread and persistent presence of COVID-19 variants, both in the U.S. and in non-U.S. countries, the risk ~~factor “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” above, the COVID-19 pandemic has significantly increased economic uncertainty.a global recession remains. 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 initial months following the pandemic’s breakout in 2020 has moderated, but due to the persistent presence of COVID-19 hotspots both in the U.S. and more significantly in non-U.S. countries, risks of a global recession remain. AdverseIn addition, adverse changes in economic conditions ~~including~~such as a rise in inflation and inflationary expectations, whether as a result of the pandemic or otherwise, can significantly harm demand for our marketing solutions (or change the mix of solutions demanded) and make it more challenging to forecast our operating results and make business decisions.

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,~~markets; instability in the stock ~~market~~market; and high unemployment. There could be a number of other follow-on effects from these economic developments on our business, including customer ~~insolvencies;~~insolvencies, decreased demand for our marketing solutions; decreased customer ability to pay their ~~accounts;~~accounts, and increased collections risk and defaults.

8790

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

~~Issuer Purchases of Equity Securities~~

In February 2021, the Company’s Board of Directors authorized a one year share repurchase program (the “2021 Program”) for the Company to repurchase up to $50.0 million of its common stock from February 2021 through 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, 2021, the Company did not repurchase any shares of its common stock. As of September 30, 2021, $50.0 million remains available for future share repurchases under the 2021 Program.None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

Incorporated by Reference

Number

Exhibit Title

Form

File No.

Exhibit

Filing
Date

Filed
Herewith

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

3.1

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

3.2

Certificate of Designation of the Series A Junior Preferred Stock of the Registrant, dated November 12, 2021.

8-A

001-36331

3.1

11/12/2021

3.3

Certificate of Amendment of Amended and Restated Certificate of the Registrant, effective June 29, 2022.

8-K

001-36331

3.1

6/30/2022

3.4

Amended and Restated Bylaws of the Registrant, effective June 29, 2022.

10-Q

001-36331

3.4

8/9/2022

4.1

Form of Registrant’s Common Stock Certificate.

S-1/A

333-193692

4.1

2/25/2014

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

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

4.3

Tax Benefits Preservation Plan, dated as of November 11, 2021, by and between the Registrant and American Stock Transfer & Trust Company, LLC as rights agent.

8-A

001-36331

4.1

11/12/2021

4.4

First Amendment to Tax Benefits Preservation Plan, dated as of April 29, 2022, by and between the Registrant and American Stock Transfer & Trust Company, LLC as rights agent.

8-K

001-36331

4.2

4/29/2022

10.1†

Change of Control and Severance Agreement with Yuneeb Khan effective as of July 5, 2022.

10-Q

001-36331

10.6

8/9/2022

10.2

First Amendment and Limited Waiver to Loan, Guaranty and Security Agreement dated August 5, 2022 by and between Registrant and Bank of America, N.A., as agent for the lenders.

10-Q

001-36331

10.2

8/9/2022

10.3

Senior Secured Revolving Credit Facility by and between Registrant and PNC Bank, National Association.

8-K

001-36331

10.1

11/8/2022

10.4

Senior Secured Financing Facility by and between Registrant and Blue Torch Capital LP.

8-K

001-36331

10.2

11/8/2022

31.1

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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.

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.

32.1*

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.

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.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.

8992

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)

†

Indicates a management contract or compensatory plan or arrangement.

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 ~~4, 2021~~9, 2022	By:	/s/ ~~Steven Boal~~Matt Krepsik
		~~Steven Boal~~Matt Krepsik
		Chief Executive Officer
		(Principal Executive Officer)

Dated: November ~~4, 2021~~9, 2022	By:	/s/ ~~Pamela Strayer~~Yuneeb Khan
		~~Pamela Strayer~~Yuneeb Khan
		Chief Financial Officer ~~and Treasurer~~
		(Principal Financial Officer and Principal Accounting Officer)

9094


	Three Months Ended September 30, 2020						Nine Months Ended September 30, 2020
	Ubimo		Elevaate		Ahalogy		Ubimo		Elevaate		Ahalogy
	Level 3		Level 3		Level 3		Level 3		Level 3		Level 3
Balance at the beginning of period	$	10,239	$	3,207	$	—	$	5,686	$	3,534	$	27,000
Change in fair value during the period	4,769		(3,207)		—		9,322		(3,534)		—
Payments made during the period	$	—	$	—	$	—	—		—		(27,000)
Total	$	15,008	$	—	$	—	$	15,008	$	—	$	—


	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


	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


	Operating Leases
2021, remaining three months	$	1,108
2022	5,194
2023	5,480
2024	4,923
2025	3,761
2026 and thereafter	11,272
Total lease payments	$	31,738

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